the world of private banking

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THE WORLD OF PRIVAtE BANKING
In the Netherlands, private banks originated from the securities business of the
eighteenth century. Traders in securities were merchants, usually Sephardic Jews
of Spanish or Portuguese origin, who came to specialize in this field.
During the wars of the French Revolution and Empire eighteenth-century
merchant bankers had to refine their techniques in financing trade. Paris then
emerged as a national and international payments centre. Indeed, as the only country
undertaking reciprocal exchange with Latin America and also having a positive
balance of payments with the Anglo-Saxon world, France played a significant role
in the international payments system. Whilst the English and Americans sought to
procure bills on Paris to pay their imports of French goods, continental merchants
turned to Parisian banks to manage their debts to Anglo-Saxon countries. Foreign
banks had also set up offices in Paris, chiefly Swiss Protestants and German Jews.
While keeping busy in international trade, they placed government loans for the
restored monarchies. As a result the haute banque came into being in Paris during
the Bourbon Restoration. It was an informal but closed circle of twenty private
banks, some of them established well before the Revolution. Among them were
German Jews such as Louis d’Eichtal, James Rothschild, Salomon Oppenheim.
Other Jewish bankers joined later: Fould, Cahen d’Anvers, Stern, Bischoffsheim.
Until 1870, private banks enjoyed a privileged position in Germany. Most of
them originated in trade and business of the Hofjuden of the numerous eighteenthcentury
German States. By the turn of the century, one hundred and fifty court
Jews’ families had been raised to the nobility, mainly in south Germany and
Austria. Thus, Aron Elias Seligman of Mannheim, who did the king of Bavaria
services during the Napoleonic wars, was ennobled in 1814 as Leonard, Freiherr
von Eichtal; then he converted to Roman Catholicism. Similarly, the Kaulla family
founded a bank with Duke Frederick of Württemberg in 1802; it became the bank
to the Kingdom of Württemberg’s court after the Napoleonic wars.
Frankfurt-am-Main was especially favoured as a financial centre because
of its status as a free city, as well as because of its geographic position at the
crossroads of major European commercial and water routes. The early nineteenth
century confirmed its rise as the pre-eminent commercial and banking centre of
Germany, a rise which had begun in the previous century. Private bankers made it
their preferred market for broking international government loans – especially the
Bethmann firm, whose activities in this market were eventually to be overtaken by
the Rothschilds. Cologne also figured among the important financial centres from
which the Oppenheims built their international network. At that time the Berlin
banking houses could not compete with Frankfurt in the Prussian government
loan market. At Hamburg, the Warburgs, whose first known ancestor worked
as a money changer and pawnbroker during the sixteenth century, established a
banking house in 1798.
The rise of the house of Rothschild fascinated contemporaries because of the
size of its operations throughout Europe. The dynasty’s founder, Meyer Amschel
Rothschild, was trained by the Oppenheims at Hanover. He was one of the many
businessmen who made a fortune in military procurement during the wars with