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Speer, Arthur James
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Unique IDPE-000055SurnameSpeerGiven namesArthur JamesBirth date22nd October 1859Birth date qualifierexactPlace of birthSydneyDeath date21st October 1911Death date qualifierexactPlace of deathTimaruBiographical abstractArthur James Speer was born in Sydney in 1859. In 1880 he commenced at the Council working as a Clerk. He rose in the ranks to become Assistant Cashier, Cashier and Assistant City Treasurer and, for periods of time, Acting City Treasurer. Speer married Lily Riley in 1893. In 1896, while Speer was on leave, it was discovered that Speer had been appropriating sums of money for himself. A special audit followed. Speer was arrested and sentenced to 6 years. He served his sentence at Darlinghurst and Goulburn Gaols and was discharged in 1901. He moved to New Zealand and died in 1911.Biographical noteArthur James Speer was born in Sydney on 22 October 1859. His parents were William Speer, born county Tyrone and Annie Bennett, also of Irish origins, who married in Sydney in June 1848. The couple had eight sons and three daughters. Arthur James was their 5th son.
At the time of Arthur Speer’s birth, his father was an Alderman of Sydney Municipal Council. Speer senior was an Alderman between 1858 and 1867 and was Mayor of the city in 1864. He was the MLA for West Sydney in the NSW Parliament from December 1869 to February 1872. During his time as alderman he was a principal of Osborne Wallsend Coal Co which supplied coal to the council for the water works at Botany. In the following years, his eldest son, William Meiklejohn Speer took over the contracting part of his father’s business and supplied coal to the City Waterworks until their transfer to the newly formed Metropolitan Water Supply & Sewerage Board in 1888.
In April 1880, Arthur James Speer aged 20, applied for a position in the City Treasurer’s Department. Council had advertised for an audit clerk at £300 pa, a clerk at £200, another clerk at £180 and two water branch clerks at £150 and £120. Speer applied for the clerk’s position with salary £200 and if unsuccessful he wished to be considered for the position paying £180. The Council considered 400 applicants for the positions. Speer was successful in gaining the position of clerk at £180 pa. In his letter of application, Speer stated he had been employed with the Commercial Banking Co of Sydney and presented references from FN Burt, assistant manager of the Head office of the Bank and Mr Humphrey, manager of the Kempsey branch of the Bank. Speer also stated that he had passed the Civil Service Examination (City Archives CRS 26/165/735). The sureties he offered for the due performance of his position were his father William Speer and Robert Watson of Cumberland St, a business partner in Speer family enterprises. In September 1881, on the retirement of the City Treasurer, JR Clayton, the junior officers of the department all advanced another rung up the ladder and Speer became the assistant cashier.
His progression in the City Treasurer’s department continued and his salary increased so that by 1883 as assistant cashier he received £225 pa and by 1884 he was the cashier with a salary of £250. In August 1885, he applied for some leave. The council employees of this period had no automatic entitlement to leave and the granting of leave was up to the Mayor. Speer wrote “Sir, After more than five years’ service I beg to apply to you for a month’s leave of absence, dating from the 7th September. I may add I am writing with the approval of the Head of this Department. I have the honour to be sir your obedient servant, Arthur Speer.” The leave was granted (City Archives CRS 26/206/1319). His duties as cashier were described as posting treasury and water-meter ledgers, preparing accounts, slips, and warrants, registering coupons, making bank deposits, &c., &c. (‘Sydney Morning Herald’ 13 November 1885 p5)
Speer’s role in the Treasurer’s Department appears to have expanded and in August 1886 Joseph Carroll, one of the City Auditors, wrote that “the City Treasurer and his assistant Mr Speer, continue to perform their duties in a most correct and satisfactory manner and that the books would do credit to the most exacting institution or establishment”. His role was acknowledged by Council when it decided in December 1886 to give him the official title and position of “Assistant City Treasurer” but without increasing his salary. Speer at the age of 26 had been given a boost to his prestige and could probably see a destined path leading to the top role in the City Treasury. His superior, the City Treasurer, Charles Henry Lines, had been in the Council’s employ for the past 23 years and had been the Treasurer since 1881 having worked his way up the ladder from clerk, to cashier and to treasurer. Speer appeared to be following the same path.
In July 1887, with the concurrence of Lines, Speer applied to the Mayor, Alderman Alban Joseph Riley, for leave to visit Adelaide. His wish was granted. Speer went to view the Adelaide Jubilee Exhibition. Alderman Riley with his wife and one of his daughters was himself to be at the Exhibition as an official guest in his role of NSW Commissioner for the Exhibition and member of the NSW Parliament. In a specially constructed Exhibition building displays were presented from the Australian states, Great Britain and several European countries. It was one of the many international exhibitions held around the world in the closing decades of the 19th Century. The exhibits were cultural, agricultural, horticultural, manufacturing and industrial in nature and were meant to promote trade and investment while showcasing excellence. Prominent government officials from around Australia and thousands of other persons visited Adelaide. Special excursion trains ran from the other states. Speer’s return journey to Sydney from Adelaide was aboard the special overland express train which left Adelaide on Wednesday 27 July arriving in Sydney on Saturday 30 July. On this train, as a “car passenger”, Speer found himself in exalted company for also returning on the train was the Governor of NSW, Lord Carrington, and his party including the Colonial Treasurer. Other passengers were NSW Parliament members, Thomas Colls, James Gormly and Joseph Creer who had been official guests at the Exhibition. Mayor Riley and family too were on the train.
In October 1887, Charles H Lines applied for six months’ leave on medical grounds at the recommendation of his doctor, Dr Henry Normand MacLaurin. Leave was granted and Speer was appointed Acting City Treasurer during his absence which stretched to nine months with Lines not returning to his office until about August 1888.
By the end of 1887, City finances were in a stressed state with a large bank overdraft, an increasing deficit and the expected cessation of the Government grant at the end of 1888. Further changes to the Council’s staff, expenditure and receipts were to take place with the transfer of responsibility for water and sewerage from the Council to a new statutory body, the Metropolitan Water Supply and Sewerage Board, in May 1888. Retrenchments in the labour force and reductions in expenditure were to be carried out. Retrenchments of staff in the Treasury were stated to be inadvisable by Speer. The Aldermen decided reductions in pay rates for salaried employees were also needed. The City Treasurer’s salary was reduced from £800 to £600; Speer’s salary was reduced by £25 to £250 while, in the Town Clerk’s office, the new Examiner of Accounts, SH Solomon, had his salary reduced by £50 to £300. The Sydney paper, ‘The Australian Star’ 31 December 1887, was highly critical of the last two reductions stating
“Both gentlemen have the handling of immense sums of money; they are, moreover, not paid much more than half what is usually paid in other large municipalities for positions of equal responsibility. To further reduce the salaries paid to these gentlemen, seems under the circumstances unwise. We trust that the rate of pay incident to these most important offices, may, in the interest of the citizens, receive the gravest and most careful consideration before the proposed reductions are finally confirmed.”
Throughout most of 1888, Speer was the acting City Treasurer with the responsibility for all the duties of that office while being paid a salary less than half that of his superior on leave. It would not be surprising if he felt some resentment and dissatisfaction with his situation. Extra pressures must have been felt too as not only were the elected City Auditors (John Carroll and George Christie) performing their normal audit procedures for the legislatively required half-year audits for the half-years ending 31 December 1887 and 30 June 1888 but at the same time Special Auditors appointed by Council (George Durham and John Miles) were conducting extensive audits into all matters relating to Council’s dealings with Bradford Brothers iron foundry in the six year period January 1880 to August 1886.
The so-called ‘Bradford Frauds’ had come to light in September 1886 when George Pasfield, a clerk in the City Engineer’s department, found discrepancies in records relating to Council dealings with Robert and David Bradford’s company. The Bradford brothers, their clerk Charles William Forbes, and the Council storekeeper, John Walton, appeared in the Police Court charged with conspiring to defraud the Corporation of Sydney. The charges against Walton and Robert Bradford were withdrawn for lack of any evidence against them. David Bradford and Charles Forbes were committed for trial in November. Bradford received a sentence of four years and Forbes a sentence of seven years. Council had suspended MA Felton, the Examiner of Accounts, J Trevor Jones, the City Engineer, John Fyfe, the Mechanical Engineer and John Walton. All but Felton were reinstated and despite his dismissal no legal action was taken against him. He had stated that he had simply passed vouchers already signed by the City Engineer, had checked the calculations and had no special engineering knowledge to reveal that the quantities of items apparently ordered were false.
The special auditors presented a report to the mayor in April 1888 revealing the mode of the frauds and the amounts defrauded. At the trial the sum defrauded had been estimated at about £9,000 but rumours abounded of greater sums. The special audit uncovered not just the payment vouchers with altered quantities of goods or forged store-keeper initials which were the main facilitators of fraudulent payments but also dummy contracts and other irregularities. Most of the false vouchers had been authorised by senior officers despite the fraudulent alterations. The final report stated the amount defrauded between 1880 and 1886 in the Water Department (under the City Engineer’s management) was about £29,925-18-4; an additional amount of £1,360-17-1 had been identified as fraudulently obtained in dummy contracts. There were plenty of rumours that similar frauds had been perpetrated in the City Surveyor’s office under Adrien Mountain but Mountain had resigned and gone to Melbourne for a better paid job and no further investigation was made. On 15 March 1888, the Mayor suspended the principal officers in the Engineer’s department (Trevor Jones, DC Robertson and Fyfe) but they resigned twelve days later and were transferred to the new Metropolitan Water Supply and Sewerage Board where their careers continued. The public was left to speculate where all the money went.
The Treasurer’s department was not implicated in the Bradford frauds but to the public perception it must have seemed strange that an amount of some £32,000 in a six year period could have been improperly paid out with no-one in authority questioning the expenditure. The auditors strongly criticised the processes of handling of the vouchers that had allowed them to be altered by Bradford or Forbes after the signing of receipt of goods by the storekeeper and before presentation for payment. It is clear that there was no overall financial plan in place. As far as the Treasurer’s department was concerned, all the expenses were authorised and had been checked by the Examiner of Accounts while as far as the City Engineer was concerned, he declared his role to be engineer not accountant.
In August 1888 just before Lines returned from his sick leave, Speer apparently took a week’s unauthorised leave (City Archives CRS 26/230/1419) but the records give no further detail and, as there seems to have been no disciplinary action taken, perhaps he had good reasons. In the same month he was instrumental in forming the Port Jackson Sailing Club for which he acted as honorary secretary for a number of years. (‘Evening News’ 30 August 1888 and ‘Australian Town and Country Journal’ 13 October 1888). His eldest brother, WM Speer, had been instrumental in forming the Manly Rowing and Sailing Club in December 1883 so it seems sailing may have been a family interest.
Meanwhile the City Auditors were busy at work on the regular audits for the two half years ending December 1887 and June 1888. No doubt gauging public interest to be high, the ‘Evening News’ published the full report on 13 November 1888 p 3. Charles Lines had returned to his role as City Treasurer by September but his health remained precarious. The auditors no doubt also felt pressured by the findings of the Special Auditors about matters in the Water Branch of the Engineer’s department because they needed to finalise the accounts of that branch for its move from Council responsibility to the Metropolitan Water Supply and Sewerage Board in May 1888. The Water Fund was found to be correct and ready for transfer to the new board. In regard to the accounts for the City Fund for the two audit periods, the auditors issued a certificate that the accounts were correct and that all moneys had been duly accounted for but they added the rider “But there is no complete system to ensure all revenue being so entered and reaching that officer [the City Treasurer]”. This complaint by auditors of the lack of checks in the system was one that continued to be made for the next ten years.
