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