the world of private banking
the world of private banking
the world of private banking
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138<br />
THE WORLD OF PRIVAtE BANKING<br />
In comparison with <strong>the</strong> early 1860s, <strong>the</strong> balance sheet total rose from 19 to<br />
45 million francs (and even 47 million in 1912) and <strong>the</strong> pr<strong>of</strong>its, although very<br />
irregular, translate into a strong upwards trend; considering that <strong>the</strong>y were zero<br />
in 1913, over 900,000F in 1910 and 1911, and 742,000F in 1912, this gives an<br />
average over <strong>the</strong> four years <strong>of</strong> more than 600,000F compared to 150,000F in 1860.<br />
This progress was achieved with a capital <strong>of</strong> 5 million francs, which had changed<br />
little (it was 4.5 million in 1865).<br />
In France <strong>the</strong> house no longer resembled its original form: with a certain<br />
amount held in <strong>the</strong> new businesses, overall it satisfied itself by maintaining its<br />
position in <strong>the</strong> sectors where it had operated for a long time, such as insurance.<br />
It was <strong>the</strong> development <strong>of</strong> its international operations which undoubtedly<br />
allowed this house, which had been involved with <strong>the</strong> exchange markets since<br />
its origin, to find a new dynamism. The number <strong>of</strong> its foreign agents increased<br />
by more than 50 per cent. The acceptances, which from now on served almost<br />
exclusively to finance <strong>the</strong> international trade, had a value ten times higher than in<br />
<strong>the</strong> 1860s, by <strong>the</strong>mselves representing 33 to 40 per cent <strong>of</strong> <strong>the</strong> assets instead <strong>of</strong> 9<br />
per cent.<br />
The three liability entries which we have already analysed also point towards a<br />
strong move to foreign business. Amongst <strong>the</strong> debtors’ accounts, which rose from<br />
5 to 22 million francs, foreign accounts represented 2/3 <strong>of</strong> <strong>the</strong> total instead <strong>of</strong> a<br />
third. Amongst <strong>the</strong>se one can pick out Goldman Sachs and Co. <strong>of</strong> New York, with<br />
900,000F, Portalis & Co., <strong>of</strong> Buenos Aires, with 700,000F, Poulil<strong>of</strong>f with 400,000F,<br />
Coutts & Co., with 195,000F, Union de Banques Suisses, with 110,000F, etc. In <strong>the</strong><br />
portfolio <strong>of</strong> bills <strong>of</strong> exchange, it is difficult to make a comparison, since up until<br />
around 1880 <strong>the</strong> foreign bills were mixed in with <strong>the</strong> provincial bills, but <strong>the</strong> fact<br />
that from this point <strong>the</strong>y are differentiated (and represent 20 per cent <strong>of</strong> <strong>the</strong> total and<br />
<strong>of</strong>ten close to a third) is a sign <strong>of</strong> <strong>the</strong>ir new importance. Finally, under <strong>the</strong> heading<br />
‘public funds and industrial securities’, <strong>the</strong> foreign securities are not far <strong>of</strong>f <strong>the</strong><br />
majority, and <strong>the</strong>y represent 80 per cent <strong>of</strong> this heading, instead <strong>of</strong> a third. All <strong>the</strong>se<br />
signs point in <strong>the</strong> same direction: <strong>the</strong> Mallet bank worked more and more with<br />
foreigners, and its position in <strong>the</strong> international market was considerably stronger.<br />
In some regards, one could <strong>the</strong>refore compare this <strong>private</strong> bank in Paris to certain<br />
merchant banks or accepting houses in <strong>the</strong> City during <strong>the</strong> Edwardian era. 11<br />
One may assume that it was <strong>the</strong> same for <strong>the</strong> o<strong>the</strong>r houses <strong>of</strong> <strong>the</strong> Haute Banque,<br />
and in particular, but at a completely different level, for <strong>the</strong> Parisian branch <strong>of</strong><br />
Rothschild. One again finds <strong>the</strong> names <strong>of</strong> <strong>the</strong>se houses <strong>of</strong> <strong>the</strong> Haute Banque on<br />
<strong>the</strong> majority <strong>of</strong> security issues at this time, which shows that <strong>the</strong>y were successful<br />
in maintaining <strong>the</strong>ir activity in this type <strong>of</strong> operation in spite <strong>of</strong> <strong>the</strong> competition<br />
from <strong>the</strong> major credit establishments. Thus, when in 1901 <strong>the</strong> Russian government<br />
intended to place a 4 per cent loan <strong>of</strong> 424 million francs on <strong>the</strong> Paris market, it was<br />
Rothschild which became <strong>the</strong> ‘<strong>the</strong> director <strong>of</strong> <strong>the</strong> syndicate’ for <strong>the</strong> guarantee, and<br />
11<br />
Cf. Y. Cassis, Les banquiers de la City à l’époque Edouardienne (Geneva, 1984);<br />
and Y. Cassis, La City de Londres, 1870–1914 (Paris, 1987).