the world of private banking

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THE WORLD OF PRIVAtE BANKING
head of the partnership at about this time. Bates, who was born in Massachusetts
in 1788, had emigrated to London in 1816 or 1817, and had steadily progressed in
his business career. But Bates showed little partiality to his native land.
Under the leadership of Bates, the partnership exhibited a vacillating attitude
toward the American economy in the 1840s and 1850s. Bates recruited Thomas
Wren Ward, a Boston merchant, to serve as a general supervisor for all the Barings’
operations in the United States, and Ward was even made a junior partner in the
firm. But Ward had only limited influence over the independent houses that acted
as Baring agents in other US port cities. Always fearful of a repeat of the 1837
disaster, the Baring partners could never bring themselves to make an unshakeable
commitment to either the US trade market or the nation’s rapidly developing
capital market. Periodically optimistic and aggressive in their involvement in the
American economy during this period, the partners invariably pulled in their horns
at the first sign of potential disturbances.
Rather than taking the initiative and establishing a network of branch offices in
the main US ports, the Barings continued to work through a chain of independent
American agents. In several instances the partners had working arrangements
with two or three agents in the same port city, who competed with one another
for new business. In other words, to interject modern Chandlerian terminology
into this discussion, the Barings failed to take the steps necessary to build an
organizational structure with the potential to take optimum advantage of their
enviable competitive position at the end of the 1830s. The appointment of Ward as
their primary American agent was only a half-measure. As a consequence of their
failure to build a strong organizational network, other firms began to carve out
larger market shares in various sectors, leaving the Barings in their wake.
Perhaps one of the main stumbling-blocks to any greater expansion in the
US market was the fact that the Barings were simultaneously deeply involved in
business affairs in other regions of the world, including continental Europe. The
partners were unable to perceive at mid-century that one of their best opportunities
for maximizing future profits was in the US market. Other regions seemed
equally appealing. In trying to become and remain a global enterprise long before
that modern-day terminology had entered our vocabulary, the Barings spread
themselves too thin. To compound the problem, the partners regularly withdrew
a large proportion of their yearly profits, which kept the capital base stagnant.
The maintenance of a luxurious standard of living was more important to many
partners than the growth of the enterprise. Several members of the Baring family
also served in Parliament and thus became distracted by politics. Reservations
about adding new partners, especially permanent non-British residents, may also
have inhibited the Baring partners from pursuing expansion plans abroad.
Given all these factors, the Barings’ failure to commit greater resources, both
capital and personnel, to the United States gave other firms the opportunity to
make inroads. By the 1850s the Browns had inherited the leadership position in
Chapman, Rise of Merchant Banking, p. 27.