Bulletin Newsletter from the EABH

bulletin Newsletter from the EABH

1/2011

European Association for Banking and Financial History e.V. Editorial Weyouall that hope reading willenjoyg edition,this pleasedgive to warmveryathem welcome and look forwardf a to hereonin. w WarszawieSA w are we even able to deine risk as it is so signiicantly dependen important. more becomes risk reduce ultimately and classify evaluate, In situations of uncertainty, the element of risk arises. And i thingiscertain that weis– do know!not t understand to tool a as probability use cannot we if ences instant, where recent inancial disasters lead to wo inancial and political uniication process, but rema w struggling itself inds Euro The others. in people own their o abolishment the to lead and countries Arabic most faceb platform network social the by things, all above ported, is delighted to count the Leaving apart considerations of how much we can learn from the Sundsvall1888.Fire case the in action prevention the and disaster of impact the into deeper go will we Bulletin the of edition this In asse for value predictive better no have one “does Or context? cal subsequent butterly effects. People’s revolutions h recent of consequences the with confronted itself inds world Our DearColleagues, on believing in concepts of historical evidence? Is it actuall a 2011and Will perception history”. our of change dynamics the to predict outliers that imply the inability to predict the Nicholas Nassim by remark a on relect but Talebhelp cannot I in obviouslyfailed ideology.as rationalit the predictabilities, and mathematics of concept a amongst its members now. In this edition they will present th present will they edition now.this members In its amongst National National Bank of Serbia ins one of the world’s most stable currencies. In t and rldwide doubts about a inancial system undermined b ave taken place in Tunisia and Egypt, signiicantly the topic of risk, presenting a paper that researches that paper a presenting risk, of topic the et someinspiration et andwish you successfula 2011 course of history, given the share of these events in f tyrannies in some places, but to leaders ighting ighting leaders to but places, some in tyrannies f The The Kronenberg Foundation – Bank Handlowy y possible to take advantage of former experi f f we really can’t predict anything, our ability to y that underlies modern social sciences has sciences social modern underlies that y he present and predict the future? The only The future? the predict and present he of the Risk Management of Swiss Re in the in Re Swiss of Management Risk the of ith the discrepancy between the European the between discrepancy the ith ook. This revolutionary spark spread over spread spark revolutionary This ook. t t upon social, cultural, political and histori pproach towards history? Should we go we Should history? towards pproach past in order to predict the future, EABH his book “Black Swans”: “Our inability “Our Swans”: “Black book his catastrophic events in Japan and the and Japan in events catastrophic ruitfulcooperation! ssing the total risks than astrology”? than risks total the ssing The next question must be then, be must question next The eir institution and we are we and institution eir Yoursfaithfully, ManfredPohl his very sup y - - - Contents

New research 2 Corporate photography 38 New members 58 Workshop report 67 Archives news 70 Forum 76 Book trailers 81 Removing the dust 82

Published by the European Association for Banking and Financial History e.V. ISSN 2219-0643 Key title: Bulletin (European Association Banking and Financial History) Editor: Damir Jelic Assistant Editor: Carmen Hofmann Language Editor: Verity Gale

The European Association for Banking and Financial History e.V. Geleitsstrasse 14 D-60599 Frankfurt am Main [email protected] Tel: 0049 69 97 20 33 09 Fax: 0049 69 97 20 33 08 www.eabh.info The Bank of England: Historical Gift to the Bank of Russia

In June 2010, the Central Bank of the Rus- a highly professionall report, eagerly accepted sian Federation (Bank of Russia) celebrated its by the participants of the conference, but also 150th anniversary. Among the foreign guests acquainted those present with a most interesting

New research New participating in the international conference historical document that we consider deserving “Central Banks and Development of the World of special attention. Economy: New Challenges and a Look Ahead” Mr. King brought a small book in a silver cover organized by the Bank of Russia there were bearing an engraving “His Imperial Majesty the well-known bankers from the European Central Emperor Nicolas of Russia” and dated 1895. Bank, 45 foreign central (national) banks as well The document turned out to be an original book as representatives of the International Monetary of account belonging to the Emperor Nicolas II. Fund, Bank for International Settlements (Basel, The account was held with the Bank of England Switzerland), European Bank for Reconstruction from 1895 to 1900. On Mr. King’s kind permis- and Development. Vladimir V. Putin, Chairman sion this unique historical document, kept in the of the Government of the Russian Federation, Bank of England’s archive, was copied, and its delivered a speech at the conference. contents will be disclosed to the public. Among the invitees to the celebration was First of all, the account of Nicolas II shed ad- Mervin King, governor of the Bank of England, ditional light on the issue of the tsar’s foreign one of the world’s oldest central banks. Mr. King assets. After the February Revolution of 1917, is widely known in the international banking com- Special Provisional Government Committee munity. Great Britain’s chief banker not only held studied all the accounts of the Ministry of the

Book of account held by Nicholas II with the Bank of England in 1895-1900.

2 Imperial Court, responsible for the money be- about the size of the dynasty’s prewar deposits longing to the tsar and his family. It was found in the credit institutions of Great Britain. Accord- that the ex-tsars’ current accounts contained ing to the mentioned Emperor’s account with valuables of 93,5 mln roubles. These funds, as the Bank of England, their amount was at least well as lands, palaces and crown jewels were comparable to those in Germany. The coupon nationalized in 1917. income provided by the securities belonging to As far as the foreign assets are concerned, the the Emperor was entered to the revenue side deposits in the English banks had stopped by of the account. The coupon interest was usually research New 1917: those previously made had been spent paid on 1 March and 1 September; the amount on weapons purchases and sanitation facilities of 8,000-9,000 pounds sterling was entered to during World War I (1914-1918). The only for- the tsar’s account. (The peak inlow was 9,683 eign account was held with the ”Mendelssohn pounds sterling). & Co.” banking house in Berlin. The owners The records in the book relecting the interest of the account were the tsar’s children; money rate (5% per annum) make it possible to es- was invested into the Prussian 3,5% permanent timate quite precisely the total nominal value loan bonds. The four daughters and son Alexey of all the securities owned by the last Russian owned in total 5795.2 thousand marks on this Emperor. By 1900 it equalled 193,7 thousand account (about 2665 thousand gold roubles, 1 pounds sterling, or about 2 mln roubles (accord- mark equalled 46 kopecks). When the world war ing to the exchange rate of that time 1 pound broke out, all the accounts in Germany owned by sterling equalled 10 roubles). the Russian citizens, including the one belonging Of interest is information about the types of to Nicholas Romanov, were arrested (seques- securities transactions which were recorded in tered) and, in fact, lost. the account. Records of 1895 – 1900 constantly There is no reliable information in literature state on the revenue side “Russian 5% bonds”

Book of account held by Nicholas II with the Bank of England in 1895-1900.

3 sometimes specifying “1822” which brings us to Gurjev and aimed at reducing the amount of conclude that the Emperor’s securities portfolio banknotes in circulation and consolidation of consisted mainly of Imperial Russian Govern- national debts. The Russian government failed ment Bonds of early issue. to ind the necessary resources at the domestic The inancial means provided by the coupons market and inally had to resort to foreign loans. seem to have been spent twice a year, usually in In total in 1820-1822 there 83 mln roubles of for- April and October – obviously on the order of the eign loans were issued, the largest of which was

New research New account owner – on new securities. As it follows the 5% loan of 1822 provided by the “Nathan from the records made by the Bank of England’s Rothschild & Co” banking house in London. At- clerks, those were exceptionally Russian 5% that time, one bond brought its owner “a continu- Government Bonds. So, the revenue obtained ous income of 5 to 100”. from the Russian securities was invested by the According to the decree signed by Alexander I Emperor into the bonds of the Russian Govern- on 23 June 1822 the 5% state loan was raised ment. A natural question arises: why did the for 43 mln roubles (1 silver rouble equalled 37 1822 bonds attract the attention of the most pence). In accordance with the decree signed august customer of the Bank of England? on 6 April 1823, the obtained revenue was to This loan was issued as part of the programme be used for repurchasing the excess amount of introduced by the Finance Minister Dmitry A. paper money which would restore its par value. In fact, a signiicant part of revenue – 11.5 mln roubles – was used for the budget deicit reduction: in 1822 the budget gap made up 57.6 mln roubles. The rest of the revenue was used for establishing a “reserve fund” needed in case of unforeseen expenditures, including repayment of earlier borrowed loans. The 1822 loan payment period was supposed to be quite long (100 years). The loan interest was paid twice a year, on 1 March and 1 September, in London and St. Petersburg, and the coupons were replaced every 12 years. There were 4 nominals of the bonds issued: 720 roubles in silver (111 British pounds sterling), 960 roubles in silver (148 British pounds sterling), 3,360 roubles in silver (518 British pounds sterling) and 6,720 roubles in silver (1,036 British pounds sterling) . Although initially the loan was placed by Roth- schild from London in Great Britain, with time, its bonds became widely spread in other West European countries. The Bank of Russia Mu- seum collection contains some of the bonds 5% coupon bond with a nominal of 3360 roubles in sil- like these bearing French, Dutch and German ver (518 British pounds sterling). 1822. Bank of Russia registration stamps. Museum collection. Tax payment stamps: 1. Round, black “TITRES ETRANGERS AU DESSOUS DE 1000 If the paper wore away completely the bond F. 1 F. 50 C. POUR MILLE” (France). 2. Round, red “50 owner received a duplicate copy. It is known, c COMPLEMENT DE DROIT Paris 1898” (France).

4 for example, that in 1887 such a duplicate of a scribed from the Russian treasury. An equal sum 720 roubles nominal of a bond was issued on was given for the monument being prepared for the permission of the Finance Minister Ivan A. the Duke of Wellington”. Apart from this, before Vyshnegradsky. It had “the same number and quitting England, Nicholas I didn’t forget to leave the same face value” and was issued in substitu- 3000 pounds to the domestic stuff of the Buck- tion for the original unit bond put to destruction. ingham Palace attending to him during the visit, Judging by the records of account of Nicholas and 400 pounds he awarded to the crew of the

II, he bought the 1822 bonds at a market price royal yacht “Black Eagle”. And this is apart from research New (signiicantly higher than the par value) which the golden snuff boxes, diamond rings and other indirectly implies the popularity of the Russian jewellery generously granted by Nicholas at the funds amongst the European montary public. dinners and receptions in his honour. Most probably, apart from the high interest rate One may assume that Nicholas I opened an (the 1822 loan interest rate was 5% whereas account in the Bank of England and bought his interest rates of the loans issued later were 4 Empire’s liabilities on his personal money to – 4.5% per annum), the motive for opening an make the Russian bonds popular with the British account in the Bank of England was a possibil- monetary public. ity to receive interest payments straight in the It is not quite clear why transactions on this ac- Bank of England and buy the new bonds of this count stopped in 1900. There is a laconic record proitable loan right there. “account closed” at the end of the book. In 1900 The irst record in the book of account balance the coupon income was about 5000 pounds, that belonging to Emperor Alexander (evidently, is the Emperor’s bond portfolio was reduced by Alexander III (1883-1894) for 8,404 pounds almost half. It is entirely possible that Nicholas II sterling 10 shilling, 10 pence implies that Ni- sold the bonds he owned and closed the account cholas II inherited the account from his father. in the Bank of England. The account might have Apparently, it was the Romanovs’ family account been transferred to another bank. In particular, opened, most probably, by Nicholas I, the last the last record of April 1900 contains a hint to Emperor’s great-grandfather, during his state this providing a reference to the London banking visit to Great Britain in 1844 on invitation of house “Lagerquist”. Queen Victoria - Queen of the United Kingdom The material we presented to the readers is just of Great Britain and Ireland. It’s a well-known one of the examples of cooperation between fact that in the course of the visit, the only oficial the Bank of Russia and foreign central banks in visit of the Romanovs dynasty representatives studying our common history. to the United Kingdom, Nicholas I spent his money generously. Thus, there is an illustrative Yury A. Petrov episode described by the Canadian researcher Sergey V. Tatarinov Alexis Troubetzkoy in his book on the history of Bank of Russia Crimean War. Let us take the liberty of quoting the description: “While driving through streets of London, the tsar’s carriage crossed the Trafalgar Square, where His Majesty observed and commented upon the uninished statue of Nelson’s Column. On being told that the funds allocated for its construction had been depleted, the Emperor ordered that 500 pounds be immediately sub-

5 Money Circulation in Russia in 1839 – 1899 from Silver Monometallism to the Gold

As a result of the frustration of money circulation in Russia in the irst quarter of the nineteenth century there was a necessity to carry out a

New research New currency reform. The Minister of Finance E. F.Kankrin, who made the decision on restoration of metal money circulation on the basis of silver monometallism in Russia became the initiator stopped functioning and the free exchange of of this reform. bank notes for gold and silver stopped. On 1 July, 1839 the Manifesto "About the struc- From 1853 to 1856 Russia was at war with Tur- ture of monetary system" was passed, accord- key and with the European states – England, ing to which the silver coin of Russian coinage France and Sardinia (from 1854). In 1877 – 1878 was declared "the main state payment coin and there was a new war with Turkey, which Russia the silver rouble, of the current denomination joined to help liberate the Balkan states from the main legal unit of account circulating in the Turkish domination. These wars were a heavy country". In 1843 there appeared new paper burden on the Russian economy and needed money – bank notes. much investment. As a result there was a dra- The results of the reform of 1839 – 1843 were matic fall of the rouble exchange rate and rising the following: inlation. Delationary policy of the Russian gov- 1. The silver coin became the main legal tender ernment did not give positive results. Therefore and the silver rouble became the monetary unit beginning in the 1880s the main objective of the with the value of 4 zolotniks 21 dolyas of pure Russian Ministry of Finance became stabilization silver; of the rouble and the money supply. It had to de- 2. The gold coin remained an auxilliary means cide what system to choose – monometallism or of payment; bimetallism, and if it was to be monometallism, 3. New paper money – bank notes, which were on the basis of which metal – gold or silver? secured by the assets of state credit institutions A system based on simultaneous use of gold and and were easily exchanged at a ixed rate for silver was seen unreliable as the price difference silver and gold from the exchange fund. between gold and silver was constantly luctuat- Formally silver monometallism in Russia re- ing. Hence, it was necessary to undertake the mained till 1895 – 1897, however since 1853, reform on the basis of monometallism (either the stable monetary system based upon it gold or silver).

5 rubles 1894

6 Silver monometallism existed in India in 1852 the European countries. The gold rouble could – 1893, the Netherlands in 1847 – 1875 and in become such a monetary unit. some other countries. The use of silver money In 1881 N.H.Bunge became the Minister of Fi- as the main unit of payment also had historical nance of Russia. He chose the policy that was traditions. In the Bible, silver was mentioned as expensive but the most correct for Russia from the symbol of money. In the Middle Ages the the point of view of international inancial rela- great bulk of coins was minted from silver and tions – gold monometallism. The gold reserves the most well known coins, which were ances- by that time made up 298.4 million roubles (see research New tors of the present world currencies, were silver, the table 1 below), and the amount of bank for example Joachimstaller. notes (paper money) had grown from 300 million However in the 1870s – 1880s of the nineteenth roubles to 1,188.1 million roubles. The follow- century gold, being more expensive, began ing measures were taken for the restoration of replacing silver. Gold had been the symbol money circulation: of might and wealth since ancient times – as 1. The issuing of bank notes was stopped. money it was used 1500 years ago in China, 2. Accumulation of gold necessary for carrying India, Egypt, and the states of Mesopotamia. out the reform began. This happened as a result of the discovery of new large goldields – in California (the USA, Table 1. Gold reserves of the Russian empire 1848), Australia (1851) and Southern Africa (1881 – 1897) (1885). From 1846 to 1908, 15,063 tons of gold was produced in the world – 3.5 times more than Year Gold reserves, mln. roubles for the previous three and a half centuries. The 1881 298,4 increase in the quantity of gold made it possible 1882 271,4 to start mass minting of gold coins, as well as 1883 264,4 the use of ingots for international settlements. 1884 298,4 At the same time silver extraction increased. In 1885 303,4 1857 4,430 tons of silver were produced (gold – 1886 366,5 996, 9) and in 1886 – 1890 17,362 tons of silver 1887 382,0 (gold – 796,8 tons). The depreciation of silver 1888 389,0 in relation to gold, with sharp and unexpected 1889 429,9 luctuations, began. The gold and silver ratio in 1890 475,2 1866 was 1:15.43, in 1878 – 1:17.1, and at the 1891 575,8 end of the nineteenth century – 1:35. 1892 642,2 England (1816) was the first country which 1893 851,8 established the system of gold monometallism. 1894 894,8 Later the example was followed by Germany 1895 911,6 (1871 – 1873), France (1873 – 1874), Austro- 1896 963,8 Hungary and most of other European countries 1897 1095,5 with which Russia made settlements for the exchange of goods and payment of foreign On 17 December, 1885 the new money charter debt. In 1867 at the Paris conference gold was was granted according to which the gold coin recognised as the basic form of money. was accepted for the irst time as an independ- Hence, for the creation of a stable currency of ent means of payment, that could be used for Russia it was necessary to use the monetary collecting customs duties, for making settle- unit similar to monetary units of the majority of ments on government debt and tax collecting

7 for the treasury. In fact it meant that from 1886 February, 1895 S. Ju. Vitte presented the report to 1895 the system of gold and silver bimetal- to the emperor Nikolay II on the introduction of lism was established in Russia. However for- gold circulation. Having received his consent, S. mally having retained the former system of silver Ju. Vitte presented the project of the coming re- monometallism the charter did not contain the form to the General Meeting of the State Council. regulation about the possibility of an exchange On May, 8th, 1895 the Law permitting gold trans- of bank notes only for gold. actions was passed .

New research New In 1887, instead of Bunge, I. A. Vyshnegradsky In March and April, 1896 S. Ju. Vitte presented was appointed Minister of Finance. Once again the inal project to the inancial committee in there began, in the Russian society, a discus- the State Council. The reform consisted of the sion about the expediency of transition to metal following: money circulation as the accumulation of the 1. Introduction of gold monometallism; necessary quantity of gold demanded big ex- 2. Circulation of both metal and paper money penses of internal resources of Russia, intensive with the guaranteed exchange of the latter for attraction of foreign capital (hence the external gold; debt of Russia grew), export increased greatly, 3. Transformation of the State Bank of Russia including grain which led to the fall of prices on into the issuing center of the country; grain and the ruin of peasant farms. 4. Restriction of issuing paper money exceeding Nevertheless, Vyshnegradsky turned out to be the requirements of money supply; the supporter of the introduction of gold standard 5. Granting the right to the Treasury to accept in Russia and gold accumulation became the metal money for tax payments and revenues at main objective of the inancial policy of Rus- the current rate. sia at that time. Unlike Bunge, Vyshnegradsky On 3 January, 1897 "the law about minting and acted more resolutely and rigidly. As a result issuing gold coins in circulation was passed", of that policy gold reserves doubled, but it was which set the gold parity of the rouble. achieved at a high price. Export of grain resulted The credit rouble was equaled to 66 2/3 copecs in the fall of prices on grain, which caused mass of gold which reduced its gold content by 1/3. ruin of the nation’s economy. The value of the gold rouble also decreased. The The poor harvest of 1891 – 1892 led to further 10-rouble gold coins existing before the reform deterioration of the economic situation in Russia. became 15-rouble imperials, and 5-rouble coin In 1892 Vyshnegradsky resigned and S. Ju. Vitte became a 7,5-rouble semiimperials. Then there became the Minister of Finance who completed began the minting of 10 and 5-rouble gold coins, the preparatory stage and started the implemen- but with a lower amount of gold. tation of the reform. Additionally, for the convenience of calculations The monetary reform, as a result of which gold auxiliary silver coins were issued into circulation standard was established in Russia, was carried – 1 rouble, 50, 25, 15, 10, 5 copecks and copper out over several years from 1895 to 1899. In money. By 1901 there were gold and silver coins

10 rubles coin 1899 (gold) 1 ruble coin 1896 (silver)

8 worth 856,5 million rubles in circulation (gold – The role of silver in monetary circulation in Rus- 694,9 million rubles, silver –161,6 million rubles). sia was auxiliary. The state had the exclusive Since the reform was carried out unnoticed it did right to mint silver coins. It was deined by the not lead to any dramatic rise in consumer prices decree of 27 August 1898 about the circulation as a result of the gold rouble adjustment to the of silver coins. For imported silver there were im- rate of the paper rouble. posed tariffs 3 roubles per a pound which made There happened changes in paper notes, the it easier to prevent forgery of silver coins and issue of which was subjected to the rules of provided additional revenues for the treasury. research New the law of 29 August 1897 about the issue of The final stage in carrying out the monetary banknotes and was limited to the amount of reform was the publication of the Coin Charter gold reserves. According to the law the only is- of 7 June 1899. The charter combined all the suing centre of the country was the State Bank, legislation decrees of the coin part of the reform. which was authorised to issue banknotes for the It declared that the state monetary unit in Russia sum of 600 mln roubles with 300 million roubles was the rouble containing 17.424 dolyas pure covered by gold. But this right was never used gold. The gold coin could be minted from the by the bank. In order to cover the paper money gold owned by the treasury or private owners. in circulation the law provided for a large sup- Silver and copper coins could be minted from ply of gold in the country. Strictly limited issue the metal belonging to the treasury and were of banknotes sought to ensure stability in the auxiliary in circulation. With the help of this post-reform monetary system. charter the government sought to dispel the doubts of creditors, especially foreign creditors, concerning the stability of the new monetary unit of Russia.

Viacheslav Baybikov, Money and Credit Journal Editor, Post-Graduate Student of Financial University

one half copeks 1895 (copper)

9 From Wood to Stone The Risk Management of Swiss Re in the Sundsvall Fire 1888

Through the lens of the Swiss Reinsurance (SRC), whose risk management is the focus of Company’s (today Swiss Re) nineteenth century the present study. More speciically, the paper correspondence, the Swedish and international researches the impact of disaster occurrence on

New research New (re-)insurance industry’s risk management after the preventive action of reinsurance businesses the devastating ire of Sundsvall, Sweden, on in the wake of a disaster, taking SRC as an ex- 25 June, 1888, unfolds. The article focuses on ample. Reinsurance and insurance companies the Swiss Reinsurance Company’s post disaster deal with the interface of the natural and the built ‘risk-shaping’ and the formation of reinsurance environment and can therefore inluence the lat- lobby-groups in the aftermath of the disaster. It ter considerably with their contracting policies. argues that even the insurance industry’s con- The most common instrument of risk manage- cept of ‘objective risk’ is not static but luid and ment for reinsurers is the raising of premiums open to negotiation within the insurance system. after the occurrence of loss. However, in case Since the insurance industry works on the in- of catastrophic loss – potentially threatening terface between the natural and the built envi- not only one but several companies’ existence ronment it can inluence directly how societies – smaller scale negotiations between reinsurers interact with nature. The article argues further- and insurers become insuficient to deal with more, that perceiving ire merely as a man-made the threat of insolvency. Historically, those were hazard without considering its ‘natural’ context the moments when reinsurers gathered to form falls short of an accurate analysis, in particular lobby-groups in order to push through their in- concerning ‘catastrophic loss’ (i.e. large-scale terests. Thus, this study about the conlagration loss) affecting (re-)insurers geographical risk of Sundsvall is particular in so far as it presents distribution. such a case and provides a (historical) look behind the scenes of the reinsurance industry. Introduction The relevance of this subject is underlined by On 25 June 1888 at half past eleven o’clock a the current debate (prominent in the widely ac- ire broke out in a storage building located in the knowledged Stern Review on the Economics of district of Brolmfondet on Långerån in Sunds- Climate Change ) about the role of insurance in wall. It burned down almost the entire city centre climate change politics. Important parallels be- within 12 hours. Only a detached, massively come evident when Stern states that “insurance built school-house covered by a hard roof, two provides another important mechanism through wood-warehouses on Lå-ngerån, a brewery and which market signals can drive adaptation. Insur- the train station, which was protected by many ance has a long history of driving risk manage- trees, were saved. ment through pricing risk, providing incentives to Thus begins a lengthy report about the ire that reduce risk, and imposing risk-related terms on destroyed most of the Swedish city of Sundsvall policies.” The points listed by Stern are among on 25 June 1888. It was written by a German the factors this paper researches historically. insurance claims adjuster named Corty who Turning from present climate change debates had been assigned to this post by a group of back to reinsurance in the nineteenth century, international reinsurance companies involved an additional, important question is how risk by contract in the losses of the event. Among was redeined by reinsurers as a consequence them was the Swiss Reinsurance Company of the disaster. In insurance theory risk is used

