Elora’s first bank run by extraordinary citizen

The following is a re-print of a past column by former Advertiser columnist Stephen Thorning, who passed away on Feb. 23, 2015.

Some text has been updated to reflect changes since the original publication and any images used may not be the same as those that accompanied the original publication.

One of the least known of the small-town businesses of the 19th century was the private banker. These were one-man operations or partnerships with one office, offering a range of banking services.

There was no government regulation of this industry. Depositors and customers had only the personal reputation of the banker as their guarantee that they would ever see their money again. 

Between 1865 and 1910, about 700 private banks operated in Ontario, most in the smaller towns.

Elora’s first private banker, Walter Newman, operated in Elora as the “Farmers Bank” between 1866 and his death in 1881.

Newman was one of the most extraordinary men in the village’s history. The son of a wealthy merchant in Cheltenham, England, Newman ran away from home at an early age and hired out as a cabin boy. 

He drifted around Australia for a couple of years, then migrated to Upper Canada to try his hand at farming.

In 1846, the 27-year-old Newman showed up in Elora and presented himself to Charles Allan. He was immediately hired as a clerk in Allan’s store. 

Although he had virtually no schooling, Newman was a quick study, and had managed to pick up a solid education on his own initiative. His interests ranged widely. In 1848, he designed and patented a turbine, the prototype of which operated Elora’s mill for several years. By 1849, he was handling the books for Allan’s many business interests. The following year he set up his own accounting practice. He was soon handling real estate and mortgages.

During the 1850s, Newman persuaded his three brothers to join him in Elora. His elder brother, Edwin, was the first to come and remained in Elora the rest of his life. In 1853, Edwin purchased Charles Allan’s store. Walter was a junior partner in the venture, and carried on his accounting and real estate activities from the back room of the store.

The demands for banking services in the Elora of the 1850s were not great. Merchants were largely a part of the credit system of their suppliers in Hamilton, Toronto and Montreal. Few locals had any money to save or invest, and much business was conducted by barter.

All this would change in the following decade. Walter Newman’s business soon became the centre for financial transactions in the village. By the early 1860s, he was an agent for the Bank of Montreal in Guelph, handling deposits and drafts for the bank, and advising on loan applications.

In 1866, the Newman Brothers store, at the north end of the Victoria Street bridge (at the site of the footbridge currently under reconstruction), was destroyed by fire. The Newmans rebuilt a stone structure on the site, with a fireproof vault for the banking business. There were two retail spaces on the first floor and offices above. 

The banking business was established as a separate concern, known alternately as W.P. Newman and Co., and the Farmers Banking House. 

Brother Edwin operated the store in this building briefly, later moving it to larger quarters. Upstairs, Walter conducted his real-estate and insurance agency, and Edwin kept offices for his auction business.

By modern standards, or even those of the late 19th century, the Newman bank was not a large one. The brothers did not have a great deal of capital at their disposal, and much of the local deposit money only passed through their hands to the Bank of Montreal, though there were many people at this time who were disinclined to deal with a business they did not know personally.

As well, private bankers such as Newman frequently offered better interest rates than the chartered banks. 

The Farmers Banking House soon had several hundred depositors on its books, and offered loans to farmers, merchants and individuals. Newman was careful to restrict the size of his loans, and to spread his risks widely. He specialized in loans for cattle and machinery, cultivating a rural clientele that was shunned by the chartered banks.

Competition arrived in Elora in 1867. The Merchants Bank, with headquarters in Montreal, established an agency that became a full branch in 1870. The branch closed eight years later, after alienating the local community when it foreclosed on the Elora mill and the two largest factories in Elora.

By the mid-1870s, Newman’s meagre capital was insufficient, and he decided to bring in additional partners. Among these were Hugh Pritchard and David Foote, two successful area farmers. Their participation in the bank strengthened ties with the agricultural community.

Walter Newman continued to find new interests through the 1870s. 

He took a leading role in the horticultural society and began cultivating cactuses and tropical plants in Elora’s first greenhouse. He spearheaded efforts to clean up the Elora gorge, and spent many hours planting wildflowers and scattering seeds along the banks of both rivers. He tried his hand at local history, contributing several columns to local newspapers in a prose style so baroque that it is virtually impenetrable.

In 1880, Walter Newman was diagnosed with kidney disease. A son and daughter took over the day-to-day running of the bank. As his health faded, he was unable to care for his tropical plants. These were sold at an auction which took a full day and attracted buyers from across the province.

Walter Newman died in May of 1881, three weeks after his brother Edwin.

*This column was originally published in the Elora Sentinel on Aug. 28, 1990.

Thorning Revisited