Matthew Henry Davies: Solicitor, Speculator, Politician and Philanthropist 1850-1912

Matthew Henry Davies – Speaker of the Legislative Assembly of Victoria.

Matthew Henry Davies was born at Geelong on 1 February 1850, the fourth son of Ebenezer Davies (1808-1886) and his wife Ruth, nee Bartlett. Ebenezer Davies was born at Tetfield in Gloucestershire, England, the sixth son of a Congregational minister. He left home at an early age and worked in general trade in London. Later he acquired a straw hat manufactory at Halstead in Essex. In the late 1840s, Davies inherited an annuity of about £500 and determined to emigrate to Australia. Davies arrived at Geelong aboard the emigrant ship, the Travancore with his wife and family of three infant sons, in November 1849.

Ebenezer Davies soon established himself in Geelong society. He founded a tannery on the Barwon River in the early 1850s and later acquired further property in the region of the Breakwater. Davies later sold some of this land to James Harrison for his refrigeration experiments. He served as a director of the Geelong and Melbourne Railway Company in the 1850s and remarried in 1857 following the death of his first wife. His biographer, R. D. Freeman records that Ebenezer Davies worked tirelessly in the interests of Geelong and that he was also deeply religious, though something of a tyrant to his family, convinced that his duty to his children was only to educate them. [1]

In this regard he certainly succeeded, sending his sons in turn to Geelong Grammar or Geelong College. John Mark Davies (1840-1919) became a solicitor, politician and speculator, George Schoen Davies (1841-1910) became a banker, company manager and accountant and the third immigrant son, Joseph Bartlett Davies (1843-1924) found a career as a banker, accountant and speculator.

The only son to be born in Australia, Matthew Henry Davies attended both public schools at Geelong before matriculating at the University of Melbourne in 1869. After a brief foray with freelance journalism, Matthew Davies joined his brother John in February 1870 and served as an articled clerk in this burgeoning legal practice until April 1875, when he was admitted as a solicitor of the Supreme Court. On the 23 March 1875, and at the age of 25 years, Davies married Elizabeth Locke Mercer, the eldest daughter of the Rev. Peter Mercer, D.D, a leading Presbyterian minister. Matthew Davies set up practice as a solicitor on his own account in February 1876, taking space in Eldon Chambers in Bank Place.

His legal, political, business and speculative career is a dramatic illustration of life in 19th century Melbourne, for his fortunes soared with the rise of ‘Marvellous Melbourne’ in the buoyant 1880s and just as dramatically plunged with the collapse of the metropolitan land boom in 1890.

Freeman records that much of Matthew Davies’s early legal work was for Charles Henry James (1848-1898), an Irish businessman and land speculator, later acknowledged as ‘Melbourne’s first land boomer’.[2] James arrived in Victoria around 1867 and reputedly began business as a grocer in North Melbourne. In the 1870s, James began to buy, subdivide and sell real estate in the northern and north eastern suburbs of Melbourne using a technique that guaranteed prosperity. James cultivated political and social contacts to buy farmland in strategic locations in Fairfield, Ivanhoe, Heidelberg and Rosanna by the acre and resell by the foot.

He made a habit of donating large allotments from these suburban subdivisions for use by the major religious denominations and advertised extensively. It was inevitable that he became Davies guide and mentor, and within two years his solicitor was also an accomplished speculator in land. Matthew Davies’s initial forays were highly profitable and Michael Cannon records that

By 1877 the young solicitor had already made enough money to take a leading part in floating the Australian Economic Bank, successor to the moribund Australian European Bank. [3]

The memorial books in the Registrar General’s Office in Melbourne confirm that Davies’s first excursions in land speculation were in his own name and involved small parcels of land in outer suburban localities. He was appointed a Justice of the Peace around 1880 and cut his political teeth when elected to the Prahran Council in 1880. At the same time, Davies won appointments to a number of company boards, including the Head Office General Board of the National Mutual Life Association of Australasia Limited, a position he held until 1888. In 1881-1882 Davies’s business and political acumen was soon recognised and he served his second term on Council as mayor of the burgeoning municipality. [4] The following year Davies, on his first attempt, was elected to Parliament as the Independent member for St Kilda.