The auditors added some general remarks. They suggested improvements to the processing of payment vouchers with initials being required of officers and aldermen before payment. They had a few complaints also. They said certain documents had not been checked for correctness for months; a better system would ensure they were checked daily. They had referred a number of vouchers back to the City Treasurer (presumably Speer as acting treasurer) for incompleteness in regard to verification procedures. They wrote
“It appeared to us that the records are carefully and regularly kept; but that their ultimate utility is neutralised because of the want of a proper connection with the principal account books of the corporation. We would mention with regard to the City Surveyor's Department that the butts of the cash-dockets appear not to have been examined by the officers of the treasury, and that the balance of the stock-book should be compared at least once a year with the actual stock…. The officers of the treasury have had during the year under review a considerable amount of extra work consequent on the special audits and investigations, the searching nature of our audit and the closing and transfer of the water fund. Also during that period the much to be regretted illness, of Mr. C. H. Lines, the city treasurer, prevented that officer from attending to his duties for some eight months. We are pleased to see that he is again able to resume his duties but his absence greatly increased the responsibility and the work of Mr. A. Speer who was appointed acting-city treasurer. We have great pleasure in stating that the duties of that office were well and faithfully performed by Mr. Speer, and regret that, so far as we observed, no special recognition has yet been made of that gentleman's extra services.”
The following month, December 1888, Speer requested an increase of £25 in salary to bring the amount back to the level before the last reduction had been applied and Lines endorsed his letter as follows: “For many well-known and special reasons I trust, very respectfully, that Mr Speer's application will receive your generous and substantial recognition” (City Archives CRS 26/231/1959½). The matter was debated in Council. Alderman Palmer during the debate said that “if Mr. Speer did the work of the City Treasurer for nine months satisfactorily it was clear that either Mr. Lines or Mr. Speer was unnecessary.” (‘The Sydney Morning Herald’ 13 December 1888 p 7) Speer did not get his increase. In January of the new year, Alderman JD Young made an unsuccessful attempt to bring about further consideration of retrenchments among the salaried officers by moving a rescission motion to the Council resolution that had set the salaries for 1889. He said that:
“with the present state of the finances, they could not afford to keep such a large staff of officers. It was an unpleasant thing to have to ask for the reduction of the staff, but there were officers who were not required. There was a treasurer and an assistant treasurer, and he thought that it was an imposition on the ratepayers to keep Mr. Speer, who had very little to do.” (‘The Australian Star’ 23 January 1889 p 6).
Speer requested ten days leave in February 1889 which was granted. His thoughts about the attitudes of the Aldermen to his employment could not have been very happy.
In March 1889, a Council clerk, Willis A Benson, appeared in the Police Court and once more the newspapers headlined their reports ‘Corporate Fraud’ or ‘More Corporate Fraud’. Benson had years before (from 1880 to 1884) been employed by Council firstly as a clerk in the Water Branch and then as a clerk in the Treasurer’s Department. He had left his position abruptly for the reason that he had deserted his wife and children and departed with another woman for New Zealand. His latest employment by Council was again to be ended by his own dishonourable behaviour. Benson had been given a temporary appointment as a rate-collector. He proceeded to take City funds in an unsophisticated crime bound to be fairly swiftly uncovered. The money was missed within days. Benson was charged on three counts, the first being that he had embezzled £17-11-3 (a cheque paid in relation to two rates notices issued to Parker Bros) and the other two being that he had forged the signature of RC Robertson on the two rates receipts. When he pleaded guilty to the first charge the other two charges were dropped. Benson had used the cheque at Neustadt & Co’s furniture store paying off his account, purchasing goods and receiving cash change. Benson was sentenced to 18 months gaol, the judge having been influenced to mitigate the sentence in accord with a number of good character references being presented.
In June 1889, the Mayor, Alderman John Harris, directed Speer to examine the books and accounts of any of the departments administering a revenue creating entity. When Speer reported back to the Mayor in September, he stated that he had prior to these instruction already made “periodical inspections” of the books of the Metropolitan Cattle and Saleyards at Homebush, the George Street Markets, the Belmore Markets, the Eastern Fish Markets and the Sussex Street Saleyards. He had needed, consequently, he said, only to inspect the accounts of the Building Surveyor’s Department which collected building fees, the City Surveyor’s Department which collected some fees and the Inspector of Nuisances Department which collected moneys related to prosecutions initiated in the Police Courts. He detected a few clerical errors in some books but found them generally “well-kept”. He recommended some simplification to the systems relating to the building fees and a reduction in the number of books for that department and the Inspector of Nuisances department. The Mayor directed that he implement these changes (City Archives CRS 26/236/1451).
By the end of the year, the City’s finances were in a much improved state. Under the direction of Mayor John Harris, using his executive powers, impressive reductions had been achieved in expenditure, the bank overdraft had been eliminated, work previously contracted out was now being competently performed by day labour under the supervision of the City Surveyor, while it had still been possible to make meaningful improvements in various civic departments. The ‘Evening News’ 21 November 1889 listing in detail the reduced expenditure reported optimistically:
“There has, however, been a municipal Cromwell evidently at work during the last two years, and Mr Harris is certainly deserving of the highest public eulogium for his determination in putting down the plundering and extravagance which largely make up the history of Sydney municipalism. The facts … are perfectly astounding. It is admitted on all hands that Sydney was never better kept and never healthier, yet here are the savings …It is clear that the citizens have at last the assurance that the Town Hall is no longer a feeding trough for contractors and jobbers, and it will be their own fault if they allow the old state of things again to be introduced.”
No pressing problems seemed to arise in the Treasurer’s Department during the rest of the year and into 1890. By August of that year it became apparent that Lines’s illness had become terminal and he was given leave which was extended at monthly intervals for the rest of the year. Speer was appointed Acting City Treasurer on 1 September and, in November, Council increased Speer’s salary as Assistant Treasurer from £250 pa to £300 pa.
Charles Henry Lines died on 24 February 1891. At the meeting of the Finance Committee (a Committee of the Whole) on 26 February 1891, it was recommended that Speer be appointed City Treasurer at an annual salary of £600 (appointment confirmed 12 March). To all appearances he would seem to have achieved his ambition to become the City Treasurer and at the unexpectedly early age of 31 but unknown to anyone at this time and remaining unknown for a number of years, Speer had already begun to embezzle significant amounts from the City Accounts. The special audit conducted five years later in 1896 by James Robertson identified his first defalcations: several small amounts totalling £55 taken in December 1890 and a very large amount of £1,000 taken in one transaction in January 1891.
In his private life, Speer remained prominent in the affairs of the Port Jackson Sailing Club although he retired from the role of honorary secretary in May 1891 and was presented by the members with a Waltham watch and an illuminated address. In June, the ‘Sydney Mail’ reported his presence at a private assembly (a dance) at the Burwood School of Arts at which were also present Alban J Riley (now a Member of the Legislative Council although no longer an Alderman), his wife and daughters. Perhaps Speer had begun to court Miss Lily Riley then aged 20.
Speer continued to present to Council, a weekly statement of the financial position of the Council providing the balances held in numerous Council bank accounts following the same format that Lines had used. Listed were separate bank accounts for each “Fund” named for its purpose such as the City Fund (general operations), the Cattle Saleyards Fund, the Town Hall Loan Fund, the Streets Loan Fund; all of these were held in current accounts at the Union Bank. Then there were multiple separate accounts designated as sinking funds for each of the main funds and these were held in bank accounts or special investments accounts or bank debentures or with the Colonial Treasury; for a time there was an account designated City Fund Reserve Fund place on fixed deposit. Some dozen or so accounts were listed and it seemed that all Council funds were visible and accounted for and the balances presented for Council and public information. In time, the Moore Street Improvement Fund account replaced the Street Loans Fund. What were not mentioned nor missed were balances for three other Council bank accounts.
In the new year, confidence in Council’s financial administration was once again shattered when the new Mayor, WP Manning, announced to Council that he had on 15 January 1892 suspended Ernest A Pidcock, the Assistant City Treasurer, for irregularities in his accounts. The matter had been discovered when Pidcock confessed the frauds to the Mayor and repaid £420. The Mayor made a report to the Council meeting on 28 January at which he said he had dismissed Pidcock, accepted the repayment and did not intend to prosecute him or as the headline writer of the ‘Bathurst Free Press and Mining Journal’ put it: “the assistant treasurer embezzles and pays back, then gets his ticket.”
The Mayor reported he had asked one of the City Auditors, James Robertson, to conduct a special audit and was confident all the frauds had been detected. Pidcock had taken money from the Belmore Market receipts, having recognised the system in use did not reconcile the receipts recorded in the Cash book with the amounts paid in to the Treasury. At one stage he had also designated deposits to the City Fund as market receipts when they were rate payments and later designated market receipts as being from rates apparently in an effort to disguise the reduced market receipts. Essentially, he had taken money directly from the Belmore Markets receipts.
The Mayor further reported that he had suspended Speer for matters revealed in the special audit. The auditor found that Speer had not properly checked the books of the Belmore Markets or the George Street Markets. Speer said he had accepted the junior officer’s receipt as evidence that payment and deposits had been made and he had not checked further (City Archives CRS 26/255/164). Mayor Manning further stated that Speer had not complied with a Council resolution of 1887 that accounts of all departments were to be audited by the City Treasurer once every six months. He had not done so in the case of the Markets. Manning said “The city treasurer was an officer who had done good work for the city and he thought he was a good accountant and capable of exercising that check and control over the receipts and expenditure of the council which such an officer should be able to do. Nevertheless there was a neglect in this matter …” (‘Daily Telegraph’ 29 January 1892). The Aldermen debated possible actions such as removal of the suspension but delivering a severe reprimand, reduction of salary or lifting the suspension without further action as a number felt the suspension to be a harsh measure. The decision was deferred to the next meeting and Alderman Henry Chapman foreshadowed the bringing of a motion to make an inquiry into the working of the City Treasury. Speer’s suspension was lifted at the next meeting on 4 February. Chapman’s motion “That a thorough inquiry be held as to the working of the City Treasurer’s department and the Mayor be empowered to call a meeting and summon witnesses with the least possible delay for such inquiry” was put at a subsequent meeting and passed. The Council sitting as a Committee of the Whole made its inquiry on 24 March 1892.
The inquiry achieved very little. Its terms were very vague and many of the Aldermen expressed their view that it was a waste of time either because they were satisfied with the actions already taken or because a proper inquiry would take months and would require professional experts to make recommendations about system changes. Only 14 of the 24 Aldermen bothered to attend and not all stayed till the end. Alderman Henry Chapman said “Mr Speer was either guilty or not guilty and I hold that a reprimand was not sufficient.” He said further:
“I will tell you what I want and why I moved for an inquiry is this: I am not satisfied with the decision arrived at in the recent defalcations in the Treasury and I am sure it will be more satisfactory both to the Aldermen and the officers of the treasury to have the matter thoroughly sifted. I wish to find out the sort of system that has prevailed in the Treasury under which fraud of this nature could occur; and I wish to find out further whether the frauds could not have been prevented. If they could have been prevented then who is to blame – whose fault is it that greater supervision or a better system has not been introduced?”
Alderman Hughes supporting the need for an inquiry said:
“Mr Robertson, one of our auditors, has pointed out that the present system of keeping the books opens the door to fraud… Personally, I think there is no check on those employed in the Treasury, for the same clerk who receives money gives a receipt. That should not be. The Treasury ought to be worked the same as any other department or large business establishment is worked, and every precaution ought to be taken to prevent fraud….From the report of our auditors it is clear to me that under the present arrangement one man can commit a fraud without being found out, at least for a considerable time. What I desire to find out to-day is the system of checking followed in the Treasury. If it is sufficient, then I take it our inquiry is concluded; but if it is insufficient, then we can call witnesses to show us what changes we can introduce to remedy the evil.”
Alderman Fowler summed up what was probably the majority view:
“The report we have received tells us that no harm has been done, beyond the mere abstraction of this money. The Mayor did his duty; he suspended the officer at the head of the Department and dismissed the author of the fraud, and we supported him in both actions. My desire in opposing this inquiry is to save time; if I thought the slightest good would result, I would support it.”
The Mayor informed the Aldermen that Speer had already admitted to laxity in his duty of supervision. He gave details of the modus operandi of the theft and reported that he had already given instructions to Speer to make certain improvements.
Speer was called for examination. He pointed out that Pidcock’s action was theft and not a tampering with the books. The system of book-keeping had previously been altered in the ways suggested by the then City Auditors, George Christie and James Carroll, in 1888 and had met with the auditors’ approval since that time. The internal audits were done by the clerk Shuttleworth who did not handle money. Speer had, however, since Pidcock’s theft, made changes to the receipt system, including that at the Cattle Sale Yards, to ensure the money collected by an employee was paid into the treasury and internal audits would be made at greater frequency.
