Historical Association of Deutsche Bank

Bank and History Historical Review

No. 3 End of November 2003

One Man – One Bank: Adolph von Hansemann died one hundred years ago "A hard man: he seemed to be … a man with After the death of his father David, Adolph nerves of steel, no one could tell in the von Hansemann took over as his successor. morning that he had been treading the Under his management, Disconto-Gesell- evening before – how many times! – over schaft developed into the leading big very thin ice." bank and ultimately to the most important Maximilian Harden bank of the German Empire. The formation of bank syndicates, already used by David A hundred years ago, during the night from Hansemann for the purposes of placing large December 8 to 9, 1903, Adolph von government or private bonds, was developed Hansemann died. Over four decades he was further under Adolph von Hansemann's the undisputed leading figure in Disconto- guidance. Also in the mortgage banking area, Gesellschaft, a bank founded by his father, Hansemann developed a special initiative. David von Hansemann (1790-1864). After difficult negotiations, in which even Hardly conciliatory, and even tending Bismarck displayed a high degree of interest, towards coarseness – that's how even his in 1870 it came to the founding of Preussi- well-meaning contemporaries sometimes sche Central-Bodenkredit-Aktiengesellschaft, described him. Intuition, a strong will, a man which then incorporated the Preussische of action and without prejudgements, these Hypotheken-Aktiengesellschaft, which had were considered his outstanding character- been founded in 1864. istics. Adolph von Hansemann was one of During the Franco-Prussian war, Hansemann the most successful and actually also one of was financial advisor to the Prussian govern- the richest bankers of the Bismarck era. His ment. In this capacity, he achieved for the outer appearance – he preferred old- first time that a German government paper, fashioned frock coats – led one to think of a that is the Prussian Treasury instructions, country pastor rather than a big banker. which served towards financing the war, Born on July 27, 1826, in Aachen, at that could be placed on a foreign exchange time the center of his father's life (who had (London). Hansemann's elevation to the initiated the cooperative Aachener Feuerver- hereditary Prussian noble rank in 1872 was sicherungsgesellschaft only a few years also to honour his services in financing previously, one of the first German stock 's war costs. corporations). Like his father, Adolph von After the founding of the second German Hansemann also displayed at an early age a Empire in 1871, new areas of work opened distinct favour for the commercial profession. up for Adolph von Hansemann. He estab- After finishing school in Aachen, he followed lished relationships, for example, to the West up with a commercial apprenticeship starting German mining industry systematically. His in 1841, working in Hamburg, Berlin and particular attention was also focused on the Leipzig. At seventeen, he was co-owner of expansion of the railway network. In this, he the fabric factory of one of his cousins in did not limit himself to the financing of Eupen. In 1857, his father appointed him domestic railway lines, but rather participated proprietor in Disconto-Gesellschaft. Whereas in numerous foreign railway companies his father reserved the right to represent the (Gotthard Railway, etc.). In the 1870's, bank externally, the junior partner was first Hansemann succeeded, together with the assigned to the organization and manage- bank S. Bleichröder, in restructuring the Ro- ment of ongoing business. manian Railway of the "railway king", Bethel

