Australian Dictionary of Biography

Sir Henry John Sheehan (1883-1941), public servant and banker, was born on 27 December 1883 at St Kilda, Melbourne, son of Australian-born parents Acquilla Arthur Sheehan, railwayman, and his wife Elizabeth Malcolm, née Forrester. Educated at state schools and at South Melbourne College, he was briefly employed in the Victorian Department of Education. In June 1903 he transferred to the Commonwealth Treasury, gaining one of three places available, with Stuart McFarlane who eventually succeeded him as Treasury secretary. In January 1908 Sheehan was admitted to membership of the Incorporated Institute of Accountants, Victoria, having gained first place in the final examinations, and qualified also to hold a licence from the Victorian Auditors' Board.

In July 1912 he was promoted through the ranks to a post especially created in the Treasury accountant's branch. To his departmental head he was 'undoubtedly the best junior', having 'the mental aptitude to grapple with the difficult questions which constantly arise in the Treasury Department'. Sheehan had helped to prepare the 1912 budget, but in July 1913 he joined the Postmaster-General's Department as chief ledgerkeeper at the Sydney General Post Office. On 5 November 1913 he married Mabel Levenia Cust at Camberwell, Melbourne, with Churches of Christ forms.

He returned to the Treasury as loans officer (1916-26) following a brief secondment in 1916 to the finance branch of the Department of Defence. Directly responsible to the secretary on loan raising, Sheehan established an intelligence bureau to monitor governmental loan raising. In 1922 he was invited by the administrator of New Guinea to reconstruct the Territory's accounting system. The necessary three months leave at Rabaul was refused, because he could not be spared.

As secretary (1923-32) to the Loan Council, Sheehan was closely associated with Prime Minister (Viscount) Bruce in framing the 1927 Financial Agreement between the Commonwealth and the States. In August 1926 Sheehan became one of two assistant secretaries dealing separately with finance and administration. Appointed to administration, he dealt chiefly with loan matters and departmental administration—in effect, as deputy to the secretary. At critical times in the following years he was acting secretary to the Treasury. The department had moved to Canberra in 1927. In 1928 he was appointed C.B.E.

Throughout the Depression he was the Treasury's chief adviser to the Commonwealth government. Successful loan conversions in 1930 and 1931 were attributable largely to his organizing skills, acquired in managing successive war loans. His advice at the Premiers' Conference in 1931, stressing the need to revive public confidence and the equitable sharing of the burdens of the Depression among the community, appears to have been decisive in persuading the treasurer, Edward Theodore, to accept the Premiers' Plan. Prime Minister James Scullin commended Sheehan's 'loyal and conspicuously efficient service … throughout a very trying period', and Theodore told James Heathershaw that Sheehan's 'untiring devotion to duty and great ability entitles him naturally to be your successor in due course'.

In October 1930, during the 'battle of the plans', Sheehan furnished acting treasurer Joe Lyons with a programme to stabilize the economy involving depreciation of the exchange rate to benefit primary producers, the stabilization of internal prices by means of monetary policy, co-operation with trading and state savings banks to reduce interest rates, and an arrangement with the banks to provide credit to industry. This plan, allowing a mild degree of expansion, and reflecting Sheehan's preference for monetary rather than fiscal policy and for exchange rate adjustment to facilitate recovery, was defeated in Federal caucus by the more expansionary scheme supported by Theodore.

In April 1932 Sheehan replaced Heathershaw as secretary to the Treasury. He was appointed consequently to the board of the Commonwealth Bank and was secretary to the National Debt Commission. Lyons granted him six months leave in 1933 to serve as principal financial adviser to Bruce at the World Monetary and Economic Conference. He was appointed a delegate to the League of Nations and throughout the 1930s was a corresponding member of its fiscal committee. During several months at the British Treasury he advised on the conversion of Australian public debt held in Britain.

In 1936, as principal Treasury witness before the royal commission on Australian monetary and banking systems, Sheehan supported the use of Treasury bills in moderation as a short-term instrument of public debt management and endorsed the 1930 Mobilization Agreement on a permanent rather than a voluntary basis. In order to render the Commonwealth Bank's control of the exchange rate effective, he recommended that the private banks should be compelled to lodge with it a variable percentage of their deposits. He opposed decimal coinage because it would impair commercial relations with Britain.

Sheehan exhibited exceptional administrative acumen and was adept at identifying politically feasible expedients. Though his formal training was limited, he was intuitive and possessed unlimited energy. As an architect of the 1927 Financial Agreement and the permanent Loan Council, which he served as chief administrative officer during the early years of the Depression, he played an important part in the transfer of economic power from the States to the Commonwealth that led to centralization of economic policy through the Commonwealth Treasury.

In 1937 Sheehan was knighted. When he succeeded Sir Ernest Riddle as governor of the Commonwealth Bank in March 1938, he achieved the unique distinction of having headed the nation's two principal economic and financial institutions. His appointment, however, was controversial. Within the bank he was criticized as an outsider and public servant lacking practical banking experience. However, his appointment had been recommended by the bank's board, and Treasurer Richard Gavin (Lord) Casey released him reluctantly only so as not to deny him a salary almost double that of Treasury secretary. In the result the appointment created a stronger and more harmonious relationship between the Treasury and the bank. Moreover, just as Sheehan's rise in the Treasury was associated with an acceleration of Treasury dominance over economic and financial policy, so his governorship was marked by the bank's acquisition of stronger central banking functions. As foreshadowed in his evidence before the 1936 royal commission, Sheehan sought, though without immediate success, to have a system of compulsory reserve deposits accepted both by the trading banks and the government, and to increase bank contributions of foreign exchange under the Exchange Mobilization Fund.

With war threatening, Sheehan began to negotiate regulations for exchange control with the Bank of England to prevent a flight of capital; they were promulgated on his advice six days before the declaration of World War II. More stringent monetary controls, including compulsory reserve deposits, were delayed until the wartime emergency regulations of November 1941.

Sheehan was president of the Royal Canberra Golf Club for many years. He died of cancer on 26 March 1941 in Sydney and was cremated after a service at St Stephen's Presbyterian Church. The Sydney Morning Herald recalled his 'inexhaustible industry and high ability' as one of the 'most brilliant officers' of the Commonwealth. Prime Minister Menzies, warmly acknowledged his 'complete grasp of all questions of finance' and his 'amazing help'. Lady Sheehan, two daughters and a son survived him. When an outstanding tax liability, threatening acute family hardship, was brought before cabinet in 1943 it was extinguished on the recommendation of the treasurer, Ben Chifley.