The Committee was at a loss as to what further it could do and what it would report. Alderman Hughes found a solution. He said:
“I will move ‘That the committee report that the inquiry has been made, and they are satisfied an improved system of keeping the accounts is being carried out; and that the Mayor be empowered to take such further steps as he may deem necessary to continue such improvements’. The Mayor has already told us that he stayed his hand pending this inquiry. We now find, as a result of the inquiry, that certain improvements have been initiated. We can report the fact to the Council, and ask the Mayor at the same time to continue what he began; because it is the improvements prompted by him that have satisfied the Committee.” (City Archives CRS 22/55/1 contains the full report of the Committee.)
The irony of the inquiry is, of course, that Speer was already responsible for appropriating a larger sum than Pidcock had taken. The attention of the Aldermen was directed to the gaps in the receipts system; the Examiner of Accounts was doing his job in examining invoices and payments to outside persons or bodies; the internal audits were focussed on the specific well-known funds and accounts. The City Auditors examined the accounts placed before them. No-one asked for a list of all the city bank accounts and their balances.
Aldermen continued to have very little real grasp of the state of the City’s finances. No-one produced a budget to plan future expenditure and tailor it to the City’s capacity to pay. Mayors throughout the 1880s and 1890s used their executive powers to make retrenchments and limit expenditure in an ad hoc way. The annual accounts of the City drawn up to fulfil statutory requirements simply produced an abstract of annual receipts and expenditure for each fund, lacking meaningful categories or descriptions; and there was no balance sheet or statement showing all assets and liabilities, other than the liabilities on each loan fund. One of the City Auditors, George Christie, in office 1887-1894 and 1896-1897, complained from time to time that the Annual Statements failed to give a true picture of the city finances and that the overall system was poor; he took to writing limiting statements into the City Ledgers at audit time but still signed off on the accounts as they satisfied the legal requirements. James Robertson, in office 1887-1899, noted occasionally that the system was in various ways open to fraud. Nothing changed. The Treasurer’s role seemed to be more one of recording transactions rather than having any real control of or influence on financial management but Speer of course was hardly interested in changing the treasurer’s role in any way. (For examples of the ‘Annual Statements or Abstracts of Receipts and Expenditure or Disbursements’, see the following statements prepared by Speer: City Archives CRS 26/264/498 for 1892 and 26/279/343 for 1894, both digitised.)
Matters continued with apparently no problems for the remainder of 1892 and into 1893. On the personal level, Speer continued his association with the Port Jackson Sailing Club often acting as official race time-keeper. His courtship of Lily Riley was successful and a decision to marry was made. Speer continued behind the scenes to siphon away Council funds and shifted funds between accounts to cover his defalcations. The public saw a man of charm and ability but, apart from his secret fiddling of the funds, his administration of his department was lax as was the case with various of the other Council officials of the time. Five years later in January 1898, the Council’s Inquiry into the running of its departments revealed that Speer had not always been in attendance at his office when he should have been, but was frequently to be found in the afternoon at the Australia Club. He had also indulged members of staff in allowing advances on their salaries. His routine work was often not up to date.
The years 1892 and 1893 were depression years in the financial life of NSW and Victoria with continuing business failures and trading difficulties. Among the failures were a number of banks and public panic grew. Some banks closed, some suspended payments. Both state governments had to take actions to prop up public confidence. Many prominent business men appeared in the insolvency courts.
At the beginning of October 1893, the Mayor announced he had suspended the City Solicitor “on account of irregularities in the discharge of his duties”. Once again Council’s apparent faulty financial management hit the headlines: “A Question of Mixed Accounts; Four Thousand Pounds involved”; “sensation” and “financial neglect” were some. George Merriman was highly respected both as a lawyer and former member of Parliament. His late father, James, had been a City Alderman and Mayor. Members of the family including George were considered wealthy. His defalcations had been discovered because he had become very ill and his doctors gave a poor prognosis. The very recent defalcations had been the banking into his own account of payments received by him on behalf of Council. Other defalcations dating from 1891, however, were failures to pass on payments made to him by Council intended for others, such as an amount due to be paid into Court in regard to the Starkey case and payments for land purchases by Council. Speer had no responsibility in any of the offences but once again weaknesses in the systems for accounting for Council transactions were exposed. Merriman’s health continued to decline; a warrant was made out for his arrest for embezzlement but was never served and he died aged only 48 on 17 November. The medical opinion expressed by Dr Kesteven who attended him in his last weeks in a letter to ‘The Daily Telegraph’ (21 November 1893 p 6) was that Merriman had died of "general paralysis of the insane" in the course of which he had suffered from “mental oblivion, exaltation of ideas, and impairment of muscular action” and that he had exhibited the disease symptoms for “some years before his demise”.
Meanwhile Speer applied for a month’s leave as he was to marry Lily Riley, daughter of Alban Joseph Riley, on 8 November. The marriage took place at St Luke’s Burwood where the couple were married by Canon Moreton. The Speers took a sea trip to Melbourne aboard the P and O Company’s RMS ‘Massilia’.
Also in November, Parliament passed a Bill enabling the City to raise a £300,000 loan “to cover the expenditure already incurred in the extension of the fish markets (£15,898), the building of the Belmore markets (£30,097), and the estimated cost of the proposed George-street markets (£130,000), together with the cost of the land known as the old police court site (£124,000)” (Town Clerk’s Annual Report for 1893, published March 1894). The loan was to be raised by the sale of debentures on the London market. No doubt this would once again bring in to operation the little known bank account referred to as the “interest and debenture account” into which funds had in the past been transferred prior to the payment of dividends; accordingly, this account should have a nil balance at the end of each half-year and even when in credit the account funds could be argued as belonging not to Council but to the debenture holders. This account was one Speer had been using to manipulate funds. The auditors had in fact queried a credit balance in it in January 1892 but Speer had made an explanation which had been accepted.
A significant event in Speer’s extended family occurred on 24 November 1893 when his father-in-law, A J Riley, filed for insolvency. ‘The Australian Star’ headlined its report “Big Bankruptcy” and its article continued
“Mr. A. J. Riley, who is looked upon as one of the biggest business men in the city, filed his schedule to-day. His petition to the Bankruptcy Court set forth that he (Alban Joseph Riley), residing at Burwood, and carrying on business at 386 and 390 George-street, Sydney, having been unable to pay his debts asked that a sequestration order might be made with respect to his estate and that he might be adjudged bankrupt. The Acting-Registrar, Mr Salusbury, made the order and appointed Mr. Lloyd official assignee. The bankrupt in an affidavit estimated his assets at £35,000 and his liabilities at £100,000.”
Riley’s principal business was in the import and warehousing of drapery including fabrics, clothing, millinery, furnishings and accessories. In the hearings, Riley maintained he could have offered his creditors 6/8 in the pound if allowed to continue trading. He had offered various accounts of the state of his business. His warehouse stock was sold. He was allowed to keep his household furniture and effects. There were allegations made about the conduct of his affairs. When he applied for a certificate of discharge from the bankruptcy in July 1894, Justice Manning ruled that the most serious allegation, that he had obtained credit by means of false representations, had not been proved. He believed that Riley had, however, not made a full and fair disclosure of his position. He felt it had been proved also that Riley had continued to trade while knowing he was insolvent, that he had incurred debts that he knew he would probably be unable to repay and that he had also given undue preference to his wife in making certain payments to her ahead of other creditors. These breaches, he said, forced him to suspend the issuing of a certificate of discharge but he thought that, taking into account Riley’s long business career and the assistance and co-operation he had given to the official assignee, justice would be satisfied if he imposed only a 12 months suspension and did not order the payment of costs (‘Evening News’ 20 August 1894).
In September 1894, Speer’s wife gave birth to a daughter, Eleanor Birkenhead Speer, at their home, ‘Netherby’ at Concord. Speer’s life and work appeared to be continuing with no problems for him. In February 1895, Speer took part in a cricket match between Council staff and the Gas Company staff, won by a large margin by the Gas Company (the Australian Gaslight Company). Speer was Council’s second highest scorer with 12 runs and he was also a principal bowler. The match was played on Rushcutters Bay Oval before a large group of spectators and official representatives. Afternoon tea was served to the visitors. (‘The Sydney Morning Herald’ 23 February 1895). At the repeat match in February 1896, Speer and his wife were spectators when the Gas Company once again beat the Council staff team.
Speer took leave in October 1896 apparently for health reasons and while he was holidaying in Katoomba, Robert Clement (‘Clem’) Robertson, Assistant City Treasurer, stumbled across a discrepancy in the accounts. When asked in January 1898 at the Special Inquiry into the working of the Council departments about his discovery of Speer’s defalcations, Robertson described how it came about. He had been asked to provide a statement showing the balances in the various sinking accounts. He had found the records were not up-to-date and upon calculating what he believed the balances should be and checking against the bank books, he found what appeared to be a shortage. Knowing that the accounts had been audited at half-yearly intervals and had been certified correct, he spent several days checking back through six years of records and was able from that process to conclude that an irregularity had occurred. He reported the matter to the Mayor, Alderman Ives. The Mayor instructed him to get out balances for all the Council accounts. He did so and found more discrepancies.
The Mayor asked James Robertson, one of the elected City Auditors, to perform a Special Audit of the Council accounts. George Christie, the other auditor, was not consulted or informed of this. The Mayor gave Robertson the information already gathered by RC Robertson and the balances of all the bank accounts held in Council’s name. To Robertson’s surprise, he found there were three accounts of which he and George Christie had been totally unaware. These accounts were called the City Fund No 2 Account, the Fixed Deposit Interest Account and the Charged Cheque Account. The No 2 Account, as it came to be called, was used to bank overpaid rates and refundable deposits made by contractors when tendering for work and consequently it could only ever have a zero or a credit balance. This money it could be argued was not Council’s money but held in trust. The bank had permitted Speer to operate this account on his own signature unlike the normal accounts where the Mayor and Treasurer’s signatures were required. When Mayor Ives had ordered that all accounts required the Mayor’s signature as well as the Treasurer’s, Speer had asked Ives to co-sign cheques on the No 2 account, which he did, but Speer did not present those cheques to the bank. Instead Speer had written replacement cheques signed by him alone, presumably so as not to risk alerting the bank to question the previous mode of operation on Speer’s signature alone. Assistant Treasurer, RC Robertson, knew of the account but regarded it as a Treasurer’s Trust Account and knew nothing of the details of its operation. Speer’s first major defalcation in January 1891 of about £1,000 had been from the Interest and Debenture Account which was used to deposit funds for the payment of interest to holders of City Debentures due half yearly, again an account for which legal argument might be made that these funds were no longer Council funds. When money was needed for the interest payments, he had transferred funds from one of the Sinking Fund Accounts. Then later in order to correct the balance in that account, he had made use of the No 2 Account withdrawing funds from it. Over the years, he had taken money from various accounts and covered his tracks by using funds from the No 2 account to conceal shortages. The No 2 account had been in existence since at least 1873 and had never been included in an audit.
Robertson made a verbal report to the Mayor before completing his audit and the Mayor travelled to Katoomba to speak to Speer. Both returned to Sydney, Speer to inform his family members of his impending disgrace and Ives to consult with the City Solicitor, George Waldron. Based on the fraudulent transactions already identified by James Robertson, Waldron recommended applying for a warrant for Speer’s arrest. Waldron carefully chose to specify in the warrant withdrawals which were embezzlements of what were indisputably Council moneys. These were three transactions in 1890 totalling £55 and a transaction in 1891 for £227/15/-. Speer presented himself for arrest and was granted bail.
At the committal hearing on 4 December 1896, Ives gave evidence that Speer had agreed that the No 2 account had a debit balance of over £2,000 and he had admitted to embezzling about £2,500 altogether. ‘The Australian Star’ 4 December 1896 reported that Ives further stated:
“At one time, in the Town Hall, after the matter had been discussed, Speer wanted to know if it could be arranged. Witness replied, "certainly not." Speer said something to the effect that now that his own knew it, he didn't care so much, but he would have liked to have avoided publicity.”
