the world of private banking

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THE WORLD OF PRIVAtE BANKING
exclusively on providing financial services for the American foreign-trade market.
By the mid-1840s the Browns had supplanted the Barings as the leading Anglo-
American house providing services to American importers and exporters, a
leadership position that the partners never surrendered throughout the remainder
of the nineteenth century.
The Browns were enormously successful in serving the US foreign-trade
market because of their truly unique organizational structure. The firm had critically
important branch offices, manned by partners or salaried employees, on both sides
of the Atlantic Ocean. The offices in New York and Liverpool, with the latter
superseded by London in 1863, served as dual headquarters. The entire operations
of the firm were carefully coordinated and closely monitored. The Browns adopted
uniform policies and procedures at all their offices, which included – in addition to
New York, Liverpool, and London – branches in Boston, Baltimore, Philadelphia,
New Orleans, and Mobile, Alabama. Many non-family members joined the house
as lowly clerks and advanced through the ranks. Except for William Brown, all
the directing partners in the British branches were British nationals, among them
Joseph Shipley – thus the famous branch office title of Brown, Shipley & Co. At a
later date, Mark Collet and Francis Hamilton shared the managerial duties. Collet,
incidentally, became governor of the Bank of England in 1887.
Unlike the hesitant Barings, the Browns proved willing to make a strong
commitment to the US trade sector. For more than half a century, they assiduously
built the organizational capacities to succeed over the long run, and their carefully
laid plans eventually translated into a profitable reality. The partners focused
on the activity that they knew best, which was serving the requirements of the
American foreign-trade sector. From 1840 to 1857 the firm’s capital account grew
at a rate of 5.5 per cent annually – not as fast in the previous twenty years but still
a respectable performance. The Browns constantly reinvested a high proportion
of their earnings in their thriving enterprise. In only one exceptionally bad year
during this period, 1842, did the partners’ withdrawals exceed profits.
Unlike most of their competitors, including George Peabody, the Browns
breezed though the worst moments of the Panic of 1857 without seeking aid from
the Bank of England and without suffering any serious losses. On the eve of the
American Civil War, the partnership was flying high. Reminiscent of the status of
the Barings at the end of the 1830s, the Browns were thoroughly ensconced as the
undisputed leaders of the Anglo-American merchant-banking community at the
end of the 1850s, and the partners were exceedingly proud of their achievements.
But developments subsequently turned sour for the Browns as well, and they
eventually fell off the Anglo-American pedestal. Million-dollar underwriting
of government bonds and railroad securities became routine in the US capital
markets, and portfolio transactions soon overshadowed the volume of activity
in the more mundane foreign-trade sector. While the Browns ranked among the
leaders in financing the trade sector through the 1890s, that sector’s relative
importance within the Anglo-American economy continued to fade. In the first
decade of the twentieth century, a number of American commercial banks with