the world of private banking

CHAPTER 12
Jewish Private Banks
Ginette Kurgan-van Hentenryk
Trade lies at the core of the history of Jewish private banks. From the Hofjude in
eighteenth-century German States or the pedlar immigrant in nineteenth-century
America to Lazard Brothers today, Jewish private banks have built their fortune
on trade, be it trade in commodities, trade in capital during their golden age before
World War I, or trade in ideas and services during the late twentieth century. Those
who survived the golden age kept the basic methods of their ancestors, while
adapting themselves to the economic environment and anticipating new activities
and financial products.
This chapter focuses on the evolution of Jewish private banks in Europe during
the nineteenth and twentieth centuries, from three angles. First, it discusses their
economic role and the factors of their success and decline. Second, it analyses the
social position of the Jewish banker in different countries. Third, it considers its
political influence, often overestimated by anti-Semitic campaigners.
Economic Role of Jewish Private Banks
During the first half of the nineteenth century the banking structure of European
countries was dominated by private banks. In these family businesses, personal
wealth intermingled with capital invested in business. Deeply rooted in the
local milieu, their financial development rested on the experience accumulated
by their owner and the network of family and personal business connections he
built throughout the country and abroad. Two elements played a significant part
in networking: wedlock alliances and the apprenticeship of the heirs in family
businesses or allied banks in the country and abroad. Thus the personal factor
played an essential part in dealings with partners and customers.
In England, private banks were founded by merchant bankers who had developed
banking activities accessory to their business in international trade during the
eighteenth century. Progressively, discount activities and the development of the
endorsement and acceptance of bills of exchange tended to replace speculation in
commodities. Since the mid-eighteenth century, the City banks, i.e. the London
private bankers, were considered members of a specialized club in the market for
short-term commercial credit. A few Jewish merchant bankers appeared during or
after the Napoleonic wars. The most prominent of them was Nathan Rothschild.