A bank official gave evidence that the No 2 account had first been in overdraft in 1893. RC Robertson gave evidence that in his role of cashier he had received the money that went to the No 2 account but that Speer alone made any disbursements and kept the records of the account. James Robertson gave evidence that he and his other co-auditors (George Christie and Arthur Brierley) had been unaware of the account, believing that Speer had presented all the Council’s bank accounts balances to them. He had found in Speer’s desk a cash book that showed that the account should currently have had a credit of £1448/17/5 whereas it was overdrawn by more than £2,000. Speer’s counsel, WP (Paddy) Crick, M.L.A., reserved the defence saying he had a defence he believed would be successful.
Once again the Council’s financial affairs headed the news stories in the papers in both Sydney and country NSW. Headlines such as “Civic Sensation”, “A Serious Charge”, “A Startling Arrest” and “Arrest of the City Treasurer – Alleged Embezzlements” abounded. That Speer was dishonest took all by surprise. The ‘Barrier Miner’ in far-away Broken Hill wrote on 30 November 1896:
“The reported embezzlements by Arthur J. Speer, treasurer of the city of Sydney, must have come as a shock to the community. A more popular man than the accused was not to be found attached to the Town Hall. His seniors, his subordinates, and the general public alike were ever ready to testify to the urbanity, the kindness and the always-gentlemanly bearing of Mr. Speer.”
James Robertson completed his written report to the Mayor. For the three accounts he had identified as never having been revealed to auditors, the No 2 account as stated in the committal hearing was overdrawn; funds from the Fixed Deposit Interest Account which was intended for receiving payments on Council Fixed Deposits had been correctly transferred to the main City Fund account in 1895 leaving a zero balance but later in 1895 it had become overdrawn by the cashing of two cheques transferring amounts to other City accounts; the third account was the Charged Cheque Account. Robertson said the Union Bank had not reported these accounts to the auditors and he believed there must be laxity at the Bank in allowing the accounts to become overdrawn without authority. He said the defalcations he had identified totalled £5039/11/10 being shortages in the No 2 Account, in the Interest and Debenture Account, in the Fixed Deposit Interest Account and two dishonoured cheques by Speer’s in the Charged Cheque Account. (City Archives CRS 22/55/1)
In January 1897, a sale of the contents of his home, ‘Netherby’, on the corner of Mermaid Street and Broughton Street at Concord was advertised as a “Highly Important Sale By Auction” and a catalogue was issued. Included in the list for sale was a Pleyel Grand Piano in a rosewood case, modern English furniture, a gentleman’s and a lady’s “high-class bicycle”, as well as general household appointments.
Speer came up for trial on 25 February 1897 with the charge being that he had embezzled £3,699/2/6, the property of the Council. City Solicitor Waldron had decided not to include the money missing from the No 2 Account and it appears that the Union Bank was left to carry that loss. Speer had decided in the meanwhile to plead guilty so the trial proceeded straight to a plea in mitigation of sentence. He admitted to having taken £5039. The ‘Evening News’ 25 February reported:
“Mr. Wise, who appeared for the accused, addressed his Honour in mitigation of sentence. He said that the accused desired to state that no other person, either in the bank or in the Council, was cognisant of the fact that a fraud was being perpetrated. What wrong had been done was his own doing, and his alone… It might be possible that if the case went to trial some point might be raised as to whom the money belonged, but the accused preferred to plead guilty and throw himself on the mercy of the court. Although Speer had never informed the auditors of the contractors' account, there must have been some laxity in the investigation of the accounts that it had never been discovered. The accused had been treasurer since 1890 and the Crown would admit that up to this time he had borne a good character.”
Justice Cohen said it was clear to him that a jury would have found Speer guilty and he had held a position of public confidence and had failed to preserve it. In regard to the submissions, the ‘Evening News’ reported that His Honour said:
“that so far as he could see there could be no reasonable point raised as to whom the money belonged. He had been asked to take into consideration the laxity of the system with regard to the No. 2 account. He could not do so and he failed to see how the laxity of a system of keeping accounts could be used in mitigation of the sentence on any person who took advantage of the laxity. Mr. Robertson had frequently asked if there were any other accounts to be audited, and the accused had as frequently answered 'No.' It was the latter's bounden duty to place all the books before the auditors… Although the indictment treated the matter as one offence a very large number had been committed.”
He sentenced Speer to six years’ penal servitude and directed that £500 be paid out of Speer’s estate to the Council and if that was done, he would recommend a remission of twelve months of the sentence.
The newspapers gave full coverage to the trial but as Speer had pleaded guilty there was no additional information about his defalcations let alone anything revealed as to why he had taken a dishonest path. Sydney’s ‘Truth’ in a pre-trial piece published 10 January 1897 with sub-headings such as “Corruption and rottenness rampant” had drawn attention to the series of frauds perpetrated on Council in the preceding years; swindles such as the embezzlements by City Architect Sapsford, the City Solicitor Merriman and other frauds such as the faulty Town Hall foundations. It also pointed the finger at Council subsidised overseas trips by the “sycophantic” City Surveyor, Richards, and the “ornamental” City Organist Wiegand, both while still on full pay. “And so the merry game of wholesale robbery, jobbery, and tomfoolery has been allowed to go on in the full light of day.” What ‘Truth’ asked were the auditors doing? “How comes it that these dishonest operations of Speer’s have been permitted to go on unchecked and undetected for a number of years.” Above all, it asked “How these Aldermanic muddy-brained, muddle heads are going to relieve themselves of the responsibility of the present chaotic state of Municipal affairs is a secret not yet disclosed…”
‘The Australian Star’ on 26 February 1897 published an opinion piece in a column called “Current Topics”. It said:
“The sentence passed upon Arthur James Speer, the late city treasurer, cannot be regarded as too severe. The offender was appointed city treasurer in 1890, and from that date until the discovery of his defalcations he embezzled moneys of the city treasury amounting to £5000. This is a very large sum, and it is curious that such enormous frauds upon the council could go on for years undetected. The explanation of Speer's immunity is that he manipulated a separate and almost secret account, known as the "contractors' account." Of this separate account the auditors knew nothing, and apparently successive Mayors must have been equally ignorant of its existence, an ignorance shared by the finance committee of the council and the whole of the aldermen. If they knew of this account obviously they should have insisted upon the inclusion of its books in the audit, and, of course, this would have led to the discovery of Speer's theft at an early date. The citizens would like to know how it is that those most concerned were ignorant of the existence of this account, which has been in evidence since 1873 but was never criminally manipulated until the arrival of Speer upon the scene as city treasurer. The absolute impunity afforded to fraud by the condition of the contractors' account probably formed his chief temptation. Counsel in the case exonerated the auditors from blame, but it is clear that the City Council was culpable to a considerable degree in remaining so grossly ignorant of the state of its transactions with the bank. As for Speer, the opportunity afforded him in no way minimises his culpability. In a Town Hall which has seen in its time a good deal of corruption and dishonesty his remains the worst case.”
A number of NSW country papers carried a syndicated column which suggested that patronage had contributed to the selection of dishonest officers of Council. ‘Northern Star’ (Lismore) and ‘Illawarra Mercury’ (Wollongong) were among those publishing it on 16 January 1897:
“The backstairs mode in which some of these gentlemen gained their appointments is not favourable to the selection of the best men, especially when honesty and integrity are a desideratum, for honest men will not stoop to the meannesses of the intrigues required. The City Council will do well if, instead of arranging a nice little family party to appoint protégés of their own, they will invite applications openly from the best men who can be obtained. The city finances and the manner in which they are maladministered threaten to become a scandal, and strong and thorough-going measures of reform are imperatively demanded.”
After Speer’s arrest at the end of November, Council had appointed RC Robertson as Acting Treasurer. It appointed Robert Murray McCheyne Anderson the new City Treasurer at the end of March 1897. Anderson achieved a complete overhaul of the City Treasury and then of the Town Clerk’s Office in four years’ service. His later career in business, the army and government positions was brilliant. What did Anderson find on taking office? In an interview with the ‘Daily Telegraph’ published on 26 January 1901 when he was leaving Council service, Anderson said he had found bad systems, a lack of checks and balances, no discipline in the staff, £30,000 worth of negotiable bearer bonds kept in the treasurer’s safe which was often unlocked instead of at the bank, records not kept or not utilised and a regime that resisted change.
"I came," he said, "from the Bank of New Zealand to the corporation service in 1897, on April Fool's Day, and I had not been in the new position a week before I realised how exceedingly appropriate a day I had chosen for the new occupation. It is difficult to realise now the state of matters then existing… I never before met people so well satisfied with the order of things as existing, but who had more reason to be horrified.”
The Council only recovered £30 from one of the Insurance Companies who issued the Fidelity Bonds intended to cover Council for such things as embezzlement. Various technical issues brought this about, such as that the current insurance company had not taken over any responsibilities from the previous one and so its policy only covered a short period of time while the previous company had clauses in its policy that required any frauds to have been notified in a lesser time than had occurred. Once more Council’s administration failed it.
Speer served his sentence at Darlinghurst and Goulburn Gaols. He was discharged on 16 January 1901 having served just under four years of his sentence. Presumably he paid the £500 specified in his sentence giving him one year’s remission and received some other remission as well. The gaol photographs taken in February 1897 and digitised by NSW State Archives and Records show a man who looks much older than his age of 37 and the newspaper sketch of him published by ‘Truth’ on 6 December 1896 also shows a strained older man. The gaol records state he had black hair turning grey and the photos show more grey than black hair. In contrast the sketch taken from a photograph published in ‘The Australian Star’ on 7 December 1896 depicts a much healthier and younger looking man.
Speer left Australia and lived the remainder of his life in New Zealand. He died at Timaru on 21 October 1911. A very brief notice appeared in the death notices in the ‘Sydney Morning Herald’ “Speer – At Timaru (N.Z.), Arthur Speer, aged 52”. He died at Timaru Hospital of cancer of the mouth. He was a member of the Lodge of St John and was given a masonic funeral. He was buried at Timaru.
His wife, Lily, did not marry again and died in 1938. His daughter, Eleanor, did not marry and died in 1981.
[This biographical Person registration was researched and drafted by City of Sydney Archives volunteer Marilyn Mason, 19 January 2018]
References
City of Sydney Archives and web-site: www.cityofsydney.nsw.gov.au:
CRS 7 Minutes of City of Sydney Council; CRS 21 Reports of Committees; CRS 22 Reports of the Finance Committee; CRS 26 Letters Received; (item descriptions or digitised objects available online)
City of Sydney Aldermen, http://www.sydneyaldermen.com.au/
Hilary Golder: A Short Electoral History of the Sydney City Council 1842-1992; electronic edition, http://www.cityofsydney.nsw.gov.au/__data/assets/pdf_file/0016/120283/a-short-electoral-history.pdf
Online resources:
Australian Newspapers: digitised by the National Library of Australia and searchable online: www. trove.nla.gov.au/newspaper
New Zealand Newspapers: digitised by the National Library of New Zealand and searchable online: https://paperspast.natlib.govt.nz/
Dictionary of Sydney online: http://home.dictionaryofsydney.org/
Australian Dictionary of Biography online: adb.anu.edu/au.biography
NSW Births Deaths Marriages Registry, indexes online: www.bdm.nsw.gov.au/Pages/family-history/family-history.aspx
Parliament of NSW: former members: www.parliament.nsw.gov.au/parliament/members.net
NSW State Archives and Records: https://www.records.nsw.gov.au/
Portraits, drawings, caricatures:
Pen and ink drawing published in ‘The Australian Star’ 7 December 1896 p6
Pen and ink drawing published in ‘Truth’ (Sydney) 6 December 1896 p2
Photographs taken 25 February 1897 at Darlinghurst Gaol, Sydney, NSW State Archives and Records; Photo No 6884, page 198, NRS 2138, Item 3/6060; also at page 197, NRS 2232, Item 19/17654
Transcriptions of NSW Birth, Death or Marriage Registrations and printouts of NZ Certificates by NSW Family History Transcriptions Pty LtdRelationship legacy dataRELATED TO: City Treasury Department I AG-0012 - Worked inGenderMaleOccupational historyCity Treasurer’s Department: Clerk April 1880-1881. Assistant Cashier September 1881-1883. Cashier 1883-1886. Assistant City Treasurer December 1886-1891 including Acting City Treasurer October 1887-August 1888. September 1890-February 1891. City Treasurer February 1891-November 1896.Source system ID55
At the time of Arthur Speer’s birth, his father was an Alderman of Sydney Municipal Council. Speer senior was an Alderman between 1858 and 1867 and was Mayor of the city in 1864. He was the MLA for West Sydney in the NSW Parliament from December 1869 to February 1872. During his time as alderman he was a principal of Osborne Wallsend Coal Co which supplied coal to the council for the water works at Botany. In the following years, his eldest son, William Meiklejohn Speer took over the contracting part of his father’s business and supplied coal to the City Waterworks until their transfer to the newly formed Metropolitan Water Supply & Sewerage Board in 1888.