By the end of 1881, Matthew Davies had amassed both sufficient capital and financial connections to enable him to contemplate building a large mansion in Toorak. In March 1882, architect, William Henry Ellerker called for tenders for construction of a large residence on land at the corner of Lansell Road and St George’s Road, the quantities for which were prepared by another architect and quantity surveyor, James Henry Fox. [5]

Toorak Residence of Matthew Davies.

Six months later Ellerker again called for tenders, this time to build the Davies family holiday villa at Mentone. [6] The following month Ellerker and Co. sought tenders for completion of M.H. Davies’s fashionable Italianate style mansion ‘Prado’ by construction of commodious stables and out offices. [7] Cannon records that, at the time of completion, the Davies mansion was mortgaged to one of the Melbourne banks for £80,000 and that the furniture alone cost £10,000. Years later, the social rag Table Talk held that ‘All Melbourne was dazzled by the splendour of his residence and the magnificence of his entertainments’. [8]

Real Estate Land Poster showing location of Matthew Davies Mentone villa on the corner of Palermo Street and Mentone Parade. Courtesy of Mordialloc and District Historical Society.

Whilst Ellerker and Co. were overseeing the design and construction of the Toorak mansion, M. H. Davies, having been spurred on by the success of his political allies and speculator clients, determined to further expand his city real estate holdings. In April 1882 he completed the acquisition of a substantial parcel of land in Chancery Lane at the northern end of Bank Place, and within days of the memorial being registered, tenders for construction of ‘extensive offices in Chancery Lane, Melbourne, for M.H. Davies, esq., J.P.’ were advertised. [9] This time, Davies engaged the recently formed partnership of Henderson and Smart as architects for the design of his new offices in the tight legal precinct of Chancery Lane (the name given for Little Collins Street between Queen and William Streets). Upon completion in 1883, Davies named his new premises ‘Normanby Chambers’ after the then vice-regal incumbent at Government House, the 2nd Marquess of Normanby and presumably because of the welcome role Normanby played in the administration of constitutional politics in the early 1880s in Victoria. [10]

Normanby Chambers from Bank Place, Melbourne, 2003. Courtesy Graham J Whitehead.

Davies’s political career flourished, and with it came many influential new contacts in the banking and finance arena. His legal business was hard pressed keeping up with the demands of both his land boomer clients and the string of companies he had personally established to head his speculative and finance operations. In February 1885, Davies accepted Charles Samuel Price and James Wighton as partners in his legal practice, which he then styled as ‘Davies, Price and Wighton, solicitors and notaries’.

This was not the first time Davies had been in a legal partnership, he having earlier taken on Mr Strongman in an association which lasted from October 1876 until October 1881. In February 1886, and following his appointment as minister without portfolio in the Gillies Government, Davies apparently retired from active practice with the firm to concentrate on his extensive investment and speculative ventures and to further his parliamentary career.

He visited London in mid 1886 to attend the Indian and Colonial Exhibition ‘and was presented at court by the Secretary of State for the Colonies, and enjoyed the hospitality of the Prince and Princess of Wales in connection with the exhibition’. [11] The organisation of this exhibition led to the founding of the Imperial Institute in 1887 and Davies made substantial contributions and many gifts to this colonial establishment in the jubilee year of Queen Victoria’s reign. Davies later used his influential London connections to advantage in his burgeoning financial affairs in Melbourne, setting up branches of his principal companies in London ‘to tap English deposits’. [12]

Following his return to Melbourne in 1887, Davies sat on several committees of enquiry and was chairman of the Royal Commission on Banking, of which the primary recommendation was to allow all banks to participate in the buying and selling of property. Davies’s philanthropic activities were extensive, and ranged from involvement with the Law Institute in the early years of practice to the foundation of the Young Men’s Christian Association of Melbourne, the Cheltenham Convalescent Home and the Melbourne Convalescent Home for Men. As well he actively supported the work of the Melbourne City Newsboys’ Society and the Try Boys’ Society in Toorak and took a leading role in many of the principal cultural institutions of the day including the Philharmonic Society.