10 as an objective term that can be understood in ance companies with interests in Scandinavia two ways. On the one hand, it signiies a physical had been involved. Consequently, the Swedish item exposed to destruction or damage, on the Insurance Association, consisting mostly of other hand, it stands for the calculable probabil- members from the national insurance compa- ity of loss. In researching the redeinition of risk nies, began lobbying for a stricter handling of the underlying assumption, in accordance with foreign businesses in order to restore public Mary Douglas and Niklas Luhmann, is that risk conidence. per se does not exist but that the term shrouds As a result, the six companies mentioned ear- research New a social construction which varies in its deini- lier strengthened their oligopolistic network tion not only over time but even within different which had, however, already existed before. On spheres of society. the one hand, this structure gave the Swedish The article starts out with an introduction to the joint-stock companies considerable power and Swedish insurance market of the nineteenth advantages in their domestic market. On the century whose particular structure inluenced other hand, the oligopolistic form of organisa- the reinsurance network in which SRC was tion made the insurers inherently vulnerable to involved. Next is a brief dip into the climatic, catastrophic loss as the density of insured risks i.e. “natural”, components of ire, the hazard in had risen. Thus, to achieve better balance, insur- question, followed by the account of the ire and ers had to seek risk-sharing on the international by the analysis of SRC’s risk management as it reinsurance market. Although insurance legisla- emerges from the company’s correspondence tion had been introduced in the form of licensing with other reinsurers and its cedents. foreign companies, the Swedish government did not actively participate in the insurance market An Oligopoly of Security in providing services through a state-owned Even if some of the local Swedish ire and ma- company. Rather, it supervised the domestic rine insurance companies were founded in the insurance market to protect consumers against eighteenth century, a proper national Swedish possible insolvency on the part of the insurers. insurance market only emerged in the second half of the nineteenth century with the foundation The ambiguity of ire of Skandia in 1855. Skandia was the country’s In the recent debate in historical disaster studies irst national joint-stock company starting out in it has been argued that disasters were primarily the life insurance sector, however, soon picking social, or indeed, that “there is no such thing as up ire in order to increase mar-ket share, dis- a natural disaster.” Particularly ire disasters tribute risk more evenly and increase corporate have traditionally been perceived as “human- profitability. Other joint-stock companies fol- made” ones originating in human settlements. lowed with the establishment of Svea in 1867, As a highly domesticated element, used in many Nordstjernan in 1872, Thule in 1873, Victoria in ways in the social as well as economic environ- 1883 and Skåne one year later. ment of humans, ire has lost its clear deinition In the early years, when solvency regulations of being a purely natural element. Therefore, ire and company licensing did not yet exist, the disasters often combine aspects of human-made Swedish national insurance market was open to as well as “natural” hazards, and, thus, create foreign companies. Conditions changed in 1875 ambiguity for deinition. Unlike all other elements with the foundation of the Swedish Insurance containing hazards for humans, ire remains a Asso-ciation (Svenska Försäkringsföreningen) potentiality until kindled. Consequently, there provoked by the UK insurance industry’s insol- has been a persisting tendency to focus on its vency crisis in the late 1860s. Two British insur- trigger (in most cases: humans) and not to count

11 it among natural hazards like loods, storms, This synoptic situation promotes subsidence, landslides and earthquakes. stabilization of the atmosphere connected with The dificulty of pinning down ire as a “natural” dry and warm conditions. disaster becomes even clearer in comparing Temperatures could only be elicited for Stock- diverse locations where ire disasters are likely holm (400 km south of Sundsvall), as the closest to occur. Forest ires result in different impacts, meteorological station was located in the capital outcomes and measures from city ires, or ires town of Sweden. The 21 degrees Celsius meas- New research New in country side villages. Thus, it seems that ured there were, however, a high value for late the classiication of ire as a “natural” hazard June compared to the reference period of the is case-sensitive, which indeed applies to the last 120 years. There was the deviation (i.e. the Sundsvall ire. anomaly) of mean sea level pressure (in mbar) According to the records, hot and dry weather of 25 June, 1888 from the mean measured for had prevailed in the Sundsvall area during the that day over the past 120 years. It indicates days before the ire. Adding to this, strong winds that positive pressure had risen to ive to ten were reported – in short, in the natural environ- mbar above average across Scandinavia, thus ment this was an "ideal" climatic situation for pointing to prevailing stable warm and dry con- ires to break out. In Sweden, the natural as well ditions. Furthermore, both charts show that the as the built environment provided ample fuel in anomaly was not merely a local event but could the form of large forests and towns entirely built be observed over a larger area. Therefore, it can in timber. However, would those warm and dry be assumed that the same situation concerning conditions have had the same effect on a wood- the desiccation of the (natural as well as urban) built city as one would grant it would have on environment in Sundsvall also applied to a wider the wild-land? area. This is supported by Lars Nilsson’s state- Stephen Pyne, a life scientist studying the “hu- ments about the occurrence of numerous forest man history of ire on Earth”, suggests that in ires burning in Sweden on 25 June, 1888. order for cities to catch ire, they irst had to be in a condition to burn, and thus, were susceptible What a spark can do to the same rules as ires in open country. Ac- The fire that broke out on 25 June 1888 laid cording to Pyne nineteenth century wood-built Sundsvall almost entirely to ashes. From a cities were like “a reconstituted forest”, that is population of 10,000 people, approximately “[they] burned with the frequency and intensity of 9,000 were left homeless. Surprisingly, in view the forests from which [the wood] came.” Thus, of the scope of the fire, only four casualties Pyne’s observations underline the ambiguity were reported. According to the lengthy account of ire as a hazard, showing that even in urban written by W. Corty of Preussische National environments, presumably under human control, Versicherungsgesellschaft in Stettin (he will be climatic factors played a decisive role for the ire- further introduced below) the ire in Sundsvall proneness of a city. No ire, howsoever “human- had started at 11:30 a.m. and had been caused made”, would break out or spread in a wooden by sparks emitted from the chimney of a passing city covered in snow or soaked by heavy rainfall. steam ship. Due to the aforementioned “unusu- The “weather reports” in the SRC records and ally great heat and dryness which existed the other sources are supported by climate recon- days before and also during the ire” a wooden structions for the date of the conlagration. The warehouse quickly caught ire which was spread daily sea level pressure map for 25 June 1888 by a “strong western storm”, and burnt down the shows high pressure over Scandinavia and whole – entirely wood-built – city within 12 hours. lower pressure over the eastern North Atlantic. Two other towns, Umeå, north of Sundsvall and

12 Lilla Edet south of Gothenburg, experienced the one of the fewer reinsurers connected with three same fate and burnt down on the same day. of the Swedish companies, but nevertheless Clearly, the Swedish tradition of building houses got away with a comparably low percentage of completely in wood (even roves were sometimes loss. Still, 10.7% of the gross premium of the covered with wooden shingles), made cities with company’s ire department may be considered a high percentage of timber buildings exceed- substantial enough. ingly vulnerable to ire. As a consequence, one might expect a well organised ire brigade to Reinsurers as a lobby-group research New operate in a wealthy trading town like Sundsvall. Even if the event did not have a devastating ef- This was not the case, however. According to fect on SRC’s annual gross premium income, it Corty, the local ire brigade started panicking called for immediate action. Sundsvall was the and “made a bolt for it” when they saw the town irst disaster of such a magnitude in the com- burning in several places. Apparently, adding to pany’s dealings with Sweden. In order to protect the unfortunate circum-stances, their equipment themselves from repetition of such damage had been insuficient and the authorities had contracting policy had to be changed quickly. forgotten to close the main water pipe so that it However, SRC was not the only reinsurer in- could have been used to extinguish the ire. The volved and in order to act in their own interest, overall damage covered by insurance amounted the connection to other reinsurance companies to 20m Swedish Crowns, rising to 30m Crowns was vital in forming a powerful lobby capable of including uninsured risks. enforcing far-reaching modiications. Therefore, Five Swedish insurance companies were af- SRC’s director Wilhelm Wasels made use of fected by the conlagration, the Mutual Building established internal networks existing between Assurance (which had no reinsurance cover), the leaders of the reinsurers involved in the Svea, Skandia, Sverige and Skåne. The lat- Sundsvall conlagration. ter three belonged to the oligopoly mentioned The central point of discussion in all his corre- above. According to the records, a network of 57 spondence was the maximum for wooden cities European reinsurance companies (or insurance in Sweden. Wasels’ main contact was director enterprises acting as reinsurers) had contracts Thyssen of Gladbach Fire and Gladbach Re. involving them in the Sundsvall loss. The visu- In their lively exchange of letters Wasels ex- alisation shows the reinsurers and their connec- pressed his concern about the reinsurance of tions with the four Swedish insurers. The most wood-built cities in Sweden. Wasels, Thyssen central reinsurers are those with links to three and six other directors of reinsurance companies or four insurers, whereas those appearing at the (National Bukarest, Cologne Re, Gladbach Fire periphery were under contract only with one or and Gladbach Re, SRC and Queen & United two Swedish companies. This representation (Berlin branch), thus developed a plan of action. of the network makes visible the central group They decided to appoint a claims adjuster who of reinsurers (i.e. with three or four contracts) would travel to Sundsvall to supervise the loss SCR belonged to. Moreover, the group cluster- regulations and represent their interests in situ. ing around the cen-tre contains all of SRC’s Thus, W. Corty of Prussian National Insurance, correspondence partners in the Sundsvall case. a “neutral” company in the sense that it was Looking at the distribution of the damage, the not involved in the Sundvall conlagration was reinsurers taken together shared a loss of 10.3m nominated. Concretely, Corty’s task as claims Crowns amongst each other, whereas the ive adjuster meant that he spoke to representatives Swedish insurers faced nearly half of the overall of the Swedish insurers and decided on location insured loss, a sum of 9.1m Crowns. SRC was about the new maximums that were to be as-

13 signed to factories and to towns built in wood. existing tariffs were raised by 100% for market Also, Corty sent a map to Wasels visualising towns and narrowly built cities and 50% for the scope of the ire in Sundsvall, thus literally “remaining risks in the countryside.” Whether “mapping vulnerability.” He used beige colour to the tariff committee’s meeting was motivated by high-light the burnt down parts of the city built in previous pressure from reinsurers or whether wood and red for those built in stone. Red build- they had simply judged the situation correctly ings with a blue frame represent buildings that in deciding to augment the premiums cannot be New research New had survived the ire. deduced from the sources. The extensive rais- Concerning the Swedish contracts, Thyssen ing of premium rates was, however, a necessary declared in several letters to Wasels that he se- step in view of the reinsurers who would other- riously considered cancelling them as a whole. wise have been likely to terminate their contracts He explained that “this [was] the best way of with Scandinavian insurers altogether. showing the Scandinavian companies the seri- ousness of the situation” as he was convinced From Wood to Stone “that the gentlemen, if they [did] not receive vig- By no means did the negotiations of maximums orous animation from outside, [would] let things for wooden towns end at the close of 1888. run as they had before.” Three years later, as can be gathered from an As mentioned earlier, SRC did not act on their exchange of letters between Wasels and Penk- own in making demands and pressing the insur- witt, the director of Baden Re, the latter had ers to change their policy. Neither did they solely discussed the subject of maximums with the communicate with other reinsurers by letter. As director of Skandia. The irst of Penkwitt’s let- can be gathered from the exchange between ters dating from 17 February 1891, was a reply Wasels and Thyssen a group of reinsurers came to Skandia’s proposition to augment the 1888 together in Mainz on 28 July 1888, a month after maximums for Swedish towns and of freeing the ire in Sundsvall, to discuss the changes that Sundsvall entirely from maximisation. were to be introduced into the existing contracts According to the Scandinavian director, far- with the Scandinavian insurers. At this con- reaching improvements in construction methods ference the present reinsurers worked out new had been made which justiied such far-reaching guidelines for further contracting in Sweden. modiications of contract. Penkwitt, however, Concerning towns built in timber the new regula- expressed strong doubts that substantial amelio- tions stipulated that reinsurers would only cover rations could have been made in such a short a quarter of a given maximum loss in wooden space of time and declined the offer, especially cities. A following deinition decreed that “wood- regarding Sundsvall. From Lagerbring’s (Skan- en cities are those in which 50% and more of dia’s director) reply, referring to a map he had the houses are built in wood.” This paragraph sent to Penkwitt earlier, we learn “that the whole stands out in importance as its application di- actual city [was] [re]built in stone [...].” rectly affected the Swedish companies’ ability The change in building material from wood to to insure cities with high percentages of wooden stone amounted to a near-complete reduction of houses and in turn pressed them to change their ire risk and, from the Swedish insurer’s point of policy towards owners of wooden houses. view, justiied the disbandment of maximisation. Only two days before the meeting in Mainz, on And indeed, the Swedish tariff committee’s regu- 26 July, the Swedish tariff committee had held lations from 26 June 1888 stated that premiums a special gathering at Gothenburg where deci- were to be lowered as soon as improvements sions on new insurance premiums had been had been made in wooden cities regarding made. The result of this session was that the building material or the ire brigade and their

14 equipment. In using the argument that other some of the Swedish insurers were withdrawing reinsurers had conceded Skandia’s proposal as insurance cover from the wooden peripheries of a further means of pressure, Lagerbring eventu- the city. In other words, the social vulnerability ally managed to gain Penkwitt’s consent. Thus, of Sundsvall was shifted as a consequence of Sundsvall was freed from maximisation only the ire and the newly agreed-upon premiums. three years after its almost complete destruction Assuming that the reinsurers’ pressure did play by ire. However, this was only possible because a vital part in the reconstruction of the town of what appears like a sub-clause in the insurer’s in stone, it is important to see the emerging research New correspondence: The town had been rebuilt in chain of reaction and – apart from the positive stone after the conlagration of 1888. reduction of ire risk – the fact of possible nega- The economic pressure of high ire premiums tive impacts on society. It is activated through should not be underestimated as one of the de- the negotiation and re-shaping of risk between cisive factors for local authorities to improve ire reinsurers and insurers and thus, mediated by protection and, hence, to reconstruct the town in contracts and policies, ultimately affecting the stone. The incentive of being placed in a lower policy holder. category of risk as a consequence of architec- tural improvements accelerated change so that Conclusion only three years after the great ire, Sundsvall This paper has focussed on, irstly, the chang- could be freed of its maximums. es of risk management initiated by reinsurers (namely SRC) and insurers following a disaster, Shifting Vulnerability secondly, on how and whether those changes On the one hand, the rebuilding in stone ren- were enforced, or, to put it another way, in how dered the town considerably less vulnerable to far reinsurers acted as a pressure group, and ire and therefore also mirrors a process of learn- thirdly, how risk was redeined by the reinsurers ing. On the other hand, the reconstruction did as a consequence of the disaster. not leave Sundsvall’s demographic composition From Wasels’ correspondence with Thyssen of entirely unaffected. Before the ire, middle-class Gladbach Re, the view is derived that those two or poorer people had lived in the wood-built reinsurers, along with at least ive others, formed town centre. However, they could not afford a distinct pressure group with the aim of pushing the newly erected expensive stone houses and through contract modiications in their own inter- apartments, and consequently had to move to est. However, no black-and-white power pattern the periphery of the town. Although, this situation emerged in the sense of reinsurers subordinat- had to a certain extent already existed before the ing insurers. Rather, the Swedish companies ire, it became more pronounced through the re- had their own means of realising their interests, construction. Also, as even most of the wealthier thus applying pressure likewise. The apogee of people used to build in wood and consequently the negotiations and modiications following the were equally affected by ire, only minor segre- conlagration is the reconstruction of Sundsvall’s gation existed between poor and rich parts of the entire city centre in stone. Clearly, the reinsur- population through the ability to afford costlier ers (along with the insurers) had had a strong and “safer” building material. This changed, inluence on the city’s reconstruction by way of however, after the reconstruction of the city, the augmentation of maximums and premiums. which resulted in a partition of people who could Thus, this paper has shown how reinsurers can afford the “safer” stone houses and those who change the interface where the human and the lived in potentially “riskier” wooden buildings. natural spheres touch by acting primarily in order This situation was deteriorated by the fact that to protect their own enterprises from future loss.

15 Initially, the transition from a wood- to a stone- ing forces were overruled by the new pricing built city after a conlagration may seem banal. of risk initiated by a reinsurance lobby-group Rather the “obvious thing to do” than a process determined to shape risk so it would not threaten of learning or adaptation. However, if it was their enterprises anymore. Even though there such a simple matter we would have to ask why are voices criticising Stern’s optimism concern- the transformation had not taken place earlier, ing the political inluence of insurance lobbies or, indeed why the Swedes built their houses interested in disaster prevention – precisely

New research New in wood at all. The answer is twofold: on the because they are primarily economic enterprises one hand there is the gravity of tradition which interested in their own survival – his words to- prevents change, on the other hand there is gether with the successful history of adaptation economic pressure. In a country covered with in Sundsvall might sketch out one possible tool forests, timber is a cheap building material that to adaptation in the future. does not have to be transported to the building site from a distant place, as may be the case Eleonora Rohland with stones, but it can be found nearby. Both factors, although appearing in the historical Eleonora Rohland concluded her MA studies in context of a Swedish city conlagration, have economic, social, and environmental history at lost none of their virulence for present societies the University of Bern, Switzerland in February and the current debate about the adaptation to 2009. She is currently working on her Ph.D. the- climate change. sis on the memory and perception of hurricane In the case of Sundsvall, those two persever- disasters in New Orleans (1722–2005) at the Institute for Advanced Study in the Humanities, Essen (KWI), Germany. In November 2010 Ele- onora’s thesis was awarded the young researchers award of the Research Group for Critical Business History (AKKU), Bochum, Germany.

16 Business of a Swiss Private Bank in the Nineteenth Century The History of Dreyfus Söhne & Cie AG, Banquiers Basel

Today the irm Dreyfus Sons & Co Ltd may be portrayed as the typical Swiss private bank, specialised on "managing private clients' wealth" and administering personal discrete relations. The head ofice is located in the centre of Basel in an unassuming though elegant 6-storey building from the Fifties. Neither logo nor letters disturb the sober appearance. You either know your way or you will research New need some advice. This is not only the head ofice of a company with a balance sheet total of 2bn, but the only place of business. It is for more than 125 years that the Dreyfus family has run its business from this very address on Aeschenvorstadt. Although the irm is incorporated since 1942 and therefore, strictly speaking, not a "Privatbank" along the articles of a private partnership, members of the founder's family are still active in the management and in the board of directors. The current chairman and vice-chairmen of the board belong to the sixth generation of the family. Their forefather Isaac Dreyfus, a French Jewish immigrant, started business in the town in about 1812.

Yet the origin and establishment of this inan- and interaction of the Dreyfus irm. The research cial irm is less linear than it seems today and institution Schweizerisches Wirtschaftsarchiv it certainly did not start with conservative asset Basel offers important archival holdings and management. As the bicentennial anniversary documentation to explore the textile business in of Dreyfus Sons & Co Ltd approaches, the bank the region and the capitalisation of the Swiss in- takes great effort to shed light on its history. The dustry in the late nineteenth century. The records establishment of a long-term archive is on the of inancial companies, which relect the activi- way and a small brochure about the irst hundred ties of Dreyfus Sons & Co from the second in- years of the house has been published under dustrial revolution until 1914 became, to a great the title "Merchant House, Manufacturer and extent, part of the long-term archives of the UBS Bank. The Business of Dreyfus Sons & Co in the and are thus not directly accessible. Given the 19th Century" (Bennewitz, 2010). This article is scattered documentation I had to cast a net in based on my indings published in the booklet. order to capture the pieces for a more complete The research has been fully inanced by Dreyfus picture of the company's engagements. Sons & Co Ltd. So far, presentations of the history have focused So far the company did not manage a historical on the leadership of the family members and archive, making it dificult to reconstruct the de- their personal achievements, especially for the velopment of its business from the Napoleonic Jewish community of Switzerland. The interplay era until World War I. Balance sheets and ledg- between the family business and the Jewish ers as well as records and correspondence community in town – and later on a regional and from the nineteenth century are basically not European level – is in fact most interesting and available. The documentation through family deserves further research. The Dreyfusbank is collections is slightly better, so that at least core one of very few Jewish-owned banks that ever documents about ownership and inheritance are made it into the realm of Swiss banking and it at hand. The main source to reconstruct busi- survived the deadlock of World War II. Further- ness activities in the irst half of the nineteenth more the irm is the oldest Jewish business in the century were the records of the city archive. I town and fulilled at times a decisive social and systematically studied the iles of the local juris- economic function for the Jewish community. diction to reveal a pattern of business partners Set aside those interesting social and political

17 aspects, the development of the core business He ordered batiste from France, delivered it to in itself is a story worth telling. home workers in the Black Forest who reined This compilation focuses on the company in the tissues or scarfs, and inally sent it back to terms of its commitment to various areas of the French market. His business activities in the commerce and industry in the irst century of its textile market remained varied, since he acted existence; it focuses on the transformation from as agent, forwarding agent, and middleman. As merchant to inancial services. The mechanisms a wholesaler he commissioned pedlars in the New research New of change can only be insinuated, but it becomes countryside and supplied retailers next door, very clear that the history of the Jewish banking most of them also Jewish Alsatians. Credit on house, so far told as a separate story, involves goods, with or without a bill of exchange, was the major themes of the Swiss economy and the inancial basis for this part of the wholesale technology in the nineteenth century: cotton business. trade, silk ribbon industry, Alpine tourism, railway companies, and electrical engineering. Shipping agent Upon request, the middleman Isaac Dreyfus Textile trade also handled delivery of the goods. Temporarily The merchant Isaac Dreyfus (1785-1845) grew the freight forwarding business became quite up in a fabric trading family in Alsace, 15 km from prominent. For example, in 1832 he kept six Basel on the French side of the Rhine valley. coaches ready for such use. Around this time After the French Revolution the Jews of Alsace freight forwarding in Basel was synonymous with were granted civil rights and free settlement. The contraband. For the textile merchants in the area French citizenship opened the way for Dreyfus where three national borders converge, shipping and other Jewish entrepreneurs to move their goods afforded large proit margins, always as- business to Switzerland, despite their religion. suming that one ignored embargo on imports The Helvetic Confederation still rejected the idea and bypassed customs posts. The contraband of civil rights for Jews and the canton of Basel in trade of the Basel textile barons reached a particular withheld residential permits for Swiss striking climax during the continental blockade. Jews. But, until the end of the Napoleon Empire, Cotton products, even exports from Switzerland, the French paper was suficient. came under the trade embargo imposed against The textile industry dominated Switzerland's England, which meant that the entire textile trade foreign trade balance in the eighteenth and was operating in a grey area. The business of nineteenth century. France was the country's duty-free delivery remained proitable after the most important trading partner, especially for war, both for the individual merchant and for the the import and export of raw cotton and cotton economy of Basel. For a guaranteed delivery fabrics. The city of Basel igured as the central to Paris in 1835, Isaac Dreyfus could still ask trading hub on the Swiss side of the border. For for a commission of 30% of the value of goods. this reason the young Isaac Dreyfus opened He guaranteed the goods with a blank bill of his agency for wholesale fabric trade in Basel, exchange sent in parallel to the consignment. building a network with family partners in Alsace Items coniscated by the French authorities were and Mulhouse. He traded "grey cloth and yard put up for auction at the French customs ofice. ware", that is, ordinary fabric sold by the meter, On these occasions Isaac Dreyfus competed but also raw wool and luxury items. The trading with other merchants from Basel to bail out the was by no means long-distance, yet interna- goods. Only in 1835 did the government of Basel tional. He ordered prints and embroideries in St. decide to put an end to the flourishing com- Gallen for his customers in Paris and Frankfurt. merce and began to prosecute claims against

18 contraband. city of Basel grew by almost half of the former area through this addition. In connection with Real-estate credit the private urban development, typical for the In parallel with his wholesale trade and com- period of promoterism, Dreyfus participated in a mercial credit, Isaac Dreyfus was also engaged smaller mortgage bank, the Banque Foncière du in the real-estate credit business, especially Jura. The Bank's name originated from its Swiss in France. Dreyfus took out loans from Basel head office in Delémont, but business soon patricians for small credits on land and houses concentrated on foreign markets. It is telling research New to smallholders and crofters from rural Alsace. that the real-estate business, the central activ- Thanks to his local knowledge and close co- ity of the Dreyfus irm in the nineteenth century, operation with brokers and French notaries, totally vanished in retrospective presentations he could save on fees and registration entries. on the irm. In 1845 80% of the capital of the irm Dreyfus consisted of French title deeds. In theory and Silk ribbon factory by law, the French entrepreneur could have Due to the strict anti-Jewish policy of the canton, also taken up real-estate trading in Switzerland. the sons of the company's founder did not obtain But political reasoning ran contrary, at least for personal permits to live and work in the town the Jewish Frenchman. The controversy over a until 1849, one year after the federal constitution. "Jewish agenda" in real-estate reached a climax For the irst time since 1815 the Jewish family in 1837 in Germany, as well as in Switzerland. could plan on the prospect of a permanent resi- The neighbouring canton of the city of Basel, a dency in town. The successors of Isaac Dreyfus, split-off from the liberal upheaval in 1833, even who had died in 1845, reorganised the business generated a bilateral crisis between Switzerland by giving up the trade in goods and building up and France by discriminating against French an enterprise of their own. They established a estate agents of Jewish religion. silk ribbon factory on the outskirts of the city, Thus, the Frenchman Dreyfus irst requested thus competing in the most proliferate and most permission to buy land in the canton of Basel prestigious economy of Basel. The silk ribbon in 1839, still provoking a general debate on the manufacturers in town, alongside with Lyon and deteriorating inluence of Jewish agents on the Saint-Etienne (Saint Stephen), dominated the real-estate market. As always, Isaac Dreyfus European and American market until the more did not evade the public argument but fought industrialised production in England took the for a legalistic procedure. In the following years lead. In the early 1850s the silk ribbon industry he acted as broker for or traded agricultural developed promisingly, in Basel a dozen new estates. His sons carried on the real-estate busi- factories went into operation. Most of them had ness and participated in syndicates to liquidate to close down only ten years later because the some of the larger properties owned by nobility American Civil War had driven up commodity in France and Baden. In 1868, the two sons who prices and, what is more, fashion had changed. had taken over the irm determined "le but de la Isaac Dreyfus Sons liquidated its operation as société sera de traiter des affaires de banque de well in 1866. Though it was a short interlude, it spéculation en biens immeubles". In 1872 the seems to have been a serious attempt to switch company oversaw a huge development project business to manufacturing. Isaac Dreyfus Sons in the city of Basel that was initiated by a real- produced not only the typical Basel assortment estate investment company in Mainz. The main of plain and timeless ribbons for clothing, hats investors in the new urban district in Basel were and shoes. The irm specialised in velvet ribbons brought in by the Frankfurter Bankverein. The and in woven images in the small ribbon format,

19 imitating prints and photographs of celebrities. Siemens tried to claim supremacy as the power One of the remaining specimens shows Abra- supplier for the Turin region and erected several ham Lincoln on the occasion of his investiture power stations. Jules Dreyfus-Brodsky became as president in 1861. The American market was chairman of Alta Italia since Indelec was the obviously a target for Dreyfus, competing with inancing partner in this enterprise. Indelec was the Lyonnaise Jacquard industry. also heavily committed to the Russian market through the metropolitan lighting company in St.

