the world of private banking

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THE WORLD OF PRIVAtE BANKING
of the Buenos Aires Waterworks, the finance of which was to bring Barings to its
knees in a liquidity crisis in 1890.
Of slightly less importance are the very many ‘proposals for business’ that
were turned down as unattractive. Many were for conventional bond issues for
governments and businesses, but the range is much wider and includes funding for
the construction of the Schleswig-Holstein Canal in 1880 and exotics such as the
purchase of the Château Margaux vineyards in 1835.
A highly important group is the correspondence exchanged with agents acting
as local negotiators or correspondents of Barings; these firms and individuals have
already been encountered in the sections on merchanting and trade finance. When
it came to the securities business they were the firm’s eyes and ears, maintaining
contact with customers, reporting on economic and political events, sending market
intelligence, giving opinions on investor sentiment and individuals, referring on
proposals, and so on; their correspondence is of interest to political as well as
economic historians. When a bond issue was contemplated they played a vital
negotiating role. Many long runs of correspondence exist, but of particular value
is that with Alexander Baring in the United States (1796–1803); Thomas Ward at
Boston (1828–50); SG and GC Ward at New York (1872–85); Kidder Peabody at
Boston and New York (1878–1920s); Hope & Co. at Amsterdam (1822–1900s);
Hottinguer & Cie at Paris (1820–1900s); Stieglitz & Co. at St Petersburg (1825–
84); Charles Jutting also at St Petersburg (1863–79); Ericksens at Vienna (1848–
61); Nicholas Bouwer at Buenos Aires (1876–90); and Essex Reade also at Buenos
Aires (1891–1900).
As the international capital markets grew larger and more sophisticated, better
organized and more extensive records were needed in place of the somewhat
ad hoc procedures of the early century when issues were smaller. At Barings
this is reflected in the creation of new archive series to record the underlying
underwriting and issuing process. Of greatest significance here are the new issue
registers running from 1876, which identify syndicate banks behind the issue, subunderwriters
and subscribers, and record the extent of their participation. They
allow analysis of investors and an understanding of market mechanisms such as
the evolution of risk distribution.
While the above archives shed light on particular transactions, customers and
processes, they also have much to offer in understanding the changing nature
of the international capital markets. Most obviously, they trace the emergence
of new markets such as Berlin and New York and the ways in which they were
co-ordinated in syndicates. A particular feature highlighted is the extraordinary
competition for business that arose between syndicates and markets.
Another area covers the relationship between customer and bank and the means
by which they worked together to build and maintain a market in the customer’s
securities. This took the form of careful control of issuing in order to foster the
market; it might require the bank to advance funds as a stopgap measure, especially
to fund interest payments, when market conditions for further issues were
unfavourable. Such reputation-building was at the heart of, for example, Barings’