the world of private banking

PRIVAtE BANKS AND INtERNAtIONAL FINANcE 157
Much of this was routine work, but sometimes it involved major investment
with a strong international dimension. An example close to home was speculative
investment in the 1850s in the important Weardale Coal & Iron Co., a potential
supplier of iron rails to the United States and Russian railway companies for which
Barings marketed securities. Another example is the 1796 investment, with Hopes
of Amsterdam, in one million acres of land in Maine, USA; it not only represented
a safe haven for surplus funds outside an unstable Europe, but underlined the firm’s
credibility in the USA, where it was building a major presence. While relatively
few papers touching on the Weardale Company survive, a large number do for
the Maine Lands transaction giving, inter alia, fascinating insight into United
States trade and government finance and, not least, eighteenth-century life in New
England. Other wide-ranging investments include the National Bank of Turkey,
Caucasus Copper Co. Ltd and the British-based Pressed Steel Co. in the 1930s.
Summary
The above account deals with the main functions of London’s merchant banks and the
archives that these functions gave rise to. It is a generalized account, short on detail
and with much omitted. It nevertheless serves to show the vital function of merchant
banks in international finance from the late eighteenth to the early twentieth century,
especially through their short-term finance of international trade via the accepting
of bills of exchange and their long-term finance of governments and businesses via
the issue of securities. These were the principal means by which overseas borrowers
accessed the London capital market at a time when London was far and away the
most important source of international capital. Given the importance of this role,
it is extraordinary that it should have been carried out by privately owned banks
employing family capital and family management. It highlights the vital importance
in private banking of elements such as reputation and goodwill, contacts and
networks, market intelligence and quick decision-making.