the world of private banking

xxii
THE WORLD OF PRIVAtE BANKING
decline of private banking has to be postponed until the 1930s, when private
banks indeed lost many of their ‘niches’. It is instead non-economic factors, like
the racist policy of the Third Reich, that explain the decline in private banking
towards 1945 and after.
Luciano Segreto addresses the different sequence of events in Italy. While
statistical analysis has shown that universal banks had from the 1890s crowded out
private banks and other lenders in regard to industry finance, he demonstrates that
hardly any business was conducted by universal banks without the involvement
of one or more private banks. Segreto offers an intriguing picture of the presence
of Italian private banks in joint industry finance between 1890 and 1914, thereby
confirming the division-of-labour hypothesis. The fact that private banks had despecialized,
taking up industry and railroad finance, might have been overlooked by
financial historians, because those banks did not change their company structures
accordingly. Limited-liability partnerships remained rare until the early twentieth
century and private bankers’ partaking in major deals under the wings of bigger
joint-stock banks remained undetected. In the Italian case personal banking, based
on trust and discretion, and often on family ties, remained important through the
late nineteenth century and well into the 20th. The weakness of the emergent new
State and its enormous financial needs offered a leading role to several major
bankers who were particularly adroit in negotiating between the government,
parliament, the central banks and the international financial centres, writes Segreto.
Towards the end of the nineteenth century re-specialization may have taken place,
as indicated by the repeated appearance of certain private bankers specifically in
relation to industry finance undertaken by mixed banks.
The private bankers are thought to have been needed not so much to help jointstock
banks spread risk, as above all to secure the placement of securities with
the various urban elites. The importance of this specific type of intermediation
would seem to be underscored by the stability in the number of private bankers in
the years 1913 to 1924, but perhaps even more so by its growth in the war years,
which brought the figures for the country’s seven major financial centres back to
the levels of 1896. Segreto attributes the dramatic decline in the number of private
banks after the mid 1920s mainly to the introduction of banking laws which de
facto greatly restricted private banks’ traditional ways of doing business.
For both, Italy and Germany, it seems to be the big regional private banks whose
role in industry finance has been diminished by looking at industrialization through
a Gerschenkronian lens. Gabriele Teichmann’s study naturally complements the
two preceding chapters by putting the spotlight on one of the most successful early
industry financiers in nineteenth-century Germany, the Cologne-based bank Sal.
Oppenheim. The Oppenheims occupied the middle ranks of the European haute
banque. They had strong ties with big and medium-sized entrepreneurs in the industrial
regions of Germany, France, Belgium, and Luxembourg (to name the most frequent
contacts). They pioneered joint-stock banks and kept in close contact as these grew
into big universal banks in the second half of the nineteenth century. Teichmann is the
archivist of Sal. Oppenheim and provides a ‘user’s guide’ to the Oppenheim Archive.