Davies served as an executive commissioner and vice-president for the Centennial International Exhibition held in Melbourne in 1888 and was an ‘irrepressible advocate for the “great city of Melbourne” which he and his fellow speculators hoped to build’. [13] All these activities were in addition to his parliamentary duties and his more onerous responsibilities as chairman and director of the many land development, banking, mortgage and finance companies which he had established in the 1880s and effectively controlled. Geoffrey Serle in his history of the Colony of Victoria from 1883-1889, The Rush to Be Rich, notes that of all the companies formed for land speculation in the boom, the constant was always the names which ‘combined variously the terms Land, Property, Investment, Realization, Freehold, Estate, Mortgage and Banking’. [14] Michael Cannon in his revealing account of laissez-faire capitalism in Melbourne in the 1880s, Land Boom and Bust , records that Matthew Davies was the key figure in no less than thirty-four major companies and that it would be ‘a futile task to trace all of Davies’s financial interests’. [15]

Following the resignation of Peter Lalor in October 1887, Matthew Davies was elected (by the narrowest possible margin) Speaker of the Legislative Assembly, and ‘adorned the office by his impartiality and skill in conducting business smartly without limiting discussion’. [16] The Herald recorded his elevation as Speaker by noting that not only was Davies successful in his legal business but also conspicuously fortunate as a financier, and it is understood that by his land speculations he has amassed a large fortune’. [17] In November 1888, Davies sold Normanby Chambers to his partner Charles S. Price for a consideration of £50,000. Davies monumental contribution to public life was acknowledged in 1890 with a knighthood.

From the enormous tangle of companies formed or taken over by Davies during the course of the land boom of the 1880s, a select number of principal financial institutions serve to illustrate the nature of his speculative interests. Matthew Davies and his confreres used the Colonial Investment & Agency Company Limited from as early as 1879 for land speculations, and later this apparently successful company was amalgamated with other trust, mortgage and investment companies, including the Land Mortgage Bank of Victoria Limited.

Davies used the latter company to finance the purchase of the Chancery Lane site and construction of his office building ‘Normanby Chambers’. [18] Davies used the strategy of appointing his friends, legal colleagues, parliamentary associates and professional consultants to positions of authority on the boards of many of his companies to great effect. Francis Joseph Smart, one of the architects in the partnership responsible for the design of Normanby Chambers was rewarded for his professional efforts when appointed chairman of the Colonial Investment & Agency Company after 1884. Smart presided over its changing fortunes until the inevitable collapse of the company in 1892.

Davies formed the Freehold Investment Company Limited in 1882, and at the same time as he was involved with the building of his mansion in Toorak, his holiday villa at Mentone and the offices in Chancery Lane. This company with its entourage of eminent directors (including James Balfour, M.L.C., Joseph Bartlett Davies and C. H. James), built the impressive Victoria Buildings at the south-east corner of the intersection of Collins and Swanston Streets in 1887 (to designs by architect W. H. Ellerker) and opened up land on the Windsor Park Estate at Surrey Hills in the mid-1880s. The company went into liquidation in 1893 amidst acrimony, public uproar and threats of criminal proceedings against the directors. Another company, The English & Australian Mortgage Bank Limited served Davies’s share trading interests and was used-to raise extensive capital in London for various speculative ventures until investigations by Table Talk and an inquiry by shareholders in 1892 revealed that this finance company had been administered with wild abandon and that all of the once considerable shareholders’ funds were gone.

Davies, like many of his parliamentary and speculator colleagues, used the Voluntary Liquidation Act of December 1891 to advantage. Ailing companies were wound up with little or no publicity, and Cannon records that by June 1892, ‘practically every company in the Davies ring had been liquidated by its own directors’. [19] In the Sands and McDougall Victorian Directory for 1892, Normanby Chambers, once the home of eminent legal practitioners, architects and agents, was listed as being filled with Davies’s failed companies, and by 1894, virtually all carried the notation ‘in liquidation’.

All of the activities of Davies’s many companies however pale to relative insignificance when compared with the history of his principal financial institution, the Mercantile Bank. Michael Cannon critically recounts Davies’s career in front line banking in great detail in The Land Boomers (1966), and the expanded Land Boom and Bust (1972). Other historians since 1966 have taken a somewhat less acerbic view of Davies’s role in the downfall of the Mercantile Bank, with Davies’s official biographer, R. D. Freeman giving a succinct account in the Australian Dictionary of Biography entry of 1972.

