THE AUSTRALIAN WIDOWS' FUND: BOOM & BUST
This unassuming NSW 1d pink Queen Victoria mint Post Card reveals a story of Melbourne's past (late 1800's). The front has not been illustrated, but the reverse shows it is from The Australian Widows' Fund, Life Assurance Society Limited, with Offices in Melbourne, Sydney, Adelaide, Brisbane & Launceston.
"Notice is hereby given that an Extraordinary General Meeting of the Members of the Society will be held at the Society's head Office, corner of Collins and William Streets, Melbourne, on Wednesday, the 31st day of August, at 3 o'clock p.m.
To receive and consider the Report of the Directors and the Report of the Actuary on the Society's business for the Five years ending 31st October 1886.
Dated at Melbourne this 3rd day of August, 1887.
By the order of the Board,
JOHN DONALDSON, Secretary."
In light of future events and Melbourne's reputation during the Land Boom and Bust period, one has to wonder whether the proposed meeting was to be a precursor of future concern.
The Australian Widows' Fund Life Assurance Society Ltd was formed in 1871 and was absorbed into the Mutual Life and Citizens Assurance Co. Ltd. (M.L.C.) in 1910. The Widows' Fund got its funds by canvassing prospective holders of insurance policies particularly widows and it was promoted with large advertisements.
The company invested the resultant week-by-week payments in sound, steady and splendid enterprises. It carried on business in its own two-storey building at 454 Collins Street. The chairman of the Company was James Black Lawrence, son of prominent Melbourne contractor James Lawrence.
The former James (junior) was a clever hearty fellow who started trading in William Street, Melbourne in 1863 as a wine and spirit merchant. His business developed into a highly prosperous partnership (with John Adam, a former Richmond mayor), with an annual turnover averaging £240,000, showing a clear profit of about £26,000 annually.
"With his widows on the one hand and his wine on the other, Lawrence was generally regarded as one of the colony's soundest men. Nor did he appear to be greatly attracted by the lure of the land boom. 'I have never speculated,' he proudly told the judge when the Insolvency Court eventually caught up with him." His was a vast over-simplification of the facts.
As a prominent commercial leader, Lawrence felt it his duty to get into the building society business, for this was providing cheap housing for the growing Melbourne population. Early in the boom, he became chairman of the Victoria Mutual Building Society. As affairs developed, he became a founder and treasurer of the Colonial Permanent Building Society and a director of the Victorian Estate Co. Ltd, a speculative enterprise. He had to find profitable outlets for his ample investment funds, and he started to lend out his depositors' savings on the security of leasehold properties.
By the second half of 1891, the industrial slump had become so serious that many members of building societies were unable to keep up their regular payments. At the same time, most of the land boomers (to whom he had made large advances) were becoming seriously embarrassed for cash. The Victoria Mutual Building Society was forced to close its doors. There was a restructuring under the name of St. James' Building Society, but financial problems persisted and it was the finish of Lawrence's reputation as a sound financier.
In the meanwhile, the affairs of the Australian Widows' Fund (A.W.F.) also reached a crisis, for the Fund had loaned £30,000 to the West Melbourne Land Company under the personal guarantee of Benjamin J. Fink (an entrepreneurial financier of mythical proportions), whose fortunes and those of the Company burst at the same time, paying a half-penny in the pound. The A.W.F. applied to the Supreme Court on the grounds that their funds had been procured by fraud. The case was settled out of court, there being a satisfactory arrangement with the return of money to the A.W.F.
Lawrence held out against the final act of insolvency until 1895 and the A.W.F. struggled on for some years longer. In 1896 the A.W.F. wrote off £125,000 capital to help cover its losses of the boom period. By 1910 the Fund still had not recovered its position. The directors of the Fund approached the Mutual Life Association of Australasia (which had just absorbed the Citizens' Life Company) and the subsequent amalgamation became the giant M.L.C. organization of to-day.
Acknowledgment: This paper is largely based on Michael Cannon's "The Land Boomers" Melbourne University Press, 2nd paperback edition 1995, both the text and Figure 2. This remarkable book is a wonderful historical account of Melbourne's troubled financial past.
This paper was published in The N.S.W. Philatelist, February 2004, Volume 26, Number 1, pages 17-19.
Addendum August 2007: This cover was sent from Sydney to Molong in 1904 and the use of the green half-penny stamp was allowed as the cover was not sealed (Figure 3).
The flap on the reverse of the cover has been enlarged so that the text can be read (Figure 4).