Wallace Brothers
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The Wallace brothers were the six sons of Edinburgh architect Lewis Wallace. In varying combinations, the brothers established themselves as one of the leading nineteenth century East India merchants, trading in cotton, tea, coffee and other commodities. Through their investments in Burma, they became the world’s leading exporter of teak. The rise of independent governments after World War II meant the progressive loss of the family’s Eastern assets and the redeployment of capital back to London. This capital was used in the 1960s to establish Wallace Brothers as a banking house but this strategy did not long survive the secondary banking crisis of 1973-75.
Company Structure
It is important to understand that Wallace Brothers was not a single entity. In a general sense, the brothers were the six sons, born between 1818 and 1836, of Edinburgh architect and builder Lewis Alexander Wallace. In order they were William (1818-88); Richard (1819-85); Lewis (1821-1906); George (1824-1903); Robert (1831-78); and Alexander (1831-1925). All worked as East India merchants; all worked together sometimes, but not always, and in different combinations. Thus, the London partnership of Wallace Brothers was formed in 1863 by Lewis and George, with Richard joining in 1865; the other three brothers did not join. Wallace & Co was the Bombay (now Mumbai) company in which most of the brothers seemed to participate at different times and in different capital amounts. Individual partnerships, often with non-family members, were found in peripheral parts of the business both in England and India. It was William alone who developed the Burma business, largely financed by Wallace Co; this was later capitalised as TheBombay Burmah Trading Corporation. Thus, the three main entities through the nineteenth century were Wallace Brothers in London; Wallace & Co in Bombay; and Bombay Burmah Trading in Burma. In the text they will be referred to as Brothers; Wallace & Co; and Bombay Burmah; more names will appear in the twentieth century text. [1]
From London to Bombay
The impetus for the brothers becoming Eat India traders was Lewis senior’s provision of capital to J G Frith, a merchant well established in the Bombay trade.[2] The eldest son William was the first to go to Bombay in 1841 but disliked it and came back to London to form a partnership with Frith called Frith Wallace. Next, Lewis went to Bombay in 1844 to work in the local Frith business, taking it over in 1848; this was the start of the Bombay firm of Wallace & Co. Back in London, Frith Wallace was dissolved in 1847 and a new firm of Frith Sands was formed with William as a partner; they worked closely with Wallace & Co.in Bombay. In 1850 George joined Lewis in partnership in Wallace & Co. in Bombay followed in 1853 by William and then Robert and Alexander. The Wallace & Co partnership was formally incorporated in 1862 by all the brothers except William. The business between London and Bombay was the traditional one of shipping agents trading cotton, coffee, pearls, etc. later importing cotton goods from Manchester, which became their leading activity. [1]
Bombay to Burma
The expansion of the railways in India led to a demand for teak from Burma. In the mid-1850s Wallace & Co contracted a delivery of teak but there were delivery problems and William, the eldest brother, was sent out to resolve them. He liked the opportunities there and based himself in Rangoon, supplying teak to India. He bought land and property, built a saw mill and even began shipbuilding. Although he operated as a sole trader, the finance came from Wallace & Co and the extent of loans began to put pressure on the relationship between the five brothers in Bombay and William in Rangoon. The solution was a public flotation of The Bombay Burmah Trading Corporation in 1863. In the following year, William transferred all the assets for a cash sum and retired to London, taking no further interest in the family businesses. In typical agency style Wallace & Co was to be the Secretary and Manager. For all that Bombay Burmah was an independent public company, control remained firmly in Wallace hands until 1956 and it was to provide an important part of Wallace & Co profitability. As a footnote, William also received ten per cent of the shares as Founders shares, which entitled him to one-third of the profits in excess of a given level of dividend. These Funders shares were to exist for as long as they remained in William’s name; this provoked a major controversy after his death in 1888 as the Wallace family remined the shares in his name in the executor’s account. [3]