Networks and business development: Convict businesspeople in Australia, 1817–24

Abstract

This article uses social network analysis to examine accounting records in order to establish and analyse business relationships. It applies this methodology to accounting transactions recorded at Australia's first bank, the Bank of New South Wales (BNSW) in order to establish whether a business network existed among ex-convict businesspeople in Sydney during 1817–24. Uncertainty regarding distance from suppliers and credit facilities, lack of markets and business connections plus the social stigma of ‘convictism’ meant that it was difficult but not impossible for ex-convicts to establish businesses. The network among BNSW shareholders and depositors served the purpose of pooling of resources and information and alleviating uncertainty.

Keywords:

• business networks
• social network analysis
• Australia
• colonial banks
• accounting records

Notes

 1. For the purpose of this article, all ex-convicts are referred to as ‘emancipists’. This includes those who had served their sentence, those who were pardoned before expiration of their sentence and those who were granted tickets-of-leave. Emancipist was a term loosely applied to all ex-convicts in the colony at the time, regardless of how they had been emancipated.

 2. Although the bank did not open officially until 8 April 1817, the first minute book contains minutes for meetings convened earlier to discuss and arrange formation of the bank.

 3. A few convicts were freed almost immediately on tickets-of-leave upon arrival in the colony if they possessed needed skills or trades. For example, lawyer Edward Eagar was granted a ticket-of-leave three days after arrival because of the shortage of lawyers (Whitaker, 2000).

 4. The NSW Corps officers chartered the Britannia to sail to the Cape of Good Hope. The officers subscribed over £4000 in £200 shares. By sailing to the Cape rather than India, they avoided contravening the monopoly of the East India Company over trade with India, China and the UK (Ellis, 1955, pp. 44, 48).

 5. The British social system dictated that ‘gentlemen’ could be wholesale traders but not retailers (Hainsworth, 1971, p. 36). Status was of crucial concern for would-be gentlemen in the colony. Not only were officers breaking the taboo regarding involvement in trading pursuits, but many lived with convict mistresses. They lived a double life by a tacit agreement to ignore the obvious. Thus, an officer would live with a convict woman but would not take her into colonial society. Furthermore, gentlemen could do business with emancipists, but would not meet socially with them (Neal, 1991, p. 98).

 6. Free migration really only took place in large numbers in the 1830s (Nicholas, 1988), but increased from 1500 during 1811–20 to 6500 during 1821–30 (Vamplew, 1987, p. 4).

 7. The UK government forbade the building of vessels capable of navigating to ports within the East India Company's sphere of influence. Colonists devised ways of circumventing these regulations, so much so that Governor John Hunter in 1796 ordered that no boat should be built without official permission. In 1797 he vetoed the building of boats for private individuals (Hainsworth, 1968a, pp. 18–19).

 8. Macquarie considered Simeon Lord, magistrate Andrew Thompson, William Redfern, Chaplain Henry Fulton, surveyor James Meehan, and Superintendent Richard Fitzgerald, all emancipists, as ‘sufficiently rehabilitated’ to invite them to dine at Government House (Whitaker, 2000, pp. 126–127).

 9. When Macquarie held a dinner and ball at Government House on 18 January 1817, 40 of the 155 invited guests declined the invitation because of the presence of emancipists (Ritchie, 1997, p. 164).

10. For example, wealthy emancipist Henry Kable joined forces with exclusive John Macarthur in opposing Governor Bligh in the Rum Rebellion (Neal, 1991, p. 18).

11. These men were John Wylde, D'Arcy Wentworth, Alexander Riley, Simeon Lord, Robert Campbell Snr., Charles Hook, John O'Connor, William Browne, Thomas McVitie, Richard Brooks, James Birnie, Richard Jones, Robert Jenkins and John Thomas Campbell. Lord was the only emancipist.

12. £100 was a considerable sum of money in the colony at the time. For example, in April 1817 emancipist John Croaker was employed as a clerk in the judge-advocate's office on an annual salary of £50 plus stores for himself (Booker & Craig, 2000, p. 80). Thus, not all those who signed the original subscription papers ended up buying shares. The colonial population was very mobile and there was considerable risk involved in many business ventures. Ready cash for initial purchase of shares, and later instalments, was a problem for some subscribers.

13. On 18 December 1816, a general meeting of subscribers elected a committee to frame regulations for the management of the bank.