New research New Industrial credit and electro banks Petersburg, but Dreyfus-Brodsky pulled out of It was not until 1868 that the foundations were Indelec and its industrial investments in Russia laid for today's private bank: the two elder broth- before 1917, because Dreyfus Sons & Co parted ers returned to the core business;the youngest company with the Basler Handelsbank group brother Jacques opened a bank in Frankfurt am in 1904 and joined the Swiss Bankverein. The Main, to which the Swiss irm always remained liaison with the Basler Handelsbank had been related via syndicates and limited partnership. put up in 1895 exactly because of its venture into The Basel inanciers were increasingly involved the international electricity business, while the in the Swiss securities and issuing market and competing Basler Bankverein rejected the offer also maintained close links with the Alsatian of Siemens to participate in its inancing trust. In industry and its new commercial bank, Banque the meantime the banking sector in Switzerland de Mulhouse. As from 1891 the reorientation had changed fundamentally. The former Basler towards industrial credit was clear. The third Bankverein, now also registered in London as generation of bankers did not further expand the Swiss Bankverein (later known as Swiss the real-estate business, but became involved Bank Corporation), had taken the lead in the na- in industrial inancing, more precisely in the "Un- tional consolidation process of the banking sec- ternehmergeschäft" of founding special holding tor. Dreyfus and others urged the Handelsbank companies for the electricity industry in Europe. to merge with the Swiss Bankverein, in vain. So The venture capital for the new industry, starting private bankers like Alfred Sarasin and Jules with telephone and electric lighting, was raised Dreyfus dissociated from the Handelsbank and through a special type of investment trust, the so became partners of the larger corporated bank. called "electro banks". The inancing company The privately owned banks A. Sarasin & Cie and for Siemens & Halske in Berlin was Indelec, Sch- Dreyfus Sons & Co were, on the other hand, weizerische Gesellschaft für elektrische Industrie interesting partners for the Swiss Bankverein in Basel. Jules Dreyfus-Brodsky, third generation because they made an excellent junction to the in the Dreyfusbank and married to a Ukrainian French investment and electricity market. dynasty of industrials, invested in Indelec and Sarasin and Dreyfus had already brought up their represented the interests of Indelec in industrial own holding company, the Société d'Applications companies. For a short period he was on the Industrielles, registered 1896 in Paris. The SAI Supervisory Board of Siemens & Halske itself, started as a holding company for the Basel representing the interests of the Basel inanciers based industry Elektrizitäts-Gesellschaft Alioth, with the leading Basler Handelsbank. One of the which merged with Brown Boveri & Coin 1910. irst construction projects of Siemens in Switzer- The inancial holding, in comparison with the land was the river power station at Wynau/Bern, famous Swiss electrobanks only a small player, built in 1895. Before the power station went into became an effective vehicle to venture into the operation Indelec assumed responsibility for French market. It took stakes in inancing the the power company and started the marketing construction of power stations by Est-Lumière for electric lighting in the region. In Piedmont, in the outer city ring of Paris and the construc-

20 tion of hydroelectric power plants in the Jura, attraction for the international irst-class tourism Savoy and southern France by Union Electrique. during the winter season, under the most difi- But the national concentration of its investment cult weather conditions. The Basel banks were strategy brought along an even greater risk for predominantly engaged in the tourism industry the private banks Sarasin and Dreyfus in this in the Engadine. The Dreyfusbank held shares very young and struggling large scale industry in another Spa hotel in St. Moritz and hotels of of the Second Industrial Revolution. the Ritz group. It is without discussion that unincorporated irms In comparison with the large scale venturing research New and private inanciers did not individually dis- business the capitalisation of individual hotel- pose suficient capital to have a say in transport companies seems to be manageable and itting and heavy industry business ventures. The for private inanciers. But actually the hotel busi- strategic moves of a privately owned bank in ness was intrinsically intertwined with interests in the nineteenth century cannot be explained in the transport and electricity industry. The canton isolation but only in terms of the interaction be- Grisons and the Engadine valley provide an ex- tween private inanciers, corporate banks and cellent example of how railways, power plants regional industry. Nonetheless, it is astonishing and funiculars all served the ambitious aim to and probably underestimated how agile the implement a tourism industry with considerable small players were. The Dreyfusbank formed turnover. For the Dreyfusbank the stakes were and modiied alliances, for example giving up high in all sectors of this evolving industry. the cooperation with Siemens for the cooperation with its competitor Alioth, switching party This is a short overview of the most important between Handelsbank and Bankverein several activities of Dreyfus Sons & Co during the irst times, or in 1904 escorting the inancing com- hundred years in business. The company was pany Schweizerische Eisenbahnbank in Basel run as a private partnership of family members, through the conlict in 1904 between the rivals one to three partners at a time, with less than Basler Handelsbank and Swiss Bankverein. 15 employees. The founder Isaac Dreyfus had proited from his position as a middleman. He Alpine tourism was a border crosser between Alsace and Swit- The engagement of the Dreyfusbank in the zerland, an outspoken stranger in the protestant Swiss tourism sector appears more directly and merchant community of Basel, but with excellent personally. Jules Dreyfus-Brodsky (1859-1942) ties to the rural economy in Alsace. His activities was himself on the board of several irst class in the textile trade were almost exclusively con- hotels as well as being a regular guest in the ined to a Jewish network, while his real-estate top houses. The Dreyfusbank managed the and mortgage business went along new lines syndicate for the capitalisation of prestigious and involved inanciers from the few patrician old institutions like the Spa Hotel Gurnigel in families in Basel. I see quite separate strands the Midland and for the still operating Grand of business relations at work, by no means a Hotel National on the shores of Lake Lucerne. logical or natural transformation from merchant The boost of the Swiss tourism industry around banking to inancial services. It is also striking the turn of the century is marked by the entirely that the majority of his grandchildren went into new concept of grand hotels in the High Alps. the textile trade and textile industry. Especially These houses offered the comfort of a luxurious for the Basel branch of the family the manu- metropolitan lifestyle with private bathrooms facturing activities and industrial participations and electric lighting in the remote and rough in the Alsace cotton industry did not turn out countryside. The initial idea was to create a new satisfactorily. With the Second Industrial Revolu-

21 tion the Dreyfus bank took a role in international Dr. Susanne Bennewitz industrial inancing and built strong alliances with Historian, Saarbrücken local engineering and electricity industries. [email protected]

Literature New research New Bauer, Hans (1972): Schweizerischer Bankv- Histoire générale de l'électricité en France. Tome erein, 1872-1972, Basel 1972. deuxième, L'interconnexion et le marché, 1919- Bennewitz, Susanne (2010): Handelshaus, 1946, Paris: Fayard, 1994. Manufaktur und Bank. Die Geschäfte von Drey- Mazbouri, Malik (2005): L'émergence de la place fus Söhne & Cie im 19. Jahrhundert. Publication inancière suisse (1890-1913), Lausanne 2005. by Dreyfus Söhne & Cie AG, Banquiers Basel, Morsel, Henri (2000): Le rôle des banques dans 2010. le inancement de l'hydroélectricité en France Broder, Albert (1986): The Multinationalisation jusqu'à la nationalisation en 1946, in: Marguerat of the French Electrical Industry 1880-1914: / Tissot/ Froidevaux (Ed.), Banques et entre- Dependence and its Causes, in: Hertner / Jones prises en europe de l'ouest, XIX-XX siecles: (Ed.), Multinationals. Theory and History, Gower Aspectx nationaux et régionaux, Neuchâtel 1986, p. 169-191. 2000, p. 137-152. Guth Biasini, Nadia (2008): "Dreyfus", in: Histor- Panozzo, Marco (1985): Stadterweiterung auf isches Lexikon der Schweiz, http://www.hls-dhs- dem Gebiet des Gundeldinger-Quartiers, un- dss.ch (19/04/2005) published thesis, Basel 1985. Hausman, William J. / Hertner, Peter / Wilkins, Paquier, Serge (2001): Swiss Holding Compa- Mira (2008): Global Electriication. Multinational nies from the mid-nineteenth Century to the early Enterprise and International Finance in the His- 1930s. The Forerunners and Subsequent Waves tory of Light and Power, 1878-2007, Cambridge: of reations, in: Financial History Review [Great Cambridge University Press, 2008. Britain] 2001 8(2), p. 163-182. Hertner, Peter (1987): Les sociétés inanciers Rauber, Urs (1985): Schweizer Industrie in Rus- suisses et le développement de l'industrie élec- sland. Ein Beitrag zur Geschichte der industri- trique jusqu'à la Première Guerre mondiale, in: F. ellen Emigration, des Kapitalexportes und des Cardot (Ed.), 1880-1980, Un siècle d'électricité Handels der Schweiz mit dem Zarenreich (1760- dans le monde, Paris 1987, p. 341-355. 1917), Zürich 1985. Hoffman, Philip T./ Postel-Vinay, Gilles / Reissner, Hanns / Kaufmann, Uri (2006): "Drey- Rosenthal, Jean-Laurent (2000): Priceless Mar- fus", in Encyclopaedia Judaica, 2nd Edition, kets. The Political Economy of Credit in Paris, 2006, Vol. 6. 1660-1870, University of Chicago Press, Chi- Sarasin, Philipp (1997): Stadt der Bürger. cago 2000. Bürgerliche Macht und städtische Gesellschaft Imwinkelried, Daniel Thomas (1995): Das Ver- (Basel 1846-1914), Göttingen 1997. hältnis von Banken und Industrie am Beispiel der Segreto, Luciano (1994): Stratégie et structure Elektrizitätswirtschaft: Die Firma Siemens und des sociétés inancières suisses pour l'industrie die Schweizerische Gesellschaft für elektrische électrique (1895-1945), in: Gugerli, David (Ed.), Industrie 1896-1914, unpublished thesis, Bern Allmächtige Zauberin unserer Zeit. Zur Ges- 1995. chichte der elektrischen Energie in der Schweiz, Lévy-Leboyer, Maurice / Morsel, Henri (1994): Zürich 1994, p. 57-72.

22 The Relationship of the „Third Reich“ and Turkey Between 1933 and 1939 a Highly Politicised Economic Relationship

Introduction Since the time of the Ottoman Empire rela- allied occupation. Both countries had to suffer tions between Germany and Turkey have been large losses of territory and high payments of positive, if we disregard the differences over the reparations as a consequence of the treaties of research New Turkish accession to the European Union and Versailles and Sèvres. the Turkish handling of the Armenian genocide. To overcome their international isolation both Beginning with several military advisory missions countries searched for support, which they found and economic interests in Turkish commodities, in the Soviet Union: Turkey agreed on a treaty the sale of arms and investments of German of Friendship on 16th March 1921 whereas Ger- banks in the Turkish infrastructure and inancial many agreed on the so called “Rapallo”-Treaty system in the end of the nineteenth century led on 16th April 1922. to close relations between the German Reich Shortly afterwards, both countries tried to re- and the Ottoman Empire. This relationship was establish their relations partially against the damaged on both sides in the disastrous mutual resistance of the victorious powers, because ight against the Triple Entente in the First World the treaty of Versailles did not allow relations War. between the former allies. Germany and Turkey The following work discusses the re-estab- agreed on 3rd May 1924 on a treaty of friendship lishment of relations between these countries, , which were the basis of all future political and especially in the foreign trade sector. It focuses economic relations. The irst trade treaty of both on the early years of the “Third Reich” between countries was agreed on 15th March 1927 with a 1933 and 1939. The period was chosen because validity of two years. It was followed by several of a) the accession to power of Adolf Hitler as economical contracts and the establishment of chancellor of the Reich, the related establish- several chief agencies of German corporations ment of dictatorship, and redistribution of new in Istanbul. economical measures as well as b) the avoid- This parallelism of the foreign policy devel- ance of international isolation of the German opment changed within a few years: Turkey Reich and the Turkish Republic. I will discuss under the strong governance of Ataturk was the economical interests of the “Third Reich” in endeavored to fulill a compensatory and neutral Turkey and vice-versa and what kind of relation- policy to all countries with bilateral and multi- ship developed. lateral agreements to ensure their territory and achievements after the political recognition with The initial situation of Germany and Turkey at the treaty of Lausanne 1923, whereas the main the begining of the 1930s goal of nearly all German politicians during the After the First World War both countries were in Weimar-Republic was the revision of the treaty a similar situation. Both countries were experi- of Versailles. This focus increased during the encing great internal turmoil: the German mon- national socialist era with ambitions not only archy broke down and a democratic system was regarding the revision of the borders but with the established, and in Southeast-Europe the Otto- attempt to realize the racist habitat theory (“Leb- man Empire collapsed. As a successor state the ensraumtheorie”). In this perspective we have to Turkish Republic was established under Mustafa question the economic concept (“New Plan” and Kemal, after a struggle for liberation against the autarky) as well as the interests of the German Reich in Southeastern Europe and Turkey.

23 The “New Plan” of Hjalmar Schacht and the To resolve this problem, Hjalmar Schacht, at this background of the German – Turkish Relations time also minister of economy, proclaimed the “New Plan” in 1934 as the German Reichsbank At the time of accession to office of Hjalmar grew into a foreign currency administration and Sacht as president of the Reichsbank 1933 distribution vehicle with a dictatorial position in Germany was facing a strong foreign trade the foreign trade sector. deicit: “The German foreign trade was, since In a irst step a highly bureaucratized internal New research New 1930, under external and internal delationist control for the distribution of the few foreign cur- pressure, which was structurally conditioned, rencies for the export process was established cyclically enhanced and administratively de- on the basis of the economic necessity (vital creed.” Especially the worldwide collapse of goods). Involved were primarily 20 inspecting currencies in 1932 increased the deterioration authorities of the industrial groups with several of the foreign currency further. Despite these pre-inspecting authorities. Additionally 20 foreign problems in foreign trade the national socialist trade agencies, which where subordinate to the regime forced their agenda with full-employment Reich Authority for Foreign trade, were given the due to ambitious projects of the public sector task to act as a regional information service for (“First Four-Year-Plan”) and, as a consequence export companies while 20 foreign exchange au- of the revisionist and expansionist ideology, the thorities, which were based in the several state military armament. Especially the latter made tax agencies were responsible for the capital it almost impossible to obtain a positive trade transactions. Regarding the import of raw ma- balance because of the high demand of raw terials, the foreign trade agencies had to follow materials. Further, several boycott-movements the appointments of the 26 supervisory agen- in response to the German anti-Semitic-policy cies. The supervisory agencies were mostly led to a decline of trade with the traditional trade part of the Reich Ministry of Economics (RWiM) partners in Europe. while ive of them were controlled by the Reich As a result the foreign exchange asset of the Ministry for Public Food Administration. The German Reich dropped from 3 Mrd. RM in 1930 RWiM and the Reichsbank periodically issued to nearly 100 Mio. RM at the end of 1933. In the amount of foreign exchange currency, credit short: the “Third Reich” was nearly incapable of items, and credit on goods etc., which were at acting and bankrupt. disposal for import. Afterwards the foreign cur-

24 rency was distributed among the importers on ing substitute materials. the basis of urgency, for example the require- The corresponding Four-Year-Plan in 1936 ment of raw materials of the preferred arms- or manifested the subordination of the foreign trade export industry. It was also determined where to ensure the military armament: In a session of the importer had to buy his goods. the chancellery of the Reich, Göring adminis- Whereas the import was relatively easy decided tered the aims of the German economic policy: on this basis, the export was much more dif- “1. Autarky in all ields, which would lead to sav- icult. The central coordination and control of ings of foreign currency (…). 2. Use of foreign research New the measures of export promotion was based currency where it is necessary for the armament. in the “Abteilung E” of the RWiM with circa two (…) All measures have to be taken as it would dozens inspecting authorities, with the main be under wartime.” task of determining the subventions for exports To fulil this aim in the absence of foreign ex- on the fundament of the different products and change assets, Germany had to pay with manu- export countries. factured goods. Proit in foreign trade was not According to the internal control of import and the main goal. This was a strong disadvantage export the foreign trade system was reorganized of the “New Plan” together with the fact that im- on the basis of bilateral clearing and compensa- porters could not buy their raw materials at the tions arrangements. These agreements regu- best world market price, because of concessions lated the whole payment and capital transactions of the German Reich within the bilateral agree- via a central institution (alternatively the bank of ments. The import was so much more expensive issue) in the partner-country without foreign cur- than before and led to high negative balances. rencies and went back to a kind of barter trade. To get advantages in trade negotiations and to Already in 1935 almost 80 per cent of the Ger- solve the foreign currency problem, it was also man trade was accomplished on the basis of decided to export weapons. Further an internal clearing-arrangements. The main goal of the export subvention was established, which did “New Plan” was to achieve all vital goods for not succeed. armament, industrial production and nutrition The thoughts of autarky became a part of the without paying with foreign currency. In parallel German expansionistic attempts in the economic a promotion of domestic raw material production context, because autarky could only be reached was started together with an increase in produc- with an enlargement of the country. First steps

25 to achieve this goal were the establishment of can be dated to 1927 with an Industrial expan- a “cordon ecónmique” with friendly or neutral sion Law, which stipulated acquisition of land for trade partners and the attempt to get them into a enterprises, promotion of infrastructure, custom strong dependence on the German Reich. The concessions and tax exemptions as well as sub- territorial destination was already mentioned in ventions. The strong role of the state within the the so called “Hugenberg-Memorandum” in 1933 economy was a consequence of the pragmatic and in the statements of Franz von Papen as ideology of “etatism”: Ataturk did not want that

New research New ambassador in Vienna 1934, where he stated, Turkey will fall back into dependence on foreign that “(…) whole south-eastern Europe is the powers. In that vein foreign impact was excluded natural hinterland of Germany” and he has the and the economical inluence of the state was in- mission “to bring the whole area under the eco- creased, despite private entrepreneurship being nomic and political inluence of Germany.” The desirable. With etatism a far reaching regulation south-eastern countries should be secure suppli- and control of the economic sector was estab- ers of raw materials as well as secure sales mar- lished. Every economic activity was subordinate kets, which should be incorporated in an informal to the interest of the state. Within this process, empire. The trade with the south-eastern states most foreign companies were nationalized. The was especially intensiied after the annexation of state became actively involved in the economic Austria and the Sudetenland in 1938, because process because of the absence of a strong en- of the changed political landscape. trepreneurship and capital market. For inancing If we look in parallel at the economic situation the economic build-up, the Turkish One-party of Turkey within the same timeframe and the system founded several inancial institutions. aims of the political regime until 1939, we can With the help of the UdSSR the Turkish Repub- recognize that both countries would proit from lic adopted a Five-Year-Plan in 1934, with the an increase of the trade relations in the 1930s: aim to strengthen the production of consumer The economic goal of the regime under Mustafa goods on the basis of domestic raw materials. Kemal was the industrialization of the Turkish Additional new jobs should be generated with Republic, because it was at this time an eco- preference to the textile industry. Further the nomically and socially underdeveloped coun- infrastructure should be improved with the focus try. Particularly disadvantageous for economic on central and east Anatolia. growth was the absence of a necessary trans- After signing the treaty of Lausanne (1923) the port infrastructure and the inherited debts of the Turkish Republic was internationally recognized. Ottoman Empire. Very important for the economical and inancial The beginning of the Turkish Industrialization system of Turkey was Art. 28. With this article

26 the capitularies, which were active since 1881 Like Germany, the Turkish Republic instigated and granted foreigners privileges in iscal and an import restriction on necessary goods and economic areas, were fully suspended after contingent systems. Turkey was interested in an interim period in 1929. With the treaty the goods and equipment for the ongoing industriali- Turkish Republic could regain its customs re- zation like machines, railways etc., which could gime, which was essential for an independent be imported without restrictions. The measures foreign trade sector. Insofar we could not refer led to a positive trade balance by the beginning to a Turkish foreign trade policy until 1929. The of the 1930s. After modifying the contingent- research New passivity of the foreign trade, which reached its lists, they would not any more emphasize the turmoil in the same year, led to a reduction of structure of goods but their country of origin. A the foreign currency and constituted a danger consequence was the establishment of barter to the Turkish currency as a whole. In that way trade-agreements, which led to a full abandon- the Turkish Republic was in a similar position as ment of the contingent-system in 1937 and the the German Reich. signing of several bilateral clearing-agreements. Even a quantitative increase of export goods would not have automatically led to an increase German-Turkish Relations 1933-1939 in foreign currency due to unsteady world market The Near East and Turkey were seen in the eyes prices for agrarian products and raw materials. of the German Reich as a promising and inter- Despite that, because of the industrialization esting area, especially if the transportation con- efforts the import needed to be increased, es- nections would be enlarged. The unique mineral pecially the demand of machines. raw materials of Turkey made it a much courted The irst step to change the foreign trade regime trade partner. As we have seen in the above began already in 1928: the Turkish Republic discussed economic and political background, started to cancel all foreign trade contracts. The both countries changed their foreign trade to a aim was a correction of the foreign trade bal- bilateral system. While the Turkish Republic had ance. On 1st October 1929 the Turkish Republic interests in importing goods for industrialization, established a customs tariff with protectionist Germany wanted to import raw materials for the character. Earlier than the German Reich, at the military armament and preferred a system of au- beginning of 1930 the Turkish Republic also es- tarky. In this way the economic interests of both tablished a system of foreign exchange control. countries complemented each other between The control was transferred to a bank consor- 1933 and 1939, especially as the “New Plan” of tium, within which the Turkish government was Hjalmar Schacht coincided with the irst Turkish involved with a capital contribution. Together with Five-Year Plan. the Istanbul stock exchange a foreign currency equalizing fund was established, on which the The basis of all economic relations in the 1930s Bank consortium was responsible for the com- constituted the Trade Treaty of 27th May 1930. pensation between available foreign currency The contract was followed by several additional and foreign currency demand. At the beginning arrangements until 1939: of 1932 the responsibilities of the bank consor- 1. Supplement of 10th August 1933 tium were taken over by the newly established 2. Supplement of 19th April 1934 Turkish Central Bank. It implemented full foreign 3. Supplement of 15h April 1935 exchange control until January 1933, where 4. Supplement of 19th May 1936 all incomes from export businesses as well as 5. Supplement 30th August 1937 exchange currencies of other banks had to be 6. Clearing-Agreement 25th July 1938 transferred to the Turkish Central Bank. 7. Credit-Agreement 15. January 1939

27 The Supplement of 19th April 1934 was the import countries to place 15 in 1938 and from first bilateral agreement on barter trade and place 29 to place 10 of German export countries a irst step in the implementation of the “New in the same time period. Plan” and a change to bilateral trade with very If we look at the structure of the exported goods large custom reductions for the Turkish import of both countries, we can recognize that through to Germany. The inal decision on irst clearing- all implementations of the “New Plan”, the pay- accounts was taken with the supplement of 15th ing of imported goods with cost intensive manu-

New research New April 1935, which inherited an arrangement be- factured goods took place. Table 2 refers to the tween the German Reichsbank and the Turkish export structure of 1938, which can be repre- Central Bank. The bilateral agreements inally sentative for the whole 1930s and all above led to an oficial Clearing-Treaty in July 1938. mentioned supplement agreements to the trade The trade supplements with a term of mostly one treaty of 1930 show explicitly the different and year led to almost enduring trade negotiations complementing trade structure. (Table 2) As on the foreign policy level. Germany was especially interested in raw ma- Due to several benefits to Turkey admitted terials like grain for securing the food supply by Germany in the agreements until 1933 the and mineral ores for the military armament, the German-Turkish trade increased rapidly and development of the exported Turkish products quadrupled from 1933 to 1939 as table 1 shows. perfectly matched the German interests. As The Turkish export started with an amount of 37, Table 3 clarifies, Germany imported mainly 9 Mio. RM and reached 122,6 Mio RM by 1939. fruits, agrarian products, textile raw materials, There was a small decrease between 1937 and like wool and cotton, as well as chrome from 1938 when Germany took back the right of free Turkey. Especially Turkish chrome was essential import in the 1937 agreement and reduced the for the German military armament. The German Turkish import contingents by 60 per cent of the dependency on Turkish chrome was essential, level of 1936. This was necessary because of acknowledged by the economic policy division in the high deicit in the balance, which had ac- August 1939. Over 50 per cent of the total Ger- cumulated to 92,5 Mio. RM by the end of 1936. man chrome demands were met by the Turkish As Turkey was part of the Near East in the sta- Republic. tistics of the German Reich until 1936, it was In turn, Germany exported machines, railways, the biggest trade partner in the Orient. Between inished textiles, electronic products and iron 1933 and 1936 the proportion of German import products, which where essential for the Turkish from the Orient accounted for by Turkey grew industrialization. (Table 3) from 35,3 per cent to 65 per cent. In terms of The presence of Germany within the Turkish German export to the Near East, Turkey ac- trade was unequally high and led to a high counted for 45 per cent in 1936. As Turkey has dependence of Turkey on Germany: The Ger- been seen in a racial way as part of Europe man Reich imported 51 per cent of all Turkish and classiied as a European state within the exports in 1936 and supplied 45 per cent of all trade statistics since 1937, we have to look at Turkish imports. This amount did not change Turkey’s role in the German foreign trade in this very much until 1939. Further the political and regard as well. In the period of highest trade economical influence increased with several relations of1938 and 1939 the Turkish Republic agreements with the German private economy provided Germany with almost 4 per cent of their sector as nearly 2000 Germans were employed entire European import and around the same in as technical advisors. Since the late 1920s European export. Overall Turkey rose in trade several German corporations were engaged in importance from place 29 in 1933 of all German Turkey: Junkers and Lufthansa for the establish-

