the world of private banking

PRIVAtE BANKS AND INtERNAtIONAL FINANcE 153
relationship with the government of the Province of Upper Canada. A hundred
years later it was present in Barings’ connection with the government of the newly
formed State of Czechoslovakia. This also touches on the resolution of differences
between customer and bank and the fiscal and economic policies required of the
sovereign customer in order to maintain its standing in the markets.
There is also much in Barings’ archives about default and debt reconstruction.
While a merchant bank sought to protect its reputation by issuing securities that
would maintain their market value, misjudgements occurred and losses were
sustained by investors through default soon after issue. Barings was certainly no
exception, and several groups of papers deal with debt reconstruction. The earliest
cover the 1824 Government of Buenos Aires loan, its default in the late 1820s and
its conversion in the 1850s. Here Barings’ archives cover Argentine government
finance generally, negotiations with bondholders and negotiations undertaken by a
succession of emissaries dispatched to Buenos Aires to treat with the government.
Other early papers were accumulated by, for example, George White, a Barings’
clerk and trouble-shooter sent to Mexico on behalf of the Mexican bondholders
for two years in the 1860s to deal with the Mexican government. Although he was
unsuccessful in his negotiations to reschedule the government’s debt, his extensive
papers provide extraordinary insight into Mexican economy and politics at that
time. Later examples, in the late 1920s and 1930s, are extensive files covering debt
rescheduling by Argentina, Brazil and Germany.
The role of the merchant bank as a formal and informal agent of government
is another area of interest. Co-operation and competition between merchant banks,
supported by their national governments, for control over bond issues for the
Chinese government is well known, but Barings’ archives also shed light on similar
developments elsewhere, not least the extension of British economic power in the
eastern Mediterranean before 1914. For this there are papers touching on Turkey
and Egypt, and especially on the proposed Baghdad Railway promoted to link the
railway networks of Asia and Europe. Other areas where strong political undertones
are present include the Russo-Japanese War, in which Barings managed to assist
both sides, finance of the Imperial Russian government between 1914 and 1917, and
issues for European governments, especially Czechoslovakia, between the wars.
Corporate Finance Advice
In the twentieth century, especially after 1945, corporate-finance advisory services
for British and overseas businesses became a mainstay of London’s merchant banks,
its origins being in mid nineteenth-century bond issues for railway companies
outside Britain. It was a short step from this to issuing equity and debt for Britishbased
businesses, but this work soon became more complex and wide ranging.
Early on, in the 1880s, for example, it included the conversion of old-established
but very large private partnerships, such as Guinness and Whitbread, into publicly
owned limited companies through flotation on the London Stock Exchange. Such