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Larnach, Donald (1817–1896)

by G. P. Walsh

This article was published in Australian Dictionary of Biography, Volume 5, (MUP), 1974

Donald Larnach (1817-1896), banker and financier, was born on 17 July 1817 in Caithness, Scotland, son of William Larnach (d.1829), naval purser, and his wife Margaret, née Smith. He arrived at Sydney in the Numa on 22 November 1834 to join an elder brother, John. Larnach became manager of Barker & Hallen's steam flour-mill and bought it in 1842. He engaged in mercantile pursuits and speculated in town lots in Bathurst and Sydney as well as a run on the Lachlan River near Gunning. On 3 September 1845 at Trinity Church, Sydney, he married Jane Elizabeth, eldest daughter of William Walker. In that year he was appointed an auditor of the Bank of New South Wales and on 20 August 1846 elected a director. As general manager he wound up the affairs of the 'old' bank in 1850. In 1852-53 he was president of the new bank which profited from gold-buying; Larnach claimed the credit for the bank's innovation of buying on the gold-fields. He had become a magistrate for Sydney in 1847.

Larnach arrived in London with a fortune on 16 June 1853 to organize a branch of the Bank of New South Wales and was appointed managing director on 23 May 1854 at a salary of £1200. Next year he offered to resign and return to Australia when his brother James was detected 'dealing privately in discounts for his own benefit'. Nothing came of it, though he put up over £2000 as surety for his brother. Energetic and efficient, Larnach's expertise in money matters was recognized in 1866 when he was appointed chairman of the committee of leading bankers dealing with matters arising out of the failure of the Agra & Masterman's Bank.

A close friend of Henry Parkes in the 1860s, Larnach constantly urged him to subsidize migration to New South Wales and, convinced that the Riverina would eventually be separated, advised the government to make what it could from selling all the crown lands in the area. He floated loans on the London market for the New South Wales government and sometimes for the other colonies. When New South Wales debentures fell he arrested the decline by his heavy purchases, from which he later profited greatly. In the fiercely competitive scramble for capital, he showed skilful organization and timing to prevent clashes of interest, although he often demanded greater powers of discretion from colonial treasurers whom he thought ignorant of London conditions. In the early 1870s while Charles Cowper was ill, Larnach virtually ran the New South Wales agent-general's office in addition to his own work. Conservative and often critical of radical colonial banking practices, he increasingly deplored the dangerous borrowing of the Australian colonies and re-emphasized the advantages of subsidized migration on the North American example. He also had a different view of the functions of the London branch of his bank from those of Shepherd Smith, and signs of a rift in their good understanding began to appear in 1878 when the board decided to take deposits in London against Larnach's advice. He hinted that he might resign at the end of June 1879 but loan-raising commitments caused him to postpone his trip to the colonies and he was appointed chairman of the London board.

Larnach was also a director and president of the London Joint Stock Bank, a director of the Indemnity Mutual Marine Insurance Co. and an investor in other colonial banks and the Colonial Sugar Refining Co. He kept close touch with Australasian conditions through correspondence and friendships with many politicians, businessmen and squatters such as G. A. Lloyd and William Forster, to all of whom he dispensed useful advice. He revisited Australia in 1880-81 and 1886. In 1885 he had contributed £500 to the patriotic fund for the Sudan contingent. He was a member of the Australian Club in Sydney.

Larnach was a colourful figure for a banker and had an enthusiastic, considerate and pleasant nature. The bank's historian, R. F. Holder, describes him as 'energetic, self-confident, and sure of his own rectitude; to those with whom he disagreed he was often querulous, sometimes impatient, but invariably willing to speak his own mind'. Larnach had bought a country seat, Brambletye, East Grinstead, Sussex, and was high sheriff of the county in 1883. He also owned much real estate in Suffolk as well as the colonies. He died at 21 Kensington Palace Gardens on 12 May 1896, survived by his wife (d.1908), two sons and a daughter. His estate was sworn for probate at under £258,383 in New South Wales, £7450 in Victoria and personalty in England at £619,935.

Select Bibliography

  • N. Gunson, The Good Country: Cranbourne Shire (Melb, 1968)
  • R. F. Holder, Bank of New South Wales: A History, vols 1-2 (Syd, 1970)
  • Australasian Insurance and Banking Record, 15 Sept 1888, 19 May 1896, 20 Mar 1897
  • Australasian, 1 Apr 1893, 11 July 1896
  • Sydney Morning Herald, 4 Mar 1895
  • Town and Country Journal, 23 May, 11 July 1896
  • Colonial Secretary's land letters (State Records New South Wales)
  • Parkes letters (State Library of New South Wales).

Citation details

G. P. Walsh, 'Larnach, Donald (1817–1896)', Australian Dictionary of Biography, National Centre of Biography, Australian National University, http://adb.anu.edu.au/biography/larnach-donald-3995/text6319, published first in hardcopy 1974, accessed online 23 November 2014.

This article was first published in hardcopy in Australian Dictionary of Biography, Volume 5, (MUP), 1974

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