28 ment of the Turkish air trafic, Krupp with sale sider its best client. But at this time the regime of arms and railway-material, investments of desired an even stronger economic interlocking the machine-factory Augsburg-Nuremberg for of both states and promised to support Ger- building an electricity plant for the biggest Turk- many’s military armament, because of the proit ish copper mine and other irms, which helped for the Turkish industrialization process and for to build up the Turkish infrastructure. military equipment. After the unmasking of the The strong German influence in the Turkish German foreign policy and its expansionistic economy coincides with the aims of autarky pol- approach with the annexation of Austria and research New icy of the “Third Reich” towards South-Eastern Czechoslovakia in 1938, Turkey tried to de- Europe. In the ongoing 1930s, especially in the tach itself from the German stranglehold, which last two years before the start of the Second threatened the Turkish neutral foreign policy. World War, the Reich tried to use this inluence While countries in a similar position, like Hun- to achieve political concessions from Turkey gary and Romania, formed an alliance with the regarding a possible alliance (or to maintain “Third Reich”, Turkey approached Great Britain Turkish neutrality). This can be veriied by docu- and France under President Ismet Inönü , which ments of the foreign ofice: The German Reich inally led to an English-French-Turkish mutual threatened the Turkish government with a termi- aid pact in October 1939 and several trade con- nation of all trade contracts, if they would change tracts. Further, as a response to the German the faction. Similarly delays of new negotiations delays in military deliveries (artilleries, aircrafts regarding the expiring trade contract of 1937 and submarines ) Turkey suspended its’ chrome and clearing-arrangement of 1938 were used exports. In the ongoing negotiations Germany to apply pressure to get political concessions. tried to exclude the arms exports, because of Additionally the new credit-agreement of Janu- their own war preparations and wanted to get ary 1939 was used to ensure chrome deliveries Turkey back to a position of dependence with and to maintain the strong German position. This huge trade concessions. Despite trade relations agreement reached an amount of 150 Mio. RM, increasing during the Second World War, after a arranged with the German “Golddiskontobank”. strong decline in 1940, the German Reich could The amount should be settled within the clear- not re-establish its strong inluence as Turkey ing-agreement by an increase in Turkish export. signed a secret chrome-agreement with Great The credit was combined with large scale-orders Britain, France and the United States on 8th to German companies by the Turkish Republic, January 1940. This pending between Germany for example for the development of chemical in- on the one side and Great Britain, France and dustries, expansion of harbours, mining facilities, USA on the other side was a great success for power plants and other industrial and agrarian the Turkish Foreign Policy as Turkey could stay construction-projects. To increase pressure out of the Second World War until early 1945 on Turkey, the German Reich did not ratify the and only declared war on Germany to secure contract immediately and throttled especially its its entrance-legitimacy to the United Nations. military exports into Turkey, while the latter was still paying and delivering exports. This led to Conclusion a debt amount of 200 Mio. RM of the German As shown above, foreign trade between the Reich to the Turkish Republic within the clear- German Reich and Turkey developed very well ing accounts in August 1939, which should be between 1933 and 1939 as both countries had settled after the war. vital interests in each other’s products. Turkish Turkey recognized already in 1936 that their raw materials were perfectly suited to the newly capacity to act was restricted by the need to con- established “New Plan” and autarky approaches

29 of the “Third Reich” whereas German machines France and the United states to reduce German and industrial products, as well as military equip- inluence. Thus German-Turkish relations could ment, were seen as necessary for the Turkish be referred to as a politicized economic relation industrialization. until 1945. The rapprochement of both states was further supported by the change to bilateral trade agree- Christopher Gunkel ments as both countries had strong deicits in the New research New foreign exchange assets. The national socialist Christopher Gunkel, M.A. studied political sci- dictatorship caused no disruption in the relations ences, modern history and public law at the between both countries. It was only as Germany University of Gießen and University of Leicester. tried to get political concessions from Turkey, He is working since August 2010 for the Eu- due to the strong Turkish economic dependency ropean Association for Banking and Financial on the Third Reich, the relationship changed and History e.V. Turkey started to negotiate with Great Britain,

Primary Sources

Akten der auswärtigen Politik (ADAP) 1918-1945, Serien A – D, München 1975. (Documents of the Foreign Ofice 1918-1945, series A to D, Munich 1975.) Akten der Reichskanzlei (ADRK). Regierung Hitler 1933-1945, München 2002. (Documents of the Chancellery of the Reich. Government of Hitler 1933-1945, Munich 2002.) Reichsgesetzblätter 1926-1939 (Reich Law Gazette 1926-1939). Statistische Jahrbücher für das Deutsche Reich 1934-1941. (Statistical Yearbooks of the German Reich 1934-1941). Secondary Sources Boelcke, Willi: Die deutsche Wirtschaft 1930-1945. Interna des Reichswirtschaftsministeriums, Düsseldorf 1983 Buhbe, Matthes: Die Emigration deutschsprachiger Wissenschafts- und Sozialwissenschaftler in die Türkei, in: Hagemann, Harald (Hrsg.): Zur deutschsprachigen wirtschaftswissenschaftlichen Emigration nach 1933, Marburg 1997. Gumpel, Werner: Wirtschaftssystem und Wirtschaftsentwicklung, in: Grothusen, Klaus-Dieter: Türkei. Südosteuropa-Handbuch Band IV, Göttingen 1985,p. 327-345. Hüber, Reinhard: Deutschland und der Wirtschaftsaufbau im Vorderen Orient, Stuttgart 1938 Kienitz, Karl: Türkei. Anschluß an die moderne Wirtschaft unter Kemal Atatürk, Hamburg 1959. Reulecke, Jürgen: Deutsch-türkische Beziehungen nach Gründung der türkischen Republik bis ca. 1960, in: Rainer S. Elkar u.a. (Hg.): „Vom Rechten Maß der Dinge“ – Beiträge zur Wirtschafts- und Sozialgeschichte. Festschrift für Harald Witthöft zum 65. Geburtstag, St. Katharinen 1996. Teichert, Eckart: Autarkie und Großwirtschaftsraum in Deutschland 1933-1939 – Außenwirtschaftliche Konzeptionen zwischen Wirtschaftskrise und Zweitem Weltkrieg, München 1984. Önder, Zehra: Die türkische Außenpolitik im Zweiten Weltkrieg, München 1977. Volkmann, Hans-Erich: Ökonomie und Expansion. Grundzüge der NS-Wirtschaftspolitik, in: Chiari, Berhard: Beiträge zur Militärgeschichte, Band 58, München 2002.

30 Business Organisation in Late Developing Economies: A Dynamic and Comparative Analysis of the Urquijo Group (Bolde)

Introduction This project examines the relationship between gard to their growth strategies and responses to business organisation and economic develop- major economic shocks. ment from an economic, inancial and business The ultimate goal of the proposed research is to research New history perspective. It does so by systematically make: 1.) an empirical contribution to the history and comparatively analysing the emergence of inancial groups in Spanish-speaking coun- and development of economic groups in Spain tries by producing a dynamic typology; and 2.) a and Latin America, the starting hypothesis be- theoretical contribution to ongoing international ing that in late industrialising countries business debates on the relationship between inancial groups constitute an eficient alternative to the organisation and economic development. The large managerial irm. Business groups (in Latin results are oriented toward the national and America, economic groups) are deined here international scientiic communities, as well as as sets of irms engaged in a wide variety of the business community and the top managers industries and services and held together by of business education and cultural institutions. common ownership or ties of control, linked very often to a family and/or a bank. We suggest that Background and state of the art the speciic, mainly project execution, capabili- The organisation of business in general and the ties of inancial groups allow them to seize the structure of irms in particular are central issues opportunities created in relatively backward, pro- in business history, as shown by the most recent tected and intervened economies. Our research and ambitious publication in this ield, an inter- focuses on the group created around the Urquijo national business history handbook edited by G. Bank (Banco Urquijo). As the largest and most Jones and J. Zeitlin (Jones and Zeitlin, 2008). inluential private and banking business group This has been the case ever since Harvard in twentieth century Spain, as well as an active historian A.D. Chandler published a ground- partner in several Latin American groups, the breaking work revealing the interdependence Urquijo Group provides an excellent case study of growth strategy and organisational structure for testing available business and inancial group in the modern industrial irm (Chandler, 1962). theories. The six tasks to be carried out in the His subsequent books on the dynamics of the future will consist of: 1.) identifying and estab- large modern enterprise in the United States and lishing a typology of the most historically relevant other advanced countries also had an enormous inancial groups in Spain and Latin America; 2.) international impact on the work of management analysing the Urquijo Bank in terms of industrial and business history scholars (Chandler, 1977 and entrepreneurial banking; 3.) analysing the and 1990, and Chandler, Amatori and Hikino, constellation of irms created by or around the 1997). The conluence of Chandler’s work with Urquijo Bank and estimating their weight and that of the most prominent representative of the impact in the Spanish economy; 4.) examining transaction costs theory, O. Williamson, contrib- the recruitment and development of Urquijo’s uted to strengthening the conceptual basis for top and middle management; 5.) analysing the the organisational model of the hierarchical irm Group’s cultural activities.; and 6.) comparing which, by its internalisation of various economic the Urquijo Group with other Spanish and Latin functions, constitutes an eficient alternative to American inancial groups, particularly with re- the decentralised model of the market (William-

31 son, 1975 and 1985). To a large extent, subse- cos of Argentina, Mexico, Brazil, and Colombia. quent conceptual and theoretical debates on Among Spanish-speaking countries, Argentinian business organisation have been either inspired groups were the most studied (Marichal, 1998; or determined by the dichotomy between the Barbero, 1997, 2000 and 2006). In contrast, the market and the irm. empirical evidence for European or highly de- The debate intensiied throughout the 1990s, veloped countries other than Japan was scarce, thanks to new scholarly contributions from evo- but not inexistent (Shiba and Shimotani, 1997).

New research New lutionary economics (Nelson and Winter, 1982), What is interesting is that the available studies the resources and capabilities theory (Prahalad demonstrate that business groups were a wide- and Hammel, 1990; Kogut and Zander, 1992; spread phenomenon, known in many countries Peteraf, 1993), and neo-institutionalism (Powell by different names. and DiMaggio, 1991; Langlois and Robertson, The earliest theoretical contributions on busi- 1995). Building on the seminal work of Penrose ness groups, however, were made by develop- (1959), many of these authors pointed out the ment economics and sociology scholars in the role of the firm as a source of intangible as- 1970s. N. Leff (1978 and 1979) maintained that sets, hard to codify or imitate, yet one of the economic groups emerge to respond to well- cornerstones at the microeconomic level of known conditions of market failure in the less economic progress. Economic sociologists such developed countries, such as ineficient capital as Granovetter would also enrich the debate by markets or intricate and unstable legal and politi- explicitly acknowledging the importance of efi- cal frameworks. Economic groups, thus, become cient, alternative forms of entrepreneurial organi- an eficient business organisation in which the sation (Granovetter, 1992 and 1995). Probably low level of entrepreneurialism is an obstacle because the existence of such hybrid organisa- to economic development. H. Strachan (1976) tional structures, lying somewhere between the characterised business groups by pointing out market and the hierarchical irm, contradicted their long term stability, the high levels of loyalty the neoclassical paradigm and challenged the and trust among members, and a high degree conceptual framework developed by Chandler of diversification. In contrast, the few avail- and Williamson, they had far less academic able studies of business groups in advanced repercussion than the large multidivisional irm. economies (Japan, Sweden, France, Germany) This was the case of the industrial districts (Be- consider these organisational structures to be cattini, 1992), of entrepreneurial networks (No- either close to the American multidivisional irm hria and Eccles, 1992; Casson, 1998; Fruin, or a functional response to transaction costs or 2008), and of business groups, the organisation agency problems (Goto, 1982; Caves, 1989). structure we are concerned with here. The most inluential interpretation of business The interest in business or inancial groups as groups from the perspective of economic soci- a distinct organisational structure, and as a ology was given by M. Granovetter (1992 and concept in management, sociology, and eco- 1995). He introduced to the study of business nomic and business history, arose in the early groups concepts such as the strength of weak 1990s. By then a number of empirical studies ties and the embeddedness of individual pat- on the topic had been published, most of them terns of behaviour and action in speciic social focused on Asian and Latin American countries: and cultural contexts, which he had previously the Japanese zaibatsu and keiretsu, the Korean applied to other fields of study (Granovetter, chaebol, the Taiwanese and Thai groups, as well 1973 and 1985). According to this author, busi- as several Indian business houses and Turkish ness groups, unlike the large and vertically and family holdings, as well as the grupos económi- horizontally integrated Chandlerian irm, present

32 a great variety of forms, with their eficiency de- to work. Yet, as the economic environment of pendent on the following factors: 1.) the axes of these countries changes, usually becoming solidarity upon which the links among members more liberal as a result of their own economic rely; 2.) ownership structures; 3.) the ways in development, the groups ought to exploit new which authority is exerted within the group; 4.) capabilities and pursue new growth strategies. the scope and strength of shared moral values; It is at this point that contact capabilities, the 5.) the role of banks; and 6.) the relationship ability to seize new business opportunities, and between the members of the group and the unrelated diversiication come to be replaced research New State, particularly when it favours economic by a generic ability to execute projects and, and business development, as this might then later on, by the more specific organisational be determinant in the structuring of the groups. and technological capabilities inherent to the Amsden and Hikino (1994), for their part, made innovation process. We are convinced that this an equally useful contribution to the further de- theoretical framework, together with Granovet- velopment of a theoretical framework applicable ter’s ideas, can be extremely useful in explaining to business groups. Halfway between sociol- the dynamics of business groups in Spain and ogy and business history, and starting from the developing a dynamic, comparative typology. So theory of irm resources and capabilities, these far, the closest attempt at this has been Guillén’s authors built their interpretation of the eficient institutional-comparative study of Spain, Argen- functioning of highly diversiied business groups tina and Korea since the 1970s (Guillén, 2001). in late developing economies upon the concept On the whole, Spanish economic and business of project execution capabilities. Relationships, historians have tended to ignore the role of busi- and eventually partnerships, with foreign irms ness groups in the national economy. There are are crucial for the transfer of technology and its a few exceptions, however. The role of mixed or subsequent application to new business projects universal banks in Spain’s industrialisation has, in less developed countries. The most eficient on the one hand, called the attention of many groups, however, are those able to transform this economists with a strong interest in history, advantage into their own organisational know- and been exhaustively studied by economic how (project execution capabilities); that is, into historians on the other. Pons (2001 and 2002), a key resource for growth through a strategy of Pueyo (2006a and 2006b), and the irst issue of unrelated diversiication. the Revista de la Historia de la Economía y de Later, Guillén (2000 and 2001) and Kock and la Empresa, edited by J.L. García Ruiz, provide Guillén (2001) considerably enriched this frame- valuable information about related authors and work by explaining why the growth strategy of topics. unrelated diversification is sustainable over In much of the available literature, therefore, time and how it faces domestic and foreign the entrepreneurial groups revolving around or competition. According to these authors, en- linked through a bank or group of banks are usu- trepreneurs in late developing economies build ally referred to as inancial groups. Directorship groups and exploit their contacts inside and interlocks is the proxy used by most economists, outside their countries to successfully combine sociologists, and historians to delineate and ana- foreign technology with their knowledge of local lyse such groups (Muñoz, Roldán and García markets. Since the ability to mobilise contacts Delgado, 1973; Muñoz, Roldán and Serrano, is very general, they pursue a growth strategy 1978; Aguilera, 1998; Pueyo, 2006b). For many of unrelated diversiication. Protectionist trade authors, the existence of these interlocks sug- and investment regimes are those that cre- gests that the Spanish economy has been to a ate the most incentives for such arrangements large extent dominated by a rather oligopolistic

33 inancial system. Indeed, the pioneering book on Spanish groups about which information is avail- this topic was published under the title El poder able. Moreover, our research team includes two de la banca en España (Muñoz, 1969). Even reputed specialists in Latin American business though the idea of a powerful banking system history who are currently conducting research on was forged in the 1950s and 1960s under the large Argentinian and Mexican business groups inluence of the anti-liberal corporatist ideology and this will ensure an international perspective known in Spain as falangismo (De la Sierra, and diffusion for our study (Barbero, 1997, 2000

New research New 1953; Velarde, 1967), it would reach its peak in and 2006; Cerutti, 1992 and 2006; Cerutti and the 1960s and 1970s, supported by the research Marichal, 1997 and 2003; Marichal, 1998). of scholars with a radically different frame of The Urquijo Group is not only the most con- mind (Tamames, 1961, 1968 and 1977; Muñoz, spicuous business group in twentieth century 1969; Roldán and García Delgado, 1973; Tortel- Spain, but the one that probably its better into la, 1974; González, Sánchez and Torres, 1981; our proposed analytical model, relying on the Tortella and Palafox, 1983). The economic crisis seminal contributions of Granovetter, Amsdem of the late 1970s and early 1980s made it patent and Hikino, Guillén, and Kock and Guillén. Some that this explicative model was limited, as has general information on the Urquijo Group can be been stated by several economists (Cuervo, found in the studies of Spanish inancial capital- 1990 and 1991; Fernández, 2001; Torrero, 1991) ism mentioned above (Tamames, 1961, 1968 and specialized economic historians (Pons, and 1977; Muñoz, 1969; Roldán and García 2001; Pueyo, 2006b). In contrast, little attention Delgado, 1973; Muñoz, Roldán and Serrano, has been paid to previous and/or more recent 1978; González, Sánchez and Torres, 1981). economic shocks. The origins and early development of the Group The concept of business groups has been used have been described, however partially, by Ota- in the ield of Spanish business history since the zu (1987) and Díaz Hernández (1998 and 2007). late 1980s, as research activities and the vis- These authors provide abundant evidence on ibility of the discipline increased considerably. It the personal, political and entrepreneurial net- has helped to provide new and valuable empiri- works created by the Urquijo family from 1940 cal evidence on the creation, rise, and decline through 1918, networks which were as essential of business groups in the Basque Country (Díaz for establishing stable partnerships with foreign Morlán, 1996, 2002 and 2007; Torres, 1993; irms as they were for growth in the Spanish Valdaliso, 1988, 2002 and 2004) and Catalonia economy. The international connections of the (Rodrigo, 2000), pointing out the relevance of Urquijo Group after 1918 have been studied this organisational structure in modern Spain. by three members of this research team (Puig, To date, however, little effort has been made to 2003; Puig and Álvaro, 2004 and 2007; Álvaro, add to its theoretical or conceptual development, 2007; Castro, 2007), and the irst full historical even though Torres (1993) and Valdaliso (2002 chronicle of the Urquijo Bank, built upon internal and 2004) have applied concepts of transaction archival sources, was recently published by the costs economy, as well as evolutionary and neo- two senior researchers of the proposed project institutional economics, to explain the existence (Puig and Torres, 2008). and development of business groups in Spain. Our proposal is thus truly innovative within the Initial hypothesis framework of the Spanish business history. It We strongly believe that the previous research is also important to note that it focuses on the and its results will enable us to adequately for- largest and most relevant Spanish economic mulate our initial hypothesis and rigorously de- group with the aim of comparing it with other ine the main research lines of our case study:

34 irstly, an empirical and dynamic reconstruction economic) groups are usually deined as sets of the entire Group (a dificult task if we consider of irms engaged in a wide variety of industries that at times it comprised more than 200 irms; and services and held together by common secondly, the interaction between the Bank’s ownership or ties of control, linked very often managers and their main foreign partners, this to a family and/or a bank. Since the late 1980s, being fundamental, as argued before, to under- there has been abundant historical evidence standing the process leading to the creation of about the existence and development of these technological and operational knowledge scarce groups. In the case of Spain, research has fo- research New or absent in Spain; thirdly, the strategy for im- cused traditionally on the rise of inancial groups, proving the Group’s management and human with studies on particular business groups being capital, an essential step in the creation and more recent. By explicitly or implicitly pointing strengthening of its project execution capabili- out that contacts with the local Administration ties; fourthly, a systematic study of the Bank’s and with foreign irms were crucial to access- cultural activities, a complementary strategy of ing external capital and know-how, inluencing recruitment and development which had appar- or coping with the dominant economic regime, ently signiicant effects on the Group’s human and developing speciic managerial capabilities, capital and the advance of both economic re- they provide the ground for testing some of the search and scientiic/cultural activities in Spain; theories developed in other academic fields. and ifthly, a comparison of the Urquijo Group The group created around the Urquijo Bank, the with other Spanish and Latinamerican business most important in 20th century Spain as well as groups aimed to better understand how business an inluential partner in various Latin American groups operate in contexts of economic growth groups, provides an excellent case study upon or depression. which to build a conceptual, dynamic, and com- The available research on Spanish and Latin parative analysis of business groups, particu- American business history suggests that the larly with regard to their growth strategies and large managerial enterprise (Chandlerian model) responses to major economic shocks. is not an appropriate paradigm for studying the organisational structure of Spanish business. Objectives Alternative organisational structures such as This project pursues six main objectives: business groups, networks, industrial districts, and family irms seem far more adequate than 1. To identify and elaborate a dynamic typology the Chandlerian model for understanding the of the historically most relevant business groups dynamics of markets and firms in Spanish- in Spain and Latin America. This will require a speaking countries. This coincides with the systematic review of the theoretical literature conclusions of an increasing number of studies and the available historical research. based on other historically less developed countries, particularly in Asia, where business groups 2. To analyse the Urquijo Bank in terms of invest- seem to have been extremelly important at both ment and entrepreneurial banking, paying par- the macro and microeconomic levels. There is ticular attention to the challenges posed by the also a growing interest in the conceptual and 1970s’ crisis. The corporate history of the bank theoretical analysis of this particular organisa- will be reconstructed in order to identify its core tional structure in the ields of economic soci- competencies and how they have performed ology, economic development, management, over the long term. The group will build upon the and industrial organisation, although this rarely previous research by Puig and Torres (2008) to involves solid historical evidence. Business (or achieve this fundamental objective.

35 3. To analyse the constellation of irms created This project provides beneits to: by or around the Urquijo Bank and to estimate their impact on the Spanish economy. This 1. The international social sciences. We offer dynamic analysis will be carried out according them a historical analysis of the largest business to four variables: date of establishment and/or and inancial groups in the Spanish-speaking major inancial and corporate changes, links with world. With its solid theoretical, interdisciplinary the Urquijo Bank, activity sector, and corporate background and sound empirical foundation, this

New research New structure. Part of this analysis has been already analysis aims to shed light on the debate over done in previous works (see point 3.2). the relationship between business organisation and economic development. We offer historians 4. To examine the recruitment and develop- and social scientists all over the world a data- ment of Urquijo’s top and middle management. base and dynamic taxonomy of these groups The research aims to identify the Group’s key that will allow them to be compared with Asian individuals by examining their educational and and European groups or integrated into a com- professional backgrounds, the roles they have prehensive cross-country analysis. played within the Group’s irms, the political, economical, educational and cultural networks they 2. The Spanish and Latin American communi- belonged to or helped to create, and, last but not ties of economic and business historians. By least, their part in the development of project providing new and systematic evidence on his- execution capabilities (a fundamental concept torically relevant business and inancial groups, in the hypothesis supporting this project). our research will shed light on the role of alternative business organisational structures in 5. To analyse the cultural / intellectual activities the Spanish-speaking world, contributing to the of the Urquijo Group and their contribution to the debate on the Chandlerian paradigm, currently economic and social modernisation of Spain. the most intense in the ield of business history. It will also help to integrate the theoretical contribu- 6. To compare the Urquijo Group with other tions of other ields into the economic historical Spanish and Latin American business groups, research in general. Moreover, our database and particularly from Argentina and Mexico. This taxonomy will allow business groups to be seen will strengthen the conceptual framework which as major players in the economic and social de- supports the project and provide a better un- velopment of their countries, as well as a better derstanding of how business groups operate in understanding of the role of inancial groups and contexts of economic growth or depression. For the interaction between migration and entrepre- this reason, cooperation with our Latin America- neurship. Finally, our in-depth analysis of the based senior investigators is crucial. Urquijo Group will be a major contribution to the business and economic history of modern Spain. The ultimate goal of the proposed research is to make: 1.) an empirical contribution to the his- 3. The Spanish and Latin American business tory of business groups in the Spanish-speaking communites. This research group has been countries by producing a dynamic typology; and cooperating with the Spanish business com- 2.) a theoretical contribution to ongoing interna- munity for several years while preserving its tional debates on the relationship between busi- independence. Its members have also led or ness organisation and economic development. participated in a number of privately funded

36 projects, allowing us to work closely with institu- The BOLDE GROUP of research: tions such as the French, German, British and American Chambers of Commerce in Spain, the Núria Puig (Universidad Complutense de Ma- Círculo de Empresarios, the Asociación para drid, [email protected]) el Progreso de la Dirección, the Instituto de la Empresa Familiar, and a large number of foreign Eugenio Torres (Universidad Complutense de and Spanish industrial and service irms. We Madrid, [email protected] ) also cooperate regularly with business schools, research New and one of our members is afiliated with the Mario Cerutti (Universidad Autónoma de Nuevo IESE. The Latin American scholars included in León) [email protected]) the group have also been very active in establishing stable links within their business environ- María Inés Barbero (Universidad de San Andrés, ment. A top-priority goal of the project consists [email protected]) of consolidating these connections as well as promoting dialogue between the academic and Marta Rey (Universidade de A Coruña, mar- business communities. [email protected])

4. Top managers of educational and cultural Adoración Álvaro Moya institutions. As the Urquijo Group has had a (CUNEF,[email protected]) huge inluence on the intellectual development of Spain – supporting the individual and collec- Rafael Castro (Universidad Autónoma de Ma- tive work of many scholars, collaborating with drid, [email protected]) institutions such as the Ford Foundation, and creating various cultural enterprises –, we want María Fermández (Universitat de Barcelona, to examine the intellectual activities of other [email protected]) groups as well. Our indings, which will be integrated into our database and taxonomy, should therefore contribute to the study of educational and cultural entrepreneurship from an academic as well as professional perspective.

