the world of private banking
the world of private banking
the world of private banking
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GERmAN PRIVAtE BANKS AND GERmAN INDUStRy, 1830–1938 163<br />
Prussian ‘railway bank’ – besides Sal. Oppenheim jr. & Cie. (Cologne) and von<br />
der Heydt-Kersten & Söhne (Elberfeld). 14<br />
The financing <strong>of</strong> railway companies induced several <strong>private</strong> bankers to develop<br />
a primitive mixed <strong>banking</strong> by diversifying <strong>the</strong>ir activities into both large and risky<br />
transactions and <strong>the</strong> carrying out <strong>of</strong> payment transactions (including trade credit<br />
and current account transactions). This metamorphosis is well documented in <strong>the</strong><br />
case <strong>of</strong> Sal. Oppenheim jr. & Cie. This bank was not only heavily engaged in <strong>the</strong><br />
management and financing <strong>of</strong> <strong>the</strong> first West German railway, <strong>the</strong> Rhenish Railway<br />
Company Cologne-Aachen (-Antwerp), but also realized that <strong>the</strong> introduction <strong>of</strong><br />
railways was linked to an as yet unknown demand for coal, while at <strong>the</strong> same<br />
time <strong>the</strong> future prospects <strong>of</strong> goods produced near <strong>the</strong> track would become more<br />
than promising. Already by 1832 Oppenheim had granted a mortgage loan to a<br />
coalmine near Aachen. Although it cannot be proved positively, it is very likely<br />
that Oppenheim’s 1836 initiative to concentrate coalmining in <strong>the</strong> region by <strong>the</strong><br />
creation <strong>of</strong> a joint-stock company combining almost all <strong>the</strong> mines was strongly<br />
influenced by its parallel activities in <strong>the</strong> Rhenish Railway Company. 15<br />
The Frankfurt bankers, lacking <strong>the</strong> experience <strong>of</strong> financing railway companies,<br />
did not engage in funding industrial undertakings. In general, <strong>the</strong>y favoured cutting<br />
<strong>the</strong>ir risks and preserving and administering <strong>the</strong>ir assets ra<strong>the</strong>r than exposing <strong>the</strong>m<br />
to <strong>the</strong> vicissitudes <strong>of</strong> <strong>the</strong> industrial age. In 1838, Moritz von Bethmann, who had<br />
every reason to look for new business opportunities if he wanted to withstand <strong>the</strong><br />
Rothschild competition, declined <strong>the</strong> application for an involvement in a lignite<br />
mine near Frankfurt by pointing out that ‘a project <strong>of</strong> this nature lies entirely<br />
outside <strong>the</strong> sphere <strong>of</strong> activities <strong>of</strong> my firm’. 16<br />
Historical research is unanimous that this attitude became one major reason for<br />
Frankfurt’s decline as <strong>the</strong> leading German financial centre, while from <strong>the</strong> same<br />
(viz. ex post) point <strong>of</strong> view <strong>the</strong> enterprising business strategy <strong>of</strong> <strong>the</strong> Cologne and<br />
Berlin bankers finally proved to be more farsighted. In <strong>the</strong> short run, however,<br />
<strong>the</strong> risks involved in <strong>the</strong> financing <strong>of</strong> industrial undertakings were substantial<br />
and at times even threatened <strong>the</strong> existence <strong>of</strong> <strong>the</strong> bank itself. Almost all ‘<strong>banking</strong><br />
heroes’ <strong>of</strong> German industrialization experienced <strong>the</strong> situation <strong>of</strong> near bankruptcy<br />
when major industrial clients came into difficulties. In <strong>the</strong> case <strong>of</strong> <strong>the</strong> already<br />
mentioned Oppenheim-bound mining company, short-term pr<strong>of</strong>its turned out to be<br />
much smaller than <strong>the</strong> expected margin, while at <strong>the</strong> same time additional capital<br />
was needed to become a pr<strong>of</strong>itable business in <strong>the</strong> long run. When by <strong>the</strong> late<br />
14<br />
Treue, ‘Privatbankwesen‘, p. 110; M. Stürmer et al., Wägen und Wagen: Sal.<br />
Oppenheim jr. & Cie.: Geschichte einer Bank und einer Familie (München, 1989), pp.<br />
84–92; D. Krause, Garn, Geld und Wechsel. 250 Jahre von der Heydt-Kersten & Söhne<br />
(Wuppertal, 2004), pp. 31–4.<br />
15<br />
G. Teichmann, ‘Das Bankhaus Oppenheim und die industrielle Entwicklung im<br />
Aachener Revier von 1836–1855’, in M. Köhler und K. Ulrich (eds), Banken, Konjunktur<br />
und Politik (Essen, 1995), pp. 10f.<br />
16<br />
Heyn, Private Banking, p. 306.