the world of private banking

208
THE WORLD OF PRIVAtE BANKING
When the Ruhr area developed into the industrial heart of Germany, from
the 1850s onwards, the Oppenheim Bank was also present, taking part in the
establishment of several coalmining and heavy industry companies like the
Bochumer Verein, the Gelsenkirchener Bergwerksverein or the Dortmunder Union.
In the immediate vicinity of Cologne, the Oppenheims became owners of major
lignite mining concessions in 1870 and introduced opencast mining in this area.
It seems, however, that the bank’s commitments in mining and heavy industry
soon overstretched its financial resources and did not meet with its expectations
of profit; nor did the bankers feel they could sufficiently control risks. This is why
Simon Oppenheim beseeched his sons in his testament of 1863 ‘never after my
death [to] participate in any industrial enterprise, whatever its name, and especially
avoid like the plague any dealings in mining’. Even if the sons did not completely
follow their father’s advice, it is clearly noticeable that activities in mining and
heavy industry played a less important role thereafter in the bank’s investment
policy than those in other branches of industry.
The insurance business
This line of commitment was opened up in 1818 when the Prussian customs tariff
made the monarchy a large economic area without internal frontiers. Salomon
Oppenheim participated significantly in the establishment of the Rheinschiffahrt-
Assekuranz-Gesellschaft (Rhine Shipping Insurance Company), a Rhine navigation
insurance company which, in fact, marked the beginning of the investment business
for the bank.
In 1839, Salomon Oppenheim’s sons Simon and Abraham founded Colonia,
the first private fire insurance in Prussia, cooperating closely with other Cologne
private bankers as well as Rothschild from Frankfurt and the Paris firm of Fould,
owned by their sister and brother-in-law. A few years later, the Oppenheim Bank
initiated the Kölnische Rückversicherung, the world’s first reinsurer, set up with
the backing of the Frankfurt, Paris and London Rothschilds. Other companies
insuring special risks followed, until the 1880s. The establishment of insurance
companies was a logical answer to the expansion of industrial credit, insofar as
they could serve as a means of security against the risks of investment credit.
Banking
This also holds true for the Oppenheim Bank’s commitments in the banking business.
The necessity to look for further means of controlling risks became ultimately clear
to the Oppenheims during the 1848 revolution, when A. Schaaffhausen, another
powerful Cologne private banker, had to suspend payments. In order to avoid a
complete crash, Schaaffhausen was restructured as the first joint-stock bank in
Prussia, with the active participation of the Oppenheim Bank.
Four years later, in 1852, the Oppenheim Bank was one of three foreign
institutions to take part in founding the Crédit Mobilier in Paris, the first joint-