the world of private banking

‘HAUtE BANqUE’ AND tHE INtERNAtIONAL EcONOmy 139
in the ‘participation in the contract’, 50.47 per cent fell to the house of Rothschild,
followed by Hottinguer which acquired 9.43 per cent, just as much as Crédit
Lyonnais, the other major banks only acquiring percentages of 4.72 or 2.36. 12
Two years later, for an issue of 4 per cent Russian railway bonds for an amount
of 173 million francs, fixed value, the direction of the syndicate fell to the Banque
de Paris et des Pays-Bas, 13 a new bank, set up as a limited company, but with the
support of a certain number of old banking families. The ‘participation’ of the
Haute Banque appeared to be a minority share, since only Hottinguer acquired 25
per cent, the same as the Banque de Paris et des Pays Bas and Crédit Lyonnais.
But the ‘retrocessions’ of securities to be placed show that the majority of the
houses of the Haute Banque remained present, due to their remarkable ability to
‘close’ the new securities within their own clientele, who were rich and trusted
them: the ‘participants’ thus retroceded a million securities to Heine (the successor
to Fould), to Vernes, to de Neuflize, and to Mallet, and 500,000F to Mirabaud,
Lazard, Cahen d’Anvers etc.
As for Rothschild de Paris, if from this time they kept their distance from
the ‘Russian loans,’ they were converted to other operations, amongst these the
placing of Japanese loans (in co-operation with Rothschild of London), issued in
three phases, in 1905 (625 million at 4 per cent), in 1907 (290 million at 5 per cent)
and in 1913 (200 million at 5 per cent). Each time, the house of Rothschild alone
signed the contract and was director of the syndicate, but it retroceded part of the
issue to other houses of the Haute Banque, notably to Hottinguer. It made Crédit
Lyonnais the beneficiary of a ‘retrocession,’ again very significant, which shows
that the success of these issues of foreign securities drove the houses of the Haute
Banque to collaborate closely with the major credit establishments, showing that
they did not think of them only as implacable competitors.
But the movement toward internationalization of the financial business of the
Haute Banque did not only come about by the development of exchange transactions,
by the increased use of finance by acceptances, or by their participation in issues of
foreign securities on the Paris market. Many of these houses, with greater or lesser
success, launched themselves into grand international speculations involving raw
materials and, in particular, non-ferrous metals. Thus, after having taken part in the
speculation on copper at the end of the 1880s, the house of Demachy and Seillière
participated, at the end of the nineteenth century and start of the twentieth, in
another operation regarding tin, in association with Kleinwort & Co. of London,
and tied up many millions in this business over a long period of time.
Certain of these houses also made direct investments in various foreign
businesses, among others mining businesses. The Parisian branch of Rothschild
12
The shares of different banks in this security issue and in those which are mentioned
afterwards are held in the Crédit Lyonnais historical archives (folders 158 AH 1 et seq.).
13
J.P. McKay, ‘The House of Rothschild (Paris) as a Multinational Industrial
Enterprise, 1875–1914’, Conference on Multinational Enterprise in Historical Perspective
(University of East Anglia, 1985).