37 “Grammar” of Corporate Photography The Case of BNP Paribas Fortis’ Archives

Scope of companies concerned in 1993 and 1998, before merging the following Since 2009, BNP Paribas Fortis has been the year with the Générale de Banque. name of the main Belgian bank, formed in 1999 The historical archives of BNP Paribas Fortis under the name of Fortis Bank following the comprise those of the Société Générale de integration of the Société Générale de Banque Banque and the CGER, as well as those of and the Caisse Générale d’Épargne et de Re- numerous banking companies which these traite. These companies were both founded in two companies themselves incorporated and/ the nineteenth century. or absorbed. Without wanting to be exhaustive, Corporate photography Corporate The roots of the Société Générale de Banque those for which we hold extensive archives are go back to the foundation in 1822 of the Al- listed below. For instance, we have the Société gemeene Maatschappij der Nederlanden ter Nationale de Crédit à l’Industrie, a public credit Begunstiging van de Volksvlyt. Founded on the establishment created in 1919, privatised in initiative of King William of the Netherlands, this 1995 and taken over by the CGER. A few sub- mixed bank became the Société Générale pour sidiaries of the Générale de Banque active in the Favoriser l’Industrie Nationale and in 1903, the last century abroad have left substantial archive Société Générale de Belgique. In 1934, due to material: Banque du Congo Belge and its sub- new banking legislation, the Société Générale sidiary, Banque Commerciale du Congo, along de Belgique was obliged to hand over its pure- with Banque Belge pour l’Étranger. ly banking activities (deposits and short-term loans) to Banque de la Société Générale de Group Archives and Archiving Policy Belgique, a new company. In 1965, this became After the 1999 merger of the CGER and the the Société Générale de Banque. Société Générale de Banque, the historical As regards the Caisse Générale d’Épargne et archives of BNP Paribas Fortis were organised de Retraite (CGER), this was founded in 1865 more systematically than previously. To do so, on the government’s initiative. A public credit the bank enlisted the help of the Association for establishment, it was privatised in two stages the Valuation of Corporate Archives (Association pour la Valorisation des Archives d’Entreprises or AVAE), a non-proit association specialising in the processing and use of corporate archives

01- Colorised picture- departure of a boat in Congo- 02- Brussel's ofice of Banque du Congo Belge, about 1937 1930 38 and working in partnership with the Belgian are very old, like those of the Société Générale State Archives. The AVAE undertook the task of de Belgique, which dates back to 1822, or the bringing together the historical archives of the Banque Joseph le Grelle, an Antwerp bank of various merged entities into a cohesive whole, which initial archive volumes date back to the then systematically inventorying them. close of the eighteenth century. After almost ten years’ work, in 2008 the bank The archives kept are very rich. In them, you can founded the BNP Paribas Fortis Historical Cen- ind hundreds of posters, medals, ilms, a library, tre to consolidate the future of its historical her- and hundreds of objects (ofice machines and so itage. This Centre, which is run by the AVAE on). Some pieces are of great heritage value, pursuant to an agreement entered into the same like the sample banknotes issued by the Banque year, continues to bring together and process the du Congo Belge before 1952. Analysis of this bank’s historical archives, but also encourages heritage allows Belgium’s inancial evolution to their use by the bank’s various departments or be observed, as can its expansion throughout photography Corporate by third parties, speciically by uploading existing the world (China, Egypt, Congo, Eastern Eu- inventories on-line, setting up a reading room, ropean countries etc.) over the past 200 years. outlining the terms and conditions of document consultation, lending out documents and objects Photographic Collection of BNP Paribas Ar- and so on. The Centre contributes in this way to chives maximising the value of the historical heritage of One of the objectives of the BNP Paribas Fortis BNP Paribas Fortis via scientiic studies, exhibi- Historical Centre is to develop a database allow- tions and conferences, to name but a few. Much ing the value of the photographic collection to be of its work is intended for the Bank’s depart- maximised. This work is actually a long-term ex- ments themselves, for the purposes of internal ercise. Though it is very dificult to give the exact and external communication. number of photos held in the archives, it would The historical archives of BNP Paribas Fortis not be excessive to say there are over 80,000. currently take up some 1,300 linear metres, The quantity is thus considerable, though the comprising some 15,000 items! This is an excep- shots are of very varying degrees of interest. tional heritage for Belgium but also a fantastic They are also kept in very diverse formats: database: 80% of the archives have been inven- negatives on glass plates, large prints in their toried, and the inventory lists are gradually being original frames, colour or black and white nega- uploaded to the Internet (http://www.bnpparibas- tives, Ektachromes and slides, prints mounted fortis.com/en/pid2106/online-inventories.html). on card or wood, sundry computerised formats, Some of the archives ‘fonds’ (or record groups) etc. (photo 1).

03- Photo of A.L. Myers 05- ID photo of a CGER employee, about 1930

39 The quality of the archive photos is also very The oldest photos in the archive of the BNP variable. Before the Second World War, compa- Paribas Fortis Historical Centre date back to nies generally used the services of professional the 1890s – however these are rare, with fewer photographers who would take a speciic shot or than ten or twenty taken prior to 1900. Many are make reportage series that sometimes included commemorative photos, taken during notable many dozens of shots. Some photos from this events, such as those taken by photographer time are of remarkably high quality, showing Henri Crampon during a celebration on behalf genuine thought in terms of staging, where time of seven employees of the Banque Générale seems to stop because the people in the images de Liège, who in 1894 all celebrated 25 years’ are standing still (photo 2). service (photo 4). The number of photos prior to However, from the outset of the tentieth century, 1940 is most likely to be under 10,000. The vast it was not always possible to use profession- majority of shots are taken after 1960. Some Corporate photography Corporate als in this way. In the Banque du Congo Belge periods are very sparsely illustrated, like the war archives, for instance, there are a number of years (1914-1918 and 1940-45) or the years of photos taken from life by bank employees – the Great Depression (1930-37). and as such, a good many of them are blurred, We decided to group together most of the photos poorly framed, overexposed, etc. Twenty or so into a single purposefully gathered collection. It of the most eye-catching shots conserved in should be noted that this practice was what the this bank’s archives were however taken in the banks themselves did, prior to merging. When ield by a professional photographer signing as we recovered photos from the Société Géné- A. L. Myers. This photographer it seems com- rale de Banque, the CGER or the Banque du piled a reportage of several hundred photos in Congo Belge, they had already been grouped the Colony in 1918-1919, though we have only into their own series. We have continued in this found a small fragment (photo 3). same spirit of categorisation. However, we did After 1945, banks used professional photogra- not systematically take photos out of the iles phers less frequently – it was no doubt considered to be a costly practice. The average quality of the photos bears witness to this. Except in the illustration of documents such as the annual report, banks generally used an employee – whose degree of talent would vary. When illustrating the company journal, in particular, amateur or semi-professional photographers reporting to the Bank were used.

06- Fingerprints of a CGER employee on the back of his 07- Photo of LouisThielemans, employee of Société photo, about 1930 Générale de Belgique, about 1924 40 containing them. For example, in the case of Banque Générale du Centre (1903) staff iles from the Société Générale de Banque, Banque Centrale Gantoise (1906) often containing a photo of the employee, we Banque de Huy (1907) considered it more appropriate to leave them Banque du Congo Belge (1909) where they were, thus keeping them in their ar- Banque Centrale de la Dendre (1910) chival context, and if need be, creating a virtual Banque Italo-Belge (1911) collection by scanning the originals. Banque Générale du Nord (1919) How did we classify the photos grouped in this SNCI (Société Nationale de Crédit à l’Industrie) way? We obviously made a distinction between (1919) the different banks providing the photos. Here is BBIE (Banque Belge et internationale en Égypte) the list of banks for which we have shots, quoted (1929) in order of foundation: Société Belge de Banque (1932) Corporate photography Corporate Banque Joseph J. Le Grelle (1794) Banque Diamantaire Anversoise (1934) Société Générale de Belgique (1822) Banque Belge Ltd (1934) Banque de Flandre (1842) Banque Belge France (1934) CGER (Caisse Générale d’Epargne et de Re- BSGB (Banque de la Société Générale de traite) (1865) Belgique), subsequently Société Générale de Banque d’Anvers s.a. (1870) Banque (1934) Banque du Hainaut (1872) BBE (Banque Belge pour l’Étranger) Extrême- Banque Centrale de la Sambre (1872) Orient, which became Générale de Banque Banque de Courtrai (1873) Belge pour l’étranger, then General Belgian Banque Centrale de Namur, subsequently Bank, followed by Fortis Bank Asia (1935) Banque Centrale de Namur et de la Meuse Banque Générale du Luxembourg s.a. (1935) (1874) Banque Belgo-Libanaise (1953) Banque Centrale de la Dyle (1874) Belgian American Banking Corp. (1950) Banque Centrale Tournaisienne s.a. (1881) Cogeba (Compagnie de Gestion et de Banque) Banque de Gand, subsequently Banque de (Genève) s.a. (1956) Flandre et de Gand s.a. (1881) Banque Belgo-Congolaise alias Belgolaise Banque Générale de Liège s.a. (1882) (1960) Banque d’Outremer (1899) European- American bank (Euram-Bank) (1968) Banque Générale Belge, subsequently Société Banque Parisienne de Crédit s.a. and BRN Belge de Banque (1901) (Banque Régionale du Nord) s.a. (1991) Banque Sino-Belge s.a. (1902) subsequently Generale Bank Nederland n.v. (1993) BBE (Banque Belge pour l’Étranger) (1913) Fortis Bank (1999)

08- New building of Banque d'Anvers- the construction 11- Cycle ride organised by the Staff club of the Société of the vaults 1913 Générale de Belgique about 1920 41 Due to a lack of time and resources, it was not present is a genuine boon. In some cases, this possible to compile an inventory on a photo-by- means allows an entire reportage to be dated. photo basis. We chose to make inventories of Once a photo has been identiied – we know existing entities in accordance with: slide boxes, the bank the photo came from, the date when photo albums, iles containing negatives classi- it was taken, its subject and perhaps the name ied in chronological or thematic order, etc. of the photographer – from a critical standpoint, Several photos obviously pose accurate dating there remains the issue of motive. Why was the and identiication problems. Often, there is no shot taken? It has acquired historical value, but key – or else the key is very summary. In some what was its original function? In other words, for cases, we can make up for the lack of a key which purpose does a bank take a photo? This thanks to the context. For instance, it is some- reasoning leads us to offer below a “grammar” of times the case that a packet of photos is kept in corporate photography, distinguishing between Corporate photography Corporate an envelope or box carrying overall identiication three essential functions in the photographic for the entire batch. However, we must take care, discourse: management, internal cohesion and because sometimes these envelopes or boxes publicity or propaganda. have in fact been re-used. In addition, it is inevitable that over time, some packets of photos are Photography as a Management Tool mixed together. First of all, let us consider photography as a In the CGER archives, several thousand shots management tool. Any photo actually allows for used to illustrate the staff magazine between remarkable savings to be made in terms of the 1965 and 1977 were kept in bulk and their description of a person or building and so on. keys were lost: reclassification work is now And banks also used this medium as an “objec- in progress, which consists of systematically tive” data format. comparing the collection of shots with photos In this respect, human resource management published in the magazine. This method does has long used photography extensively. The ar- not however allow for accurate dating, since chive collections held at the “BNP Paribas Fortis some time may have elapsed between the photo Historical Centre” include many individual iles being taken and it being published. of former staff members. These iles are often Some office photos kept in the BNP Paribas accompanied by an ID photo of the employee. Fortis archives can be accurately dated thanks However, at the CGER between the wars, it was to the wall chart that can be seen in a corner: decided to centralise photos of all employees in extensive blow-ups then reveal the actual date! an alphabetical ile. Regardless of their position, The custom of these wall calendars being they were photographed from the front and in

12- Publicity of Banque du Congo Belge about 1917 13- 100th anniversary of the Société Générale de Belgique in the presence of King Albert, 1922 42 proile, and the resulting prints were mounted on buildings at various times with a brief description card. Some cards carry the employee’s inger- and one or more photos – in general taken from prints on the back (photo 5-6). These were no the outside. doubt employees who would handle valuables. In many cases, photography also allowed moni- The Société Générale de Belgique had a similar toring of the construction and internal ixtures of system at the time. In it, all employees were pho- buildings – central head ofice and branches, tographed standing up, often against a measure as well as staff accommodation in the case of to allow their height to be assessed. At their Banque du Congo Belge. Special attention was feet, a slate displayed the photo number (photo often paid to the construction of the vault, the 7). This was visibly a systematic photograph- bank’s nerve centre (photo 8). ing campaign, and not just photos taken when Some building photographs were taken as evi- employees were taken on: the age of those dence, in the event of poor quality building work Corporate photography Corporate photographed varies widely. Dating of this photo or damaged buildings. This is the case in two campaign was made possible by comparing photos of a warehouse built for the Banque employees’ curriculum vitae – based on the em- Belge pour l’Étranger in Shanghai, which acci- ployment date for the youngest, thus the starting dentally burned down in 1910 (photo 9). The ile point or terminus a quo, and on the departure created to collect the insurance policy included date for the eldest, thus the end point or terminus two or three photos. Other building photos were ad quem. In this way, we obtain the date 1924. taken in connection with the preparation of war Perhaps this photo campaign was undertaken damage iles. As such, the administrative head- to facilitate the search for an employee who had quarters of the Banque de la Société Générale committed theft or embezzlement? The card on de Belgique in Courtrai was completely de- which the photos were mounted allowed space stroyed in July 1944 following an aircraft crash. for a detailed breakdown of the individual on the The request for reparations made to the “ad hoc” back, with anthropometrical data such as height, commission includes forty or so photos of the eye colour and hair colour and so on, although destroyed building. these questionnaires were not completed. In the same vein, photo iles were created so Above and beyond staff management, the banks’ as to document the bank’s artistic heritage. Art real estate pool also generated substantial num- collections were systematically photographed bers of photos. In two record groups (Banque de to facilitate bothmanagement of the works and la Société Générale de Belgique and Banque du contacts with insurance companies. Congo Belge), there are extensive inventories of However, photography was not only used as a this stock, a type of “atlas” featuring all the ofice management tool in terms of bank employees

14- Ofices of the CGER in 1930 15- Employee's accomodation in Congo, 1920

43 and assets. Some shots taken by staff at the widespread, turning into genuine corporate Banque du Congo Belge were used to support news-sheets, designed by professionals who credit transactions. One photo taken in Elisa- were paid for their services. Some themes were bethville (today Lubumbashi) in 1911 shows a recurrent: sporting and cultural activities organ- batch of ivory deposited with the bank (photo ised within the bank, daily life within the depart- 10). Others show corporate establishments to ments, branch creation tendencies, the devel- which loans had been granted between the opment of ofice automation tools, staff leisure wars. This was doubtless intended to show activities and so on. However, the magazines the administration in Brussels, to whom the also strove to be instructional, offering articles of branches in Africa sent these shots, that the general interest. Lastly, one section talked about bank’s customers had prosperous businesses mobility within the bank: promotions, retirements and tangible sureties with which to guarantee and so on. Corporate photography Corporate loans granted to them. Meanwhile, in so doing, These magazines have left behind signiicant the bank gave historians a very interesting view photographic collections from the middle of of the Congolese economy in the 1920s, since the 1960s onwards. They are an unparalleled we can see photos relating to a few dozen com- source to see daily life in banks, despite the panies of all sizes. photo quality not always being optimal. The bank took advantage of this service to highlight Photography as a Tool for Cohesion its progress in terms of the social promotion of Photography is not just a management tool, it is its workers (internal training courses) and their also an instrument for cohesion. It can contribute families (holidays for children, social commit- to the creation of an “esprit de corps” within the ments, etc.) The reports from departments and company. branches underline the family atmosphere and This is indeed the case of the shots taken during professional skills of employees and the bank’s celebrations intended for staff or management. technological performance. These photos often show the entire staff of a branch, a department, and so on. Photography as a Publicity or Propaganda In different record groups, photos also show Tool staff members who fell in the line of duty during Alongside its application in management and the World Wars: soldiers who died in combat, internal cohesion, photography obviously allows prisoners of war, etc. a positive image of the company to be conveyed In terms of relations between management and to third parties. staff, internal magazines are a genuine gold- Photography has long been used in connection mine. These magazines were originally born of with institutional banking publicity. Furthermore, cultural and sports clubs organised by staff. it was at the beginning of the twentieth century Paraprofessional activities organised by staff that the irst illustrated photographic brochures members irst tasted success at the beginning appeared introducing the bank’s services (photo of the 20th century (photo 11). The staff club of 12). For instance, we have price lists illustrated the Société Générale de Belgique, founded in by photos published by Société Générale de 1912, published an internal magazine from 1921 Belgique in 1907 and 1913. The photos fre- onwards. The initiative came from staff but man- quently used in brochures are those of the vaults agement agreed to subsidise this journal, irst on – an excellent way for banks to stand out from an ad hoc and then in an increasingly regular the competition: the capability of a inancial insti- basis. After the Second World War magazines tution is measured visibly in terms of the number inanced by banks for their staff became more of vaults made available to customers.

44 In the BNP Paribas Fortis archives, we also have We cannot leave the Banque du Congo Belge photos which illustrated commemorative works, photo collection without taking a look at this shot often published to coincide with an institution’s taken shortly after the Congo’s independence in anniversary. For instance, we have those used 1960 (photo 16). It clearly appears as a justiica- for the brochure issued to mark the 100th an- tion of the colonial regime or propaganda in its niversary of the Société Générale de Belgique favour. In it, we see a Congolese clerk working in 1922, and those taken during the academic for the bank. He is posing with his wife and chil- session organised on 23 December the same dren in front of a comfortable house and, the year, in the presence of King Albert I of Belgium pinnacle of luxury, his own car. (photo 13). Clearly means of reproduction have A large part of corporate communication can be evolved hugely since then, and it is interesting found in its annual report. Actually, the custom to start again using original print runs as a basis of illustrating these is relatively recent. Société Corporate photography Corporate when these are still available. Générale de Belgique irst introduced the oc- In the archives group of the CGER, some high- casional illustration in its report for the 1969 quality reportages show the institution’s ofices inancial year, while CGER did so in 1964. The at different times: 1902, 1926, 1930, etc. We type of photo is rather standard. All the photos can see the staff at work, and these photos give resemble one another, and the recurring themes a good impression of the atmosphere in the of- are very neutral: new branches, foreign net- ices – even though they are obviously staged works, departmental computerisation and the photographs (photo 14). Why were such report- economic role of credit establishments are the ages made? Perhaps in connection with the favoured topics of corporate life. CGER’s participation in fairs or exhibitionsbut in any casefor the sake of publicity. Conclusion In the same vein, we have two series of black There is no point in showing endless examples, and white glass slides in the archives of the as by now the theme of this article is clear. Banque du Congo Belge, which were used “Grammar” of corporate photography or the in conferences given by René Guillaume, the analysis of banks’ motives when ordering or managing director in the 1930s. One of the two using a photo can help to show the values un- conferences talks about the bank’s network derlying banks’ actions, and thus the environ- in the Congo. Several shots show the bank’s ment in which they operate. Thanks to a critical social policy, in particular staff accommodation analysis of the image above and beyond simple (photo 15). This accommodation became stylish, identiication, a historian can largely recreate the or even opulent, during the 1920s. Of course, atmosphere of a time, and even in some cases it these photos are in part a way to identify the can be used as a replacement in the absence of bank’s property inventory. Yet above all, the bank other sources. This analytical work is particularly wanted to be able to show that expatriates lived relevant if we process a large number of images. in enviable conditions. Clearly, this was an invi- It also opens the door to comparative analysis: tation to any candidates for a posting who were beyond the Belgian example, with BNP Paribas wondering about the comfort of life in the tropics. Fortis, can we ind points for comparison with The other conference comprises some 90 shots banking establishments in other countries? and was completely dedicated to the work organisation within the bank, highlighting all the René Brion & Jean-Louis Moreau ofice machines the bank was equipped with at BNP Paribas Fortis Historical Centre the time. Here, this was positive publicity for the [email protected] bank, its capabilities and its effectiveness.

45 The History of Collecting Fine-Art Photography

Introduction In her book About Photographers Mariëtte Have- who often single-handedly succeeded in estab- man writes the following: “Although it appeared lishing photography as art, thus worthwhile to that there was no end to the increase of the be collected. market value for photography, it seems like this development is bound to limits. In contrast with 1. The irst collectors the monstrous prices paid for paintings until the On a summer day in 1827, Joseph Nicephore collapse of the market in 1991, photographs Niepce made the irst photographic image with have been relatively affordable, and it is unlikely a camera obscura. Normally people just used Corporate photography Corporate that this will change”. How could Haveman have the camera obscura for viewing or drawing pur- known that her prediction was far from the truth, poses, not for making photographs. Niepce's and that Andreas Gursky’s 99 Cent II Diptychon heliographs, or sun prints as they were called, (ig.1), a colour photo of racks of candy inside a were the prototype for the modern photograph. discount store, holds the record for the highest (Fig.2) price paid at auction for a photograph--Sotheby's The Frenchman Louis Mandé Daguerre invented sold it for $3.3 million in 2007. This photograph the irst practical process of photography called by Gursky is by the way a beautiful example of the daguerreotype in 1839. Around the same the current photography trend among collectors: time the English aristocrat Fox Talbot invented monumental sized and in deadpan aesthetic the photographic process. He produced a nega- style. The aim of this article is to present an tive of the subject with a corresponding method historical overview of the collection of ine-art to duplicate an unlimited number of positives photography and how the market for fine-art and called this the calotype, later known as the photography developed. The initial problem pho- talbottype. This technical progress was very tography faced was that a machine was needed promising, but Talbot patented his invention. It to create a photograph and therefore it wasn’t made commercial exploitation dificult; anyone considered as art. The idea that an esthetical who wanted to take photographs had to apply input of the photographer was necessary for the with a written request. There was of course the result didn’t matter. Later critique is familiar to possibility to fall back on the daguerreotype, but the much-heard comment on the Cobra move- the main objection was the single print and the ment: “my little sister could do that”, insofar as price of the equipment. Photography became anyone can take a photograph, so why would it be art? In my essay I will highlight the people

Figure. 1 Andreas Gursky, "99 Cent II Diptychon" (2001) Figure 2. Nicephore Niepce, View from the window at C-print mounted to acrylic glass Gras (c.1826) Heliograph

46 a hobby for gentlemen who made their money portant photography collector of his day, collec- with a real profession. These gentlemen united tor poet Chauncy Hare Townshend (1798-1868). in the middle of the nineteenth century and The collection was probably collected during the eventually formed photographic societies in period 1855-60 and is nowadays in the Victoria order to exchange ideas. The irst one was the and Albert Museum. The earliest photographs in Heliographic Society in Paris (1851), followed the Townshend collection are the tree-studies in by The Photographic Society of London (1853). the forest of Fontainebleau by Gustave Le Gray The latter was renamed the Royal Photographic (c. 1856). Townshend also owned Le Gray’s La Society of Great Britain (1894) and still exists Grande Vague -Séte (c.1855, ig 3), a photo- today. The Great Exhibition of Works of Industry graph that was sold during the so-called André was organised in 1851 at the Crystal Palace in Jammes auction in 1999, for a world record price London. of £507.500 plus premium. Another collector was Corporate photography Corporate The Society of Arts was responsible for the art Townshend contemporary, Sir Thomas Phillips section. Joseph Cundell, founder of The Photo- (1792-1872), whom Eugenia Parry Janis refers graphic Institution and member of the Society to as a ‘vello-maniac’, or paper-maniac. After a of Arts, insisted that photography should be meeting in 1843 with Fox Talbot, Phillips bought presented in the section ‘Philosophical (scien- daguerreotypes and ambrotypes from Talbot’s tiic) Instruments’, where photography would be own collection, including a copy of Talbots Pencil presented among other instruments such as tel- of Nature, the irst important photographically escopes, galvanic batteries, and coin weighing illustrated book. Despite Phillips’s remarkable machines. Cundall got his way and this would photography collection, one has to keep in mind become the irst time that photography was ex- that he was obsessed with paper, not with the hibited during an international event. visual image. Phillips once wrote in a letter “I am The exhibition was successful and encouraged buying Printed Books because I wish to have a the members of the Photographic Society to Copy of every Book in the World!!” Since pho- organise the irst purely photographic exhibition. tography is a print medium, it had to be included Recent Specimens opened on 22 December in his collection. 1852, at the Royal Society of Arts. About 700 Finally I want to mention Sir Martin Conway, photographs from six different countries were 1ste Baron Conway of Allington (1856-1937). on show. Most of the material was on loan from His American sister-in law said about him: "He British collectors and, given the number of en- does not believe in spending money on living. tries, it suggests that there were a lot of them. His ideas are so unlike an American man’s [sic] Unfortunately there is hardly any information regarding the identity of these collectors. Never- theless, it is certain that Sir Henry Cole, director of the Victoria and Albert Museum, gave some photographs, like Panoramic view from the Lou- vre by Martens, on loan. The exhibition was well attended and extended by one month. Despite the number of visitors, it remained a challenge to interest people in collecting photographs. In his book The Golden Age of British Photogra- phy Mark Haworth-Booth, former senior director of the photograph department at the Victoria and Albert Museum, managed to identify the most im- Figure. 3 Gustave Le Gray, Grande Vague- Séte, (c. 1855), albumen print

