the world of private banking

PRIVAtE BANKS AND INtERNAtIONAL FINANcE 149
When customers encountered difficulties Barings foreclosed, took possession of
assets and administered them until their disposal. When these assets included real
estate, disposal could take years, thereby drawing Barings into their management
as going concerns. Examples well documented in the firm’s archives are the
administration of sugar and coffee estates in Ceylon between 1847 and 1896 and of
sugar plantations on the West Indian island of St Croix between 1825 and 1876.
Other series touching on trade finance have already been mentioned on account
of their relevance also to merchanting. These include reports entered into character
books on the standing and resources of customers. They cover details such as
capital resources, background, nature of business and standing, and therefore give
useful insight into an individual business or group of businesses at a particular
location. Examples at Barings include reports on houses at Rio de Janeiro in
1838, Madrid in 1848 and Moscow in 1867. A particularly good set for the late
nineteenth and early twentieth centuries, relating especially to North America,
survives amongst the archives of Barings’ Liverpool house. Other papers, already
discussed in connection with merchanting, are correspondence with overseas
agents. These also deal with trade-finance issues; the correspondence exchanged
with the Ward family and, later, Kidder Peabody of Boston and New York is
particularly important.
Security Issuance
Bill finance was essentially short-term, but from the late-eighteenth century demand
for long-term funds increased substantially, especially from governments. These
funds were raised through the sale to investors of securities, mostly bearer bonds,
repayable in, say, 20, 50 or even 100 years. Merchant banks were quick to add this
to their portfolio of activities. While bill finance provided a steady income stream,
revenue generated from issuance, while less regular, generated far greater profits.
Few Western European countries in the nineteenth century had no internal
capital market; most governments, for example, devised means of selling their
securities to local investors even if markets were imperfect and ad hoc. That said,
there were very few international capital markets in which borrowers from countries
experiencing local capital shortage could raise long-term capital. In the eighteenth
century Amsterdam was the leading international market, and several European
governments issued their bonds there. London overhauled Amsterdam at the turn
of the century and dominated the international markets until 1914, being joined in
late century by Paris and Berlin and, after 1900, by New York. After 1918, London
faded, having been weakened by war and restricted by regulations imposed to
protect sterling, while New York was in the ascendancy and unchallenged.
As the nineteenth century progressed so the range of borrowers in the
international markets increased. Initially access was limited to governments, a
class of borrower that enjoyed the highest standing in the eyes of investors; by
1900 few governments had not issued bonds in London. They did so in order