the world of private banking

CHAPTER 6
The Anglo-American Houses in the
Nineteenth Century
Edwin J. Perkins
This chapter focuses on the activities of the major Anglo-American merchant
banking houses during the nineteenth century. My goals here are twofold. First,
I plan to review briefly the most important institutional trends in the Anglo-
American trade and capital markets over the course of several centuries to provide
the proper background. Second, I will discuss the main accomplishments and
shortcomings of the leading firms in this dynamic market, with comparisons and
contrasts included where appropriate. Let me warn readers in advance that I will
devote a disproportionate amount of time and space to the House of Brown, an
important firm in the Anglo-American market with Baltimore origins. I wrote a
detailed book on the Brown partnership over two decades ago. I know the Browns
best, and I will draw on my prior strengths in this context. I also intend to focus
my attention primarily on events on the American side because, again, I am much
more familiar with that scholarly literature. With these prejudices and limitations
cited, we may now proceed with the discussion.
The Anglo-American financial sector passed through four distinct phases
from British colonization in the early seventeenth century through the end of
the nineteenth century. These four stages were: 1) an absence of institutional
specialization, 1600 to 1790; 2) an institutional emphasis on trade and trade
financing, 1790 to 1820; 3) a mixture of trade-related activities and portfolio
investments, 1820 to 1860; and 4) an emphasis on large capital transfers through
portfolio investments, 1860 to 1900. The overall trend was to downplay the trade
sector and to move toward the capital markets. Irrespective of the purpose of the
funding, during this entire era the flow of trade credit and long-term capital was
invariably from Europe across the ocean to North America.
Throughout most of the colonial era in British North America, a period of
over 150 years, the transatlantic institutional linkages between the providers of
various financial services were never very strong, and few, if any, linkages were
enduring. Indeed, the word atomistic immediately springs to mind in describing
the institutional structure of this immature market. The financial services provided
The best book on merchant banking in Britain is S. Chapman, The Rise of Merchant
Banking (London, 1984).
E.J. Perkins, Financing Anglo-American Trade: The House of Brown, 1800–1880
(Cambridge Mass., 1975).