47 on all matters of luxury. He would rather buy Mechanical poison that this terrible 19th Century a photograph, than get the most dainty meal has poured upon men, it has given us at any Delmonico’s could prepare." Conway’s photog- rate one antidote-the Daguerreotype. It is the raphy collection formed the basis of the Conway most blessed invention; that’s what it is”. Only Library at the Courtauld Institute in London. one year later Ruskin revises his opinion: “As regarding to photography, I wish it never been 1.1 Baudelaire and his supporters discovered, it will make the eye too fastidious From photography’s beginning there was a to accept mere handling”. Ruskin summarised discussion if a machine could produce art; the the concept of art together as: “a human labour dependence of a mechanical device and a regulated by human design”. Ruskin regarded chemical process to make an image aroused photography as the product of a machine. This suspicion. In 1859 it was the irst time that pho- opinion ruled until 1894. Corporate photography Corporate tographs were exhibited at the prestigious Art In the introduction of the catalogue that accom- Salon of Paris. There was a lot of comment. The panied the exhibition the Premier Exposition d’ poet and art critic Charles Baudelaire probably Art Photographique in Paris, 1894, writer Fred- had the most criticism against photography. He erick Dillay carefully tried to convince the public was not so much against the mechanical nature, that photography is art. In the mid-nineteenth but considered photography as a part of mass century a collecting mania of cartes-des-visites culture and believed that photography focused arose among the population. This was an in- too much on the external reality, which made the vention of André Disderi that made it possible imaginary inferior. This remark by Baudelaire to put several shots, each measuring 2 × 3½ says it all: “A revengeful God has given ear to inches mounted on a card sized 2½ × 4 inches, the prayers of this multitude. Daguerre was his on one plate. Between 300 and 400 million of Messiah. And now the faithful says to himself: these cartes-des-visites were sold in France, "Since photography gives us every guarantee of and collected in specially made albums, but this exactitude that we could desire (they really be- was just a trend and can’t be considered as a lieve that, the mad fools!), then photography and serious form of collecting. The carte was a mass art are the same thing." - It wasn’t just in France product. It mattered who was portrayed, artistic that people were being negative about photog- content didn’t count. raphy. England had art critic John Ruskin who was initially positive about the medium. In 1845 2. Stieglitz’s contribution in a letter to his father he wrote: “Among all the Until the Second World War, England was actively involved with photography. For comparison around 1900 there were 256 societies in England, while America counted 99. The Royal Photographic Society, mentioned earlier, was the oldest, best known and most prestigious one. This society focused on exhibitions with many different categories. Not all members were hap- py though. In 1892 a group of ifteen members left to set up a new society, the Linked Ring. They felt that with the Royal Society emphasis was too much on the scientiic side of photography and that the aesthetic side was undervalued. Figure. 4 Anna Brigman, The Bubble, (1907), gelatin The Linked Ring was committed to Pictorialism, silver print

48 a style that is mainly aimed at aesthetics. This however, followed his own path and was open international movement was shaped in 1890 and to the new generation of photographers, like came from the idea that photography should be F. Holland Day, Clarence White and Gertrude independent from depicting reality and should Käsebier, and started promoting and buying their concentrate on the transcendent mood of ine work. Stieglitz travelled regularly to England and art. Typical subjects are idealised landscapes noticed the improved ways of displaying art that and allegorical igure studies, including the nude he introduced in America. (Fig 4). Stieglitz implemented these six new rules on When the American photographer and godfather exhibiting photographs: of photography Stieglitz met a few of the Linked 1. The exhibition should only contain artistic Ring members in 1894, he was asked to become (pictorial) work; their representative in America. He accepted. In 2. Had to have an international character; Corporate photography Corporate 1902 Stieglitz established the Photo-Secession, 3. A fund was introduced to cover the cost for a group of American photographers who pro- the organisation; moted photography as a fine art. The name 4. A committee had to supervise the framing of Secession was ‘borrowed’ from groups of pro- works; gressive artists from Germany and Austria, who 5. Hanging the artworks had to be done with had the same ideals as the Photo-Secession; utmost care; objections to, and independence from, artistic 6. It was an art-exhibition, not a cheap attraction. and academic establishment. In that same year Not only did the quality of the exhibitions im- he organised a major exhibition at the National prove, but photography was also treated as if Arts Club, ‘American Pictorial Photography ar- it was art. ranged by the Photo-Secession’. It included Stieglitz would adopt more European initiatives, work by Gertrude Käsebier, Clarence White and like for example the one-man show. The irst Edward Steichen. In 1903 Stieglitz published a American photographer who had the honour was new lavishly illustrated photographic quarterly, Clarence B. Moore. Camera Work. It was presented as a collector’s item and many editions were monographs of one photographer with reproductions in highly accomplished printing techniques. The magazine was exclusive and expensive; normally prices for a magazine varied between one and two dollars. Camera Work sold for four dollars. Stieglitz argued that the prints came from the original negative, a labour-intensive process, hence the price. Since there were hardly any collectors, it became usual for photographers to collect each other’s work. Stieglitz collected actively between 1889 and 1908, but also after 1908 he purchased works, like photographs by Paul Strand (1917). As representative of the Linked Ring, one of his tasks was to look for new talent. His choices were not always appreciated because some members were extremely conservative. Stieglitz Figure 5. Cover of the Catalogue of the Family of Man exhibition

49 2.1. The irst photography galleries the collection was Pictorialism but that style was In 1904 Stieglitz visited Europe and was pleas- out of fashion, modernism ruled. Photographers antly surprised that prices for photographs had were freer with the introduction of the portable increased. He then decided that it was time for camera and were discovering the city. Stieglitz New York to have a photography-gallery. On the had invested $15,000 in a collection that had 21 of November 1905 the irst exhibition of the hardly any commercial value. In 1923 Stieglitz Photo-Secession gallery (also known as 291) is donated his collection of photographic books a fact . The gallery was to provide a focus for the to the Metropolitan Museum of Art. The major efforts to gain recognition for Pictorial photog- part of his photography collection would also, raphy as a contemporary art form. Group- and by coincidence, end up in the same museum. one-person exhibitions of photographs were the Stieglitz had plans to destroy his worthless col- main focus of the gallery for only a short time. lection and told this to gallerist Carl Zigrosser. Corporate photography Corporate Visitors could buy the exhibited works, but sales The latter had connections within the museum were disappointing. In the end it was Stieglitz and it took him only one telephone call before the himself who bought the most. Of all the exhibi- collection of seven hundred prints was brought tions at the gallery, Steichen’s one-man show to the museum. There is no information on a (1906) attracted the most visitors (2500), and photography gallery before 1931 in New York the sale with proceeds of $1500 was the most or elsewhere. In 1931 Julian Levy opened his successful. In January 1907, the first works eponymous gallery in New York. The gallery in another medium were shown: drawings by opened with a retrospective of American photog- Pamela Coleman Smith. Beginning in 1908, raphers, followed by an exhibition of works by under the inluence of Edward Steichen advis- Atget and Nadar. Prints were especially made to ing Stieglitz from Europe, the exhibition program sell, but despite the low prices, ranging from $10 dramatically shifted to works by such masters as to $50, Levy didn’t sell any. There were more Rodin, Matisse and Picasso. Photography would setbacks and Levy was forced to shift his focus only play a minor part, and by 1912 there were from photography to modern art. no exhibitions of photographs at all. Meanwhile It might seem awkward to make such big leaps Stieglitz had put his own collection in storage, in time, but since there were no photography and had a good reason to do so. The core of galleries between1931 and 1954, there is no other option. Helene Gee opened the Limelight gallery in 1954. Gee, a former student of Lisette Model, wanted to make the gallery a cultural meeting point, hence a gallery cum coffee shop. But unfortunately Gee suffered the same fate as Stieglitz and Levy. Nobody would pay $100 for a Moholy-Nagy (please note that in 1990 a Japanese museum paid one million dollar for a Moholy-Nagy). After seven years Gee closed her gallery, and until 1969 there are no new initiatives. Lee Witkin was brave enough to open his gallery in 1969. He was aware of the fact that his predecessors were unsuccessful and was realistic about his faith. He said: “So in 1969 when I rented my irst gallery space…my hopes Figure 6. Diane Arbus, A young man at home on West were slight and the prospects of my inally read- 20th Street, NYC, (1966), gelatin silver print

50 ing all of my Proust during the slow hours large”. In 1969 with Wall Street suffering major blows, Witkin managed to sustain. In the 1970s Witkin art as investment became interesting; an oficial would comment on a new trend that he calls relation between the investors market and the the manipulation of the market, and pointed his art world becomes a fact. Recently, special inger at dealer Harry H. Lunn Jr. photography art funds have been set-up: Tosca Lunn entered the stage around 1971 and would Photography Fund, initiated by Mr. Dalman, almost single handily build the market for ine executive vice chairman of Tosca Asset Man- art photography by introducing limited editions. agement LLP and the Art Photography fund, Lunn understood that photography had one big launched by Johannes Faber of the eponymous problem, its reproducibility, and believed that gallery, Vienna. a dealer had to create artiicial scarcity or ‘the Already a long time ago, in an interview with creation of rarity’, which would give photogra- Stieglitz entitled “Can a photograph have the Corporate photography Corporate phy the same status as a ine print. A famous significance of art?”, Marcel Duchamp said: example is the work of Ansel Adams. Prior to “You know exactly how I feel about photography. Lunn’s strategy, prints by Adams cost around I would like to see photography make people $400. In 1975 Adams declared that he would despise painting until something else will make not make any new prints after December 1975’. photography unbearable”. Duchamp would Subsequently Lunn placed a big order, turn- get his way. In the 1960s artists began looking ing the photographs of Adams into a lagship for ways to replace the canvas. They rejected leading the rest of the leet’ and prices for living traditional painting and sculpture and started photographers rose. As a result prices for Ansel to experiment with photography. Then came a Adams photographs went up between $4,000 group of American artists who would be known and $16,000 in 1979 (prices would drop again as the Picture Generation. These artists, with in the early 1980s, but are back again and this key-figures like Cindy Sherman and Richard time close to the $100,000 mark). Lunn was also Prince, were focusing on reproduction instead one of the organisers of Paris-Photo, the famous of production and began to appropriate images photography fair in Paris launched in 1996, and from the media. Photography was still separated became one of the founding members of AIPAD from ine art and free of theoretical baggage, and (The Association of International Photography therefore attractive for these new artists. What Art Dealers). This association is dedicated to happens next is a division in photography; the creating and maintaining the highest standards traditional photograph capturing the decisive mo- of buying and selling photographs. ment, and the staged appropriated photographs that are more related to the modernist aura of 2.2. Reasons for the acceptance of photography Lunn was undoubtedly a driving force behind establishing a market for photography, but there were more factors. Around 1967 there was a growing interest in art as investment. This was partly due to poor exchange rates. The Pound Sterling devaluated in November 1967, and the value of international currencies dropped as a result. The art-world had the advantage of operating at an international level, meaning that an important work keeps its value, or at least in the strong U.S. dollar. Figure. 7 Charles Sheeler, Wheels, (1939) gelatin silver print

51 contemporary art. This division also had conse- possible for new departments to be created in quences in the art world where two different kind the museum for architecture (1932), ilm (1935), of galleries emerged; specialist photography industrial design (1940) and photography (1940). galleries and contemporary galleries where they Photographs had been shown in exhibitions at sell work of artists working with photography. the MoMA before the oficial arrival of a photog- The auction houses have copied this model. This raphy department like, for example, Murals by will be further discussed in section 4. American Painters and Photographers (1932). But as the title implies it was an exhibition of 3. The MoMA and its curators painting and photography. Walker Evans: Pho- There are a few objects that have passed as tographs of Nineteenth Century Houses (1933) quickly and as directly from the stage of de- was the irst exhibition at the MoMA that only struction to one of worshipful admiration, from showed photography. The photography depart- Corporate photography Corporate the trash heap to the museum. This statement ment transformed after the arrival of Beamont is a good introduction to photography’s (re)- Newhall in 1935. Newhall was originally hired entrance into the museum. In 1929 a committee to run the library, but when Barr discovered that of inluential Americans decide that there should he was interested in photography, he was ap- be a museum exhibiting modern art. This new pointed as the irst curator of the photography museum would focus on traditional art forms: department. In 1937 Newhall curated his irst painting and sculpture. Its director, Alfred Barr, exhibition, Photography 1839-1937, that showed however, believed that a museum for modern 841 works by different photographers. What art should also show new media. Barr made it Newhall wanted to illustrate was the evolution of the image instead of the technical progress. This exhibition would become the basis for Newhall’s book History of Photography. The department could, however, never have survived without the support of David H. MacAlpin and James Thrall Soby, both photography collectors. MacAlpin donated money that made it possible to buy new material, while Thrall Soby donated about a hundred Man Rays from his private collection in 1940. In 1940 the irst oficial photography exhibition at the MoMA takes place. American Photographs at $10 is a compilation of work by nine top photographers all represented with one photograph. Ten prints of each work could be bought for $10 per print. Sales were disappointing; only a dozen prints were sold. In 1945 the photography collection contained about 2000 photographs and was divided into two categories: historic (nineteenth century) and contemporary. Photographer Edward Steichen became the new curator in 1947. Steichen considered photography as a universal language and it is in this context that Figure 8. Cindy Sherman, Untitled Black Bra, (1978), he curated the monumental exhibition Family of black and white photograph

52 Man (1955). The focus was not in the irst place almost as much as the supposedly banal and on artistic expression, but on photography as vulgar subject matter. a mass communication tool and presents an In his still-challenging book, The Photogra- idealised vision on the theme of man and fam- phers Eye: A way of seeing (1964), Szarkowski ily. In the introduction of the catalogue, Steichen analyses the formal development in the way wrote: “It was conceived as a mirror of the uni- of “photographic seeing”. In the introduction versal elements and emotions in the everyday- Szarkowski writes: “this book is an investigation ness of life as- a mirror of the essential oneness of what photography looks like, and of why they mankind throughout the world”. The exhibition look that way”. According to Szarkowski there showcased a selection of 503 photographs by are ive formal characteristics that can be found 273 photographers, famous and unknown, from in every photograph. 68 different countries. Family of Man attracted These are: Corporate photography Corporate around 9 million viewers from all over the world 1. The Thing itself and the accompanying catalogue sold out within 2. The Detail, no time (ig. 5). This great interest gave photog- 3. The Frame, raphy some sort of stability and comfort, and the 4. Time, proceeds made it possible for the department to 5. Vantage Point. expand its collection. These structures are based on the modernist view of the aesthetic autonomy of the medium. 3.1.Szarkowski As a consequence photography got her own In 1962 John Szarkowski was appointed direc- aesthetic focus and became independent from tor of the photography department. At the time painting. Szarkowski’s approach is democratic; photography was still not fully accepted as an he makes no difference between photojournal- art form by the commercial galleries, curators ism, documentary photography or ine art pho- and critics. Szarkowski managed to change tography. All genres can be judged by the same that, largely on his own. Szarkowski preferred criteria. Szarkowski’s curatorial choices en- contemporary photography that distinguished dured much unfavourable judgement by critics, him from his more traditional predecessors. His but by giving photography her own ‘language’, irst exhibition in 1963, Five Unrelated Photog- Szarkowski managed to (re)introduce photogra- raphers, was a group exhibition of ive contem- phy into the art scene. porary photographers: Ken Heyman, George Krause, Jerome Liebling, Minor White and Gary Winogrand. New Documents (1967) was probably his most inluential exhibition. It established snapshot photography and showed works by relatively unknown contemporary photographers (Garry Winogrand, Diane Arbus en Lee Friedlander). It caused a stir; Arbus made harsh photographs of outcasts in society (ig. 6), while Winogrand and Friedlander took pictures of the streets in New York. Another groundbreaking event was the exhibition of works by then unknown William Eggleston (1976), since it was the irst time that color photography was shown in a museum. This decision incensed the critics Figure 9. Imogen Cunningham, Magnolia Blossom, (1925), gelatin silver print

53 4 The Auction new and young market. However, Sotheby’s in Nowadays one can buy photographs at a gallery London oficially started to auction photographs or auction-house, but this is a fairly recent devel- in 1971, followed by New York in 1975. I spoke opment. In the early 1970s Sotheby’s started to with Mr. Howard Ricketts who organised the irst auction photographs, but it would take another auction at Sotheby’s in London. He told me that ive years before these auctions became regular. the material came partly from the households of Where could someone buy photographs prior to aristocratic families and the photographs would this date? The photograph had primarily served have been put together with discarded furniture. as illustration, so the place to buy a photo would This irst auction did attract the public, but only be at an antiquarian bookseller. These booksell- because this event was a novelty and hardly ers also happen to be the irst to auction pho- anything sold. 1980 was the year that Sotheby’s tographs, but only as a small part of an eclectic New York had its irst highpoint: three photogra- Corporate photography Corporate supply of goods. phy auctions achieved a return of $1.6 million. The sale of the Marshall collection (an engineer Two years later one photograph (Wheels, by from Rhode Island) would become the irst auc- Charles Sheeler, ig. 7) was bought for $67,100 tion in America dedicated solely to photography by The Detroit Institute of Arts. It was a clear and (Swann auctions, 1952). The auction –with in hopeful sign that a leading institution would pay total 371 lots- raised $5,232. The interested that amount of money for a photograph. group was small, and consisted mainly of book 1985 turned out to be a signiicant year for the dealers who called this event a ‘trial balloon’. photography market. The J. Paul Getty Museum In June 1961 book dealer Nicolas Rauch and in Malibu, California, announced that it had André Jammes auctioned 241 items from the bought a few private photography collections Jammes collection, but it was not a success. In and had opened an oficial photography depart- New York (1967), auction house Parke-Bennet, ment. The news sent shockwaves through the now known as Sotheby’s, auctioned the collec- art world, not only because of the amount of tion of Will Weisberg, a publicity photographer photographs (18,000), or the fact the curator was of the hotel Waldorf Astoria. In 1970 Sotheby’s Weston Naef, lured away from the Metropolitan sold the Sidney-Strober-collection, but only Museum of Art, but above all because the deal managed to attract a small group of die-hard was done in secret. This coup was the work of photography collectors. There were no indica- three men: curator Naef, photography dealer tions that a market for photography was realistic. Daniel Wolf and Getty-director John Walsh. Auction houses in those days were smaller than Wolf received a budget of $20 million to buy a now and it was unusual to get involved with a couple of important private collections. The collectors were not allowed to know the identity of the buyer: if they knew their asking price would have doubled. Wolf, however, made an exception for one person, André Jammes, whom he greatly respected and who he considered to be the most important and serious collector. Jammes agreed and sold a part of his collection. Wolf also bought the following collections (or a part): Wagstaff, Crane and Bokelberg. As a consequence, important works were off the market in one foul swoop. The law of supply and demand also applies in this case and prices for Fig. 10 Art Price Index 1: Photography 1985-2010

54 photographs were rising. The total revenue of than paintings and sculptures by the hottest photography auctions at Christie’s, Sotheby’s signatures on the art market. and Swann (the branches in New York) in 1985 In 1989 photography celebrated her 150th birth- was $2,920,776. A decade later, this amount is day. All around the world big exhibitions were increased to $12,173,585. mounted, like for example Photography Now In 1985 trends arise in the photography market, (London) and Photography Until Now (New and especially contemporary photography be- York), and a new record was set at auction; We- comes popular. A good example is the work of stons Nautilus Shell became the irst photograph Cindy Sherman that had a remarkable develop- to sell for more than $100,000. In 1990 Sothe- ment in the art market and was a decisive mo- by’s auctions the irst important single-owner ment for the status of photography. The market collection of singer Graham Nash (singer from for Sherman is quite recent; before 1990 her Crosby, Still, Nash & Young). During that year Corporate photography Corporate work was rarely auctioned. An important event Sotheby’s had three auctions that raised a total for Sherman’s market value was the sale of Un- of $8.000,000, twenty times more than in 1975. titled (Black Bra) for $ 28,600 (Fig. 8). The market is quiet between 1991 and 1993. The estimate had been between $6,000 and There are some outliers, like Tina Modotti’s $8,000. This black and white photograph has Roses Mexico, changing owners for $165,000, an unusually big size (28 ¾ “x 37”), and shows but nothing spectacular happens after that. An- Sherman, lying on a bed in her underwear, hold- other happening is on the way though, when in ing a mirror in her hand. A signiicant detail, in 1994 the Museum of Modern Art sells part of its the late 1970s this photograph could be bought photography collection through Sotheby’s. It is for around $150. Ever since the auction in 1991, the irst time that a prestigious institution sells a the so-called “Film Still” series fetches record part of its collection and the interest is enormous. prices. What made Sherman’s work so valu- The auction raised $600,000. Since 1994 the able is that it is categorised as contemporary photography market shows an upward trend. An art (Charles Saatchi was among the irst to pay the kind of sums that most collectors had previously paid for paintings). Going forward there is a strong belief that there will be further blurring between the contemporary photography market and the contemporary art market. This shift has caused a major change regarding photography auctions, which are now divided into: dedicated sales, and contemporary art auctions with photographs. According to gallerist Edwyn Houk of the eponymous gallery, the popularity of contemporary photography has to do with a new conception of art, which makes that sectarianism has disappeared. When people buy a piece of art they don’t necessarily look at the medium. Galleries cater to this trend by showing art works from different media next to each another, also known as crossover. Another thing, according to Houk, is the price. A print by a famous photographer, exceptions aside, is considerably cheaper Fig. 11 Daniel Gordon, Portrait in Orange and Blue, (2010) Chromogenic print

55 important moment for photography was the sale performance”. However, no two prints are identi- of the André Jammes collection in October 1999 cal: prints can have clear differences because at Sotheby’s London. Jammes is known as the of the format and the inish. Finally, photographs connoisseur of connoisseurs in the inner circle are usually printed in small numbers: practice of photography. He was originally an antiquarian showed that early prints are rare. Edward We- book-dealer and started to collect in the 1950s. ston’s notebook, for example, reveals that he During a meeting with other book-dealers, prints only sold 12 prints of his famous Pepper No. by Nadar were shown. Apparently Jammes 30. Photographer W. Eugene Smith once said asked if anyone collected these. Since nobody to photography dealer Witkin: 'The care I give did, he decided to build a collection. Setting up the prints and the agony I go through making an archive was back then the only possibility them makes it almost an unpleasant but neces- to study the history of photography. Jammes sary task. Because of the time it consumes, I Corporate photography Corporate systematically amassed a collection with all the could never “lood” the market with my prints. big names, especially from the nineteenth cen- I make my own prints because no language or tury. The Jammes auction would fall just short communication allows me, or anyone else, to tell of becoming a white glove sale (a term in the another person the very subtle balances of print auction world when all lot-numbers are sold), but quality only I can register. Anyone else’s print managed to break a record when a tree-study of my negative is a rough approximation, even by Gustave le Gray (1855) sold for £460,000. with the best of printmakers. I struggled all my Lot 64, however, will become the star-lot of the life to come back from assignments and make auction. It is a seascape: Grande Vague-Séte my own prints.' by Gustave Le Gray, that went under the ham- In the meantime the market has come up with mer for £507,500 a world record. For a while a solution for this through limited editions. It it remained unknown who the buyer was, but means there is a stated number of prints of an eventually it was revealed that sheik Al-Thani image in a particular size and in a particular from Qatar bought the Le Gray. format, preferably signed. Now all the photographer/gallery has to do is keep a record of the 5. Vintage and non-vintage number of prints. If keeping a record is neglect- It is well known that photographs can be multi- ed, the serious collector who wants rarity loses plied, a characteristic that was part of the prob- interest. A good example of a photographer lem and resulted in the idea that prints from the with a great talent, but no business acumen, is same negative were exchangeable and could Annie Leibovitz. Leibovitz never kept a record, be produced in large editions. The idea that a which might indicate that there are a lot of her photographer could make unlimited prints didn’t prints around, making her work commercially appeal to collectors who value rarity. uninteresting. A photograph can look like a direct positive, a Anyone with an interest in collecting photog- slide, a negative or a print. Direct positives, posi- raphy has come across the term vintage print, tive slides and negatives are unique objects. A but what is it? A vintage print is basically a pho- single glass negative, lat ilm or contact sheet- tograph printed within a few years of the date of 12, 24, 36 or more exposures- forms the basic when the negative was made. This window of material of a photographer, and he will choose time expands with the age of a print; a print the image he feels is the best at that moment. made in 1890 from a negative made in 1880 or This negative is the ‘mother’-in fact the plate- a print made in 1960 from a negative made in of the photographic prints. Or to quote Ansel 1958 are both generally referred to as vintage. Adams: ‘The negative is the score: the print the Prints that were made in the past, but after the