Henry Strousberg, which was just before Adolph von Hansemann – one of the largest collapsing. taxpayers in Berlin – was the embodiment of It was at this time that the friendship began the feudal patrician, who also displayed his between Hansemann and the last owners of material wealth. He acquired several estates the Bankhaus Rothschild in . After in the German provinces to the East. In total, Wilhelm Carl von Rothschild had died in he possessed 7,000 hectares (27 square 1901, the company was liquidated. In its miles) of lands that he vigorously cultivated place came the Frankfurt branch of Disconto- and in whose woods he pursued his passion Gesellschaft. for hunting. On the island of Rügen, he had Hansemann supported the colonial ambitions "Castle Dwasieden" erected in the style of of Germany, first by the foundation of the the Italian Renaissance. In his stately villa in Deutsche See-Handelsgesellschaft, which Berlin's "Tiergartenstrasse", industrialists, prepared the acquisition of four Somoan bankers, statesmen and diplomats from all islands for the German Empire. In 1885, he over the world came to meet. He had not called to life the German New Guinea Com- inherited his father's political streak and pany (Deutsche Neu-Guinea-Compagnie). liberal way of thinking. Like many other Adoph von Hansemann dedicated a large entrepreneurs of the German Empire, he was degree of attention to this commitment along an enthusiastic supporter of Bismarck. with rich endowments from his privy purse. Among the German big banks, Disconto- Hansemann's office in the old Disconto Gesellschaft was considered to be the most building "Unter den Linden 35" was panelled conservative, a belief supported in no small with noble woods from New Guinea. It was way by Hansemann's understanding of man- from there that he "governed" the foreign agement: "His relationship to the company holdings. His vision of turning New Guinea was not that of a president or of a director, into a crown jewel among the German but rather of an independent boss and colonies with the help of this company was proprietor. That gave him a certain degree of not fulfilled. When the German New Guinea superiority and a strong self-confidence and Company, long after his death, returned brought to the Disconto-Gesellschaft a sys- profits for the first time, the First World War tem in which the private banker's special broke out. News about the Shantung Mining characteristics were intertwined with those of Company – another large colonial project for the stock corporation" – according to the the development of mineral resources in obituary notice in the "Aktionär" ("The China – led Hansemann, who was otherwise Shareholder"). hardly inclined to show any emotions, to Deutsche Bank, Disconto-Gesellschaft's become passionate. When the Supervisory biggest competitor, took over first place Board member Paul David Fischer reported among the large German banks, a position on the details of his planned business trip that Disconto-Gesellschaft had long held, into the Shantung Province, "the 75-year-old during the last decade of Hansemann's life. Hansemann shouted a lively, 'Bravo!', ac- That the two banks would merge, as they did companying every sentence with marks of in 1929, is something that Hansemann would approval, finally jumping from his chair and certainly never have been capable of calling out with sparkling eyes – 'I wish I were imagining. going with you!'"

"Russian bills of exchange are as good as cash": active in Russia for 120 years

At the beginning of November 2003, Deut- leading provider of financial services in sche Bank announced its acquisition of a 40 Russia." per cent stake in the Russian securities bro- Cooperation with Russian companies has a ker United Financial Group (UFG). At the long tradition at Deutsche Bank. Its stake in same time, the two companies agreed on a the Russian Bank for Foreign Trade in St. partnership for certain capital markets busi- Petersburg, one of the most important joint ness areas. Kevin Parker, member of Deut- stock banks in the Czarist Empire, dates sche Bank's Group Executive Committee, back to 1881. The previous year had seen believes that this cooperation gives the two the bank's first exposure to Russia with the partners a chance of "together becoming the issue of Russian railway and government

