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