the world of private banking

PRIVAtE BANKS AND tHE ONSEt OF tHE CORpORAtE EcONOmy 49
Of course, the opposition between ‘private’ and ‘joint-stock’ banks should
not be overemphasized. Private banks continued to be included in the various
groupings which presided over French international finance before the First World
War and many a private banker remained highly influential. However, as distinct,
independent firms, private banks had to surrender control over international
financial operations during the last quarter of the nineteenth century. In that respect,
they differed markedly from their English counterparts. As a consequence, the
members of the Parisian haute banque formed a smaller group than the London
merchant banks, in terms of both the number of banks making up the group and
– with the exception of the Rothschilds – the size of these banks. By the end of the
nineteenth century, it was generally considered to have comprised eight banking
houses: de Rothschild Frères, Hottinguer & Cie, Mallet Frères & Cie, Vernes &
Cie, de Neuflize & Cie, Heine & Cie, and Demanchy et F. Seillière. 25 These banks
still held some important assets which enabled them to play a role in the financial
sphere out of proportion to the actual size of their firms. One was their prestige and
network of relationships. They partly remained bankers to foreign governments,
paying the coupons of the loans they had issued in the past – Hottinguer, for
example, held the large deposits of the Russian and Ottoman governments. They
were also entrusted with the funds of very wealthy customers, whether private
or corporate, and at the beginning of the twentieth century, wealth management
started to become their main activity. Their other asset was their massive presence
on the boards of the major railway companies, insurance companies, banques
d’affaires and, of course, the Banque de France. 26
In addition, like London, Paris was packed with private banking and finance
houses, which were more or less large and more or less recent. 27 Some of them
were of foreign origin and formed part of international family networks present at
the same time in several financial centres, firstly London and New York. This was,
in particular, the case for Lazard Frères, E.N. Raphaël, Seligmann Frères and A.J.
Stern. Those that were closest to the haute banque mainly took an interest in wealth
management, whereas others were involved in activities of a more financial nature
(company promotion, investment, arbitrage and others), usually in relation to a
particular part of the world. Traditional banking business, like collecting deposits
(by offering attractive rates) and granting short-term credit, had not completely
disappeared. Some banking houses specialized in discounting bills of exchange
and others in acceptances. These varied activities at once reflected and contributed
to Paris’s cosmopolitanism and vitality before 1914.
25
E. Kaufmann, La banque en France (Paris, 1914), pp. 166–74.
26
A. Plessis, ‘Bankers in French Society, 1880s–1960s’, in Y. Cassis (ed.), Finance
and Financiers in European History, 1880–1960 (Cambridge, 1992).
27
In his survey on French banking at the beginning of the twentieth century, Eugen
Kaufmann estimated the number of private banks in Paris at some 150, in addition to the
banking houses of the haute banque. Kaufmann, La banque en France, p. 175.