the world of private banking
the world of private banking
the world of private banking
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JEwISH PRIVAtE BANKS 219<br />
in France and in <strong>the</strong> German States deeply mistrusted joint-stock banks, and it<br />
took <strong>the</strong> crisis <strong>of</strong> 1848 to change <strong>the</strong>ir minds. A second motive also inspired <strong>the</strong><br />
bankers: creating a counterweight to <strong>the</strong> financial might <strong>of</strong> <strong>the</strong> Rothschilds.<br />
In France, <strong>the</strong> Pereire bro<strong>the</strong>rs promoted <strong>the</strong> mixed <strong>banking</strong> model, which<br />
prevailed from <strong>the</strong> foundation <strong>of</strong> <strong>the</strong> Crédit Mobilier until <strong>the</strong> collapse <strong>of</strong> <strong>the</strong> Union<br />
Générale in 1882. Influenced, like Louis-Napoléon Bonaparte, by Saint-Simonian<br />
ideals, <strong>the</strong> Pereires took advantage <strong>of</strong> his rise to power. With <strong>the</strong> founding in 1852<br />
<strong>of</strong> <strong>the</strong> Crédit Mobilier <strong>the</strong>y stamped <strong>the</strong>ir own imprint on <strong>the</strong> revolution in <strong>the</strong><br />
<strong>banking</strong> system, both by <strong>the</strong> broadness <strong>of</strong> <strong>the</strong>ir vision and by <strong>the</strong> energy with<br />
which <strong>the</strong>y defended and promoted <strong>the</strong>ir ideas.<br />
The Crédit Mobilier’s vocation lay in financing <strong>the</strong> development <strong>of</strong> railways<br />
and heavy industry, carrying out all operations with <strong>the</strong> public authorities, and<br />
sustaining <strong>the</strong> companies’ share values on <strong>the</strong> stock market. The bank’s originality<br />
was in its proposed method <strong>of</strong> collecting savings by issuing short- and long-term<br />
redeemable bonds to mobilize all available funds. In this way, <strong>the</strong> Pereires aimed to<br />
centralize <strong>the</strong> financial operations <strong>of</strong> <strong>the</strong> great railway and metallurgical companies<br />
in order to merge all <strong>the</strong> firms from a given industrial sector into a single company.<br />
The Crédit Mobilier, following one <strong>of</strong> <strong>the</strong> most fruitful ideas <strong>of</strong> <strong>the</strong> Pereires, would<br />
eventually substitute its own shares and debentures, in a so-called omnium equity<br />
share, for all <strong>the</strong> securities currently in circulation, in such a way as to establish a<br />
joint and several obligation and thus gain <strong>the</strong> public’s confidence.<br />
These schemes, with <strong>the</strong>ir monopolistic vision <strong>of</strong> <strong>the</strong> future great industrial<br />
firms, extended far beyond France; <strong>the</strong>y had particular appeal for continental<br />
countries yet to engage fully in industrialization, like Austria, Switzerland, Italy,<br />
Spain and <strong>the</strong> Russian Empire. After a promising start, favoured by political and<br />
economic conditions, <strong>the</strong> Crédit Mobilier’s plans united <strong>the</strong> Rothschilds, <strong>the</strong><br />
regents <strong>of</strong> <strong>the</strong> Banque de France (many <strong>of</strong> whom belonged to <strong>the</strong> haute banque)<br />
and <strong>the</strong> great railway barons against it. James de Rothschild was undoubtedly <strong>the</strong><br />
greatest opponent <strong>of</strong> <strong>the</strong> Crédit Mobilier. Not only did he attempt – unsuccessfully<br />
– to dissuade Louis-Napoléon Bonaparte from supporting <strong>the</strong> Crédit Mobilier, but<br />
he also struggled continuously against <strong>the</strong> Pereires on <strong>the</strong> stock market as well<br />
as in all <strong>the</strong> sectors where <strong>the</strong>y were involved in France and abroad. Thus, <strong>the</strong><br />
Rothschilds participated in all <strong>the</strong> railway and <strong>banking</strong> coalitions which opposed<br />
<strong>the</strong> Pereire enterprises. Their opposition went as far as creating a Crédit Mobiliertype<br />
institution in Austria, <strong>the</strong> well-known Credit-Anstalt, and in Italy where <strong>the</strong>y<br />
participated in founding <strong>the</strong> Caisse de Turin.<br />
The Pereires collapsed. But it is worth noting that <strong>the</strong> Rothschilds were unable<br />
to convince governments <strong>of</strong> <strong>the</strong> dangers <strong>of</strong> <strong>the</strong> type <strong>of</strong> credit institution <strong>the</strong>y had<br />
created. As a consequence, <strong>the</strong>y chose to adapt to that type to preserve <strong>the</strong>ir own<br />
position in European finance. But that choice was dictated by necessity.<br />
In <strong>the</strong> German States, <strong>the</strong> promoters <strong>of</strong> mixed <strong>banking</strong> were frustrated during<br />
<strong>the</strong> 1850s and 1860s by strong resistance from <strong>the</strong> Prussian government to <strong>the</strong><br />
creation <strong>of</strong> joint-stock banks. The circumstances <strong>of</strong> <strong>the</strong> foundation <strong>of</strong> <strong>the</strong> first D-