William James Mudie Larnach was born on 27 January 1833 at Castle Forbes, on the Hunter River, New South Wales, Australia, the son of John Larnach, a station owner of some means, and his wife, Emily Mudie. He had brief experiences of gold-digging and farming before entering the service of the Bank of New South Wales around 1850. After seven years he became manager of the Ararat branch, and later the Geelong branch, both in Victoria. His banking career was fostered by his uncle, Donald Larnach, a director and London manager of the Bank of New South Wales, who provided him with valuable introductions into British financial circles. Also of great assistance in William's career was his friendship with W. J. T. Clarke of Melbourne, possibly the richest man in Australasia at that time. On 21 June 1859, at Brighton, Melbourne, Larnach married Eliza Jane Guise, daughter of a prosperous squatter.
Larnach resigned his position at Geelong in 1866 and accepted the general management of the Bank of Otago in Dunedin, New Zealand. Although the bank was small and in difficulties, he proclaimed his certainty that he could retrieve its fortunes. The business world of Dunedin, so largely transplanted from Victoria, hardly presented Larnach with an unfamiliar environment. Some of his closest friends in Australia now resided there. Within a week of his arrival in September 1867 he visited Otago Peninsula and resolved to acquire land and build there. The fruit of this ambition was his famous residence, The Camp, popularly known as Larnach's Castle, and intended as 'a monument to my enterprise.' He took up residence in 1874.
Larnach invested heavily in land speculations and indicated that they were earning him around £10,000 a year during the mid 1870s. With his recently bankrupt friend, Henry Driver, and financial assistance from Joseph Clarke, son of W. J. T. Clarke, Larnach acquired the pastoral runs of Eyre Creek, Middle Dome, Longridge and Conical Hills. In 1873 he entered a timber and hardware venture with Walter Guthrie. The business was conducted on a grand scale and Larnach claimed that it employed 500 more men than any other firm in the colony. It was incorporated in 1877 as Guthrie and Larnach's New Zealand Timber and Woodware Factories Company, but Larnach remained a major shareholder.
Even at the peak of his prosperity, however, Larnach was dogged by troubles. He was fortunate to escape prosecution for misconduct as agent of a London banker. He could not revive the Bank of Otago, which was absorbed by the National Bank of New Zealand in 1873. The London directors of the National were immediately suspicious of Larnach's management and disapproved of his large obligations to the bank. Larnach resigned in November. The following year he clashed with John Bridges, the bank's inspector, who produced scathing reports on Larnach's borrowing and charged him before the committee of the Dunedin Club with dishonourable conduct. Larnach retaliated with a crude attack on Bridges through the editorial column of the Otago Daily Times, which action created an immense excitement in the city.
Larnach's heavy borrowing requirements, both on his own account and for Guthrie and Larnach, made it difficult for him to find accommodation with another bank. Eventually the Bank of New Zealand risked accepting his business in anticipation of 'many collateral benefits from the connection.' This probably led to Larnach's first involvement in politics. Strong rumours circulated that Larnach had been 'put up' by the Bank of New Zealand to oppose Robert Stout's candidature in the Caversham by-election of 1875. Senior bank officials certainly went south to make an energetic canvass on his behalf. Larnach's plank on this occasion was the abolition of the provinces, but Stout prevailed in the poll. Four months later Larnach forsook his abolitionist stance and won the City of Dunedin seat.
Larnach emerged from political obscurity in October 1877 when, at the instance of the 'Middle Party', he successfully moved a vote of no confidence in the Atkinson ministry. Larnach then took office under Sir George Grey as colonial treasurer and minister for public works. He held these portfolios for six months before leaving for England to arrange a government loan. During his absence he was appointed a CMG, an honour which occasioned much astonishment in the colony.
One of Larnach's main purposes in making his trip was to float the New Zealand Agricultural Company. He and Driver had made a timely disposal of Conical Hills, but their Southland properties, along with those of other mortgagors to Joseph Clarke, were shrinking in value due to a rabbit plague. The idea behind the company was to sell these estates, at a price much above their real worth, to British investors. Larnach boasted that 'he had never failed in anything he tried', but despite this confidence the promotion of the company caused him much anguish. The scheme was nearly wrecked by the City of Glasgow Bank disaster and the morality of the whole proceeding was severely criticised by some of his business peers in New Zealand. His public image was injured by this affair, as were his friendships with Driver, Clarke and Julius Vogel.
