Robert Barr Smith and Thomas Elder gain huge wealth from high-risk play to own Moonta Mines, South Australia
Robert Barr Smith (top right, at his Auchendarroch mansion in Mount Barker), who died as South Australia's richest man, made gifts such as the Barr Smith Library (bottom right) to Adelaide University. Thomas Elder (at right, honoured by a statue in front of Elder Hall, North Terrace, Adelaide city) also contributed to setting up the university's music coservatorum. Both Barr Smith and Elder made enormous wealth from owning the Moonta Mines, a status guaranteed after they financed an 1860s court case challenging that right.
Robert Barr image by Ernest Gall, courtesy State Library of South Australia
Robert Barr Smith and Thomas Elder, memorialised as great 19th Century philanthropists, achieved their colossal wealth by risky business moves around control of the Moonta Mines. Their Moonta Mines role also gave the cover for the shadier side of their partner Walter Watson Hughes.
The entire capital for developing copper mines at Wallaroo and then Moonta, on South Australian’s Yorke Peninsula, was raised within South Australia by using the assets of mercantile company Elder, Stirling and Company, The company’s partners – Barr Smith, Elder, Edward Stirling and John Taylor – received equal shares with Hughes in the huge Moonta mine. The five proprietors could afford to attract the best lawyers and politicians to act for them to retain the Moonta mine in a major court battle with the Mills syndicate that challenged their ownership because of alled fraud by Hughes in original claims to the mine site.
Taylor and Stirling. after getting into financial trouble through the Wallaroo mines venture with Hughes, had tried consolidating their meagre funds by resigning from Elder, Stirling and Company and taking 50% of the company’s assets with them. This would have left the company bankrupt and Elder and Barr Smith with the debts. Barr Smith cunningly resigned along with Elder, making Taylor and Stirling also responsible for the company’s debts so they couldn’t borrow on any serious cash.
Taylor and Stirling had no option but to take up Barr Smith’s deal, with the four partners supporting Hughes and his mining ventures. Given a degree of respectability, Hughes also benefited as Elder, Stirling & Co organised the financial side of the mining operations. The company’s business-like manner attracted the support of a generous bank, usually cautious of mining speculation and mine owners.
The two banks that Hughes and the Elders Stirling partners used were crucial to running a solvent mine. But, in convincing the banks how profitable the mines were, the Elder, Stirling Company was put into enormous debt by stealing the resources from its own prime sheep farming accounts. As Barr Smith recounted, “we could not have carried on those mines but for the large credit in the sheep farmer accounts of McCullock, Melrose and Maurice. Those deposits were at call. The situation therefore was, to my way of thinking, dangerous.”
The sheep farming funds hid the extent of the debts with the Wallaroo mine, so the Elder, Stirling Company was able to open an account for the mine at the South Australian Banking Company in 1862. In doing so, the bank took on an existing huge £44,000 debt that was paid by transfer between the two accounts without any fuss. This freed the way for a second account to be opened for the Moonta mines and the company’s debts climbed quickly to £30,000 by February 1866, £10,000 more than the overdraft limit.
When the partners couldn’t get their interest on the overdraft reduced, the mines’ partners switched to a better deal at the Bank of Australasia, taking their accounts and all debts with them. There the debts rose even higher to peak at £72,000 in August 1867 when the final litigation over the Moonta Mines ownership case was yet to reach its climax.
The expense of the Moonta Mines case paid off when Hughes and his partners won it. The Mills syndicate claimants finally conceded defeat and were paid off with £8000 that only covered their costs. Retaining the Moonta mines assured Hughes and his partners of phenomenal wealth and a prominent place in the upper echelons of South Australian society. Barr Smith died as the richest man at the time in South Australia.
-
Information from historian Patricia Sumerling’s paper “Fraud – Walter Watson Hughes & the Moonta and Wallaroo Mines"
