the world of private banking

GERmAN PRIVAtE BANKS AND GERmAN INDUStRy, 1830–1938 161
Prussian turnpikes, the smaller States’ finance ministers shied away from the then
necessary and unprecedented addition to the State debt, the landed interest feared
that additional credit demand by the States would result in a ‘crowding out’ of
mortgages in the capital market – but the result in almost all German States was
that the railway promoters were left alone.
The leading Frankfurt bankers quickly realized the potential of the railway
business, and in 1836 a committee of bankers, lead by Gebr. Bethmann, M.A.
Rothschild & Söhne and Grunelius & Co., was set up to plan the underwriting and
building of the first railways around Frankfurt. But by contrast with the Paris and
Vienna Rothschilds, the Frankfurt branch soon retreated from this risky adventure
and returned to its traditional business. With the exception of Gebr. Bethmann
– the leading Frankfurt bank of the eighteenth century, which was dwarfed by the
Rothschilds in the government loan market after 1815 – during the early years of
railway development only a handful of newcomers among the Frankfurt banks
sustained their interest in this new mode of transportation.
At the same time, commodity merchants in several commercial centres other than
Frankfurt and Hamburg had begun to finance trade transactions and at times even
specialized in banking. In Cologne, for example, during the 1830s several ‘bankers’
abandoned commodity trade and became proper bankers: Abraham Schaaffhausen,
Sal. Oppenheim jr. & Cie., I.H. Stein, I.D. Herstatt and others. Schaaffhausen
and Oppenheim had been the most dynamic, and both engaged in local railway
committees, such as the Rhenish Railway (Cologne-Aachen) and the Rhine-Weser
Railway (Cologne-Minden, as a component of a trunk line between Berlin and the
Rhineland).
Although Cologne was one of the outstanding centres of early railway
development, its situation was not unique. However, railway committees attracted
bankers first and foremost in those places where government financing was of
no importance, but railway promoters were particularly active: besides Cologne
also in Elberfeld, Leipzig, Breslau and later Berlin. Bankers of these cities did not
simply finance railway companies, but were themselves always among the most
active railway promoters.
D. Ziegler, Eisenbahnen und Staat im Zeitalter der Industrialisierung (Stuttgart,
1996), pp. 37f.
N. Ferguson, Die Geschichte der Rothschilds. Propheten des Geldes, 2 vols
(Stuttgart, 2002), vol. 1, pp. 497–9.
Heyn, Private Banking, p. 291.
R. Tilly, Financial Institutions and Industrialization in the Rhineland 1815–1870
(Madison, 1966), p. 92, 97.
W. Hoth, ‘Zur Finanzierung des Eisenbahnstreckenbaus im 19. Jahrhundert‘,
in Scripta Mercaturae, vol. 12, 1978, pp. 1–19; D. Ziegler, ‘Banking and the Rise and
Expansion of Industrial Capitalism in Germany‘, in A. Teichova et al. (eds), Banking Trade
and Industry: Europe, America and Asia from the Thirteenth to the Twentieth Century
(Cambridge, 1997), pp. 136f.