2

bonds. Before 1914, though, it was the the Soviet Union’s payment ethics and the competition – especially Disconto-Gesell- fulfilment of the obligations it entered into. schaft and Mendelssohn & Co. – that set the In October 1925, Deutsche Bank reached an tone there. agreement with the State Bank of the USSR In the period between the world wars, over a 100 million Reichsmark trade loan. however, Deutsche Bank's Russian exposure The following year, yet another larger loan developed a very special position. At the commitment was undertaken: a syndicate beginning of 1925, it set up the Ausfuhrver- made up of 27 banks granted the Soviet einigung Ost (Export Association East), with Union a 300 million Reichsmark loan to reputable German firms as members. The finance supplied goods. This made it leading role that Deutsche Bank was now possible to operate a substantial export playing in business with the Soviet Union business financed by a total of 12 banking soon attracted public attention. For example, syndicates with Deutsche Bank as lead the Berlin periodical Magazin der Wirtschaft manager in each case. wrote in February 1926: "Deutsche Bank, By 1941 these banking syndicates had pre- which can be acclaimed for its strong flair for financed a total 1.07 billion Reichsmarks’ business with Russia, has selected several worth of exports to the East, thereby making first-class companies from among its the largest international loan business of that customers, brought them together in the time possible. These exports to the East Export Association East, and offered the were not merely one-sided deliveries from members of this association favourable Germany to the Soviet Union; on the terms and conditions for discounting Russian contrary, a brisk exchange of goods emerged bills of exchange." As intermediary between at this time, with Germany exporting predom- industry and banks, Industriefinanzierungs inantly high-quality technical equipment to AG Ost (Ifago (Financing for Industry East)) the Soviet Union in return for essential raw was founded in July 1926, and Deutsche materials. Germany's invasion of the Soviet Bank was the only bank represented on its Union ended this long-standing and Supervisory Board. significant relationship abruptly. In those years, Deutsche Bank’s Russian Not until Deutsche Bank had remerged in exposure even took on a fantastic dimension, 1957 was it theoretically possible for it to as detailed in the Frankfurter Zeitung on establish contact abroad as a unified June 29, 1922: “A Russian newspaper report institution. that Deutsche Bank had its own representa- Before the “Eastern treaties” were ratified in tive office in Moscow and intended to set up May 1972, which signified the start of a new a branch in the city is being referred to by the phase in mutual trade relations, Deutsche management as incorrect in every aspect.” Bank had managed to follow on from the Of course, it would have been a sensation: a tradition of the 12 “Russian syndicates” with major institution of the capitalistic market a large-scale “natural-gas-pipeline loan economy at work in the midst of the young transaction” in 1970. The Soviet Union communist state, which had not long before opened up its abundant natural gas reserves cut away from almost all the traditions in and, with the help of Western technology, banking. All the same, even back then, the constructed a network of pipelines for belief was that Deutsche Bank was capable exporting natural gas, thereby generating of such a move; another 50 years were to go income in foreign currency. German by, though, before the bank finally opened a companies (primarily Mannesmann) supplied branch in Moscow in 1973. industrial-sized pipes and pipeline equip- When the “Russian business” began in the ment. These supplies were financed by way 1920's, no-one knew at that time how quickly of loans to the Russian Bank for Foreign the business partners would pay. Exemplary Trade totalling roughly 7.5 billion marks, payment ethics were the last thing the which were granted by banking syndicates majority of Western European countries with Deutsche Bank as lead manager. expected from the young Soviet Union. At this time, Western banks also started Deutsche Bank, however, considered the opening representative offices in the Soviet development to be positive and showed few Union. In 1973, almost simultaneously, Crédit reservations. The remark “Russian bills of Lyonnais, Deutsche Bank and Dresdner Bank exchange are as good as cash” became all opened representative offices in Moscow. synonymous in the twenties and thirties with Deutsche Bank was the second of these

3

banks to receive its license – probably for the Russia’s traditional window to the West. sake of keeping the applications in alphabeti- Following the break-up of the Soviet Union, cal order. This time, in contrast to 1922, there additional representative offices were was no need for denial. On March 19, 1973, opened in several CIS member states. In Deutsche Bank started work at its Moscow 1998, Deutsche Bank substantially expanded representative office, which was initially hou- and re-structured its business activities in sed in the historic Hotel Metropol. In 1993, a Russia and the CIS member states by branch was opened in St. Petersburg, establishing a subsidiary in Moscow.

Electricians in a hurry: doing 210 on 's railways

"The use of high speeds is not just the key why the German word "Tempo", which had feature of our transportation system [...], but previously meant moderate speed, now of all technical creation in the present day", resonated like a call for maximum acceler- wrote Berlin-based Professor Alois Riedler in ation. 1899, when he declared the "express A company which expressed this program- service" as the hallmark of a new era. matic stance in its very name therefore fitted Historian Joachim Radkau also believes that in with the era. After more than a year of the speed and bustle at the turn of the preparations, a society was founded in Berlin century were not merely fancy: there were on October 10, 1899 to study electrical high- actually good reasons why "restless" and speed railways. Its members included "incessant" became fashionable words and leading electric companies such as