On his return to Dunedin in 1881 Larnach faced a bleak future. The Agricultural Company was unprofitable and Larnach regretted not having sold his interest in it as soon as he left London. He became depressed and reclusive and dabbled in shares. Falling land prices revealed the folly of his ambitious land speculations. The woodware company suffered badly in the recession and recorded a crippling deficit in 1882. Larnach lost £60,000 when the company was wound up by the Bank of New Zealand. By this stage he was quite insolvent, The Camp and some remaining assets having earlier been vested in his wife. There was little left for his creditors, one of whom reported: 'I do not believe that anything more will be got out of Larnach.… The man is completely played out – is drinking again – and not the least likely to earn anything in the future worth [our] notice.'
Larnach's misery was compounded by the death of his wife in 1880. He married her half-sister, Mary Cockburn Alleyne, whom he had known since she was eight, on 7 January 1882, at Warrington, near Dunedin. She had kept company with him even before the death of Eliza. Mary Larnach died in 1887. On 27 January 1891, at St Paul's Church, Wellington, he married Constance de Bathe Brandon, the daughter of a Wellington solicitor.
Business affairs continued to cause him anxiety and left him conscious of being close to 'the edge of the ruinous cliff'. He cast around for a new career in Australia, contemplated emigration to South America, and eventually resolved to leave for Melbourne in 1888. There he entered a short-lived partnership with Vogel's brother-in-law, Montagu Pym. Losses on land and mining speculations left him utterly dejected and he returned after less than a year. Reflecting on this luckless episode he wrote, 'had I been a coward I would have committed suicide.'
Politics formed a partial outlet for his restless energies. He won the Peninsula seat in 1882 and sought government relief for the ailing New Zealand Agricultural Company. His expected inclusion in the Stout–Vogel ministries was delayed until 1885 when he was appointed minister of mines. In this capacity he distinguished himself for the zealous execution of his duties and his liberality with public funds. He conducted an inspection of mineral resources around the country and his travels were punctuated by acts of bravado and feats of horsemanship. Larnach was an athletic rider who could spend 12 hours in the saddle without food. It was said that he danced, sang and drank whisky with some of the miners he visited. He established schools of mine management and edited a comprehensive survey of the mining industry.
As a public figure Larnach was known for his practical jokes around Parliament, his 'robustious egotism' and 'rough and blundering modes of speech'. 'Rubicund of visage and slightly horsey in attire', he affected to be one of 'the genuine good old fellow school'. He could descend from his usual haughtiness and 'address the plebs in their vernacular'. This ability was thought to endear him to his working-class constituents in South Dunedin, but it did not save him from defeat in 1890, when he was thrust aside by the growing popularity of labour candidates.
Larnach regained a seat in the House of Representatives in 1894. Somewhat incongruously, he attached himself to the Liberals, although possibly more from friendship with Richard Seddon than out of approval of their policies. By then, however, his preoccupations were more of a private nature. Although his finances remained weak, he acquired 1,800 shares in the Colonial Bank of New Zealand and rejoined its directorate in 1894. His confidence in the bank was misplaced. The Colonial foundered in 1895 and Larnach complained that the complications in its affairs almost deranged his mind. It was apparently this misfortune and the accumulation of other worries which led him to commit suicide at Parliament Buildings on 12 October 1898. His deceased estate was valued at under £5,000 and its net worth might have been much less. He was survived by three daughters and two sons from his first marriage, his favourite daughter, Kate, having predeceased him. Her fate, and the profligate behaviour of the remaining family, had preyed upon his mind.
Larnach had little love for politics and looked upon business as his true calling. He participated in many commercial ventures in Dunedin and was well known in Melbourne. There is ample evidence of his popularity but an influential segment of Dunedin society regarded him with suspicion, even hostility. His contemporaries knew him to possess a changeable character. Jovial, persuasive and disarmingly vain, he could also appear moody and aloof. The need to maintain at any cost a show of material success, and to hide any trace of weakness or self-doubt, was a ruling instinct which exacted a heavy toll on his personal happiness.