56 period of time in which they would be considered its speculative peak it accounted for more than vintage, should be identified as “old” prints. half the global auction revenue generated by When the photographer or an assistant super- the photography segment as a whole. In 2009, vised by the photographer makes a print in, for the proportion was 53%. Since then, it has been example, 1998 from a negative dated 1968, this contracting. In 2010, contemporary photography print is called a modern print or printed-later. But shrank back to roughly the same proportion as in what makes the vintage print so important, al- 2006, generating 40% of the global auction rev- most holy? A vintage print, in theory, represents enue from the photography segment as a whole. the photographer’s vision and intentions of the We live in a world that is over-exposed with photographer. But this concept doesn’t always photographs. Some statistics: there are 1 billion hold up. cell phone cameras, 60 billion pictures on Face- Ansel Adams, for one, often changed his print- book and 750 million images were uploaded in Corporate photography Corporate ing style and intentionally altered negatives. The the New Year weekend alone. Photographers difference between vintage and non-vintage is are exploring the boundaries of photography particularly expressed in value; the price for a and are experimenting with digital techniques, vintage print is on average twice as much as for giving photography, as we know it, a makeover. a non-vintage. In some cases the difference is A good example is the work of Daniel Gordon extreme: in April 2010 Christie’s New York sold who makes igural sculptures with images from a rare signed print by Imogen Cunningham for the Internet. Gordon’s work does stretch the $242,500. A month later at Swann auctions, the traditional deinition of the medium, but is it still same image-non vintage- was sold for $31,200 photography? During a symposium at Foam (ig. 9). about the future of photography, Professor Fred Ritchin said that we are making a big mistake 6. The future by calling digital photography, photography. Ac- Ever since photography became a part of con- cording to Ritchin, digital photography has very temporary art, more people have started to (very) little to do with photography and compared collect. A good example of this collecting mania it to the invention of the automobile. The auto- is Pier 24, a 28,000 sq foot building where the mobile was initially called the horseless carriage contemporary photography collection of the because nobody knew what it was, but it still had Pilara Photograpic Collection is housed. As a the horsepower. Both were means of transport, result, prices have skyrocketed. Prices started but that is where the comparison stops. to increase in 1990. In 1995, the contemporary I think it is appropriate to end this article with the photograph auction was limited to 350 photo- statement of Peter MacGill of the Pace/MacGill graphs for a total of €1.4m. Since then, prices gallery: “The book on analog photography has in the segment have quadrupled and between closed and there is a limited supply of all the three and six thousand contemporary photo- good stuff, which has put tremendous pressure graphs are sold each year. on that marketplace,” MacGill says. “The value In just ten years (1998-2008), the segment an- is only going up more when people realize you nual revenue rose by 1,270% and the photogra- can’t just make another print”. Maybe the record phy segment today represents 7% of the global price for Gursky’s 99 Cent II Diptychon is only auction revenue generated by contemporary art the beginning. (€31.1m from July 2009 to June 2010). More dynamic than the market for old photographs, Maria Helene Kublin the contemporary photography sub-segment has seen an astonishing rise in value and at

57 The Kronenberg Foundation Bank Handlowy w Warszawie SA

Bank Handlowy w Warszawie SA, operating The Kronenberg Foundation under Citi Handlowy brand, is a member of Established on the 125th anniversary of the Citigroup, one of the leading global inancial in- founding of Bank Handlowy, the Kronenberg

New members New stitutions. Citi Handlowy has conducted uninter- Foundation has assisted its founder, Bank Hand- rupted business operations for nearly 140 years, lowy, in pursuing its social responsibility mission becoming the oldest bank in Poland. since 1996. The bank’s mission includes playing a leading Inspired by the work of Leopold Kronenberg, an role in the banking industry in Poland by offering outstanding inancier, philanthropist and culture world class products and high quality services to patron, we focus our efforts on economic educa- our customers, both local and international, cre- tion and protection of Polish cultural heritage. ating an attractive and satisfactory work environ- Embracing new ideas, we initiate and coordinate ment and setting ethical standard in business. volunteering projects for the employees of Citi Citi Handlowy’s activity reaches beyond busi- Handlowy and support the growth of local com- ness goals. Because the bank identiies with munities. the community it operates in, it embraces the The mission of the Kronenberg Foundation is to possibility to have impact on its shaping and provide assistance to programmes promoting growth. Citi Handlowy’s reputation as a leader the public good in the ields of education and in corporate social responsibility has been con- local development. irmed by numerous awards.

Iwona Murphy, President of the Kronenberg Foundation, and Andrzej Rottermund, Director of Warsaw Royal Castle, presenting a commemorative medal to Prof. Andrzej Tomaszewski, winner of the eleventh edition of the Aleksander Gieysztor Award. 58 The Foundation achieves its goals through: ered by other organisations countrywide, with • Supporting associations and foundations active particular focus on local initiatives. In over 15 in the areas of the Foundation’s interest, years of activity our programmes have reached • Creating advanced educational programs ad- over 6 million Poles. dressed to children and especially gifted youth, • Granting, on behalf of the founder, awards to Protecting Polish cultural heritage individuals with outstanding achievements in the Protection of Polish cultural heritage is one of

ields of economics the Foundation’s areas of interest. Our lagship members New • Supporting organisations effectively reforming in this area is the Aleksander Gieysztor Award, economic and entrepreneurship education in or- granted annually for 12 years to individuals and der to adjust it to the needs of market economy, institutions in recognition of their achievements • Supporting particularly valuable educational in the area of protection of the Polish cultural initiatives in culture, with special emphasis on heritage, in particular for museum and resto- music and cultural heritage, ration initiatives as well as collecting items of • Supporting local and regional initiatives in the value for Polish cultural heritage. The award areas listed above, was designed to promote and support those who • Activity in the third sector community, includ- undertake extraordinary efforts to protect Polish ing organisations such as European Foundation cultural heritage both in Poland and abroad. Centre, Donors Forum Poland, Responsible Roots is a program dedicated to the life and Business Forum. achievements of Leopold Kronenberg and his We have developed a number of original pro- successors. As a part of this programme in 1998 grams and supported worthwhile projects deliv- the foundation inanced the publication of a richly

Sławomir S. Sikora, President of the Management Board, Citi Handlowy, giving a lesson in My Finances project

59 illustrated catalogue entitled The Kronenbergs: deposited it with the National Museum in War- Family Memorabilia (Kronenbergowie. Pamitki saw. The collection is exhibited in the Leopold rodzinne), accompanying an exhibition in the Kronenberg Silvers Chamber. In 2006-2008 we Historical Museum of Warsaw, devoted to the were involved in the search for Nicolaus Co- family’s role in forwarding the cultural and civili- pernicus’ grave, which ended in the successful zational development of the country. In the same identiication of the great astronomer’s remains. year the LKF produced a biographic documen- In 2010 the Foundation purchased a painting

New members New tary on Leopold Kronenberg Labor Means Work formerly owned by Leopold Kronenberg, the (Labor znaczy praca). A CD History of Bank founder of Bank Handlowy. The valuable paint- Handlowy w Warszawie (Historia Banku Han- ing „Resting in Tatra Shed” by Wojciech Gerson, dlowego w Warszawie S.A.) followed in 2000, looted in World War II, was recovered and do- and in 2010 the LKF issued an album The Kro- nated to Warsaw Royal Castle. nenbergs’ Heritage (Dziedzictwo Kronenbergów) presenting the foundation against the history Delivering inancial education to Poles and achievements of Bank Handlowy and the Financial education is another key area of the Kronenberg family. In 2011 the LKF initiated the Kronenberg Foundation’s activity. We dedicate recovery and digitalisation of documents of the special efforts to assist Citi Handlowy in pursu- history of Bank Handlowy w Warszawie and the ing the strategy founded on „equal partners” Kronenbergs. approach to clients. We believe that living in The Foundation has consistently devoted much a society with market economy as is essential of its attention and grants to the protection of constituent requires personal inance manage- Polish cultural heritage. In 1998 we purchased ment skills. Low economic awareness causes a collection of nineteenth century silvers and excessive consumption, debt and unnecessary

Workshops of Hasidic dance at the Festival of Jewish Culture, a project inanced by the Kronenberg Foundation

60 overspending. This in turn leads to lifelong inan- Bank in Action is an education programme ad- cial dificulties. To prevent this, the Foundation dressed at upper-secondary students interested delivers economic education programs to a wide in inances. It was designed to promote knowl- range of social groups. edge of the principles of inancial markets, and By bringing our programmes to Poles we want prepare young people to adopt careers in entre- to assist in their inancial education, help them preneurship and economics. Over 11,500 youth learn to make rational and advantageous inan- participate in BinA annually.

cial decisions, which will most likely advance Banks in Action Contest of Financial Knowledge members New individual wealth as well as the success of the is the irst inancial knowledge competition in entire economy in the future. Poland. Its aim is to test the skills of young peo- From Penny to Pound is the irst economic edu- ple who intend to study economics, particularly cation programme in Poland addressed at chil- inance and banking. Over 10,000 students from dren aged 8-10. It aims to help them develop and 500 schools enter the competition each year. adopt rational money management behaviours. Savings Week is a nationwide educational cam- Each year the program reaches over 11,000 paign combined with the celebration of the Inter- children and nearly 25,000 parents and other national Saving Day on 31 October. The main family members. idea behind Savings Week is to promote saving My Finances is Poland’s largest youth economic as a lifelong habit and rational management of education program. Its aim is to educate young personal inances. This is done by means of people to make rational and advantageous i- a complex awareness-raising campaign in the nancial decisions and equip them with skills nec- media. We have also launched a multimedia essary to update their inancial knowledge. The portal for the needs of this program http://tdo. programme reaches 150,000 youth annually. edu.pl. The media education campaign reaches

Penny Travels workshop, part of the From Penny to Pound programme

61 over ive million Poles annually. Promoting entrepreneurship So far, the foundation’s inancial education pro- In 2006 the Kronenberg Foundation launched grammes have served directly over 1,600,000 Microentrepreneur of the Year contest. The Poles. idea behind this programme is to promote mi- The foundation is currently working with the croentrepreneurship, encourage setting up of National Bank of Poland on a National Finan- small enterprises and recognise the best micro- cial Education Strategy to help Poles become businesses as examples of effective economic

New members New conscious members of the inancial markets, activity. Directly, our goal is to recognise micro- capable of monitoring and managing their inan- entrepreneurs successfully combining tradition cial situation, make the best of available inan- and modernity and irmly rooted in their local cial products, successfully look for necessary communities. Candidates are evaluated by the information and consciously plan their future, Selection Committee composed of the repre- including saving towards retirement. sentatives of major organisations supporting The document will identify and priorise key inan- microentrepreneurship. cial education goals, determine teaching standards and their attainability. The strategy will also Recognizing outstanding economists diagnose Poles’ current inancial awareness, Competition for Bank Handlowy Award for Spe- design long-term educational goals, guidelines cial Achievement in the Theory of Economics for constructing high-quality inancial education and Finance, organised annually by the Kro- schemes, methods for reaching all social groups nenberg Foundation, is one of the most prestig- and actionable evaluation strategies. ious events aimed at recognizing scientiic and scholarly achievement in Poland. The award is

Leszek Balcerowicz, former President of the National Bank of Poland, and Sławomir S. Sikora, President of the Management Board, Citi Handlowy, at the award-giving ceremony of Bank Handlowy Award for special achievement in the theory of economics and inance

62 sometimes referred to as the „Polish Nobel prize • Special projects engaging the employees and in economics” and aims to promote the most clients of Citi Handlowy with their families, as valuable publications in economics and inance. well as student organisations, designed and The jury composed of high-proile Polish econo- delivered with Foundations Ja Wisła, Our Earth, mists, evaluates essays and books, published and ABCXXI „All of Poland Reads to Children”; in the preceding 3 years. Winners of previous as well as students of Warsaw University. editions of the Bank Handlowy Award are highly 721 projects have been delivered under Em-

reputed economists – academics, market ana- ployee Volunteering Programme in ive years of members New lysts, members of the Monetary Policy Council. its existence, with over 9,000 volunteer engagements totalling over 54,800 hours of donated Promoting employee volunteerism time, working for over 90,000 people. Employee Volunteering Programme at Citi Han- Moreover, in 2006-2010 as many as 13 Citi Han- dlowy is Poland’s irst and largest structured dlowy volunteers were chosen as the „Personal- programme of this type. Managed by the Kro- ity of the Month” by the Association Volunteering nenberg Foundation, it was created to stimulate Centre in Poland. The programme recognises and champion community involvement among volunteers who champion volunteerism in their the employees of Citi Handlowy. It provides them organisations and are uniquely dedicated to with instruments, inancial support, expertise helping people in need. and logistics necessary to volunteer for those Caring about the environment and sustainable who need help. growth Citi Handlowy employees are offered a range In 2008 we launched a programme More Trees of opportunities for volunteering for community Thanks to You in cooperation with Citi Handlowy. organisations or local self-governments. Many The idea behind the initiative is to promote pro- design their own original projects for collective eco behaviours and encourage the clients of or individual volunteering. Citi Handlowy to use online statement service Among the most important projects are: in place of printed account statements. Under • Citi Community Day, an annual event with the programme, Citi Handlowy plants a tree on ca. 1,500 volunteers implementing around 100 original community projects in several dozen locations throughout Poland; • Innovative employee integration off-sites com- Bank Handlowy is a inancial institution with bined with volunteer work, the irst of this kind a high sense of social responsibility. We do Poland. Rather than waging paintball battles, our best to be a model business in Poland, employees renovate education centres, build sensitive to the needs of our partners. We playgrounds or take care of animals. 27 such are particularly committed to initiatives in events have been held so far, with over 2,550 corporate social responsibility. At Citi Han- employees participating; dlowy, we refer to them as modern-day phi- • Involvement in the Foundation’s inancial edu- lanthropy. Modern, because involving careful cation programmes for children and youth; long-term planning to bring considerable • Regular charity projects for the inmates of beneit for local communities, contributing children’s homes in Równe, Julin, Dbniki and to their prosperity and growth” Rawa Mazowiecka; including 35 Christmas events organised as a part of „Santa’s Assist- Sławomir S. Sikora, President of Manage- ants” program; ment Board, Citi Handlowy

63 behalf of each client who has chosen the online Local development service. • Healthcare priorities Over 330,000 new trees were planted in 2008 • Social policy - 2010 as a result of wide response to the cam- • Teaching entrepreneurship paign. Supporting worthwhile community initiatives Our programme framework, inancing formula Under the Grant Program, our oldest original and grant-giving procedure developed over

New members New scheme, we annually inance dozens of non- many years of operations has brought us the profit initiatives countrywide. We provide fi- reputation of one of the largest and highest- nancial assistance to pro-bono programs in rated non-governmental organisations in Poland education and local development in the following and an unquestionable leader among corporate program areas: foundations. • Education • Innovations in education Working with the best partners • Economic education Many of the Foundation’s programs are deliv- • Cultural heritage and tradition ered with widely recognised public and NGO • Artistic activity of children and young people partners such as the National Bank of Poland, Junior Achievement Poland (member of JA Eu- rope), WSB Banking Schools, Microinance Cen- tre for Central and Eastern Europe, Academy for the Development of Philanthropy in Poland, and Volunteering Centre Poland. The Kronenberg Foundation is an active member of organisations such as European Foundation Centre - an independent association of organisations with over 200 full and associate members. It was designed as a communication platform for philanthropic organisations worldwide. Donors Forum Poland, of which the Foundation is a founding member, brings together organizations, institutions and companies that issue grants for various civil initiatives for the public beneit. Donors are associated in the Forum to improve their skills and promote good practices in issuing grants for operations of civil organisations. Responsible Business Forum is a non-governmental entity supporting the growth of corporate social responsibility initiatives in Poland. Its mission is to promote the idea of corporate social responsibility as a countrywide standard, for increasing companies’ competitiveness, social satisfaction and healthier environment.

Leopold Kronenberg (1812-1878) - inancier, philanthropist and culture patron; founder of Bank Handlowy w Warszawie SA.

64 Our credibility and prestige also comes from the For investment in employee volunteering: support we receive from outstanding people of We are Poland’s winner of the European Em- science, education and culture, who are actively ployee Volunteering Award 2011. EEVA is a involved in our operations. The Foundation’s contest organised by the European Commission Council is chaired by Professor Daria Nałcz and BITC (Business in the Community). and its members include Alan Okada, Prof. Image-Strong Award 2007 – for the delivery of Andrzej Blikle, Prof. Jerzy Dietl, Prof. Janina „Citi Global Community Day 2006”.

Jówiak, Prof. Andrzej K. Komiski, Krzysztof Colours of Volunteering – twice, in 2006 and members New Pawłowski PhD, Prof. Andrzej Rottermund, Prof. 2005. Colours of Volunteering is the most pres- Henryk Skaryski, and Prof. Edmund Wnuk- tigious token of recognition received by the Em- Lipiski. ployee Volunteering Program at Citi Handlowy. Recognition inspires us to keep up with the good work For our contribution to the protection of Polish Wide appreciation of the Foundation’s initiatives cultural heritage: and programmes is relected in the number of Honorary Award „Order of Merit for Polish Cul- awards we have gained. Some of the most valu- ture” for the recovery and donation of „Resting able are: in Tatra Shed”. The painting by Wojciech Gerson Honorary Pro Publico Bono Prize – the highest was donated to Warsaw Royal Castle. award offered to civic organisations in Poland. Image-Strong 2009 - the foundation received The foundation received it in recognition of our the award for strategic involvement in the DNA total pro-bono contribution, with particular em- research project aimed at identiication of Nico- phasis on corporate volunteering. We were the laus Copernicus’ grave. irst corporate foundation to receive this award. Benefactor of the Year 2006 – the most prestigious corporate social responsibility award. The foundation was recognised for model cooperation with the NGO sector, notably in the provision of inancial education schemes For our contribution to educating the society in inancial matters: Benefactor of the Year 2009 – the foundation won the prestigious award for the second time "In the nineteenth century the Kronenberg for strategic involvement in the delivery of inan- Family set highly commendable standards of cial education. civic and patriotic conduct. With its outstand- Award of The Association for Financial Security ing reputation in the pro bono community, the of the Citizens of the Polish Republic 2007, for Foundation has proven a worthy follower of the foundation’s work for furthering financial its patron." education. Golden Badge of Polish Economic Society 2007, Prof. Antoni Kamiski, received for long-term cooperation in the organi- commenting on the Kronenberg Foundation sation of the National Economic Contest. winning the honorary Pro Publico Bono Prize

65 National Bank of Serbia

The National Bank of Serbia was founded by law The National Bank of Yugoslavia was the only on 6 January 1883 (18 January in the Gregorian central banking and monetary institution in the calendar) as a lending and currency-issuing country right up until 1972, when the constituent institution. It began operating in the form of a republics and provinces established their own

New members New joint stock company on 2 (14) July 1884 under central banks (eight in total) as a result of consti- the name of the Privileged National Bank of the tutional changes and disempowering of federal Kingdom of Serbia. institutions. Together with the National Bank of After World War I and the uniication of Yugoslav Yugoslavia, these banks constituted a complex peoples, the Bank was transformed into the Na- central-banking system. It was a rather speciic tional Bank of the Kingdom of Serbs, Croats and and dysfunctional monetary system, comprising Slovenes (from 1929: Yugoslavia) and empow- elements of socialist self-management, market ered to manage the needs of the new state. This and planned economy. Until early 1990s, it was was regulated by the law of 26 January 1920, governed by the Council of Governors, com- which also gave the Bank the responsibility for posed of the governor of the National Bank of maintaining the stability of the dinar, which in Yugoslavia and governors of the national banks practice proved to be its most important task. In of Yugoslav republics and provinces. 1931, the National Bank became a shareholder Following the disintegration of socialist Yugo- and a fully-ledged member of the Bank for Inter- slavia, the 1992 Constitution of the Federal Re- national Settlements in Basel, thereby achieving public of Yugoslavia deined the National Bank a signiicant position in the international inancial as an autonomous and single issuing institution system. in the country in charge of monetary policy, sta- With the outbreak of World War II and the Ger- bility of the currency and inancial discipline. In man invasion, the operations of the National accordance with the Law on the National Bank Bank were discontinued. A new central bank was of Yugoslavia, as the legal successor, the Bank founded in the occupied Serbia – the Serbian assumed all the rights and obligations of the National Bank. It operated under direct regula- former National Bank of Yugoslavia and the nation of the occupation authorities, while the pre- tional banks of the republics and provinces in the war National Bank continued its operations in territory of the Federal Republic of Yugoslavia exile – in London and Cairo. (Serbia, Montenegro, Vojvodina and Kosovo). In the aftermath of World War II and establish- Pursuant to the law enacted in 2003, the Na- ment of the communist regime, the status of the tional Bank of Serbia is the central bank of the National Bank changed dramatically. Already Republic of Serbia and is accountable to the in 1946 the authorities of socialist Yugoslavia National Assembly of the Republic of Serbia. repealed the National Bank’s status of a joint The National Bank of Serbia comprises, inter stock company and nationalised its assets. The alia, an archive division, which takes care of the Law on the Lending System enacted in the same archival records of the National Bank of Serbia, year re-afirmed the National Bank of the Federal as part of the cultural heritage of the Republic People’s Republic of Yugoslavia as a federal of Serbia and the region as a whole. lending institution, while the 1965 law renamed it the National Bank of Yugoslavia.

66 2nd EABH Workshop for Young Scholars, Rotterdam School of Management, Erasmus University 29 March 2011

This spring the Rotterdam School of Manage- Mooij – are also involved in organising the 2011 ment, Erasmus University hosted the 2nd Eu- EABH Annual Conference. They were assisted ropean Association for Banking and Financial by Stefano Battilossi. Although all topics in the History Workshop for Young Scholars. After a ield of insurance, banking, inancial and mon-

call for papers ive papers were selected, cover- etary history would be considered, the organis- report Workshop ing three themes: debt markets, monetary policy, ing committee particularly welcomed papers and banks supervision. One of the papers was relating to the annual conference, i.e. Models selected to be presented at this year’s annual of corporate governance; Governance mecha- EABH conference, which will take place in Am- nisms in inancial institutions; and Regulation sterdam, 20-21 May. and legislation of governance. The response to In December 2010 the EABH issued a call for the call for papers was promising. After a careful papers for its second Workshop for Young Schol- decision process ive papers were selected out ars. Those working in the fields of monetary of ifteen submissions. The organisers, in close and financial history and within five years of cooperation with the staff of the EABH, made the Ph.D. were invited to apply. The workshop a well balanced programme of three sessions. organisers – Abe de Jong (Erasmus Univer- Each paper would be reviewed by two discus- sity), Anders Perlinge, Ingrid Elferink and Joke sants, typically one historian and one economist

Port of Rotterdam

67 working on contemporary research. allocated inancial resources between business On 29th March, the host and chairman of the men. In their paper the authors compared the workshop, Abe de Jong of the Rotterdam School French financial intermediaries with those in of Management, welcomed the 25 participants. Amsterdam. In contrast to the irst paper, this The irst session was on debt markets. Stefano was based on archival research in unexplored Ugolini (Graduate Institute of International and sources. The discussants of their paper, Erik Development Studies, Geneva) proposed, in Kole (Erasmus School of Economics) and Abe his paper “Universal banking and the devel- de Jong, both added various suggestions from

Workshop report Workshop opment of secondary corporate debt markets: their own academic research ield. lessons from 1830s Belgium”, a reassessment In the second session, the focus changed to of the old-age debate on universal banking and monetary policy. Gjermund Forfang Rongved growth in emerging countries by putting it on a (University of Oslo) in his paper “The Scandina- different plane. Ugolini used modern inancial vian central banks and the politics of supplying economics to provide new theoretical founda- the belligerents with credit during First World tions to Gerschenkron’s (1962) hypothesis. By War” analysed the monetary policy of the Scan- looking at the Belgium case, the conclusion was dinavian countries during the Great War. His that creating a new inancial market also implies point of departure was the perspective of the establishing intermediaries to supply crucial three central banks – the Danish Nationalbank- functions such as underwriting, certiication, and en, the Swedish Riksbanken, and the Norwegian liquidity provision. Both discussants Gerarda Norges Bank – in order to be able to grasp and Westerhuis (Utrecht University) and Lars Norden clarify the thinking of monetary policy inside (Rotterdam School of Management) made very these Scandinavian central banks. His discus- useful comments. The next paper was presented sants were Joost Jonker (Utrecht University) by Christiaan van Bochove and Heleen Kole and Hein Klemann (Erasmus School of Culture, (both Utrecht University): “The private credit History and Communication). Both added useful market of eighteenth-century Amsterdam: big comments. In his paper Matthias Morys (Univer- money in a small world”. In early modern Eu- sity of York) got into the “Monetary policy under rope, banks were not the main institution that the classical gold standard (1870s – 1914)”. For

“Little Break” : Stefano Ugolini, Gjermund Forfang Rongved, Hein Klemann, Matthias Morys (left to right)

68 this econometric approach the author collected was regarded as an interesting and hardly re- monthly data for twelve European countries: this searched topic by both discussants, Joke Mooij paper asks whether countries under the classi- (Rabobank) and Oscar Gelderblom (Utrecht cal gold standard followed the so-called “rules University). of the game” and, if so, whether the external After the concluding remarks by Abe de Jong, constraint implied by these rules was more the participants of the workshop took a fast boat binding for the periphery than for the core. From taxi on the river Maas to the Euromast. For a this three interesting indings emerged. In their long time the Euromast was the tallest building

comments both Ben Wubs (Erasmus School of in the Netherlands, built in the late 1950s as a report Workshop Culture, History and Communication) and Dion landmark for the Floriade, an international exhi- Bongaerts (Rotterdam School of Management) bition for lowers and gardening in Netherlands, discussed some of the indings. organised once every ten years. In this histori- The topic of the third and last session was bank cal building, high in the sky, the evening closed supervision. Mikael Wendschlag (Linköping Uni- with a dinner in a room with a view of the city of versity) presented work in progress. His paper’s Rotterdam. topic “Drivers of organizational change – banking supervision in Sweden between 1868-1991” Joke Mooij Rabobank