14. Directors' Minute Book 1, 7 February 1817, Westpac Historical Services.

15. Eagar received a conditional pardon from Governor Macquarie in 1813 and a full pardon in 1818 (Pike, 1967a, p. 343).

16. Directors were D'Arcy Wentworth, John Harris, Robert Jenkins, Thomas Wylde, Alexander Riley, John T. Campbell and William Redfern.

17. There are several software packages available which enable analysis of large amounts of network data, including business-oriented programs such as InFlow, Keyhubs and NetMiner, and academic research programs like UCInet and statnet. UCInet is a comprehensive package for social network analysis while statnet focuses on statistical modelling. However, statnet can also be packaged to include a set of tools for traditional social network analysis (International Network for Social Network Analysis (INSNA), http://www.insna.org/software/ (retrieved September 18, 2008)). It was not necessary to use such software for this article because of the small data set. In addition, local centrality was considered to be the most useful measure of prestige or importance, and this could easily be calculated using a spreadsheet program. Also the study was based on transactions which were directed and valued, so that more refined global measures of centrality like closeness and betweenness (which require binary data) were not possible (Zemlijč & Hlebec, 2005), especially considering that the data set used for this article was not a sample from a larger population. Lastly, Lee (2000) calculated betweenness and closeness and found that they were identical to the centrality measure.

18. Although the second ledger was not preserved, a list of depositors' accounts and balances at 30 December 1821 was recorded by Commissioner Bigge (Bigge Appendix, Bonwick Transcripts, Box 27, pp. 6294–6298, Mitchell Library, State Library of New South Wales, ML).

19. Unfortunately deposits are simply listed as ‘cash’, so it is not possible to see from where or from whom deposits came.

20. Shares were issued by application to the board of directors. Share certificates were granted by the signatures of three or more directors, of whom the bank president was one (Rule No. 18, Rules and Regulations of the BNSW, Macquarie to Bathurst, Historical Records of Australia, 1925, pp. 221 and 229). However, there is no evidence in the minute books that share applications were refused.

21. Considerable profits accrued to share ownership. For example, dividends paid were 12% in February 1819, another 12% in July 1819, and 9% and 6% respectively in January and August 1820. These were substantial dividends for a small bank (Johns, 2006, p. 307).

22. The literature on degree centrality (for example, Degenne & Forsé, 1999; Rosenthal, Fingrutd, Ethier, Karant, & McDonald 1985; Scott, 2000) canvasses the many ways centrality can be calculated. In its most fundamental form it describes the number of ties associated with each person in the network. This basic measure is used here.

23. Supplementary sources include written accounts by colonial administrators, for example, the Colonial Secretary's papers, letters, diaries and family papers from persons in positions of authority and importance in colonial NSW, contemporary newspaper reports and manuscripts and other archival documents primarily held in the Mitchell Library, State Library of New South Wales (ML) and the National Library of Australia, Canberra (NLA).

24. Colonial Secretary's Papers, Reel 6006, 4/3498, p. 62, 16 February 1818; Reel 6006, 4/3499, p. 318, 15 February 1819, NLA.

25. As explained above, Daniel and Robert Cooper have been included as one depositor for the purpose of the analysis.

26. Flap and Völker (2001, p. 302) maintain that if Person A has a strong tie to Person B and Person B has a strong tie to Person C, it is very likely that A and C will also develop a strong relationship.

27. Once information was relayed, the other contacts in the network would have been redundant from the viewpoint of the Coopers, and little new or different information would be likely.

28. This is the ‘strength of weak ties’ argument put forward by Granovetter (1973), who suggested that weak links (casual contacts) in a network might bring new information to a network because they have links (or ‘bridges’) to other social circles.

29. Laurie was employed as an agent for judge-advocate Richard Atkins, from 1810 to 1811 and for India merchant Alexander Riley in 1820 (Colonial Secretary's Papers, Reel 6002, 4/3490D, p. 47; Reel 6042, 4/1725, pp. 370–371; Reel 6002, 4/3490D, p. 94, NLA; Bigge Report – Evidence, Bonwick Transcripts, Box 6, p. 2543, 20 September 1820, ML).

30. Colonial Secretary's Papers, Reel 6029, 4/7016A, pp. 11–216, 4/7016B, pp. 6–208 and 4/7016C, pp. 23–385; Reel 6030, 4/7016D, pp. 21–401; Reel 6061, 4/1779, pp. 154c, 163c and 4/1780, pp. 207c, 222d, NLA.

31. Both Coopers have biographical entries in the Australian Dictionary of Biography ( http://www.adb.online.anu.edu.au/adbonline.htm).