the world of private banking

‘HAUtE BANqUE’ AND tHE INtERNAtIONAL EcONOmy 133
Furthermore, under assets, three entries include foreign holdings. First, the
current accounts of debtor clients (who represent a quarter of the total), among
which we often find some large foreign accounts mentioned (for example for the
Bank of Mauritius) which make up almost half of this entry.
Next the portfolio of bills of exchange (some 40 per cent of the assets): here
the foreign bills are still mixed with provincial bills, and in this case they together
represent a value greater than the amount of bills of exchange on Paris; however,
this is often the reverse in the inventories of neighbouring years. A good proportion
of the banking business of the house of Mallet therefore concerned internal trade.
The asset heading ‘public funds and industrial securities’ includes the
securities held voluntarily by the house and the remainder of those that the bank
has been charged to issue but has not yet had the time or possibility to place with
its clientele or sell on the Stock Exchange. The entry, which represents in this case
between 20 and 37 per cent of the jobs for the years considered, is in numbers of
securities, four times higher for French securities than for foreign securities. Even
if there are sizeable packets among these foreign securities (143,000F of stock in
the State of Pennsylvania, 95,000F of securities in Russian railways, 108,000F of
shares in Austrian railways, 107,000F of shares in gas in Mechlin, etc.), foreign
securities only represent a small part of this portfolio of securities (15 per cent in
1860, and at most 30 per cent in adjacent years).
A quick analysis of the Mallet balance sheets around 1860 therefore leads us
to conclude that for this house of the Haute Banque the main portion of its credit
openings and transferable securities were still within France. Certainly, these
balance sheets do not allow us to measure the considerable volume of operations
relating to exchanges, particularly the negotiation of bills of exchange, which was
from the start the speciality of these houses. As stated by H. Lefevre, who presented
himself in his work of 1880 on The Exchange and the Bank as ‘the former personal
secretary of the late M. le Baron James de Rothschild’, the bulk of exchange trading
was due to the volume of trade France had with foreign countries. At that time he
estimated it to be 8 thousand million francs towards France, made ‘through a small
number of banking houses of the first order’. in other words through the services
of the houses of the Haute Banque: they handled complex operations well, ‘in the
way in which they carry out the liquidation of reciprocal agreements between the
different markets’. Their role was therefore considerable, and they made large
profits because the ‘small commissions’ that they charged for these exchange
operations mounted to enormous sums. These exchange operations, which leave
little trace in the balance sheets, are also missing from the other sources available
to us. These relate more to the subject of extraordinary operations (large credits,
large issues of securities) than to daily business, which was boringly routine. We
must add that there was a trade surplus between France and Britain up until around
1860, whereas in the same period trade between the rest of continental Europe
H. Lefevre, Le Change et la Banque (Paris, 1880).