Comprehensive Discussion & Dinner

69 Rabo Canon: a New Format of Telling Bank History

Recently, Rabobank in the Netherlands released This contribution will conclude with a view on a new way of telling the story of its co-operative a future with new possibilities for the company identity and its unique history. It is known as the history. Rabo Canon. It is published on the internet. The

Archives news Archives Rabo Canon consists of 17 so-called windows. What is a canon? In pictures and words (Dutch), each window links In the Dutch language the word ‘canon’ has Rabobank’s past and present. All the windows several meanings. The word derives from the are joined together by Rabobank’s co-operative Greek word ‘kanõn’. The authoritative dictionary, principles, which are based on the idea of F.W. Van Dale Groot woordenboek der Nederlandse Raiffeisen. taal, offers ten meanings. The irst deinition this dictionary offers is ‘norm, criterion, standard’. Introduction The other deinitions refer to a collection and In the Netherlands, the concept ‘canon’ has are of a religious, cultural, musical, literary and been commonly accepted for a number of years mathematical nature. The word also refers to the now. Surf on the internet and in a few minutes thickest German font. The irst-mentioned deini- you will ind an enormous variety of canons. In tion of ‘norm, criterion, standard’ was used for this contribution, I shall go into the meaning and the Canon van Nederland (Canon of the Neth- the popularity of the canon concept. I will begin erlands – see: www.entoen.nl) and was also with the Canon van Nederland. These two sec- inluential during the making of the Rabo Canon. tions serve as a background for the description of how the Rabo Canon came about. Subse- Canon van Nederland quently, I will elaborate on the Rabo Canon itself. A few years ago, there was a passionate public discussion in the Netherlands about the content and quality of history lessons in primary schools: What ought new Dutch citizens and new genera- tions to know of Dutch history, and is there such a thing as a Dutch identity? In addition, some

70 felt that a need for maintenance of the collec- and society. Incidentally, this Dutch website also tive memory. This discussion was not limited to offers information about the canon in English. educational circles; it gradually became more Since 1 August 2010, teaching the Canon van of a national debate. Articles and letters started Nederland is required in primary and secondary appearing in the media written by people from education in the Netherlands. The windows have very divergent backgrounds. As a result of all been deined and approved for the foreseeable the commotion, a Canon Committee was estab- future, however, additional background informa-

lished in 2005. Approximately two years later, on tion can be added to them. This form, in combi- news Archives 3 July 2007, this committee presented the Dutch nation with the use of the internet, is probably minister of Education, Culture and Science with what made this model so appealing. a report, a wall chart and a website of the Canon Meanwhile, in the wake of this canon, dozens of van Nederland. other canons have been developed. There are The Canon van Nederland was not received with city canons, such as the canons of Amsterdam general acclaim. From day one some saw the and Gouda; provincial canons, such as the can- potential of this form of history education, while on of Limburg and of Friesland, but there is also others focused on what they considered serious the canon of medicine, the canon of sports, the omissions or had objections of a different nature. canon of greenhouse farming, etc. However, not As with any historical publication, choices were every canon is published on the internet. They made and explained. But take any historical pub- also appeared in book form and in poster form. lication and there will be differences of opinion. Perhaps of more interest here is the format of a Rabo Canon canon. (see also www.entoen.nu) With the publication of the Rabo Canon the In short, the Canon of the Netherlands has Rabobank, as of the summer of 2010, is the fourteen main lines which “are meant to serve irst inancial institution with its own canon. Af- as background texts to the ifty windows.” They ter ample deliberations, employees of the bank are “the red threads running through the history decided to come up with a company canon that of the Netherlands” and connecting the windows. – unlike their shining example – is not merely The windows contain: “important persons, crea- a historical canon, but also an identity canon. tions and events that illustrate how the Nether- In formulating this company canon, employees lands became the country we currently live in”, from different departments and local banks were according to the Dutch text on www.entoen. involved. Together with a number of outside nu – the website of the foundation of the same experts, they constituted a canon committee, name. The goal of this foundation is to promote presided over by the banks’ company historian. the use of the Canon van Nederland in education The seventeen windows tell in words and (moving) images who the Rabobank is, where the bank comes from, and where it is heading. Past and present are not separate entities in the seventeen windows, but are connected

71 by the bank’s co-operative principles. These egg; Triple A; and the co-operation deliberations. principles are ‘connecting with customers, ‘con- They deal respectively with: the sector research nect with society’, ‘connect with each other’ and and the corresponding Dutch publication Cijfers ‘connecting with the future’. Each principle is & Trends (Figures & Trends) and the bank’s further explained in four windows. That is how transfer of knowledge; why savings and personal the compilers came up with sixteen windows. inance of young people; the signiicance of the Last but not least, one window is dedicated to Triple A rating; and, last but not least, the delib-

Archives news Archives Friedrich Wilhelm Raiffeisen and his principles erations over the co-operative model versus the of a co-operative bank. To give an impression of shareholder model in the middle of the 1990s. the subjects in the canon, here are short descrip- The outcome was that the bank would remain tions of the different windows. faithful to its co-operative principles. The principle "connecting with customers" has Each of these windows also contains a local four windows: our bank; in the living room; across example. It also has the built-in possibility for the border; and truly involved. They discuss, in every one of the 141 local Rabobanks in the order, the co-operative structure and especially Netherlands to build on the Rabo Canon by the authority of the members; the evolution of a making their own canon. number of small local agricultural credit banks The content of the seventeen windows described into the bank it is today; the international expan- above has been deined and approved, but the sion of Rabobank and the contribution the bank charm of this instrument is that, unlike a paper wants to make to society. publication, it does not require a large operation The principle "connect with society" is explained to adapt or update the canon. For example, it in the four windows: joining hands; responsible includes the possibility of adding more windows. banking; bank for everyone; and serving & leading. These four windows deal successively with: The future the history of the merger to become Rabobank If it is up to the compilers of the Rabo Canon, this (1972); corporate social responsibility; the evo- is headed for a glittering future. In fact, the Rabo lution from an agricultural credit bank to a retail Canon is a living narrative; it is also something bank; and going from cashier to bank director simple that bank employees can refer to when and the necessary organisational changes. they are asked about Rabobank and its co- The principle "connect with society" is relected operative principles. The canon contains histori- in the four windows: The Raiffeisen of Brabant; cal facts, as well as tangible examples of local more than just money; from start to inish; and practices in the old days. Because the model is stimulate self-reliance. They deal with respec- so simple, the canon is ideally suited for digital tively: Father van den Elsen - the driving force publication. Unlike the more traditional historical behind Raiffeisen’s co-operative legacy in the publications, a canon offers the possibility of Netherlands and especially in the province of integrating words, photographs, moving images Brabant; the co-operative dividend and its sig- and audio fragments. For those interested in niicance; the various forms of sponsoring; and (bank) history it offers unprecedented dimen- Rabobank Foundation - a foundation of the sions. This, plus the combination of adding links bank that for more than 35 years is committed to other sources of information, opens a world to improving the lives of underprivileged and of opportunities for archivists and historians, as disadvantaged groups of people in society, the well as for communication specialists. Netherlands and in developing countries. See: www.rabobank.nl/rabocanon The principle "connecting with the future" has the following four windows: Cijfers & Trends; a nest Joke Mooij Rabobank

72 New Network of Business Archives in Spain.

The network ARCHIVOSYEMPRESAS (Busi- moria (http://www.archivoymemoria.com/), spon- ness Archives as centres for research and man- sored by the Archivo Histórico Ferroviario del agement of documents) has just appeared in Museo del Ferrocarril de Madrid (run by the Fun- Spain. It will be a forum where archivists, histori- dación de los Ferrocarriles Españoles (Spanish

ans, people in business, economists, jurists and Railways Trust) and the CSIC (Spanish High news Archives other interested parties can share experiences Board for Scientific Research). At the public and opinions. This initiative comes in response level, there is no tradition in Spain of recovering not only to the long-awaited desire to consolidate and storing business archives, as has occurred the collections of records of Spanish businesses for example with the Centre des Archives du in a country where there has been little tradition Monde du Travail of the French Ministry for in this respect, but also as a means to bring Culture, with the sole exception of the work be- together professionals in the handling of these ing done in this ield since 2008 by the Archivo documents and to make it easier for historians Nacional de Catalunya, which now stocks over to access them for their research. In short, Spain one hundred collections. Even at a national level is following similar, well-established initiatives in there is no extensive repository of business, other countries and supranational organisations, but merely a few very biased censuses like the such as the British Business Archives Council Spanish Ministry of Culture’s Censo Guía de or the European Association for Banking & Fi- Archivos de España e Iberoamérica, or a few, nancial History, where archivists and historians again biased, regional ones like the Andalusia have been working together from the beginning. archives website. In terms of private enterprises, To date, the limited coordination that has existed there are only a few banks and historical busi- between archivists and historians of Spanish nesses, especially in the area of energy, that businesses has been due to individual, very have organised their archives. Neither has there localised initiatives like the website ArchivoyMe- been any clear trend towards any association

View of the provisional Archivosyempresas website

73 between the archivists of business collections, Iris network in Spain of the Consejo Superior although a few have tried, off their own backs, de Investigaciones Científicas (http://www. to forge links, but these have always been weak rediris.es/list/info/archivosyempresas.html). At and very general. Once again, it is only in recent the beginning of April 2011 the list ran to 383 years that there have been some sporadic meet- subscribers, and the current administrators and ings, such as those held by a group of Madrid moderators are Miguel A. López-Morell, full lec- based business archivists, or the occasional turer at the Faculty of Business and Economics

Archives news Archives work seminar, but with very few new incorpora- of the University of Murcia ([email protected]) tions to this group of a dozen or so emblematic and José Andrés González Pedraza, archivist archives. To make matters worse, relations with of Hullera Vasco-Leonesa plc. (archivo@fhvl. colleagues from other countries are few and far es). Other coordinators include Teresa Tortella, between, while only a small number of Spanish former director of the Bank of Spain Archives, business archivists attend or take part in inter- and José Luis García Ruiz, full lecturer in History national forums. of Economics at the Universidad Complutense ARCHIVOSYEMPRESAS is the result of an de Madrid. interdisciplinary initiative born at the seminar Elsewhere the coordinators have supported a on "Fuentes para la historia de empresas y em- speciic session devoted to business archives presarios en España" (Sources for the history as a part of the Asociación Española de Histo- of businesses and businessmen and business- ria Económica (AEHE) X Congress, that will be women in Spain) organised by the research held in September 2011 in Carmona (Seville). group "Determinantes del Espíritu Empresarial", Its immediate forerunner was the session at the directed by Professor Gabriel Tortella, and held VIII AEHE Congress, held in Santiago de Com- at the University of Alcalá de Henares on 26 and postela in September 2005, devoted to business 27 October, 2009. ARCHIVOSYEMPRESAS archives in Spain, which was coordinated by took the irst step to unite efforts and to contact the Bank of Spain and Hullera Vasco-Leonesa all the interested parties a year ago when it archives. For the September 2011 event, the created its own email distribution list using the theme is “Access to business archives”, for

74 which the following communications have been semination, discussion and work, one of the proposed: main mid-term objectives of the coordinators of • “Construcción desde la base de los Archivos de ARCHIVOSYEMPRESAS is to create a freely Empresa y praxis del Archivo Histórico BBVA”, accessible website for all users. The website will by J. Víctor Arroyo Martín, director of the BBVA have regularly updated information and will offer Historical Archives. a series of links of interest as well as a census/ • “Digitalización y organización del trabajo con data base of Spanish business archives for in-

las fuentes de la historia económica: la necesi- terested parties to use. This census will include news Archives dad de reorientar el trabajo de los investigadores basic business archives iles related to the fol- de acuerdo a las nuevas posibilidades tecnológi- lowing ields: name, characteristics, legal situa- cas” by Miguel A. Pérez de Perceval Verde and tion, sector, general contents, chronology of the Miguel A. López-Morell of the Uiversity of Murcia collections, description tools, archive services, • “El acceso a los archivos de empresa: el caso access and reproduction levels, address, web- del Archivo Histórico de Iberdrola”, by Juan site, email, telephones, fax, hours and name of Carlos García Adán of the Iberdrola Historical person in charge. This initiative, which has been Archives “Salto de Alcántara”. generously hosted by the University of Murcia, • “El acceso a los archivos de empresa: el Ar- is still in the design stage, the database is being chivo Histórico de Repsol YPF”, by Leticia Cas- built according to the information received from tro Leal (Repsol Archives). the heads of archives, although the net manag- • “El acceso a los archivos de las empresas. La ers will make available all iles whose data are política llevada a cabo en Europa y en EE. UU”, already published for the public. by Teresa Tortella. Despite the scarce baggage that ARCHIVO- • “El acceso al Archivo del INI y las nuevas SYEMPRESAS has at the moment, the jour- tecnología, by Elena Laruelo Rueda, Head of ney has begun well. We have been pleasantly the SEPI Centre of Information and Historical surprised with the number of users who have Archives. registered, even if there has not been a corre- • “El acceso al patrimonio documental custo- sponding inlux of information. It is clear that at diado en el Museo del Ferrocarril de Asturias. a time when social and professional networks Criterios para la elaboración de una normativa are springing to life, the managers of business propia”, by Nuria Vila Álvarez from the Asturias information and researchers in this area have Railway Museum Centre of Information. still to hone their use of new technologies so that • “Fuentes documentales para el estudio de la they can debate, learn and improve their work. Empresa en los Archivos Históricos Provinciales. Whatever the case, we irmly believe that thanks Relexiones sobre el acceso”, by Luis Carlos to this initial impulse and with the future support Gómez Romero, Director of the Huelva Provin- of public institutions and the businesses them- cial Historical Archives. selves, ARCHIVOSYEMPRESAS will not take long to become a reference point for handling The session is to be coordinated by Teresa information and for research into Spanish busi- Tortella, José Andrés González Pedraza and nesses. Miguel A. López-Morell. Information regarding contents and other matters of the congress is available at http://www.aehe.net/xcongreso/ Miguel A. López-Morell sesion-archivos.html José Andrés González Pedraza Along with consolidating these meetings and Teresa Tortella popularising the Internet as a means of dis-

75 The Accidental Erosion of Privacy by Business Social Graphing and Proiling Knowing about Others Forum

Who we are is important to us and to other peo- • We can employ a third party to do a Social ple. We like to know with whom we are dealing. Graph analysis for us (this will have a cost). It makes us feel safe. These steps represent an increasingly complex In the pre-digital world, life may have been sim- set of search and analysis techniques each fol- pler. Relationships developed with others over lowing on logically from the other. a longer period; they were expected to last a The number of steps that we take along this long time. New contacts were often introduced path is dependent upon just two factors: First, via a mutual acquaintance that both parties how important is it for us to be certain who the knew and trusted. This process meant we could other person is? In a credit transaction we want largely rely upon others to alert us to unreliable to be absolutely sure about the identity of the or suspicious individuals. In a banking business, customer. Second, is the information worth the for example, the decision to lend to a new client time and money to ind it? We may ind in future was often taken after some input from an exist- that companies like Experian will ind that Social ing client who may also provide a reference or Graphing techniques will begin to compete with guarantee. their credit referencing service. If more “inancial In the digital world, we are introduced to new reputation” information is available from online contacts on a daily basis. Email, online shop- sources this could become as valuable as the ping, remote contact centres, wiki collabora- hard data. tion, blog comments and friend suggestions on This generates interesting and simple formula FaceBook are some of the places where we as follows: meet new people. The formal introduction is an increasingly rare event. How much we are willing to dig = ƒ {time x So how certain are we that the new digital con- money} tacts that we meet are whom they say they are? There are several steps that we can take to We know that technology has already, and will establish their credentials, including: continue to, reduce the costs on the right hand • We can check our own and other financial side of the equation. As these reduce, people will institutions’ information. In the UK Experian is a be more willing to pay for, or to create a Social leading provider of this type of comparative data. Graph analysis. • We can Google their name or email address Developments in this ield are driven by a variety and see what comes up (this often produces a of interrelated factors: lot of random and unrelated information). • The increasing power of database technologies • We can check out the popular social and busi- used for social, banking, purchase transactions, ness networking sites such as FaceBook or business networking, population surveillance, LinkedIn and see what they say about them- personal communication, performance meas- selves (this gives us their own version of their urement and process tracking, long term data story). storage, and information transfer. • We can check out the links and recommenda- • The use of information in more complex or- tions that they have to others on their social ganisational decision-making. Automation of networking sites to get a sense of what their per- the initial stages of decision-making develops sonal networks look like (this is time consuming). methods to track our choices and preferences for future analysis.

76 • A gradual improvement in links between exist- The by-product is privacy erosion and it seems ing corporate datasets plus the ability to pur- to be creeping up slowly. The gradual improve- chase and combine third party datasets is creat- ment in linkages between datasets is creating ing a more detailed picture of individuals. These a more detailed picture of individuals. These Forum aggregations can include intimate details about aggregations of information can include inti- a person and their inancial activities. mate details about a person and their activities. Technology has provided the tools and corporate The inexpensive and easy to use data analysis information management techniques that have tools for manipulating the data are available indirectly led to the development of individual to anyone, and the only limit to their use is the Social Graphing. imagination and talent of the analyst. Social Graphing uses the concept of synergy. What is Social Graphing? i.e. the whole is more than the sum of its parts; It is early days. Techniques are developing, it makes the development of new information mostly led by communication professionals, relationships possible. We may have contributed marketing analysts and academics. information about ourselves freely to a number The deinition of Social Graphing in this context of separate databases but it is unlikely that we is: will have anticipated the effect of merging the data, especially where that merger might reveal Social Graphing something more about us. The collection of available personal informa- Put simply, when we have more connections, we tion that is collated for use in an automated can build a more complex and comprehensive process that is designed to categorise peo- picture. ple into types, groups, common units, etc The diagram below illustrates that when increasing numbers of datasets are linked together, the Figure 1 - Deining Social Graphing complexity of the links is rapidly multiplied. As the links increase, the value of the information Social Graphing generally uses some form of being analysed becomes much more than the scoring or ranking mechanism to place individu- sum of its parts. Note that when 10 datasets als into a relevant category. These categories are linked, there will be 45 connections, with 15 are accurate enough to launch a marketing datasets there will be 105 and so on. campaign and this is usually where the analysis ends. However, this is the point at which I became interested, because there is a by-product. Read- ily available tools can assist us in the search for meaning in the data. Many search engines allow us to export data into other, more user friendly computer programmes for further sifting and analysis. This means that a person with rea- sonable skills in Microsoft Excel or Access can Figure 2 - How networks become exponential quickly sort a long list of possible results into a much shorter list of probable ones. The synergy we achieve when we merge da- From here, the techniques of Individual Social tasets is something that most of us do not fully Graphing can be used and human effort and appreciate. Each additional piece of information application of intelligence takes over. reveals more and more about us. This is the

77 hidden process providing the real power behind that a client who is borrowing money has links Social Graphing. of this type. In the longer term, this introduces a number of The degree of difference that is acceptable in

Forum challenges for historians. this type of Social Graphing analysis is unique • The default datasets that we keep in the long in every case. Moreover, it will be individual ana- term tend to be individual groups of data that we lysts who will be making these decisions, and the believe will be recyclable or required for audit decisions will be based upon crude alerts from purposes. These are good short-term reasons an automated system. A key indicator in the i- for keeping datasets, but what do we keep once nancial decision making process is the presence these short-term reasons expire? The default of conlicting information. situation in many organisations is to delete at this point. When social graphing becomes part of our nor- • The data sets that we keep include information mal business decision-making processes, we about individuals and these are sometimes ano- will need to rely upon human judgement to “ap- nymised to protect personal privacy. Will future prove” any doubtful graphs. Agents, who can historians come to regret this action? How do we only make the best of the information presented repeat the analyses of the past if the data has to them, will assess those of us who do not pass changed in this way? through any automated stages. How will we • The value derived from Social Proiling with capture and record the decisions that lead to datasets is often generated by ad hoc and ran- approvals in these cases? There will be value in dom combination of several sets in a complex the process, but it could be based on individual analysis. If we keep the datasets in separate decisions that may not be consistent or logical. units, how will we remember what these combi- nations were at some future date? • Are we keeping the results of a Social Proil- Figure 3 - Mismatched Social Graph ing analysis or just the data? If we keep both, how do we ensure that the future reworking of Why this is an issue an analysis will produce the same result? If we So do we need to worry? The answer to this is cannot do this it undermines the credibility of that it depends upon how the Social Graphing our archives. technique is used. It can be put to positive use e.g. to identify criminals and their networks of Linking our Digital Personality to others activities and to less positive use e.g. to provide The impact of linking our Digital Personality to political knowledge for use against a rival. other people in our network adds another level of Here are some examples of how Social Graph- complexity to the Social Graph that is available. ing and Proiling information could inluence your If the person represented in the centre of the life. These are in both professional and personal diagram below is presenting themselves as contexts, to show that these techniques really “Type 1” and we can see that their linked Digital can affect any part of our lives. Personality proiles are mostly “Type 2” does They are included here to demonstrate that this give us a cause for concern? The answer these techniques are currently being used in a is possibly yes, but only where the differences narrow, website speciic context. It is a relatively between the types are so wide that there is a small step from here to generic techniques ap- clear cause for concern. E.g., where Type 1 is plied to us all. Finance Consumer and Type 2 is Fraudster. It The irst example is taken from a 2010 web page is clearly a matter of crucial importance to know and an email communication from LinkedIn, a

78 major social networking site. One LinkedIn quote points to a collaborative system where people From the eHarmony “why it works” page. help each other, the next to a more judgemen- tal (or exclusive) approach to using information eHarmony UK is different Forum about us. eHarmony is more than just another online dating site. The eHarmony Compatibility From the LinkedIn “about us” page Matching System™ measures your compatibility with our singles to match you with men/ Relationships Matter women with whom you share deep levels of Your professional network of trusted contacts compatibility. Where other sites make you gives you an advantage in your career, and search through pictures and paragraphs, is one of your most valuable assets. LinkedIn eHarmony matches you based on your com- exists to help you make better use of your patibility in the most important areas of life professional network and help the people – such as character, intellect, sense of hu- you trust in return. Our mission is to connect mour, spirituality, values, beliefs, passion, the world’s professionals to make them more and other key dimensions. productive and successful. We believe that in a global connected economy, your success ….and eHarmony’s advice on proiling. as a professional and your competitiveness as a company depends upon faster access to The proile insight and resources you can trust. More bad news, we can’t tell you what to write that will portray who you honestly are. ….and from a 2010 email I received from .,……… What we can do however, is tell you LinkedIn. what not to write. Scientifically speaking, there are some things – listed below – that DID YOU KNOW you can conduct a more you can exclude, for proile success. credible and powerful reference check using LinkedIn? Source:http://www.eharmony.co.uk/relation- Enter the company name and years of em- ship-advice/using-eharmony/2010/01/what- ployment or the prospective employee to ind not-to-say-in-your-about-me-proile their colleagues that are also in your network. This provides you with a more balanced set Figure 5 - eHarmony on proiling of feedback to evaluate that new hire. Finally, a simple example of a Social Proiling Figure 4 - LinkedIn on reference checking technique applied by insurance companies to determine how big our pension payments might The second example is from the eHarmony be: dating website. It tells us how they use Social Graphing techniques to match customers with a potentially compatible partner. One quote extols the virtues of proiling techniques as a successful way to match us to a potential life partner; and the next quote points us to the dangers of having a proile containing anything that may be perceived as negative. Negative comments undermine our Digital Personality.

79 Generic Social Graphing takes the same tech- These days, postcodes are used to deter- nical and analytical approach as the examples mine whether or not an individual should above, but it differs in that it uses information

Forum receive a decent education, NHS operations that can be gathered for free or at low cost from or lifesaving drugs. In the case of pension published information. It does neither depend annuities, postcodes could mean up to 10% upon, nor does it need, our collaboration. Any of more income for life. our Digital Personality information can be used, irrespectively of where it comes from or who Source: http://www.h-l.co.uk/news/feature- posted it on the web. articles/pass-on-your-postcode---youre-not- properly-addressed-without-it Conclusion Social Graphing and Proiling techniques will be Figure 6 – Pension Proiling Opportunity used in a collaborative way between businesses and their customers. They will also be used The third example should be of interest to any in a generic way, when businesses methodi- inancial institution. If a postcode can be used cally collect available personal information. The to predict pension performance by using this growth in the generic approach is one that future technique, other variables can surely be applied historians need to monitor, particularly if it is to many other consumer inance products. It is developed in a way that adds value to banking just a matter of inding a correlation between the business decision-making. How will we record right variables for each situation. This is likely to and repeat these more complex decision making happen more frequently in future as it becomes processes? increasingly easy to collect information on ever On a more personal level, we all need to become wider ranges of variables. more aware of how personal information is used. These examples illustrate that businesses create Historically, the very practical safeguard to our value judgements from the information input by personal privacy was the fragmented nature of their customers. Businesses encourage us to paper based and unlinked digital information. share more information about ourselves in the Technology and Social Graphing techniques are hope that they may beneit from the relationships fast eroding this safeguard. that our information can create. Adam Blackie WebSmart ltd

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