the world of private banking

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THE WORLD OF PRIVAtE BANKING
‘financial credits’ were made available to other categories of business, especially
financial institutions. Most notably these included State banks, in order to assist
them in making international payments and operating in the foreign exchange
markets. In the early nineteenth century, for example, the Bank of the United States
figured as one of Barings’ most important customers, as did the Banco do Brasil
and the Banco de la Nación Argentina at the end of the century. A development of
this business during the First World War was the ‘rehabilitation’ of the sterlingguilder
and sterling-rouble exchanges, both of which had collapsed under pressure
of wartime conditions. Financial credits, in a somewhat unlikely adaptation,
were also used to finance ship construction; at Barings, for example, financial
credits were provided to Cunard Steam Ship Co. to fund the construction of early
twentieth-century passenger liners.
Until 1900 there is a curious absence of archives relating to trade finance
in Barings’ archives; the same appears to be so at other merchant banks. While
accounts exist in both customer and general ledgers for merchants and institutions
in receipt of commercial and financial credits and while the operation of these
credits is often referred to in correspondence with customers, no dedicated series
of archives exist for the terms and conditions of credits detailing such matters as
value, commission or interest, term, security, purpose and other parties involved.
Even schedules of credits do not exist. It is hard to think that such archives were
not once kept; their loss much reduces our understanding of the merchant banks’
role in trade finance.
Nevertheless – as with merchanting – analysis of ledgers and their supporting
journals would reveal much about finance of international trade. These ledgers
contain a mass of data which – time and stamina permitting – is capable of a
degree of scientific analysis to supplement present knowledge, which – as with
merchanting – is based largely on case studies. Research would shed light on, inter
alia, the obviously close relationship between the provision of agency services and
trade finance, the extent to which advances were provided relative to acceptance
credits, the credit mechanism, the underlying security, the spread of risk, the nature
of financial credits, commissions, defaults and so on.
Barings’ archives are vastly more informative about trade finance for the years
after 1900 when the business was handled by a dedicated Credit Department. Now
memorandum books detail the terms upon which individual credits were granted,
while other books provide precise information about their administration. These
archives are supplemented by detailed annual reports on the work of the Credit
Department dealing with, for example, new accounts, accounts in difficulty, the
extent to which credits were drawn upon, the extent to which they were provided on
joint account with other banks, their geographical spread, the general environment
in which the business operated, the spread of risk and so on. Another supporting
series from the 1920s is the Department’s ‘diary.’ These are, in fact, detailed
journals summarizing meetings, correspondence and other events on a daily basis.
Together these form a rich source for studying the trade-finance activities of a
merchant bank in the first half of the twentieth century.