the world of private banking

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THE WORLD OF PRIVAtE BANKING
to the firm’s prestige, as customers included statesmen such as Napoleon III, the
King of the Belgians, many US Presidents including James Monroe, and the Prince
de Talleyrand, as well as numerous ambassadors, other diplomats and leading
businessmen.
Another group comprises the private customers of Barings’ agents and
correspondent banks in Europe and in North America who wished to have banking
facilities in London, and in particular to hold part of their capital assets there in
the form of securities. Others, travelling or living temporarily in Europe, required
travel facilities which their home banks were unable to provide as they lacked
the well-developed correspondent network already established by Barings. This
applied especially to American travellers in the early and mid-nineteenth century
and accounts for the existence in Barings’ ledgers of unexpected names ranging
from the writer Nathaniel Hawthorne to the sculptor John Gibson. Accounts of the
Count of Monte Cristo and Phileas Fogg, who went around the world in eighty
days, are also supposedly included.
Security Management
An overlooked aspect of merchant banking is security management, whereby
portfolios were administered for customers, especially those in mainland Europe.
Securities were purchased and sold and held in safe custody, while dividends and
interest were collected, credited to current accounts or paid away. At Barings this
activity resulted in the creation of security registers arranged both by name of
customer and name of security; they date back to the 1830s, although early volumes,
of which there are only a few, appear to have been somewhat haphazardly kept
and are difficult to interpret. From 1891, however, they provide a clear statement
of sales and purchases per customer and per security and provide an excellent
resource for the study of investor behaviour.
Investment of Resources
The focus of published work on merchant-banking history has been on activities
most in the public eye, such as trade finance and security issuance. An altogether
more discreet side existed, reflecting the deeply etched sense of entrepreneurship
at the heart of merchant banking; it was the partners’ management of the bank’s
private treasury and of their personal capital kept outside the bank’s balance sheet.
Allocation was across a wide range of instruments and other assets including bills,
short-term loans made via the money market and in particular to brokers, equities,
gilts, corporate and government debt, medium-term customer loans, property and
so on. Such balance-sheet analysis is well possible for Barings, given its detailed
and comprehensive accounting archives.