the world of private banking

PRIVAtE BANKS AND INtERNAtIONAL FINANcE 151
included construction of the first significant railway infrastructure, such as the
Grande Société des Chemins de Fer Russes and the Canadian Grand Trunk
Railway. Stabilization of the Italian lira was facilitated by two especially large
issues in 1881–2 for the Italian government, while the proceeds of an 1850 Russian
government issue, ostensibly made to fund the Moscow to St Petersburg Railway,
went instead to finance a military expedition against Hungary. In the two decades
before the First World War another specialization was issues for North American
transcontinental railroads, including the Great Northern, the Union Pacific and the
Canadian Pacific.
By the end of the century, the development of competitor markets to London
coupled with improved telegraphic communications was undermining the
established practice of sole management of an issue in a single market. More
and more, syndicates of European and, later, New York banks were formed to
handle large issues simultaneously in the different markets. Thus Barings acted as
a syndicate member, often as its leader, alongside the likes of J.P. Morgan, Kuhn
Loeb and Kidder Peabody in New York, Deutsche Bank and Disconto-Gesellschaft
in Berlin and the Crédit Lyonnais and Banque de Paris & des Pays Bas in Paris.
That London’s private merchant banks could hold their own in such company
highlights the influence they exerted.
In the 1920s, bond issuing for the firm’s traditional customers in the United
States, Canada and Russia dwindled to nothing, although some business was done
for customers in Brazil, Argentina, Japan and elsewhere. Often in collaboration
with Rothschilds and Schroders, many issues were arranged for European
customers – the governments of Czechoslovakia, Hungary, Austria and Belgium
and the cities of Hamburg and Berlin – to fund monetary and infrastructure
reconstruction required as a result of First World War disruption. Very often this
was done with encouragement, sometimes co-operation, from the Bank of England,
which sought to promote economic stability in Europe. By the 1930s, access to the
London capital market for foreign borrowers was virtually at an end, on account
of embargoes introduced to protect sterling. London’s merchant bankers turned
away from international finance to focus on work for British industry; a generation
was to pass before the emergence of a new international role made possible by the
Eurodollar and the Eurobond market.
The Baring archives cover in considerable detail all the above transactions
and capital-market developments. In particular, they include correspondence with
customers and with other participating banks, contracts, prospectuses, certificates
and papers relating to the customer. The latter often deal with the underlying
project, an excellent example being The Canadian Grand Trunk Railway, for which
there are annual reports, statements of account, maps and plans and so on. Others
papers touch on the assets or revenue streams on which bonds were secured, such
as detailed reports on Japanese railways, for which issues were contemplated in
the early twentieth century, and papers referring to Portugal’s tobacco industry and
monopoly, the tax revenue from which was allocated for interest payments in what
amounted to an early form of securitization. Other papers relate to the construction