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From Bank to Battlefield

Challenges of War

Reflections of the Current Governor, Glenn Stevens

Sir Denison Samuel King Miller, the founding Governor of the Commonwealth Bank of Australia, knew well the demands of war. After the outbreak of the First World War in 1914, the bank he led played its proper part as a national institution in helping to arrange wartime financing. The Bank's officers and staff also made a very direct contribution: as Miller later recorded, a remarkably high proportion of the men employed by the Bank enlisted. The war was quite personal for Miller. Three of his four sons enlisted; one died on the Western Front in 1917.

Miller's correspondence with members of the Bank's staff during the war years provides a window into the times. In reproducing these and other documents from its archives, the Reserve Bank is seeking to make a small contribution to the marking of those terrible events.  

Lest we forget.    

Glenn Stevens
August 2014

Responsibilities of the Bank and its Leader

Prime Minister Andrew Fisher's decision to appoint Denison Miller as the first Governor of the Commonwealth Bank was an inspired one. The Bank's reputation, he maintained, would depend on the qualities of the person appointed to lead it through its early years.

Fisher made this clear when he introduced the Commonwealth Bank Bill into Parliament in 1911. He wanted the Commonwealth Bank to be a successful commercial enterprise. Having established itself, the Bank might then evolve naturally into a central bank.

Miller dedicated himself to fulfilling these ambitions. He was determined that the Bank would soon be known for its competence and enterprise. These were the skills that he himself brought to the Bank as a former commercial banker, second-in-charge of the Bank of New South Wales, Australia's oldest and most respected bank. But he was also determined to see the Bank develop as a central bank. The First World War was to assist him in this process.

As banker to the Commonwealth Government, the Bank was responsible for the massive loan raisings required to meet the demands of war and postwar reconstruction, and for financing the country's export trade. During the war, Miller petitioned the government on numerous occasions to transfer responsibility for the note issue from the Treasury to the Commonwealth Bank. The first step occurred in 1920 when the Australian Notes Board was established within the Commonwealth Bank, with Miller as Chairman.

The Bank provided additional liquidity to banks during the postwar depression in the early 1920s in a successful attempt to stabilise the financial system. Miller also urged the banks to settle their balances by cheques drawn on deposits held at the Commonwealth Bank, a process eventually forced upon the banks by the Commonwealth Bank Act of 1924. These were significant steps toward the creation of central banking in Australia.

Historians have justly praised Denison Miller for the leadership he exhibited as Governor of the Commonwealth Bank, creating as he did one of the nation's greatest financial institutions, of which the Reserve Bank of Australia is the legal successor.

Selwyn Cornish
Official Historian
Reserve Bank of Australia

Summary of Wartime Activities

When World War I broke out, the Commonwealth Bank was just two years old. The enormity of the challenge facing the fledgling organisation is unimaginable as it sought to establish itself as a national institution at the same time as it grappled with the consequences of war for the nation – and for its staff.

The First World War provided significant challenges for the Commonwealth Bank. In particular, its role in organising finance for Australia's war effort through the successful War and Peace Loan campaigns. Confidence in the Commonwealth Bank had grown early on when, after war was declared, it promptly paid any depositors wishing to withdraw their savings from the Bank. This act allayed any fears, held by some writers and members of the general public, that the war would see the collapse of the banking system due to a run on the banks. By paying all withdrawals without question and providing a guarantee that other banks would do the same, the public were satisfied that their money was safe and the expected mass withdrawal of deposits never occurred.

The Commonwealth Bank also became known as the Digger's friend. Following on from the successful campaign started in 1912 to put Commonwealth Savings Bank agencies on board Australian naval ships, the Bank extended this to the Australian Imperial Forces and opened branches around Australia and abroad. In addition, any soldier who wished to cash Australian notes or silver could do so through one of the Bank's many overseas agents at a pre-negotiated rate.

At training camps in Australia and the United Kingdom, and branches in London and beyond, Bank staff assisted soldiers, with all charges borne by the Bank. In cooperation with the Red Cross, the Bank also ensured that many prisoners of war had access to funds, thus allowing them, in many cases, to purchase a few comforts while being confined under terrible conditions. The Bank also assisted dependents of Australian soldiers, including war widows, whose pensions were paid free of charge.

Staff of the Bank formed a Patriotic Club and regularly sent parcels to soldiers stationed overseas. The grateful thanks of recipients, often accompanied by stories of their exploits abroad, was recorded in the staff magazine, Bank Notes.

And when hostilities ceased, the War Service Homes Department of the Bank ensured that homes were built or purchased at favourable rates in each state for those returned soldiers, sailors, nurses, munition and war workers and their female dependents who required housing. In this small way, the Bank was seen to be helping those who had fought for the Empire's, and Australia's, freedom.

In a short space of time, and due to the efforts of the Bank to assist the war effort and Australian soldiers, wherever they were stationed, the Bank and Governor Miller became synonymous with stability and strength, and their activities, within Australia and on the world stage, generated great public pride and patriotism. The Commonwealth Bank's role during the war years cemented it firmly within the collective psyche as an enduring Australian institution and a bank for and of the people.