In April 1880, Arthur James Speer aged 20, applied for a position in the City Treasurer’s Department. Council had advertised for an audit clerk at £300 pa, a clerk at £200, another clerk at £180 and two water branch clerks at £150 and £120. Speer applied for the clerk’s position with salary £200 and if unsuccessful he wished to be considered for the position paying £180. The Council considered 400 applicants for the positions. Speer was successful in gaining the position of clerk at £180 pa. In his letter of application, Speer stated he had been employed with the Commercial Banking Co of Sydney and presented references from FN Burt, assistant manager of the Head office of the Bank and Mr Humphrey, manager of the Kempsey branch of the Bank. Speer also stated that he had passed the Civil Service Examination (City Archives CRS 26/165/735). The sureties he offered for the due performance of his position were his father William Speer and Robert Watson of Cumberland St, a business partner in Speer family enterprises. In September 1881, on the retirement of the City Treasurer, JR Clayton, the junior officers of the department all advanced another rung up the ladder and Speer became the assistant cashier.
His progression in the City Treasurer’s department continued and his salary increased so that by 1883 as assistant cashier he received £225 pa and by 1884 he was the cashier with a salary of £250. In August 1885, he applied for some leave. The council employees of this period had no automatic entitlement to leave and the granting of leave was up to the Mayor. Speer wrote “Sir, After more than five years’ service I beg to apply to you for a month’s leave of absence, dating from the 7th September. I may add I am writing with the approval of the Head of this Department. I have the honour to be sir your obedient servant, Arthur Speer.” The leave was granted (City Archives CRS 26/206/1319). His duties as cashier were described as posting treasury and water-meter ledgers, preparing accounts, slips, and warrants, registering coupons, making bank deposits, &c., &c. (‘Sydney Morning Herald’ 13 November 1885 p5)
Speer’s role in the Treasurer’s Department appears to have expanded and in August 1886 Joseph Carroll, one of the City Auditors, wrote that “the City Treasurer and his assistant Mr Speer, continue to perform their duties in a most correct and satisfactory manner and that the books would do credit to the most exacting institution or establishment”. His role was acknowledged by Council when it decided in December 1886 to give him the official title and position of “Assistant City Treasurer” but without increasing his salary. Speer at the age of 26 had been given a boost to his prestige and could probably see a destined path leading to the top role in the City Treasury. His superior, the City Treasurer, Charles Henry Lines, had been in the Council’s employ for the past 23 years and had been the Treasurer since 1881 having worked his way up the ladder from clerk, to cashier and to treasurer. Speer appeared to be following the same path.
In July 1887, with the concurrence of Lines, Speer applied to the Mayor, Alderman Alban Joseph Riley, for leave to visit Adelaide. His wish was granted. Speer went to view the Adelaide Jubilee Exhibition. Alderman Riley with his wife and one of his daughters was himself to be at the Exhibition as an official guest in his role of NSW Commissioner for the Exhibition and member of the NSW Parliament. In a specially constructed Exhibition building displays were presented from the Australian states, Great Britain and several European countries. It was one of the many international exhibitions held around the world in the closing decades of the 19th Century. The exhibits were cultural, agricultural, horticultural, manufacturing and industrial in nature and were meant to promote trade and investment while showcasing excellence. Prominent government officials from around Australia and thousands of other persons visited Adelaide. Special excursion trains ran from the other states. Speer’s return journey to Sydney from Adelaide was aboard the special overland express train which left Adelaide on Wednesday 27 July arriving in Sydney on Saturday 30 July. On this train, as a “car passenger”, Speer found himself in exalted company for also returning on the train was the Governor of NSW, Lord Carrington, and his party including the Colonial Treasurer. Other passengers were NSW Parliament members, Thomas Colls, James Gormly and Joseph Creer who had been official guests at the Exhibition. Mayor Riley and family too were on the train.
In October 1887, Charles H Lines applied for six months’ leave on medical grounds at the recommendation of his doctor, Dr Henry Normand MacLaurin. Leave was granted and Speer was appointed Acting City Treasurer during his absence which stretched to nine months with Lines not returning to his office until about August 1888.
By the end of 1887, City finances were in a stressed state with a large bank overdraft, an increasing deficit and the expected cessation of the Government grant at the end of 1888. Further changes to the Council’s staff, expenditure and receipts were to take place with the transfer of responsibility for water and sewerage from the Council to a new statutory body, the Metropolitan Water Supply and Sewerage Board, in May 1888. Retrenchments in the labour force and reductions in expenditure were to be carried out. Retrenchments of staff in the Treasury were stated to be inadvisable by Speer. The Aldermen decided reductions in pay rates for salaried employees were also needed. The City Treasurer’s salary was reduced from £800 to £600; Speer’s salary was reduced by £25 to £250 while, in the Town Clerk’s office, the new Examiner of Accounts, SH Solomon, had his salary reduced by £50 to £300. The Sydney paper, ‘The Australian Star’ 31 December 1887, was highly critical of the last two reductions stating
“Both gentlemen have the handling of immense sums of money; they are, moreover, not paid much more than half what is usually paid in other large municipalities for positions of equal responsibility. To further reduce the salaries paid to these gentlemen, seems under the circumstances unwise. We trust that the rate of pay incident to these most important offices, may, in the interest of the citizens, receive the gravest and most careful consideration before the proposed reductions are finally confirmed.”
Throughout most of 1888, Speer was the acting City Treasurer with the responsibility for all the duties of that office while being paid a salary less than half that of his superior on leave. It would not be surprising if he felt some resentment and dissatisfaction with his situation. Extra pressures must have been felt too as not only were the elected City Auditors (John Carroll and George Christie) performing their normal audit procedures for the legislatively required half-year audits for the half-years ending 31 December 1887 and 30 June 1888 but at the same time Special Auditors appointed by Council (George Durham and John Miles) were conducting extensive audits into all matters relating to Council’s dealings with Bradford Brothers iron foundry in the six year period January 1880 to August 1886.
The so-called ‘Bradford Frauds’ had come to light in September 1886 when George Pasfield, a clerk in the City Engineer’s department, found discrepancies in records relating to Council dealings with Robert and David Bradford’s company. The Bradford brothers, their clerk Charles William Forbes, and the Council storekeeper, John Walton, appeared in the Police Court charged with conspiring to defraud the Corporation of Sydney. The charges against Walton and Robert Bradford were withdrawn for lack of any evidence against them. David Bradford and Charles Forbes were committed for trial in November. Bradford received a sentence of four years and Forbes a sentence of seven years. Council had suspended MA Felton, the Examiner of Accounts, J Trevor Jones, the City Engineer, John Fyfe, the Mechanical Engineer and John Walton. All but Felton were reinstated and despite his dismissal no legal action was taken against him. He had stated that he had simply passed vouchers already signed by the City Engineer, had checked the calculations and had no special engineering knowledge to reveal that the quantities of items apparently ordered were false.
The special auditors presented a report to the mayor in April 1888 revealing the mode of the frauds and the amounts defrauded. At the trial the sum defrauded had been estimated at about £9,000 but rumours abounded of greater sums. The special audit uncovered not just the payment vouchers with altered quantities of goods or forged store-keeper initials which were the main facilitators of fraudulent payments but also dummy contracts and other irregularities. Most of the false vouchers had been authorised by senior officers despite the fraudulent alterations. The final report stated the amount defrauded between 1880 and 1886 in the Water Department (under the City Engineer’s management) was about £29,925-18-4; an additional amount of £1,360-17-1 had been identified as fraudulently obtained in dummy contracts. There were plenty of rumours that similar frauds had been perpetrated in the City Surveyor’s office under Adrien Mountain but Mountain had resigned and gone to Melbourne for a better paid job and no further investigation was made. On 15 March 1888, the Mayor suspended the principal officers in the Engineer’s department (Trevor Jones, DC Robertson and Fyfe) but they resigned twelve days later and were transferred to the new Metropolitan Water Supply and Sewerage Board where their careers continued. The public was left to speculate where all the money went.
The Treasurer’s department was not implicated in the Bradford frauds but to the public perception it must have seemed strange that an amount of some £32,000 in a six year period could have been improperly paid out with no-one in authority questioning the expenditure. The auditors strongly criticised the processes of handling of the vouchers that had allowed them to be altered by Bradford or Forbes after the signing of receipt of goods by the storekeeper and before presentation for payment. It is clear that there was no overall financial plan in place. As far as the Treasurer’s department was concerned, all the expenses were authorised and had been checked by the Examiner of Accounts while as far as the City Engineer was concerned, he declared his role to be engineer not accountant.
In August 1888 just before Lines returned from his sick leave, Speer apparently took a week’s unauthorised leave (City Archives CRS 26/230/1419) but the records give no further detail and, as there seems to have been no disciplinary action taken, perhaps he had good reasons. In the same month he was instrumental in forming the Port Jackson Sailing Club for which he acted as honorary secretary for a number of years. (‘Evening News’ 30 August 1888 and ‘Australian Town and Country Journal’ 13 October 1888). His eldest brother, WM Speer, had been instrumental in forming the Manly Rowing and Sailing Club in December 1883 so it seems sailing may have been a family interest.
Meanwhile the City Auditors were busy at work on the regular audits for the two half years ending December 1887 and June 1888. No doubt gauging public interest to be high, the ‘Evening News’ published the full report on 13 November 1888 p 3. Charles Lines had returned to his role as City Treasurer by September but his health remained precarious. The auditors no doubt also felt pressured by the findings of the Special Auditors about matters in the Water Branch of the Engineer’s department because they needed to finalise the accounts of that branch for its move from Council responsibility to the Metropolitan Water Supply and Sewerage Board in May 1888. The Water Fund was found to be correct and ready for transfer to the new board. In regard to the accounts for the City Fund for the two audit periods, the auditors issued a certificate that the accounts were correct and that all moneys had been duly accounted for but they added the rider “But there is no complete system to ensure all revenue being so entered and reaching that officer [the City Treasurer]”. This complaint by auditors of the lack of checks in the system was one that continued to be made for the next ten years.
The auditors added some general remarks. They suggested improvements to the processing of payment vouchers with initials being required of officers and aldermen before payment. They had a few complaints also. They said certain documents had not been checked for correctness for months; a better system would ensure they were checked daily. They had referred a number of vouchers back to the City Treasurer (presumably Speer as acting treasurer) for incompleteness in regard to verification procedures. They wrote
“It appeared to us that the records are carefully and regularly kept; but that their ultimate utility is neutralised because of the want of a proper connection with the principal account books of the corporation. We would mention with regard to the City Surveyor's Department that the butts of the cash-dockets appear not to have been examined by the officers of the treasury, and that the balance of the stock-book should be compared at least once a year with the actual stock…. The officers of the treasury have had during the year under review a considerable amount of extra work consequent on the special audits and investigations, the searching nature of our audit and the closing and transfer of the water fund. Also during that period the much to be regretted illness, of Mr. C. H. Lines, the city treasurer, prevented that officer from attending to his duties for some eight months. We are pleased to see that he is again able to resume his duties but his absence greatly increased the responsibility and the work of Mr. A. Speer who was appointed acting-city treasurer. We have great pleasure in stating that the duties of that office were well and faithfully performed by Mr. Speer, and regret that, so far as we observed, no special recognition has yet been made of that gentleman's extra services.”
