The Velvet Glove of Harry Knight


Harry Knight, from 1980 Sir Harry, was Reserve Bank Governor from 1975-82. He died in 2015 at age 95. His grandsons include brothers Dominic and Jasper Knight, who have high public profiles as an ABC Chaser Boy (Dominic) and an award-winning artist (Jasper).

I wrote this piece largely as relief from the tedium of sitting through evidence to the Campbell Inquiry into the Financial System. I also used The Age to publish my original research into the proportion of top-tier bankers who do actually wear pin-striped suits.


The Velvet Glove of Harry Knight

Tony Thomas, The Age, 17/11/79

Like an ancient king, the Reserve Bank Governor, Harry Knight, appears seldom in public, and then always with dazzling effect.

He dazzled everyone at the Campbell finance inquiry the other day, radiating charm, humility and a penchant for Hamlet-like introspection.

The face that launched a thousand suasions is lean and ascetic, topped by a tousle of wispy grey hair.

He clothes his slender form in a very nice suit, with broad black and grey stripes, somewhat like the convicts in Sydney Nolan paintings.

And answering questions from the committee, he chirrups away as if he has not a care in the world, but is merely bandying pleasantries with six long-trusted chums.

All that was lacking was a fireside glow and a glass of port (1905 vintage) in hand, little finger slightly raised from the stem.

In every way, he is a credit to Melbourne’s Scotch College.

Just once that day the velvet glove slipped. He was asked by chairman Keith Campbell how odften the banks came cap in hand to Harry to get a lender-of-last-resort loan.

“Perhaps you will tell me if I am too wordy,” Mr Knight began – his usual line of patter while he worked out a sensible answer, which was –

“Use of the last-resort facility by banks has been infrequent and [he smiles like a white pointer shark] excruciating to them.”

Mr Campbell: “You would be referring to the interest cost? – Yes, sir.”

The younger Mr Knight had an unusual war career. He began with the AIF as a gunner on sound-ranging duties, then transferred to the navy to do hydographic work. There was nothing effete about that job. He served on small ships that used to scoot ahead of task forces moving to landings on Pacific islands. His boat would take soundings, under the eyebrow of the Japanese, to chart the invasion route – fairly dicey work as one bank colleague put it, which won Lt Knight a DSC.
Harry Knight’s only publication is titled Introduccion al Analisis Monetariok an obscure work in Spanish not yet translated into English.

His friends in the banking world told me that it is a novel about a bullfighter’s love for a communist spy in the Civil War, who was posing as a flamenco dancer in Franco’s headquarters.

But a Reserve Bank spokesman issued a strong denial. He said it was a collection of ten lectures on central bankng that the Governor gave in Mexico while he was doing a stint with the International Monetary Fund. He’s still fluent in Spanish.

The chatty Knight style is illustrated by his denial to Keith Campbell of Reserve Bank responsibility for the reduction in trading bank share of financial markets. He said there was a tendency of people to wave the statistics at him, and while he was ‘reeling from it’, people would say to him [he raised his arm and pointed accusingly], ‘It is all your fault!’

But he had to say, ‘Now that is a bit thick’ because there were a lot of bright people in the intermediation game carving out their own shares in any event.

“If you press me and say, ‘Come on Harry Knight, tell me what proportion of non-bank growth is attributable to your activities’, I have to smile sweetly and say, ‘I have no idea’,” he said.

Like Dickens Mrs Gamp, he is prone to invent people who then argue with him, saying ‘Harry Knight this and Harry Knight that’. Harry, in the course of these bouts, awards himself the last word and the crushing retort.

‘Are you watching for squalls, Harry Knight? Squalls can hit you without your being aware of it and you have to handle them real fast’, he warned himself once.

When the Treasury’s Fred Argy threw him the usual trap question, he replied winningly, “Mr Chairman, that is a lovely question and I am very grateful for it’. It was like watching a gentleman debating with a footpad.

The initial burbling by Mr Knight is characteristic. He operates like a champagne bottle, giving off a lot of froth before any genuine liquor emerges.

Sometimes it is hard to know if he is being sarcastic or merely effusive, as when he described the State savings banks (which tend to dodge the Reserve Bank’s network of controls) as ‘lovely people’.

He would love to relax the Bank’s controls over foreign exchange, but because of the disorders abroad, he would have to say with St Augustine, ’God, make me pure, but not yet’.

He agreed people might say to him: ‘It’s a fair while, Harry Knight, since we’ve had a wave of new foreign banks here’.

“Like the Presbyterian elder, I’d reply, “That is a great difficulty. Let us look it squarely in the face and pass on.” #



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