Australian Dictionary of Biography

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Davidson, Sir Alfred Charles (1882–1952)

by R. F. Holder

This article was published in Australian Dictionary of Biography, Volume 8, (MUP), 1981

Sir Alfred Charles Davidson (1882-1952), banker, was born on 1 April 1882 in Brisbane, son of James Madgwick Davidson, and his Queensland-born wife Lucy, née Cribb. His father, the second son of Alfred Davidson of Warmley House, Gloucestershire, who brought his family to Queensland in 1863, was manager of the South Brisbane branch of the Bank of New South Wales. Davidson was educated at Brisbane Grammar School, and joined the Bank of New South Wales at the Brisbane office in 1901 after the later stages of his formal education had been interrupted by illness. Early in his career he devoted much of his leisure to private study of banking and finance and to the activities of the South Brisbane Congregational Church.

In 1910 Davidson visited London at his own expense and on his return was appointed to the bank's head office in Sydney. For some years he worked mainly in administration under the watchful eye of the inspector Robert Tate Hilder. On 28 June 1916 at St Peter's Anglican Church, Neutral Bay, he married Dorothea Mary, daughter of Charles L. Tange, solicitor; they had no children. He was transferred to New Zealand in 1922, first as manager of the Gisborne branch and in 1924 as sub-inspector, Wellington. His adaptability and energy won the confidence of his superiors, and he was appointed manager of the Perth branch in 1925.

Developing a lifelong enthusiasm for Western Australia, Davidson plunged quickly into the expansion of business there. He became general manager of the ailing Western Australian Bank in 1926. Finding its condition weaker than expected, with strong support from most of its directors and notably from Hilder among his former colleagues, he negotiated amalgamation with the Bank of New South Wales in March 1927. Appointed inspector in Perth, Davidson was in charge of the amalgamated business in the State. However, he was recalled to Sydney as chief inspector in 1928 and became general manager on 4 January 1929.

His term as general manager of the Bank of New South Wales was one of dynamic leadership of the bank and of controversy on the national stage. Davidson's outstanding position came from a thorough and disciplined practical training, a refusal to be hidebound, a lifetime of self-education in banking and economics, and a receptivity to ideas. Above all, he had drive and self-confidence which harnessed ideas of others into practical and swift decision and action.

Impressed with the necessity for bankers to study the wider aspects and implications of their profession, Davidson became a fellow of the Royal Economic Society in 1925. His interest in economics and finance was influenced and encouraged in Western Australia by his friendship with Professor Edward Shann, which brought him into consultation and association with many leading academic economists. With his flair for publicity, he was able to encourage a lively forum for their views which helped to keep the public abreast of current economic controversies. His encouragement of young graduate staff to participate in a wide range of public affairs was later to provide the public service and business with considerable talent. Under Davidson the bank grew and prospered: he negotiated the amalgamation with the Australian Bank of Commerce in 1931; carried out a well-judged building programme and acquired fine city buildings in the low-cost 1930s; increased the number of accounts; carried on highly profitable dealings in foreign exchange; and introduced the travel service which was widely copied by other banks.

Despite the developing balance of payments crisis and growing economic depression, Davidson remained convinced throughout the 1930s that the banks could play a decisive and constructive role under suitable leadership, provided they were not frustrated by political interference. He advocated a central bank and wrote on the subject in 1929, but drew back when Edward Theodore's bill threatened political control. But the two issues on which he mainly crossed swords with the governor of the Commonwealth Bank of Australia and his fellow bankers were the exchange rate and the interest rate policy. His first show of independence was to increase interest rates in his bank, against the views of the other banks, early in 1930.

Deteriorating gold and foreign exchange reserves called for drastic action to guarantee interest payments on Australia's heavy overseas public debt. Government pressure for exchange control won some sympathy from the banks but, after Theodore proposed a voluntary pooling arrangement, Davidson gained acceptance for the exchange mobilization agreement of 1930, which assured exchange funds to meet all government debt service and other essential requirements; it also left the banks free to use the balance of their exchange earnings in their normal business without loss of independence.

Davidson's battle over the exchange rate was more protracted: preservation of parity with sterling was a sacred cow which growing external weakness made increasingly expensive, perhaps ruinous, to maintain. The Commonwealth Bank and some others thought their defence lay in government control of exports. After bitter arguments with them Davidson acted on his own, obliging the others to follow, to outbid the outside traders, and thus he effectively destroyed the myth of parity with sterling. There was some dispute about the appropriate exchange rate, but Davidson's conviction and initiative late in 1930 and early 1931 gave principle and purpose to the haphazard process of devaluation, and obliged a reluctant Commonwealth Bank to take responsibility for management of the rate. This unpegging of the old parity with sterling was later recognized as one of the most important factors in softening the impact of world depression on Australia and in assisting domestic recovery. In the confusing events surrounding the Premiers' Plan in 1931, Davidson supported the principle of lower interest rates and virtually forced the other bankers to agree, but he was prepared to move only on condition of cuts in government budget deficits and at a pace slower than the government wished. His attitude generally was to co-operate but not to be coerced into precipitate steps. In a practical way he was an early advocate of the new practice of holding treasury bills in his bank's portfolio and of supporting the bond market in conversion operations. He pressed tirelessly colleagues in the business world to keep industry moving and farmers on the land, and in New South Wales he assisted home building. Unfortunately petty wrangling and distrust and suspicion of political motives too often detracted from the efforts of his vigorous personality.

