Australia Yearbook - 2001

908 Year Book Australia 2001
their accounts. There were a few banks that
allowed depositors to withdraw funds from
States other than their own and even by
telegraph, an early example of electronic funds
transfer.
There were numerous land, building,
investment, trading and commercial companies
which received money on deposit and
transacted business as done by banks of issue.
Many of these types of institutions had folded
during the 1890s. By 1901 there were still 37
building societies operating in Australia, with
total assets £4m, and deposits of approximately
£3m.
Although merchant banks have been operating
in Europe since the sixteenth century, these
institutions did not appear in Australia until the
1950s. However, pastoral finance companies
were quite important to the provision of finance
to rural areas. There were five principal
companies which made £20–25m in rural
advances, financed by the issue of £23m in
debentures and around £10m in shareholders’
funds.
Life assurance companies and societies played a
role in 1901 very similar to their present
incarnation as life insurance corporations,
offering term and whole life cover and
annuities—essentially converting long term
savings into long term investments. There were
18 companies doing ordinary and/or industrial
life insurance business. Their liabilities consisted
mainly of their assurance funds. Only three of
the 18 companies were partly proprietary, with
paid up capital approximately £33m. Their
assets consisted of loans on mortgages and
policies £22m, and around £11m in holdings of
government and municipal securities, freehold
property, and cash on deposit.
Friendly societies provided health and death
cover, and other long term savings. There were
approximately 137 societies, with 3,008 branches
(or lodges), and total funds of around £3m.
Other insurance companies mostly transacted
marine and fire insurance, along with some
guarantee and other business. Total liabilities
for other insurance business were around £4m,
mostly due to shareholders and policyholders.
Investments made by other insurance
companies consisted of: loans on mortgage
£1m; government securities, debentures and
shares £1m; land and other property £1m; and
fixed deposits £1m. The balance of assets
consisted of cash in bank, on hand and bills
receivable £0.2m, and sundry debtors £0.3m.
Finally, there were 14 trustees, executors and
agency companies, with £1m liabilities due to
paid up capital and reserve funds. Their assets
consisted of deposits with government £0.2m;
other public securities and fixed deposits £0.1m;
loans on mortgages £0.2m; property owned
£0.2m; and other assets £0.1m. These
companies did not receive deposits and made
advances on very rare occasions. They were,
however, responsible for £31m in assets at
credit of estates.
Quantitative comparisons of financial data over
the century since Federation are problematic:
the economy, legislative framework and
statistical frameworks are very different.
Nonetheless, table 26.39 provides some
indication of relative size and structure of
financial corporations.
In this table institutions have been classified
according to the standard institutional
subsectors of 2000. As a result, the role of
friendly societies in 1901 may be
misrepresented. In both 1901 and 2000 friendly
societies offered both health insurance and
‘death’ benefits to members, but the
proportions for 1901 are not known.
There are some differences between the three
data sources consulted for 1901 data, and some
choices have been made. The 1901 data are
tabulated in many cases from annual returns with
accounting periods which were not always the
year ended June. The 1901 data in pounds have
been converted to dollars. In the absence of
specific price indexes for financial sector
products, the growth in retail prices of some
47 times between 1901 and 2000 (see table 28.5
of Chapter 28, Prices) may provide a broad order
of magnitude for revaluation to 2000 prices.
Because of the large differences in economic
and legal structures between the financial
system in 1901 and 2000, comparisons are
difficult. By scaling the 1901 and 2000 data such
that the bank data are the same relative size, the
relative change in importance of the other
institutions can be seen by comparison with
banks. In particular pension funds, other
insurance, central borrowing authorities, and
financial institutions n.e.c., are the significant
new players (graph 26.40).