the world of private banking

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