Through the Primary Producers' Advisory Council Davidson was thought to be involved with Charles Lydiard Aubrey Abbott and the Old Guard, and he was also suspected in some quarters of association with the New Guard. Nevertheless, as the government's banker he and the bank behaved with circumspection and rectitude in the crisis that led to the sacking of Lang as premier in 1932. In the late 1930s Davidson supported the Heffron group against Jack Lang and involved the bank in the finances of the Labor Daily. At the British Commonwealth Relations Conference at Lapstone in 1938, which he enthusiastically supported, he tried to persuade Ernest Bevin to meet Robert Heffron. His excursion into political factionalism helped to strain relations with members of his board.

Deep concern for preserving the banking system from political interference and from the various financial nostrums flourishing in the Depression, caused Davidson to accept the Commonwealth royal commission on the monetary and banking systems in 1935 as a great opportunity: his extensive evidence, thoroughly prepared and impressively presented, was a performance of considerable virtuosity, ranging widely over slightly idealized interpretations of current banking economics and experience. But the Depression had left its mark on public and official thinking. An independent central bank free of political connexion leading a system of banks through discussion and guidance in open-market conditions, which he had advocated from 1929, was no longer a possibility. Indeed, Davidson was hardly the man to play second fiddle to any central bank, however wisely led.

Appointed K.B.E. in 1938, Davidson had passed the peak of his power by 1939. Although he applied himself with customary energy to the defence effort and to problems of wartime banking he was not called on to play a wider role in national affairs. He devoted much effort to a diverse series of welfare organizations and to preparations for post-war conditions, including plans for bank finance of housing. With a wider vision, he returned after a visit to Fiji and New Zealand early in 1944 fired with a sense of the opportunities and responsibilities of Australia and New Zealand in south-east Asia and the Pacific. Preaching that message was his last crusade. He was struck with severe illness on October 1944, and although he hoped to resume duty with the bank, he was persuaded to retire in June 1945.

Sir Alfred spent much time at Leura, where he enjoyed gardening and carpentry. He was president of the Australasian Pioneers' Club, a member of the Union, Australian, University, Royal Automobile and Australian and Leura Golf clubs, the Church of England Sydney Diocesan Synod, and of the Walter and Eliza Hall and the Long Range Weather Forecasting trusts, and a director of the International Chamber of Commerce. In retirement his main excursion into business life was as chairman of a new, and possibly premature, merchant banking organization in 1950. He died of heart disease in St Luke's Hospital, Darlinghurst, on 18 November 1952 and was cremated after a service at St Andrew's Cathedral; he was survived by his wife. His estate was valued for probate at £36,698.

A dominating figure in the 1930s, Davidson assumed leadership among the banks with ease and confidence. Genial and generous to most people, he was also arrogant and often contemptuous towards his peers, but he won a deep affection from a very wide circle. He used his influence and his own energy to promote and extend the work of many organizations which might otherwise have gone under in the Depression. As a member of the provisional committee he had also helped to establish the Royal Australasian College of Physicians in 1938. To the end he retained a youthful enthusiasm for a diversity of interests, from water divining and organic fertilisers to world politics and philosophy.

Select Bibliography

  • Bank of New South Wales, Royal Commission on Monetary and Banking Systems, 1936 (Syd, 1936)
  • Royal Commission into the Monetary and Banking Systems … minutes of evidence, 1 (Canb, 1936)
  • L. F. Giblin, The Growth of a Central Bank (Melb, 1951)
  • R. F. Holder, Bank of New South Wales: A History (Syd, 1970)
  • C. B. Schedvin, Australia and the Great Depression (Syd, 1970)
  • Australian Quarterly, Mar 1953, p 42
  • intelligence reports, SP 1141/1/13, MP 1049/9, file 1887/2/35 (National Archives of Australia)
  • Bank of New South Wales Archives (Sydney).

Related Thematic Essay

Citation details

R. F. Holder, 'Davidson, Sir Alfred Charles (1882–1952)', Australian Dictionary of Biography, National Centre of Biography, Australian National University, http://adb.anu.edu.au/biography/davidson-sir-alfred-charles-5895/text10035, published first in hardcopy 1981, accessed online 26 September 2017.

This article was first published in hardcopy in Australian Dictionary of Biography, Volume 8, (MUP), 1981

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