the world of private banking

THE WORLD OF PRIVAtE BANKING
provides figures for the total nominal value of the loans issued by the London and
Frankfurt houses in the period; unfortunately, no comprehensive lists of issues exist
for the other houses, but the London figures include a substantial number of loans
handled jointly with Paris, Frankfurt, Naples and Vienna. These figures confirm that
the Rothschilds were, throughout the period, the dominant force in international
bond issues. Between 1815 and 1859, the London House issued altogether 50 loans,
primarily for governments, the nominal value of which was around £250 million. In
comparison, Barings issued just 14 loans in the same period, to a nominal amount
of £66 million. 17
Table 1.4
The nominal value of loans issued by the London and Frankfurt
houses, 1820–1859 (by decade) (£)
NMR MAR
1820–29 58,715,366 4,892,947
1830–39 43,194,150 3,599,512
1840–49 35,169,611 2,930,800
1850–59 88,485,900 7,373,825
Source: Ayer, Century of Finance, pp. 16–81; Berghoeffer, Meyer Amschel, pp. 29–42, 206–28.
Table 1.5 breaks down the London figures to show the regional distribution of
Rothschild loans (including a small number of quite large private sector issues).
These figures show that the contemporary view of the Rothschilds as ‘bankers
to the Holy Alliance’ was exaggerated; the London house’s biggest clients were
France and Britain, with Prussia, Russia and Austria some way behind.
It is relatively easy to show the importance of government bonds in the
balance sheets of the various houses. The earliest surviving balance sheet of the
London house (that of 1828) reveals that a very large proportion of the bank’s
assets – more than a quarter – were invested in British government bonds. The
proportion rises to 37 per cent if its holdings of Danish government stock are
added. 18 In the same year, 35 per cent of the French house’s assets took the form
of French 3 per cent rentes. 19 The ‘State securities account’ comprised exactly
the same proportion of the Vienna house’s assets, suggesting some sort of general
Rothschild policy. 20 However, it is much harder to compute the profits made from
such issues. Commissions and other charges varied considerably, and some major
issues actually lost large sums (the French loan of 1830, for example). If bonds
were taken firm (‘à forfait’ in contemporary parlance, that is, bought outright by
17
Chapman, Merchant Banking, p. 16.
18
CPHDCM, 637/1/6/52–57, N.M. Rothschild, balance sheet, 31 July 1828.
19
CPHDCM, 637/1/6/34–42, Bilan de MM de Rothschild Frères, 30 June 1828.
20
CPHDCM, 637/1/6/22, 25, Abschluss des Wiener-Filial-Etablissements, 30 June
1828; see also AN 132 AQ 3/2 No 5.