How goldfields supply spawned an empire
By WILLIAM MACE - BusinessDay.co.nz
When the Rev Rutherford Waddell gave a sermon on "the sin of cheapness" in 1888, referring to the sweatshop conditions of Dunedin's factories, Bendix Hallenstein was the only prominent businessman to side with the workers' movement.
Bendix Hallenstein was "a man of ceaselessly fertile mind". As founder of the Hallensteins clothing empire, which at its peak had 72 stores nationwide, you would have to agree with this character summation by the author of the company's history – even after you realise the author is Hallenstein's own great-grandson, Charles Brasch.
But Brasch does not overstate his great-grandfather's attributes in the 1973 book, letting his deeds speak for themselves.
The second chapter, entitled Beginnings, continues: "He was continually thinking up schemes for new enterprises large and small, and ways of raising money to finance them. He was continually buying and selling property; he backed a variety of undertakings by putting money into them, and bought and sold as their agent."
It was a case of a fertile mind ploughing fertile ground when Mr Hallenstein made New Zealand's South Island his home turf.
Born and raised in Germany, he and his two older brothers came to Invercargill in 1863, by way of Daylesford in the Victorian goldfields. But the Hallensteins were not gold-panners; they sought to make their mark in commerce. While his brothers returned to Melbourne and London respectively, he set himself up further inland, with general stores in Queenstown, Arrowtown, Cromwell and Lawrence.
He established a flour mill at Kawarau Falls (the remains of which can still be seen) and grew wheat, oats and fruit on land at Speargrass Flat.
Mr Hallenstein served as mayor of Queenstown between 1869 and 1872, represented The Lakes on the Otago Provincial Council from 1872 to 1875 and was a Member of Parliament from 1872 to 1873.
It was the difficulty in obtaining men's clothing for his stores that persuaded Mr Hallenstein to establish the New Zealand Clothing Factory in Dunedin in 1873. He and his brothers pooled some capital and made the operation a reality, although Bendix's move from Queenstown to oversee the business was disrupted when a runaway horse overturned his carriage and he was left with a badly broken leg.
Stuck in Queenstown, he sent instructions to JF Anderson, his manufacturing manager in Dunedin, setting out his expectations: "[The business] will require three heads. First, one whose sole study and attention will be required for the manufacturing. Second, one who has full charge of the counting-house and can, if necessary, take customers in hand. Third, one who is the principal salesman and traveller and who would perhaps in conjunction with No 1 do the ordering and buying. I feel confident with these three elements, all competent and pulling well together, our business can be made one of the largest and most profitable in New Zealand."
Quite a business plan, although Mr Hallenstein's fortunes were not at all guaranteed from that early stage. He wanted to open retail outlets from the start, but the other two main "heads" dissuaded him, putting all their focus on the manufacturing operation. By mid-1875 Hallenstein had warehouses full of stock and little cash to show for his production.
Mr Hallenstein eventually sold the property to the National Insurance Company for 11,000 on the condition they rent it back at 700 a year. The capital raised enabled him to buy shops of his own and get stock off the factory floor and into the hands of Dunedinites.
His first store opened in the Octagon in 1876, accepting cash only and advertising a single garment at a wholesale price – about 25 per cent on cost. He also opened shops in Christchurch and Timaru later that year, and in Wellington and Oamaru the year after. Through 1878 and 1879 the business opened shops in Auckland, Napier, Ashburton, Wanganui, Invercargill, Nelson, New Plymouth and Thames.
By 1900 there were 34 Hallenstein shops nationwide – only four fewer than exist today.
In 1883, the company's 350 staff moved into a new purpose-built factory in Dunedin. Soon after, Mr Hallenstein seeded an employee fund from which the interest was used to pay for medicine for staff.
When the Rev Rutherford Waddell gave his sermon on "the sin of cheapness" and called for a royal commission, "at a big public meeting", according to the history of Hallensteins, "Bendix Hallenstein supported him, declaring his sympathy with the movement and stating that he and his partners would sooner give up manufacturing than carry it on at the starvation rates being offered by contractors".
On June 5, 1890, a journalist from The Marlborough Express detailed Hallenstein's attitude towards the changing labour standards of the time: "The fact that amid all the turmoil of labour ... the employees of the Clothing Factory have stuck to the firm is in itself an argument that is unanswerable in favour of the Hallenstein administration.
"Mr Hallenstein spoke of the labour problem with deliberation, with hopefulness and with some apprehension. As one whose innate sense of justice enables him to grasp the situation and to prepare cheerfully for a regime to which he has no objection to urge, he regards the agitation at present going on as both irresistible and justifiable ... the experience of one so competent to speak on the subject is valuable testimony."
"Agitation" from workers and The Otago Daily Times, and the co-operation of men like Mr Hallenstein, led to the formation of the Dunedin Tailoresses Union in 1889. Mr Hallenstein also founded the Drapery and General Importing Company in 1884, later known as DIC, which was one of the first Dunedin department stores to dispense with prim and proper Victorian conventions and welcome "middle New Zealand" into its showrooms.
MR HALLENSTEIN'S legacy in New Zealand – and especially in Dunedin – emanated from his egalitarianism through the social and cultural tendencies of his descendants even after his death in 1905. His three daughters were brought up in the Jewish tradition even though his wife Mary, an Englishwoman he met in Australia, remained Anglican.
The daughters learned French, German and Hebrew and travelled to Europe where the eldest daughter Sara met and married Willi Fels. Mr Fels moved to New Zealand where he became a director of both Hallensteins and DIC. He was also a widely travelled collector and donated much of his massive stockpile to the Otago Museum.
Mr Fels' eldest daughter married Henry Brasch. Their son Charles, following his mother's death, was largely brought up in the Fels household. After a short and "uncongenial" employment with Hallensteins, Charles became one of New Zealand's foremost literary figures, founding the literary journal Landfall in 1946. He authored Hallensteins – The First Century just months before his death in 1973.
Another of Bendix Hallenstein's daughters married Isadore de Beer, whose three children Esmond, Mary and Dora fostered a love of literature and the arts. The University of Otago Library received the bulk of Esmond's rare book collection and in association with their cousin Charles they were instrumental in establishing the Frances Hodgkins, Robert Burns and Mozart fellowships at the university.
The family also presented the Dunedin Art Gallery with works such as Zanobi Machiavelli's Madonna and Child in 1982, and 170 others.
Like many pioneers in New Zealand's short history, Bendix Hallenstein's relentlessly industrious attitude, his will to succeed, and his ability to recognise such qualities in others has spawned both commercial and cultural precedents. It is only fitting that 105 years after his death he officially joins New Zealand's business elite.
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