Sir Harry John Sheehan, KBE, was Governor of the Commonwealth Bank of Australia from 1938 until his death in March 1941. Prior to his appointment as Governor, Sheehan had a long and distinguished career at the Commonwealth Treasury. He played an important part in the formation of the Loan Council and, as its Secretary, was closely associated with the framing of the 1927 Financial Agreement and the internal debt conversion of 1931. Throughout the Great Depression of the 1930s, Sheehan had a prominent role in the formation of policy and acted as the Treasury’s chief advisor to the government. His work during this period aided Australia’s financial recovery and helped to establish the financial structure of the country. In 1932, Sheehan was appointed Secretary to the Treasury and, as a consequence, became a member of the Commonwealth Bank Board. He succeeded Sir Ernest Riddle as Governor of the Commonwealth Bank in 1938, achieving the almost unique distinction of heading both the Treasury and the Commonwealth Bank of Australia or its successor the Reserve Bank of Australia (something also achieved by Bernie Fraser).¹ Although his time as Governor was brief, Sheehan’s appointment helped strengthen the relationship between two of Australia’s foremost financial and economic institutions. He is often regarded as one of the nation’s greatest public servants of the first half of the 20th century.

Early career

Sir Henry (Harry) Sheehan began his career in the public service in 1903 when, at the age of 19, he joined the Commonwealth Treasury as a junior clerk. By 1912, his aptitude and proficiency led to his promotion to a specially created post in the Treasury accountant’s branch. Sheehan helped to prepare the 1912 budget before transferring to the Postmaster-General’s Department as chief ledger keeper at the Sydney General Post Office in 1913. He returned to Treasury in 1916 as the loans officer, a position he held until 1926. As loans officer, Sheehan played a prominent role in the raising of funds for the First World War and the post-war reconstruction. He also established an intelligence bureau to monitor governmental loan raising.

Loan Council

The Loan Council was set up in 1923 as a voluntary arrangement to coordinate the processes for raising loans to meet the borrowing requirements of the Commonwealth and state governments and to avoid competition between them for funds on capital markets. Sheehan took an important part in the formation of the Loan Council and was Secretary from the time of its inception until his appointment as Secretary to the Treasury in 1932. As Secretary of the Loan Council Sheehan was closely associated with Prime Minister Stanley Bruce in framing the 1927 Financial Agreement which, among other things, gave the Loan Council statutory powers to regulate Commonwealth and state borrowing. From his key role in these negotiations, Sheehan emerged as an important adviser to the government. During this period he also received a promotion within Treasury to Assistant Secretary dealing with administration, particularly departmental administration and loan matters.

The Great Depression

Some of the most important work Sheehan completed as Assistant Secretary was carried out during the economic crisis caused by the Great Depression. His skills and organising abilities gained as loans officer during the First World War greatly aided the successful internal debt conversion of 1931, which used a conversion loan to lower the rate of interest on all internal government debt, amounting to £556 million, by approximately 22.5 per cent.

His position as Treasury’s chief adviser to the government and Secretary to the Loan Council led him to be closely involved with the framing of the Premiers’ Plan. Sheehan represented the Commonwealth Treasury and Under-Treasurers of all states except NSW on the committee appointed by the Loan Council to present a report analysing the financial and economic position of the country to the Premiers’ Conference in 1931. His advice, which stressed the need to revive public confidence and equitably share the burdens of the Depression among the community, appears to have helped persuade the Treasurer, EG Theodore, to accept the Premiers’ Plan. Sheehan’s work during the Depression did much to establish the financial structure of the Commonwealth. Upon his death only a decade later, Acting Prime Minister Arthur Fadden commented that ‘during the tremendously difficult period of the Depression of 10 years ago he did magnificent work, and a great deal of the credit for Australia’s financial recovery must be attributed to his untiring work and skilful handling of the intricate and delicate problems of that time’ (RBA Archives GHS-P).

Secretary to the Treasury

In April 1932 Sheehan replaced James Heathershaw as Secretary to the Treasury. As a consequence he became Secretary to the National Debt Commission and was appointed to the Commonwealth Bank Board. Prime Minister Joseph Lyons granted Sheehan six months leave from this position in 1933 to act as principal financial advisor to Australian resident minister Stanley Bruce at the World Monetary and Economic Conference in London. He remained in London for some months after the conference, engaged in special duties at the British Treasury. That same year Sheehan also represented Australia at the League of Nations Assembly.