The great crisis in his affairs was in 1892. His Mercantile Bank declared an 8 per cent dividend in February but suspended payment in March. He resigned from parliament in April and left for England in the City of Chicago which was wrecked on the Irish coast on 2 July. With 200 other passengers Davies scaled the cliff on a 300-foot rope ladder and lost all his luggage. He reached London too late for a meeting of depositors who resolved to apply for a voluntary liquidation of the bank. At a meeting in October he made a long statement but was severely criticized by angry shareholders. He returned to Melbourne to find most of his other companies in difficulty. [20]

Despite Matthew Davies’s frantic attempts to raise new finance and forestall an increasingly anxious and bewildered public, his empire collapsed, and with it the aspirations of shareholders who had admired him and trusted him. Davies was forced to auction the contents of his Toorak mansion and offer the huge house for rent. The times were such that there were no takers, and the house remained vacant, except for a caretaker, for many years. Cannon records that following the failure of the Mercantile Bank, the bastion of his considerable empire, Davies was ‘subjected to an extraordinary series of criminal charges, counter-charges, committals, and acquittals’. [21] Davies’s health suffered as a consequence, Freeman recording that he ‘was stricken with severe nervous prostration and ordered a complete change of scene’. [21] The incredible story of the demise of the Mercantile Bank and of the parliamentary and judicial intrigue surrounding the trial of Davies and his manager Frederic Millidge is told by Michael Cannon in his chapter ‘The Mercantile Bank Cases’ of Land Boom and Bust.

After uproarious proceedings in the Magistrate’s Court, the formal committal of Davies and Millidge for trial on the charge of conspiracy, the intervention of the Attorney-General to prevent the trial, counter action by the Solicitor-General (Isaac lsaacs) to ensure a trial proceeded despite Cabinet objections, the resignation of the Solicitor-General, and the appointment of a Grand Jury, Sir Matthew and Lady Davies disappeared from Melbourne. On the 27 May 1893, they sailed for Colombo aboard the Sailer, avoiding apprehension in Adelaide by minutes, and finally being detained in Colombo by a Victorian detective who had followed on a later ship.

Davies and his Mercantile Bank colleagues, including Millidge and another director T. B. Muntz were finally brought to trial in February 1 894, when all of Melbourne was in the throes of economic depression. With a finding of ‘not guilty’, Davies’s long agony was over and he filed for bankruptcy. All his companies disappeared, with losses to the public estimated at over £4 million. Davies’s personal losses were reputed to be in excess of £900,000. His brothers and his many political allies, including his old client C. H. James, James Balfour and even his former architect, F. J. Smart met a similar fate, often making secret compositions to avoid public scrutiny.

After the legal and political fracas died down and his sequestration was resolved in the Courts with an unconditional and controversial discharge, Sir Matthew Henry Davies returned to his legal practice in Normanby Chambers with his old partner C. S. Price. When Price went bankrupt in 1898, Davies continued in practice on his own account, taking up Room 21 on the first floor of the legal chambers he had built in 1882. He lived with his second wife, Margaret, (nee Boyle), at 254 Albert Street East Melbourne, and gradually recovered his standing in the community. He became Deputy Grand Master of the Grand Lodge of Freemasons and President of the Philharmonic Society and when an extensive biography of ‘The Honorable Sir Matthew Henry Davies, K.B.’ was published in the Cyclopedia of Victoria in 1904 without reference to his role in the 1880s land boom and bust, his controversial past was all but expunged, if not conveniently forgotten. In his later years, and with the income derived from his modest legal practice, Davies acquired a farm property at Narre Warren and a suburban villa at Armadale. He apparently also kept an interest in property at Mentone.

Matthew Davies died at his residence ‘Mabernoul’ in Mentone Parade, Mentone, on the 26 November 1912, at the age of 62 years. The cause of death was given as neuritis. His wife, two sons and four daughters survived him.

Family grave in Cheltenham Pioneers Cemetery.