The Baring Archive Is One of the Greatest Financial Archives in the World

1 250th Anniversary Synposium Barings History and Archives The Baring Archive is one of the greatest financial archives in the world. As a record of the development of the international capital markets, it has no rival in the old or new financial centres of New York and Boston, Paris and Berlin, Tokyo and south east Asia. The Archive is only matched by the archives of Rothschilds in London and by those of Hopes in Amsterdam. It explains the development of international finance from the rudimentary practices of the 1760s, based essentially on bearer bonds and bills of exchange, through to the exotic products and their associated electronic wizardry of the late twentieth century. The Archive transcends every generation of information technology – passing from traditional leather bound ledgers and letter-books to innovative telegrams and machine generated accounts and ending up with databases and computer tapes. On the way it encountered and dealt with the paperwork explosion and saw off the paperless office. The fact that the archive has survived is in some senses extraordinary but in others entirely predictable. Accumulated in a seemingly unfillable basement that stretched far under Bishopsgate, it survived the likelihood of flood, fire and theft, of storage space shortages, of over exuberant space creators, of neglect linked to disinterest and, not least, of wastepaper drives and bombing in wartime. It also benefitted from good record keeping practices down the ages. But much more than this, it has survived on account of Barings’ deeply etched and enduring sense of itself, based for so long on the ownership and influence of its founding family. The Baring partners traditionally saw themselves as custodians of the business, passing on the firm’s treasure and traditions to the next generation in the way they had inherited them from the previous. Tom Baring said in the mid nineteenth century that Barings was ‘a house which we intend to be perpetual’ and the preservation of its archives even then would have been part his strategy [1]. The most notable feature of the archive is its completeness. A record of virtually every book transaction, whether for client or house account, survives from the firm’s foundation in 1763. Elsewhere there are some gaps. For example, Alexander Ashburton’s early nineteenth century files and Sir Edward Peacock’s private files for the inter war years have not survived. Forty years’ worth of mid-nineteenth century North American correspondence ended up in the National Archives of Canada in the 1920s. But that said, most of what might be termed the ‘strategic’ papers – that is what is left after the chaff has been sorted from the wheat – survive more or less in their entirety. Virtually all The Archive is catalogued. The Archives’s active management began in 1960 when John Ashburton hired the late Tom Ingram to start the job. A quick piece of reckoning told Tom that the job would be finished in a couple of years; he was still at work – and making a splendid job of it – some twenty years later but still far from the finishing post! 2 But it is the story embedded in The Archive that is the source of its true greatness. It tells the history of a business that began in 1717 at Exeter when John Baring arrived there from Bremen to set up as a merchant. He did well and the Baring family emerged as important people in the West Country; they went on, amongst other things, to establish a local retail banking business. John died tragically young when his wife, Elizabeth, took up the reigns. On Christmas Day 1762 she put the firm on a new footing by establishing John & Francis Baring & Co in London to act as agents for the family’s Devon businesses. In a quiet way, the doors opened for business on New Year’s Day, 1763. Under Francis Baring – an engaging, ambitious, extraordinarily bright man – the London business soon decoupled from Exeter and thrived. Francis was a networker with something to say, an active participant in and certainly a beneficiary of the Enlightenment, and a liberal Whig who loathed war and destruction; not for nothing was he reckoned the most able financier of his generation. Introduced to Prime Minister, Lord Shelburne, in the 1780s, Sir Francis – as he was to become – saw his chance, wining government business but, far more important, gaining access to men of influence. The prestige this brought promoted his business to an extent his capital would otherwise not have allowed. Both he and Barings were on their way. His house was a merchanting house, buying commodities in one international market, selling them in another and making a turn in the process. His firm earned a reputation for being good at this; it allowed diversification into the provision of trade finance for other merchants by guaranteeing payment of their bills of exchange. This quickly became Barings’ engine of growth, overhauling merchanting and earning the firm its enduring title of merchant bankers. And its reputation stood it in good stead when it came to bond issuance from the Napoleonic Wars onwards. The Baring name behind an issue of bonds for an exotic sounding borrower in a far off land persuaded even the most cautious investors to take their chance, more especially as, early on, these would have been trading partners of Barings or beneficiaries of its credits. Barings’ nineteenth century history is essentially a history of bond issuing. As the century progressed so the firm passed from one generation of Baring partners to the next with important outsiders such as S C Holland and Joshua Bates being recruited when injection of new management seemed prudent. Alexander Ashburton succeeded his father shortly after 1800 and was in due course succeeded by Thomas Baring and, in 1873, by another cousin, Ned Revelstoke. Crisis overwhelmed the firm in 1890 when poor decision making by the then senior partner, Ned Revelstoke, brought the firm to its knees. ‘There is really no excuse for Ned’, Tom Baring told his cousin, Lord Cromer, in a memorable letter. ‘He has been reckless in business as in his own private money matters, losing his head from success, departing from all the old rules and traditions of the firm and doing things inconceivably foolish. A great Nemesis overtook Croesus’. [2] But Croesus withstood his Nemesis. Barings’ importance in the bill market was such that its collapse, it was widely reckoned, would have precipitated a devastating financial panic. The Bank of England launched its first ever life boat operation, 3 supporting Barings with a loan guaranteed by the City’s financial community. Barings’ business was reconstructed as a limited company ultimately to be owned by a partnership of Baring family members. Young John Revelstoke, Ned’s son, heroically steered the firm through all of this and had more or less restored its prestige by the turn of the century. He was to lead the firm with total dedication until 1929. The interwar years were not easy ones for London’s merchant banks with the domestic economy in deep trouble and the all powerful pre war sterling bond market spent. But in these years Barings’ post 1945 future began to take shape. The firm emerged as a leader in advising on the rescue and reconstruction of large swaths of Britain’s manufacturing industry. It also led reconstructions in the sterling funded debt of countries in Europe and South America. Post 1945 it maintained its corporate finance and bond issuing activities, adding to them asset management via Baring Asset Management and, later still, broking activities via Baring Securities. Throughout this period the firm remained family owned and, latterly, family influenced, most especially under John Ashburton and Peter Baring. Some areas of Barings’ history are worth a closer look. Barings’ century was the nineteenth century. Then the international capital markets expanded massively in terms of volumes, market participants and borrowers. Throughout London was the leading market and Barings was one of the two leading players. It had the best of the business as the following role call of transactions suggests. The century kicked off with the firm’s arrangement of finance for the US government’s acquisition of the Territory of Louisiana from France, a transaction that doubled the size of the USA. It was closely followed by the issue of the so-called reparation loans after 1815 to enable a defeated France to make payments to the victorious allies. The Argentine government’s first issue of the external bonds followed in the 1820s and from the ‘30s the firm, acting with Glyns, had a virtual monopoly in external finance for what became the Dominion of Canada. Mid century bonds were issued to finance the construction of some of the earliest railways in the USA, Canada, Russia and France. Arthur Guinness – then the largest brewery in the world – was floated in the 1880s. Japan was financed in its war with Russia and Russia was financed in its war with Germany. I could go on; the list is as broad as its long. These transactions reveal the economic power of Barings – not just in helping governments to balance their books and to finance warlike activities but also to finance the construction of the transport and urban infrastructure vital for the emergence of a modern industrial state. When a grateful French Finance Minister in 1818 described Barings as one of the sixth great powers in Europe he undoubtedly over-egged his pudding but in these decades there were moments when it seemed to have more than a ring of truth. These transactions also have political overtones and more than hint at extraordinary conflicts of interest.

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