the world of private banking
the world of private banking
the world of private banking
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
220<br />
THE WORLD OF PRIVAtE BANKING<br />
Banks, <strong>the</strong> Darmstädter (1853) and <strong>the</strong> Disconto-Gesllschaft (1851–6), on <strong>the</strong><br />
initiative <strong>of</strong> several Jewish <strong>private</strong> bankers are revealing in this respect.<br />
The first <strong>of</strong> <strong>the</strong>se houses was established on <strong>the</strong> initiative <strong>of</strong> a group <strong>of</strong> Cologne<br />
<strong>private</strong> bankers who had participated in <strong>the</strong> rescue and conversion to a joint-stock<br />
bank <strong>of</strong> <strong>the</strong> Schaaffhauser Bank during <strong>the</strong> crisis <strong>of</strong> 1848. At <strong>the</strong> outset, Abraham<br />
Oppenheim, Gustav Mevissen and <strong>the</strong>ir partners encountered a double obstacle,<br />
<strong>the</strong> Prussian government’s opposition and <strong>the</strong> Rothschilds’ hostility, which ruled<br />
out any possibility <strong>of</strong> setting up <strong>the</strong> new bank in Frankfurt. However, thanks<br />
to Oppenheim and Mevissen’s family connections, <strong>the</strong>y were supported by <strong>the</strong><br />
grand-duke <strong>of</strong> Hesse, and on 13 April 1853 <strong>the</strong> Bank für Handel und Industrie<br />
opened in Darmstadt. More than half <strong>of</strong> <strong>the</strong> initial capital <strong>of</strong> 10 millions florins<br />
was subscribed by <strong>the</strong> Crédit Mobilier. The new bank wasted no time in increasing<br />
its capital to 25 million florins by 1856 in order to reduce <strong>the</strong> influence <strong>of</strong> <strong>the</strong><br />
Pereire bro<strong>the</strong>rs. Since setting up branches or subsidiaries in Prussia or accessing<br />
<strong>the</strong> Frankfurt money market was impossible, its expansion was focused on <strong>the</strong> rest<br />
<strong>of</strong> Germany and abroad through partnerships with existing <strong>banking</strong> firms.<br />
Despite his significant role in <strong>the</strong> management <strong>of</strong> <strong>the</strong> Bank <strong>of</strong> Prussia, David<br />
Hansemann failed to convince <strong>the</strong> Prussian rulers that joint-stock <strong>banking</strong> <strong>of</strong>fered<br />
advantages. Indeed, after his own efforts to create such an establishment in Berlin<br />
lost him his post, he chose to develop a different type <strong>of</strong> <strong>banking</strong> institution<br />
by creating a discount house, <strong>the</strong> Direction der Disconto-Gesellschaft, under a<br />
cooperative structure. Thanks to rapid growth in membership and in <strong>the</strong> volume <strong>of</strong><br />
its operations, Hansemann was soon able to convert <strong>the</strong> cooperative into a limited<br />
partnership, <strong>the</strong> Disconto-Gesellschaft, with a capital <strong>of</strong> ten million thalers,<br />
<strong>the</strong>reby raising it to <strong>the</strong> first rank <strong>of</strong> Prussian banks and second place in <strong>the</strong> whole<br />
Zollverein behind <strong>the</strong> Darmstädter Bank für Handel und Industrie.<br />
Meanwhile, a group <strong>of</strong> leading Jewish <strong>private</strong> bankers including Bleichröder<br />
and Mendelssohn, with <strong>the</strong> help <strong>of</strong> Oppenheim and Mevissen, founded a rival<br />
establishment, <strong>the</strong> Berliner Handelsgesellschaft. Its pattern was inspired by those<br />
<strong>of</strong> <strong>the</strong> Crédit Mobilier and Darmstädter Bank.<br />
In Germany, France and o<strong>the</strong>r countries <strong>of</strong> <strong>the</strong> continent, <strong>the</strong> Franco-Prussian<br />
war decisively accelerated competition between <strong>private</strong> banks and joint-stock<br />
banks. At <strong>the</strong> time, liberalization <strong>of</strong> legislation on joint-stock companies in both<br />
countries as well as <strong>the</strong> huge business generated by financing <strong>the</strong> five billion francs<br />
indemnity imposed upon France by <strong>the</strong> new German Empire promoted <strong>the</strong> birth<br />
<strong>of</strong> new joint-stock banks. In January 1870, several Jewish bankers and politicians,<br />
among <strong>the</strong>m Ludwig Bamberger, <strong>the</strong> builder <strong>of</strong> <strong>the</strong> future Reichsbank, and Herman<br />
Wallich, had participated in founding <strong>the</strong> Deutsche Bank with <strong>the</strong> aim <strong>of</strong> financing<br />
international trade; <strong>the</strong> bank soon entered <strong>the</strong> same field as <strong>the</strong> o<strong>the</strong>r D-banks and<br />
<strong>the</strong> Berliner Handelsgesellschaft. On <strong>the</strong> o<strong>the</strong>r hand, <strong>the</strong> indemnity loans raised in<br />
1871 and 1872 by France, whose financial success stunned Europe, had multiple<br />
benefits for <strong>the</strong> <strong>banking</strong> system. The haute banque and <strong>the</strong> new banks competed<br />
to take up loans, <strong>the</strong>reby collecting guarantee commissions, underwriting fees and<br />
pr<strong>of</strong>its from arbitrage dealings and bills. While <strong>the</strong> Rothschilds put toge<strong>the</strong>r an