The following month, December 1888, Speer requested an increase of £25 in salary to bring the amount back to the level before the last reduction had been applied and Lines endorsed his letter as follows: “For many well-known and special reasons I trust, very respectfully, that Mr Speer's application will receive your generous and substantial recognition” (City Archives CRS 26/231/1959½). The matter was debated in Council. Alderman Palmer during the debate said that “if Mr. Speer did the work of the City Treasurer for nine months satisfactorily it was clear that either Mr. Lines or Mr. Speer was unnecessary.” (‘The Sydney Morning Herald’ 13 December 1888 p 7) Speer did not get his increase. In January of the new year, Alderman JD Young made an unsuccessful attempt to bring about further consideration of retrenchments among the salaried officers by moving a rescission motion to the Council resolution that had set the salaries for 1889. He said that:
“with the present state of the finances, they could not afford to keep such a large staff of officers. It was an unpleasant thing to have to ask for the reduction of the staff, but there were officers who were not required. There was a treasurer and an assistant treasurer, and he thought that it was an imposition on the ratepayers to keep Mr. Speer, who had very little to do.” (‘The Australian Star’ 23 January 1889 p 6).
Speer requested ten days leave in February 1889 which was granted. His thoughts about the attitudes of the Aldermen to his employment could not have been very happy.
In March 1889, a Council clerk, Willis A Benson, appeared in the Police Court and once more the newspapers headlined their reports ‘Corporate Fraud’ or ‘More Corporate Fraud’. Benson had years before (from 1880 to 1884) been employed by Council firstly as a clerk in the Water Branch and then as a clerk in the Treasurer’s Department. He had left his position abruptly for the reason that he had deserted his wife and children and departed with another woman for New Zealand. His latest employment by Council was again to be ended by his own dishonourable behaviour. Benson had been given a temporary appointment as a rate-collector. He proceeded to take City funds in an unsophisticated crime bound to be fairly swiftly uncovered. The money was missed within days. Benson was charged on three counts, the first being that he had embezzled £17-11-3 (a cheque paid in relation to two rates notices issued to Parker Bros) and the other two being that he had forged the signature of RC Robertson on the two rates receipts. When he pleaded guilty to the first charge the other two charges were dropped. Benson had used the cheque at Neustadt & Co’s furniture store paying off his account, purchasing goods and receiving cash change. Benson was sentenced to 18 months gaol, the judge having been influenced to mitigate the sentence in accord with a number of good character references being presented.
In June 1889, the Mayor, Alderman John Harris, directed Speer to examine the books and accounts of any of the departments administering a revenue creating entity. When Speer reported back to the Mayor in September, he stated that he had prior to these instruction already made “periodical inspections” of the books of the Metropolitan Cattle and Saleyards at Homebush, the George Street Markets, the Belmore Markets, the Eastern Fish Markets and the Sussex Street Saleyards. He had needed, consequently, he said, only to inspect the accounts of the Building Surveyor’s Department which collected building fees, the City Surveyor’s Department which collected some fees and the Inspector of Nuisances Department which collected moneys related to prosecutions initiated in the Police Courts. He detected a few clerical errors in some books but found them generally “well-kept”. He recommended some simplification to the systems relating to the building fees and a reduction in the number of books for that department and the Inspector of Nuisances department. The Mayor directed that he implement these changes (City Archives CRS 26/236/1451).
By the end of the year, the City’s finances were in a much improved state. Under the direction of Mayor John Harris, using his executive powers, impressive reductions had been achieved in expenditure, the bank overdraft had been eliminated, work previously contracted out was now being competently performed by day labour under the supervision of the City Surveyor, while it had still been possible to make meaningful improvements in various civic departments. The ‘Evening News’ 21 November 1889 listing in detail the reduced expenditure reported optimistically:
“There has, however, been a municipal Cromwell evidently at work during the last two years, and Mr Harris is certainly deserving of the highest public eulogium for his determination in putting down the plundering and extravagance which largely make up the history of Sydney municipalism. The facts … are perfectly astounding. It is admitted on all hands that Sydney was never better kept and never healthier, yet here are the savings …It is clear that the citizens have at last the assurance that the Town Hall is no longer a feeding trough for contractors and jobbers, and it will be their own fault if they allow the old state of things again to be introduced.”
No pressing problems seemed to arise in the Treasurer’s Department during the rest of the year and into 1890. By August of that year it became apparent that Lines’s illness had become terminal and he was given leave which was extended at monthly intervals for the rest of the year. Speer was appointed Acting City Treasurer on 1 September and, in November, Council increased Speer’s salary as Assistant Treasurer from £250 pa to £300 pa.
Charles Henry Lines died on 24 February 1891. At the meeting of the Finance Committee (a Committee of the Whole) on 26 February 1891, it was recommended that Speer be appointed City Treasurer at an annual salary of £600 (appointment confirmed 12 March). To all appearances he would seem to have achieved his ambition to become the City Treasurer and at the unexpectedly early age of 31 but unknown to anyone at this time and remaining unknown for a number of years, Speer had already begun to embezzle significant amounts from the City Accounts. The special audit conducted five years later in 1896 by James Robertson identified his first defalcations: several small amounts totalling £55 taken in December 1890 and a very large amount of £1,000 taken in one transaction in January 1891.
In his private life, Speer remained prominent in the affairs of the Port Jackson Sailing Club although he retired from the role of honorary secretary in May 1891 and was presented by the members with a Waltham watch and an illuminated address. In June, the ‘Sydney Mail’ reported his presence at a private assembly (a dance) at the Burwood School of Arts at which were also present Alban J Riley (now a Member of the Legislative Council although no longer an Alderman), his wife and daughters. Perhaps Speer had begun to court Miss Lily Riley then aged 20.
Speer continued to present to Council, a weekly statement of the financial position of the Council providing the balances held in numerous Council bank accounts following the same format that Lines had used. Listed were separate bank accounts for each “Fund” named for its purpose such as the City Fund (general operations), the Cattle Saleyards Fund, the Town Hall Loan Fund, the Streets Loan Fund; all of these were held in current accounts at the Union Bank. Then there were multiple separate accounts designated as sinking funds for each of the main funds and these were held in bank accounts or special investments accounts or bank debentures or with the Colonial Treasury; for a time there was an account designated City Fund Reserve Fund place on fixed deposit. Some dozen or so accounts were listed and it seemed that all Council funds were visible and accounted for and the balances presented for Council and public information. In time, the Moore Street Improvement Fund account replaced the Street Loans Fund. What were not mentioned nor missed were balances for three other Council bank accounts.
In the new year, confidence in Council’s financial administration was once again shattered when the new Mayor, WP Manning, announced to Council that he had on 15 January 1892 suspended Ernest A Pidcock, the Assistant City Treasurer, for irregularities in his accounts. The matter had been discovered when Pidcock confessed the frauds to the Mayor and repaid £420. The Mayor made a report to the Council meeting on 28 January at which he said he had dismissed Pidcock, accepted the repayment and did not intend to prosecute him or as the headline writer of the ‘Bathurst Free Press and Mining Journal’ put it: “the assistant treasurer embezzles and pays back, then gets his ticket.”
The Mayor reported he had asked one of the City Auditors, James Robertson, to conduct a special audit and was confident all the frauds had been detected. Pidcock had taken money from the Belmore Market receipts, having recognised the system in use did not reconcile the receipts recorded in the Cash book with the amounts paid in to the Treasury. At one stage he had also designated deposits to the City Fund as market receipts when they were rate payments and later designated market receipts as being from rates apparently in an effort to disguise the reduced market receipts. Essentially, he had taken money directly from the Belmore Markets receipts.
The Mayor further reported that he had suspended Speer for matters revealed in the special audit. The auditor found that Speer had not properly checked the books of the Belmore Markets or the George Street Markets. Speer said he had accepted the junior officer’s receipt as evidence that payment and deposits had been made and he had not checked further (City Archives CRS 26/255/164). Mayor Manning further stated that Speer had not complied with a Council resolution of 1887 that accounts of all departments were to be audited by the City Treasurer once every six months. He had not done so in the case of the Markets. Manning said “The city treasurer was an officer who had done good work for the city and he thought he was a good accountant and capable of exercising that check and control over the receipts and expenditure of the council which such an officer should be able to do. Nevertheless there was a neglect in this matter …” (‘Daily Telegraph’ 29 January 1892). The Aldermen debated possible actions such as removal of the suspension but delivering a severe reprimand, reduction of salary or lifting the suspension without further action as a number felt the suspension to be a harsh measure. The decision was deferred to the next meeting and Alderman Henry Chapman foreshadowed the bringing of a motion to make an inquiry into the working of the City Treasury. Speer’s suspension was lifted at the next meeting on 4 February. Chapman’s motion “That a thorough inquiry be held as to the working of the City Treasurer’s department and the Mayor be empowered to call a meeting and summon witnesses with the least possible delay for such inquiry” was put at a subsequent meeting and passed. The Council sitting as a Committee of the Whole made its inquiry on 24 March 1892.
The inquiry achieved very little. Its terms were very vague and many of the Aldermen expressed their view that it was a waste of time either because they were satisfied with the actions already taken or because a proper inquiry would take months and would require professional experts to make recommendations about system changes. Only 14 of the 24 Aldermen bothered to attend and not all stayed till the end. Alderman Henry Chapman said “Mr Speer was either guilty or not guilty and I hold that a reprimand was not sufficient.” He said further:
“I will tell you what I want and why I moved for an inquiry is this: I am not satisfied with the decision arrived at in the recent defalcations in the Treasury and I am sure it will be more satisfactory both to the Aldermen and the officers of the treasury to have the matter thoroughly sifted. I wish to find out the sort of system that has prevailed in the Treasury under which fraud of this nature could occur; and I wish to find out further whether the frauds could not have been prevented. If they could have been prevented then who is to blame – whose fault is it that greater supervision or a better system has not been introduced?”
Alderman Hughes supporting the need for an inquiry said:
“Mr Robertson, one of our auditors, has pointed out that the present system of keeping the books opens the door to fraud… Personally, I think there is no check on those employed in the Treasury, for the same clerk who receives money gives a receipt. That should not be. The Treasury ought to be worked the same as any other department or large business establishment is worked, and every precaution ought to be taken to prevent fraud….From the report of our auditors it is clear to me that under the present arrangement one man can commit a fraud without being found out, at least for a considerable time. What I desire to find out to-day is the system of checking followed in the Treasury. If it is sufficient, then I take it our inquiry is concluded; but if it is insufficient, then we can call witnesses to show us what changes we can introduce to remedy the evil.”
Alderman Fowler summed up what was probably the majority view:
“The report we have received tells us that no harm has been done, beyond the mere abstraction of this money. The Mayor did his duty; he suspended the officer at the head of the Department and dismissed the author of the fraud, and we supported him in both actions. My desire in opposing this inquiry is to save time; if I thought the slightest good would result, I would support it.”
The Mayor informed the Aldermen that Speer had already admitted to laxity in his duty of supervision. He gave details of the modus operandi of the theft and reported that he had already given instructions to Speer to make certain improvements.
Speer was called for examination. He pointed out that Pidcock’s action was theft and not a tampering with the books. The system of book-keeping had previously been altered in the ways suggested by the then City Auditors, George Christie and James Carroll, in 1888 and had met with the auditors’ approval since that time. The internal audits were done by the clerk Shuttleworth who did not handle money. Speer had, however, since Pidcock’s theft, made changes to the receipt system, including that at the Cattle Sale Yards, to ensure the money collected by an employee was paid into the treasury and internal audits would be made at greater frequency.
The Committee was at a loss as to what further it could do and what it would report. Alderman Hughes found a solution. He said:
“I will move ‘That the committee report that the inquiry has been made, and they are satisfied an improved system of keeping the accounts is being carried out; and that the Mayor be empowered to take such further steps as he may deem necessary to continue such improvements’. The Mayor has already told us that he stayed his hand pending this inquiry. We now find, as a result of the inquiry, that certain improvements have been initiated. We can report the fact to the Council, and ask the Mayor at the same time to continue what he began; because it is the improvements prompted by him that have satisfied the Committee.” (City Archives CRS 22/55/1 contains the full report of the Committee.)