Allgemeine Elektricitäts-Gesellschaft and speeds, although in the initial tests, it was Siemens & Halske; banks such as Delbrück deemed remarkable that "at a travelling Leo & Co., Deutsche Bank, Nationalbank für speed of 100 km an hour, [...] none of the Deutschland and Jacob S. H. Stern; as well contents of a free-standing drinking glass, full as companies such as A. Borsig, Philipp to the brim, were spilt." Two years later, Holzmann & Co., Fried. Krupp and van der soldiers rebuilt the track and equipped it with Zypen & Charlier. Deutsche Bank led the heavy rails – "this is an excellent per- syndicate, seeing as it held the largest share formance which would not have been with 20 per cent, followed by AEG, Krupp possible in such a short period of time had and Siemens, each holding around 13 per civil workers been employed", praised the cent. The society's aim was to obtain Supervisory Board of the society. practical experience in electrical traction. The The overhead contact line ran beside the experiments were also meant to help tracks and not over them; this was only determine whether an overhead line for the possible because intersections and junctions main power supply would also be suitable at did not have to be taken into account. The high speeds. Until then, a third rail had been three-phase current required three separate considered for this purpose, as had lines which were affixed between five and a frequently been used by local transport half and seven and a half metres high. The companies. Cologne-based company, van der Zypen & A 23-km stretch between Marienfelde and Charlier, built the two locomotives; AEG and Zossen was deemed the most suitable for Siemens & Halske delivered the electrical the planned test run. This was part of the equipment. The specification was that the royal Prussian military railway which ran from vehicle should provide enough space to Berlin-Schönefeld to Jüterbog. It shared a accommodate around 50 people. joint track with the Berlin-Dresden railway as The actual high-speed trials were carried out far as Zossen. Following approval by the from mid-September to the end of November Prussian Minister of War, work began on 1903, in which both vehicles exceeded adapting the stretch of railway in spring speeds of 200 km/h. The fastest journey was 1901. In particular, the roadbed and track on October 28 when more than 210 km/h needed strengthening owing to the heavy was reached. Arthur Gwinner took part in a weight of the trial carriage. The first trial runs, trip in which the carriage travelled at a speed in which speeds of up to 160 km/h were of 180 km/h, as a result, he held the fastest reached, showed that it was not up to such speed record by a member of Deutsche

4

Bank's Board of Managing Directors for and evening for his correspondence and many years. other activities, without even needing to tell The Frankfurter Zeitung reported that the his relations that he was taking the trip." outcome of the trials had "aroused nervous Although the trials were highly successful excitement in all cultivated countries in the from a technical point of view, it would, world". The tests confirmed that much higher however, take some time before they speeds than those prescribed in the delivered any economic benefits – they were operational regulations for main railways at simply too far ahead of their time. However, that time could be reached safely with the two electrical companies in particular vehicles of a construction not much different wanted to harvest the fruits of the work from the usual. The results of the experi- quickly and proposed a memorandum for a ments were also of benefit for the continued high-speed railway between Berlin und development of the electrical operation of Hamburg as early as the start of 1904 – to railways although it took decades before Gwinner's chagrin as it was clear to him that three-phase current technology was ready the time was not ripe for it. Large photo- for large scale production. graphs of the carriages were displayed and Emil Rathenau, the General Manager of the trial runs were described in great detail at AEG, depicted the brave new world of the the World's Fair in St. Louis in the same business traveller as follows: "at a speed of year. However, the anticipated orders did not 200 kilometres per hour, a businessman come in. Once the society had fulfilled its could conceivably cover the distance purpose, a resolution was taken to dissolve it between Berlin and Hamburg without losing in December 1905. any time. He could deal with his post in the The stretch of the military railway used for morning and with a departure time of the trials was decommissioned in 1920 and 10 o'clock, take his breakfast on the way, abandoned soon after. A plaque at the spend a few hours on out-of-town matters, if suburban railway station at Marienfelde is necessary negotiate with a large number of today's reminder of the pioneering work parties at the stock exchange, be back at carried out in 1903. four o'clock and have time in the afternoon

Lost and Found Office Tight cost management asked them if I might drop by from time to "Georg would like to create a sort of time to cut out the old balance sheets." information office at Deutsche Bank. To start A diary entry in March 1873 by Elise it off, he asked me to collect the balance Siemens, wife of the first Spokesman of the sheets of the most varied companies, sort "Direction", quoted from Karl Helfferich: them and keep files on them. Seeing as we Georg von Siemens, Volume 3, Berlin 1923, didn't want to subscribe to more than one page 237. Helfferich's comment on the entry: newspaper, I found out from our acquain- "this bureau gave rise to Deutsche Bank's tances what newspapers they have and extensive and excellent 'archive'."

Impressum: This Historical Review is published by the Historical Association of Deutsche Bank, Rossmarkt 18, 60254 Frankfurt. Responsible in accordance with the German Press Act: Prof. Dr. Manfred Pohl.

5