the world of private banking
the world of private banking
the world of private banking
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LONDON’S FIRSt ‘BIG BANG’? 91<br />
reply from Bates that ‘We consider ourselves a sort <strong>of</strong> Crédit Mobilier ourselves<br />
alone’. 71 Indeed, although <strong>the</strong> International was created by seven City merchant<br />
and merchant <strong>banking</strong> houses as a result <strong>of</strong> a proposal from Charles Mallet, it never<br />
had a formal connection with <strong>the</strong> Crédit Mobilier and severed any relationship<br />
with it after <strong>the</strong> Mexican loan debacle <strong>of</strong> 1864. The o<strong>the</strong>r major London-Paris<br />
institution, General Credit & Finance, nearly miscarried through <strong>the</strong> difficulties<br />
that arose in <strong>the</strong> creation <strong>of</strong> <strong>the</strong> Société Générale, its putative French partner. 72<br />
Never<strong>the</strong>less, this particular link was <strong>the</strong>reafter sustained, largely through Edward<br />
Blount, despite <strong>the</strong> post-1866 transformation <strong>of</strong> <strong>the</strong> General Credit into a discount<br />
house and its 1885 merger with Union Discount Corporation.<br />
With <strong>the</strong> exceptions <strong>of</strong> <strong>the</strong> International and, to a much lesser extent, <strong>the</strong><br />
General Credit, <strong>the</strong> finance companies <strong>of</strong> <strong>the</strong> mid-1860s were generally not some<br />
form <strong>of</strong> institutionalization <strong>of</strong> <strong>private</strong> English <strong>banking</strong>, whe<strong>the</strong>r City or provincial.<br />
Members <strong>of</strong> <strong>the</strong> London Financial’s board provided it with some links to jointstock<br />
<strong>banking</strong>, both provincial (National Provincial), and London (City Bank) and,<br />
possibly, a more tenuous connection with Overend, Gurney. The General Credit’s<br />
directorate had only one such interlock (Alderman Salomans with <strong>the</strong> London<br />
& Westminster), and likewise, <strong>the</strong> English & Foreign Credit with <strong>the</strong> Alliance<br />
<strong>of</strong> London & Liverpool. Ra<strong>the</strong>r, most were second-rate affairs or even bucket<br />
shops that during <strong>the</strong> mid-1860s took advantage <strong>of</strong> <strong>the</strong> gullible investing public’s<br />
apparently almost insatiable appetite for <strong>banking</strong> and financial shares, whatever<br />
<strong>the</strong>ir provenance. The example is <strong>the</strong> Crédit Foncier and Mobilier <strong>of</strong> England, <strong>the</strong><br />
mid-1860’s vehicle <strong>of</strong> Albert Got<strong>the</strong>imer/Grant. It first appeared in January 1864<br />
as <strong>the</strong> Crédit Foncier with a largely Irish directorate, promoted by <strong>the</strong> Mercantile<br />
Credit Association, whose manager, Henry John Barker, had been associated<br />
with Got<strong>the</strong>imer in <strong>the</strong> Mercantile Discount <strong>of</strong> 1859–61. Very quickly, <strong>the</strong> Crédit<br />
Foncier and <strong>the</strong> Mercantile Credit gave birth to <strong>the</strong> Crédit Mobilier, a clone <strong>of</strong> <strong>the</strong><br />
Foncier through having <strong>the</strong> same board and manager, who now styled himself as<br />
Grant. The identical twins had merged by <strong>the</strong> close <strong>of</strong> <strong>the</strong> year and <strong>the</strong> resulting<br />
institution claimed over <strong>the</strong> opening months <strong>of</strong> 1866 to have a relationship with<br />
<strong>the</strong> Paris Crédit Mobilier which assisted nei<strong>the</strong>r. 73<br />
The main activities <strong>of</strong> <strong>the</strong> finance companies initially comprised foreign and<br />
domestic company promotion, primarily <strong>the</strong> former, which was almost an entirely<br />
new field that had been opened up by <strong>the</strong> 1855/6 liberalization <strong>of</strong> company law.<br />
Amongst <strong>the</strong>ir new creations were financial institutions, home and overseas. 74 Such<br />
71<br />
Guildhall Library, London [henceforth GLL]: papers <strong>of</strong> A. Gibbs & Sons [henceforth<br />
Gibbs Papers], Ms 111036/3, H.H. Gibbs Private Letter Book, to W. Gibbs, 1 May 1863;<br />
and see Cottrell, Investment Banking, vol. I, pp. 129–58.<br />
72<br />
See Cottrell, Investment Banking, vol. I, pp. 104–7.<br />
73<br />
See Cottrell, Investment Banking, vol. I, pp. 111–12, 118, 120, 127.<br />
74<br />
Apart from those already mentioned in <strong>the</strong> text, <strong>the</strong>y comprised during <strong>the</strong> mid-<br />
1860s: Albert Insurance, Anglo-Egyptian Bank (with Agra & Masterman’s), British<br />
Columbia & Vancouver’s Island Investment, International Land Credit, Land Mortgage