The irony of the inquiry is, of course, that Speer was already responsible for appropriating a larger sum than Pidcock had taken. The attention of the Aldermen was directed to the gaps in the receipts system; the Examiner of Accounts was doing his job in examining invoices and payments to outside persons or bodies; the internal audits were focussed on the specific well-known funds and accounts. The City Auditors examined the accounts placed before them. No-one asked for a list of all the city bank accounts and their balances.
Aldermen continued to have very little real grasp of the state of the City’s finances. No-one produced a budget to plan future expenditure and tailor it to the City’s capacity to pay. Mayors throughout the 1880s and 1890s used their executive powers to make retrenchments and limit expenditure in an ad hoc way. The annual accounts of the City drawn up to fulfil statutory requirements simply produced an abstract of annual receipts and expenditure for each fund, lacking meaningful categories or descriptions; and there was no balance sheet or statement showing all assets and liabilities, other than the liabilities on each loan fund. One of the City Auditors, George Christie, in office 1887-1894 and 1896-1897, complained from time to time that the Annual Statements failed to give a true picture of the city finances and that the overall system was poor; he took to writing limiting statements into the City Ledgers at audit time but still signed off on the accounts as they satisfied the legal requirements. James Robertson, in office 1887-1899, noted occasionally that the system was in various ways open to fraud. Nothing changed. The Treasurer’s role seemed to be more one of recording transactions rather than having any real control of or influence on financial management but Speer of course was hardly interested in changing the treasurer’s role in any way. (For examples of the ‘Annual Statements or Abstracts of Receipts and Expenditure or Disbursements’, see the following statements prepared by Speer: City Archives CRS 26/264/498 for 1892 and 26/279/343 for 1894, both digitised.)
Matters continued with apparently no problems for the remainder of 1892 and into 1893. On the personal level, Speer continued his association with the Port Jackson Sailing Club often acting as official race time-keeper. His courtship of Lily Riley was successful and a decision to marry was made. Speer continued behind the scenes to siphon away Council funds and shifted funds between accounts to cover his defalcations. The public saw a man of charm and ability but, apart from his secret fiddling of the funds, his administration of his department was lax as was the case with various of the other Council officials of the time. Five years later in January 1898, the Council’s Inquiry into the running of its departments revealed that Speer had not always been in attendance at his office when he should have been, but was frequently to be found in the afternoon at the Australia Club. He had also indulged members of staff in allowing advances on their salaries. His routine work was often not up to date.
The years 1892 and 1893 were depression years in the financial life of NSW and Victoria with continuing business failures and trading difficulties. Among the failures were a number of banks and public panic grew. Some banks closed, some suspended payments. Both state governments had to take actions to prop up public confidence. Many prominent business men appeared in the insolvency courts.
At the beginning of October 1893, the Mayor announced he had suspended the City Solicitor “on account of irregularities in the discharge of his duties”. Once again Council’s apparent faulty financial management hit the headlines: “A Question of Mixed Accounts; Four Thousand Pounds involved”; “sensation” and “financial neglect” were some. George Merriman was highly respected both as a lawyer and former member of Parliament. His late father, James, had been a City Alderman and Mayor. Members of the family including George were considered wealthy. His defalcations had been discovered because he had become very ill and his doctors gave a poor prognosis. The very recent defalcations had been the banking into his own account of payments received by him on behalf of Council. Other defalcations dating from 1891, however, were failures to pass on payments made to him by Council intended for others, such as an amount due to be paid into Court in regard to the Starkey case and payments for land purchases by Council. Speer had no responsibility in any of the offences but once again weaknesses in the systems for accounting for Council transactions were exposed. Merriman’s health continued to decline; a warrant was made out for his arrest for embezzlement but was never served and he died aged only 48 on 17 November. The medical opinion expressed by Dr Kesteven who attended him in his last weeks in a letter to ‘The Daily Telegraph’ (21 November 1893 p 6) was that Merriman had died of "general paralysis of the insane" in the course of which he had suffered from “mental oblivion, exaltation of ideas, and impairment of muscular action” and that he had exhibited the disease symptoms for “some years before his demise”.
Meanwhile Speer applied for a month’s leave as he was to marry Lily Riley, daughter of Alban Joseph Riley, on 8 November. The marriage took place at St Luke’s Burwood where the couple were married by Canon Moreton. The Speers took a sea trip to Melbourne aboard the P and O Company’s RMS ‘Massilia’.
Also in November, Parliament passed a Bill enabling the City to raise a £300,000 loan “to cover the expenditure already incurred in the extension of the fish markets (£15,898), the building of the Belmore markets (£30,097), and the estimated cost of the proposed George-street markets (£130,000), together with the cost of the land known as the old police court site (£124,000)” (Town Clerk’s Annual Report for 1893, published March 1894). The loan was to be raised by the sale of debentures on the London market. No doubt this would once again bring in to operation the little known bank account referred to as the “interest and debenture account” into which funds had in the past been transferred prior to the payment of dividends; accordingly, this account should have a nil balance at the end of each half-year and even when in credit the account funds could be argued as belonging not to Council but to the debenture holders. This account was one Speer had been using to manipulate funds. The auditors had in fact queried a credit balance in it in January 1892 but Speer had made an explanation which had been accepted.
A significant event in Speer’s extended family occurred on 24 November 1893 when his father-in-law, A J Riley, filed for insolvency. ‘The Australian Star’ headlined its report “Big Bankruptcy” and its article continued
“Mr. A. J. Riley, who is looked upon as one of the biggest business men in the city, filed his schedule to-day. His petition to the Bankruptcy Court set forth that he (Alban Joseph Riley), residing at Burwood, and carrying on business at 386 and 390 George-street, Sydney, having been unable to pay his debts asked that a sequestration order might be made with respect to his estate and that he might be adjudged bankrupt. The Acting-Registrar, Mr Salusbury, made the order and appointed Mr. Lloyd official assignee. The bankrupt in an affidavit estimated his assets at £35,000 and his liabilities at £100,000.”
Riley’s principal business was in the import and warehousing of drapery including fabrics, clothing, millinery, furnishings and accessories. In the hearings, Riley maintained he could have offered his creditors 6/8 in the pound if allowed to continue trading. He had offered various accounts of the state of his business. His warehouse stock was sold. He was allowed to keep his household furniture and effects. There were allegations made about the conduct of his affairs. When he applied for a certificate of discharge from the bankruptcy in July 1894, Justice Manning ruled that the most serious allegation, that he had obtained credit by means of false representations, had not been proved. He believed that Riley had, however, not made a full and fair disclosure of his position. He felt it had been proved also that Riley had continued to trade while knowing he was insolvent, that he had incurred debts that he knew he would probably be unable to repay and that he had also given undue preference to his wife in making certain payments to her ahead of other creditors. These breaches, he said, forced him to suspend the issuing of a certificate of discharge but he thought that, taking into account Riley’s long business career and the assistance and co-operation he had given to the official assignee, justice would be satisfied if he imposed only a 12 months suspension and did not order the payment of costs (‘Evening News’ 20 August 1894).
In September 1894, Speer’s wife gave birth to a daughter, Eleanor Birkenhead Speer, at their home, ‘Netherby’ at Concord. Speer’s life and work appeared to be continuing with no problems for him. In February 1895, Speer took part in a cricket match between Council staff and the Gas Company staff, won by a large margin by the Gas Company (the Australian Gaslight Company). Speer was Council’s second highest scorer with 12 runs and he was also a principal bowler. The match was played on Rushcutters Bay Oval before a large group of spectators and official representatives. Afternoon tea was served to the visitors. (‘The Sydney Morning Herald’ 23 February 1895). At the repeat match in February 1896, Speer and his wife were spectators when the Gas Company once again beat the Council staff team.
Speer took leave in October 1896 apparently for health reasons and while he was holidaying in Katoomba, Robert Clement (‘Clem’) Robertson, Assistant City Treasurer, stumbled across a discrepancy in the accounts. When asked in January 1898 at the Special Inquiry into the working of the Council departments about his discovery of Speer’s defalcations, Robertson described how it came about. He had been asked to provide a statement showing the balances in the various sinking accounts. He had found the records were not up-to-date and upon calculating what he believed the balances should be and checking against the bank books, he found what appeared to be a shortage. Knowing that the accounts had been audited at half-yearly intervals and had been certified correct, he spent several days checking back through six years of records and was able from that process to conclude that an irregularity had occurred. He reported the matter to the Mayor, Alderman Ives. The Mayor instructed him to get out balances for all the Council accounts. He did so and found more discrepancies.
The Mayor asked James Robertson, one of the elected City Auditors, to perform a Special Audit of the Council accounts. George Christie, the other auditor, was not consulted or informed of this. The Mayor gave Robertson the information already gathered by RC Robertson and the balances of all the bank accounts held in Council’s name. To Robertson’s surprise, he found there were three accounts of which he and George Christie had been totally unaware. These accounts were called the City Fund No 2 Account, the Fixed Deposit Interest Account and the Charged Cheque Account. The No 2 Account, as it came to be called, was used to bank overpaid rates and refundable deposits made by contractors when tendering for work and consequently it could only ever have a zero or a credit balance. This money it could be argued was not Council’s money but held in trust. The bank had permitted Speer to operate this account on his own signature unlike the normal accounts where the Mayor and Treasurer’s signatures were required. When Mayor Ives had ordered that all accounts required the Mayor’s signature as well as the Treasurer’s, Speer had asked Ives to co-sign cheques on the No 2 account, which he did, but Speer did not present those cheques to the bank. Instead Speer had written replacement cheques signed by him alone, presumably so as not to risk alerting the bank to question the previous mode of operation on Speer’s signature alone. Assistant Treasurer, RC Robertson, knew of the account but regarded it as a Treasurer’s Trust Account and knew nothing of the details of its operation. Speer’s first major defalcation in January 1891 of about £1,000 had been from the Interest and Debenture Account which was used to deposit funds for the payment of interest to holders of City Debentures due half yearly, again an account for which legal argument might be made that these funds were no longer Council funds. When money was needed for the interest payments, he had transferred funds from one of the Sinking Fund Accounts. Then later in order to correct the balance in that account, he had made use of the No 2 Account withdrawing funds from it. Over the years, he had taken money from various accounts and covered his tracks by using funds from the No 2 account to conceal shortages. The No 2 account had been in existence since at least 1873 and had never been included in an audit.
Robertson made a verbal report to the Mayor before completing his audit and the Mayor travelled to Katoomba to speak to Speer. Both returned to Sydney, Speer to inform his family members of his impending disgrace and Ives to consult with the City Solicitor, George Waldron. Based on the fraudulent transactions already identified by James Robertson, Waldron recommended applying for a warrant for Speer’s arrest. Waldron carefully chose to specify in the warrant withdrawals which were embezzlements of what were indisputably Council moneys. These were three transactions in 1890 totalling £55 and a transaction in 1891 for £227/15/-. Speer presented himself for arrest and was granted bail.
At the committal hearing on 4 December 1896, Ives gave evidence that Speer had agreed that the No 2 account had a debit balance of over £2,000 and he had admitted to embezzling about £2,500 altogether. ‘The Australian Star’ 4 December 1896 reported that Ives further stated:
“At one time, in the Town Hall, after the matter had been discussed, Speer wanted to know if it could be arranged. Witness replied, "certainly not." Speer said something to the effect that now that his own knew it, he didn't care so much, but he would have liked to have avoided publicity.”
A bank official gave evidence that the No 2 account had first been in overdraft in 1893. RC Robertson gave evidence that in his role of cashier he had received the money that went to the No 2 account but that Speer alone made any disbursements and kept the records of the account. James Robertson gave evidence that he and his other co-auditors (George Christie and Arthur Brierley) had been unaware of the account, believing that Speer had presented all the Council’s bank accounts balances to them. He had found in Speer’s desk a cash book that showed that the account should currently have had a credit of £1448/17/5 whereas it was overdrawn by more than £2,000. Speer’s counsel, WP (Paddy) Crick, M.L.A., reserved the defence saying he had a defence he believed would be successful.