During the 1936–37 Royal Commission on the Monetary and Banking Systems, Sheehan worked with the Treasurer, Richard Casey, to prepare the terms of reference. He also acted as the principal Treasury witness supporting the need for stronger controls over private banks and highlighting the shortcomings of the existing mobilisation scheme. Sheehan was knighted in 1937.

Governor of the Commonwealth Bank

When Sir Ernest Riddle retired as governor of the Commonwealth Bank of Australia in March 1938 due to ill health, the position was offered to Sheehan. Although there was some controversy over his appointment due to his lack of banking experience, the appointment was supported by the Treasurer, RG Casey, and the Commonwealth Bank Board were unanimous in their recommendation of Sheehan as Riddle’s replacement. Taking up the position on 1 March 1938 for a seven-year term, Sheehan was the first person to head both the Commonwealth Bank and Treasury.

With the threat of war growing, much of Sheehan’s efforts as Governor were directed towards preparation. He began negotiations for regulations for exchange control with the Bank of England to prevent a flight of capital, which were circulated just before the war was declared. He also worked with the government to devise methods to finance war expenditure.

Sheehan’s term as Governor was cut short in 1941. After going on sick leave in January, Sheehan died of cancer on 26 March 1941. Although only three years long, Sheehan’s term as governor is associated with a stronger relationship between the Commonwealth Bank and Treasury and the Bank’s acquisition of stronger central banking functions.

Footnotes

¹ Bernie Fraser was appointed Governor of the Reserve Bank of Australia in 1989 following his appointment as Secretary to the Treasury in 1984.

This information is drawn from records held by the Reserve Bank of Australia and the following external sources:

Cornish S (2010), ‘Sheehan, Sir Henry John (1883-1941)’, Australian Dictionary of Biography, National Centre of Biography, Australian National University, viewed 5 July 2021. Available at <https://adb.anu.edu.au/biography/sheehan-sir-henry-john-8410/text14771>.

Giblin LF (1951), The Growth of a Central Bank: The Development of The Commonwealth Bank of Australia 1924-1945, Melbourne University Press, Carlton.

Schevdin CB (1970), Australia and the Great Depression: A Study of Economic Development and Policy in the 1920s and 1930s, Sydney University Press, Sydney.

Tilley P (2019), Changing Fortunes: A History of the Australian Treasury, Melbourne University Press, Carlton.

The majority of the records relating to Sheehan’s time as governor of the Bank can be found in the Bank Governors & Senior Personnel Series which are available on this site.

Research Department Series also includes documents created by and relating to Sheehan due to his work at Treasury and with the Loan Council. Some of these material are currently available on this site.

The following materials are not currently available on this site. To request to view these materials please contact the Archives.

• S-h38-1 Secretary's Department - Braban, T.H. - Congratulatory Message - Sir Harry Sheehan, Appointment as Governor
• BM-38-1 Bank Management - General Correspondence - Board Members Correspondence - Sheehan, Sir Harry
• AC-a-19 Actuary's Department - Commonwealth Unemployment Relief Scheme - New South Wales - 1932 - 1934
• AC-a-20 Actuary's Department - Commonwealth Unemployment Relief Scheme - Queensland - 1932
• AC-a-21 Actuary's Department - Commonwealth Unemployment Relief Scheme - South Australia - 1932
• AC-a-22 Actuary's Department - Commonwealth Unemployment Relief Scheme - Tasmania - 1932 - 1934
• AC-a-23 Actuary's Department - Commonwealth Unemployment Relief Scheme - Victoria - 1932 - 1934
• AC-a-24 Actuary's Department - Commonwealth Unemployment Relief Scheme - Western Australia - 1932
• AC-a-51 Actuary's Department - National Debt Commission - Agenda Papers & Minutes - 1929 - 1934
• AC-a-52 Actuary's Department - National Debt Commission - Agenda Papers & Minutes - 1935 - 1937
• AC-a-65 Actuary's Department - National Debt Commission - London Funds - 1935 - 1937
• AC-a-66 Actuary's Department - National Debt Commission - Miscellaneous - 1932 – 1949
• AC-a-68 Actuary's Department - National Debt Commission - Sinking Fund Transactions - 1930 - 1949
• AC-a-70 Actuary's Department - N.S.W. Government - Loans - 1927 - 1950