the world of private banking

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THE WORLD OF PRIVAtE BANKING
transactions came to involve more broadly based advisory work, dealing with
such matters as shareholder rights, valuation and stock-exchange regulations, in
addition to relatively straightforward issuing work. This activity came gradually
to be labelled corporate finance advice.
Although largely Britain-focused until the first wave of cross-border
transactions in the 1980s, there were important exceptions. When the Atchison,
Topeka & Santa Fe Railroad of the USA, a business for which Barings had already
made debt issues, encountered difficulties in the 1880s, the firm worked closely
with Kidder Peabody of New York in its reconstruction. Similarly the firm, via
its New York house, was active in financing the wave of mergers which swept
across United States industry in the decade or so before 1914. In the same period,
Barings was drawn into other corporate and anti-trust issues thrown up by issuing
work for the aggressively competitive North American transcontinental railways.
Later on, in the 1920s and 30s, links existed with United States businesses such as
Goodyear Tire & Rubber and Pressed Steel in their establishment of British-based
operations for the first time. Also notable is the firm’s work in injecting North
American management practice into moribund British manufacturing businesses
such as Armstrong Whitworth and the Lancashire cotton textile industry in the
1920s through the work of Barings’ Canadian-born senior partner, Sir Edward
Peacock, and the company doctor, James Frater Taylor.
Paying Agencies
Other functions grew out of the issuance of securities for sovereign and occasionally
business customers. One was paying-agency work whereby the merchant bank
made interest payments to holders of a government’s (or business’s) securities and
operated sinking funds for their gradual redemption. This generated a commission
income, a lucrative spin-off from issuing. Sinking-fund registers survive, giving
details of bonds redeemed, but this function was essentially routine and only of
note when the customer experienced difficulty in funding interest and redemption
payments. In such cases, Barings was likely to advance funds to enable payments
to be made.
Financial Agencies
An especially sensitive role of London’s merchant banks was that of general
financial agent; for much of the nineteenth century Barings acted as London
agents for the governments of the United States, Russia and Canada, plus others
from time to time. At its most routine, this involved managing the government’s
bank accounts in London, making payments and collections for the government’s
account, not just in Britain but in countries where Barings had correspondent
banks. As an extension to this, the accounts of the government’s officials and