Once again the Council’s financial affairs headed the news stories in the papers in both Sydney and country NSW. Headlines such as “Civic Sensation”, “A Serious Charge”, “A Startling Arrest” and “Arrest of the City Treasurer – Alleged Embezzlements” abounded. That Speer was dishonest took all by surprise. The ‘Barrier Miner’ in far-away Broken Hill wrote on 30 November 1896:
“The reported embezzlements by Arthur J. Speer, treasurer of the city of Sydney, must have come as a shock to the community. A more popular man than the accused was not to be found attached to the Town Hall. His seniors, his subordinates, and the general public alike were ever ready to testify to the urbanity, the kindness and the always-gentlemanly bearing of Mr. Speer.”
James Robertson completed his written report to the Mayor. For the three accounts he had identified as never having been revealed to auditors, the No 2 account as stated in the committal hearing was overdrawn; funds from the Fixed Deposit Interest Account which was intended for receiving payments on Council Fixed Deposits had been correctly transferred to the main City Fund account in 1895 leaving a zero balance but later in 1895 it had become overdrawn by the cashing of two cheques transferring amounts to other City accounts; the third account was the Charged Cheque Account. Robertson said the Union Bank had not reported these accounts to the auditors and he believed there must be laxity at the Bank in allowing the accounts to become overdrawn without authority. He said the defalcations he had identified totalled £5039/11/10 being shortages in the No 2 Account, in the Interest and Debenture Account, in the Fixed Deposit Interest Account and two dishonoured cheques by Speer’s in the Charged Cheque Account. (City Archives CRS 22/55/1)
In January 1897, a sale of the contents of his home, ‘Netherby’, on the corner of Mermaid Street and Broughton Street at Concord was advertised as a “Highly Important Sale By Auction” and a catalogue was issued. Included in the list for sale was a Pleyel Grand Piano in a rosewood case, modern English furniture, a gentleman’s and a lady’s “high-class bicycle”, as well as general household appointments.
Speer came up for trial on 25 February 1897 with the charge being that he had embezzled £3,699/2/6, the property of the Council. City Solicitor Waldron had decided not to include the money missing from the No 2 Account and it appears that the Union Bank was left to carry that loss. Speer had decided in the meanwhile to plead guilty so the trial proceeded straight to a plea in mitigation of sentence. He admitted to having taken £5039. The ‘Evening News’ 25 February reported:
“Mr. Wise, who appeared for the accused, addressed his Honour in mitigation of sentence. He said that the accused desired to state that no other person, either in the bank or in the Council, was cognisant of the fact that a fraud was being perpetrated. What wrong had been done was his own doing, and his alone… It might be possible that if the case went to trial some point might be raised as to whom the money belonged, but the accused preferred to plead guilty and throw himself on the mercy of the court. Although Speer had never informed the auditors of the contractors' account, there must have been some laxity in the investigation of the accounts that it had never been discovered. The accused had been treasurer since 1890 and the Crown would admit that up to this time he had borne a good character.”
Justice Cohen said it was clear to him that a jury would have found Speer guilty and he had held a position of public confidence and had failed to preserve it. In regard to the submissions, the ‘Evening News’ reported that His Honour said:
“that so far as he could see there could be no reasonable point raised as to whom the money belonged. He had been asked to take into consideration the laxity of the system with regard to the No. 2 account. He could not do so and he failed to see how the laxity of a system of keeping accounts could be used in mitigation of the sentence on any person who took advantage of the laxity. Mr. Robertson had frequently asked if there were any other accounts to be audited, and the accused had as frequently answered 'No.' It was the latter's bounden duty to place all the books before the auditors… Although the indictment treated the matter as one offence a very large number had been committed.”
He sentenced Speer to six years’ penal servitude and directed that £500 be paid out of Speer’s estate to the Council and if that was done, he would recommend a remission of twelve months of the sentence.
The newspapers gave full coverage to the trial but as Speer had pleaded guilty there was no additional information about his defalcations let alone anything revealed as to why he had taken a dishonest path. Sydney’s ‘Truth’ in a pre-trial piece published 10 January 1897 with sub-headings such as “Corruption and rottenness rampant” had drawn attention to the series of frauds perpetrated on Council in the preceding years; swindles such as the embezzlements by City Architect Sapsford, the City Solicitor Merriman and other frauds such as the faulty Town Hall foundations. It also pointed the finger at Council subsidised overseas trips by the “sycophantic” City Surveyor, Richards, and the “ornamental” City Organist Wiegand, both while still on full pay. “And so the merry game of wholesale robbery, jobbery, and tomfoolery has been allowed to go on in the full light of day.” What ‘Truth’ asked were the auditors doing? “How comes it that these dishonest operations of Speer’s have been permitted to go on unchecked and undetected for a number of years.” Above all, it asked “How these Aldermanic muddy-brained, muddle heads are going to relieve themselves of the responsibility of the present chaotic state of Municipal affairs is a secret not yet disclosed…”
‘The Australian Star’ on 26 February 1897 published an opinion piece in a column called “Current Topics”. It said:
“The sentence passed upon Arthur James Speer, the late city treasurer, cannot be regarded as too severe. The offender was appointed city treasurer in 1890, and from that date until the discovery of his defalcations he embezzled moneys of the city treasury amounting to £5000. This is a very large sum, and it is curious that such enormous frauds upon the council could go on for years undetected. The explanation of Speer's immunity is that he manipulated a separate and almost secret account, known as the "contractors' account." Of this separate account the auditors knew nothing, and apparently successive Mayors must have been equally ignorant of its existence, an ignorance shared by the finance committee of the council and the whole of the aldermen. If they knew of this account obviously they should have insisted upon the inclusion of its books in the audit, and, of course, this would have led to the discovery of Speer's theft at an early date. The citizens would like to know how it is that those most concerned were ignorant of the existence of this account, which has been in evidence since 1873 but was never criminally manipulated until the arrival of Speer upon the scene as city treasurer. The absolute impunity afforded to fraud by the condition of the contractors' account probably formed his chief temptation. Counsel in the case exonerated the auditors from blame, but it is clear that the City Council was culpable to a considerable degree in remaining so grossly ignorant of the state of its transactions with the bank. As for Speer, the opportunity afforded him in no way minimises his culpability. In a Town Hall which has seen in its time a good deal of corruption and dishonesty his remains the worst case.”
A number of NSW country papers carried a syndicated column which suggested that patronage had contributed to the selection of dishonest officers of Council. ‘Northern Star’ (Lismore) and ‘Illawarra Mercury’ (Wollongong) were among those publishing it on 16 January 1897:
“The backstairs mode in which some of these gentlemen gained their appointments is not favourable to the selection of the best men, especially when honesty and integrity are a desideratum, for honest men will not stoop to the meannesses of the intrigues required. The City Council will do well if, instead of arranging a nice little family party to appoint protégés of their own, they will invite applications openly from the best men who can be obtained. The city finances and the manner in which they are maladministered threaten to become a scandal, and strong and thorough-going measures of reform are imperatively demanded.”
After Speer’s arrest at the end of November, Council had appointed RC Robertson as Acting Treasurer. It appointed Robert Murray McCheyne Anderson the new City Treasurer at the end of March 1897. Anderson achieved a complete overhaul of the City Treasury and then of the Town Clerk’s Office in four years’ service. His later career in business, the army and government positions was brilliant. What did Anderson find on taking office? In an interview with the ‘Daily Telegraph’ published on 26 January 1901 when he was leaving Council service, Anderson said he had found bad systems, a lack of checks and balances, no discipline in the staff, £30,000 worth of negotiable bearer bonds kept in the treasurer’s safe which was often unlocked instead of at the bank, records not kept or not utilised and a regime that resisted change.
"I came," he said, "from the Bank of New Zealand to the corporation service in 1897, on April Fool's Day, and I had not been in the new position a week before I realised how exceedingly appropriate a day I had chosen for the new occupation. It is difficult to realise now the state of matters then existing… I never before met people so well satisfied with the order of things as existing, but who had more reason to be horrified.”
The Council only recovered £30 from one of the Insurance Companies who issued the Fidelity Bonds intended to cover Council for such things as embezzlement. Various technical issues brought this about, such as that the current insurance company had not taken over any responsibilities from the previous one and so its policy only covered a short period of time while the previous company had clauses in its policy that required any frauds to have been notified in a lesser time than had occurred. Once more Council’s administration failed it.
Speer served his sentence at Darlinghurst and Goulburn Gaols. He was discharged on 16 January 1901 having served just under four years of his sentence. Presumably he paid the £500 specified in his sentence giving him one year’s remission and received some other remission as well. The gaol photographs taken in February 1897 and digitised by NSW State Archives and Records show a man who looks much older than his age of 37 and the newspaper sketch of him published by ‘Truth’ on 6 December 1896 also shows a strained older man. The gaol records state he had black hair turning grey and the photos show more grey than black hair. In contrast the sketch taken from a photograph published in ‘The Australian Star’ on 7 December 1896 depicts a much healthier and younger looking man.
Speer left Australia and lived the remainder of his life in New Zealand. He died at Timaru on 21 October 1911. A very brief notice appeared in the death notices in the ‘Sydney Morning Herald’ “Speer – At Timaru (N.Z.), Arthur Speer, aged 52”. He died at Timaru Hospital of cancer of the mouth. He was a member of the Lodge of St John and was given a masonic funeral. He was buried at Timaru.
His wife, Lily, did not marry again and died in 1938. His daughter, Eleanor, did not marry and died in 1981.
[This biographical Person registration was researched and drafted by City of Sydney Archives volunteer Marilyn Mason, 19 January 2018]
References
City of Sydney Archives and web-site: www.cityofsydney.nsw.gov.au:
CRS 7 Minutes of City of Sydney Council; CRS 21 Reports of Committees; CRS 22 Reports of the Finance Committee; CRS 26 Letters Received; (item descriptions or digitised objects available online)
City of Sydney Aldermen, http://www.sydneyaldermen.com.au/
Hilary Golder: A Short Electoral History of the Sydney City Council 1842-1992; electronic edition, http://www.cityofsydney.nsw.gov.au/__data/assets/pdf_file/0016/120283/a-short-electoral-history.pdf
Online resources:
Australian Newspapers: digitised by the National Library of Australia and searchable online: www. trove.nla.gov.au/newspaper
New Zealand Newspapers: digitised by the National Library of New Zealand and searchable online: https://paperspast.natlib.govt.nz/
Dictionary of Sydney online: http://home.dictionaryofsydney.org/
Australian Dictionary of Biography online: adb.anu.edu/au.biography
NSW Births Deaths Marriages Registry, indexes online: www.bdm.nsw.gov.au/Pages/family-history/family-history.aspx
Parliament of NSW: former members: www.parliament.nsw.gov.au/parliament/members.net
NSW State Archives and Records: https://www.records.nsw.gov.au/
Portraits, drawings, caricatures:
Pen and ink drawing published in ‘The Australian Star’ 7 December 1896 p6
Pen and ink drawing published in ‘Truth’ (Sydney) 6 December 1896 p2
Photographs taken 25 February 1897 at Darlinghurst Gaol, Sydney, NSW State Archives and Records; Photo No 6884, page 198, NRS 2138, Item 3/6060; also at page 197, NRS 2232, Item 19/17654
Transcriptions of NSW Birth, Death or Marriage Registrations and printouts of NZ Certificates by NSW Family History Transcriptions Pty LtdRelationship legacy dataRELATED TO: City Treasury Department I AG-0012 - Worked inGenderMaleOccupational historyCity Treasurer’s Department: Clerk April 1880-1881. Assistant Cashier September 1881-1883. Cashier 1883-1886. Assistant City Treasurer December 1886-1891 including Acting City Treasurer October 1887-August 1888. September 1890-February 1891. City Treasurer February 1891-November 1896.Source system ID55
Relationships
CollectionPeople and PositionsRelated agenciesCity Treasury Department I
Registration
Detailed recordYes
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Speer, Arthur James [PE-000055]. City of Sydney Archives, accessed 26 Apr 2024, https://archives.cityofsydney.nsw.gov.au/nodes/view/609981