Sunday, March 19, 2023

A Connection Between Banking and Trading Houses

 


As we continue our studies into the beginnings of the relationship between banking and finance to merchant houses it is becoming clearer that the major players whether British or American cannot escape the less nor more careful eye.

 

We have already discussed Russell and Company, Jardine Matheson & Company, and have shared a podcast on Augustine Heard and Company. We then come across Russell Sturgis and Company which,


 
"Though muddled in other issues at times, Ward was very clear about the partners’ trade at Canton. The relationship of Russell, Houqua and Barings yielded quick and huge dividends, and, like other things Barings touched, endured the coming storm. Ward estimated the average per-voyage Boston-Canton-Boston profits on Barings’ ships at £20,000.

... Russells’ competitors despaired of the awesome lock on profits this triangle possessed, which only deepened with the absorption of Russell, Sturgis & Company by Russell & Company in 1839.” (Austin 128)

 


 

While further diving into Baring Brothers and the Birth of Modern Finance we find,

 

“In spring 1832, Thomas Ward made a new and important Far Eastern arrangement for the House. He concluded an agreement with Russell & Company – the largest, oldest and most prestigious American commission House in China. The agreement gave Russell the right to draw on Barings. A drawing account added a quantitative advantage to the American firm in a part of the world where financial resources were relatively scarce. It also added a qualitative element by bullet-proofing Russell’s bills throughout the Far East. In return, Russell provided Barings with access to its thriving businesses in Manila and South Asia; and to the Turkish opium concession Russell acquired from Perkins & Company in 1830, a firm with which Barings had long done business.222 (Austin 66)

 

An interesting connection between a merchant house and a trading house turned bank.[1] Continuing,

“By its agreement with Russell & Company, Barings likely benefited also from the firm’s working relationship with Houqua – the most powerful hong merchant in Canton and long-time friend of the Americans.223 Arrangements with Russell & Company occurred simultaneously with the reorganization in July of Magniac & Company into the trading colossus of Jardine, Matheson & Company in preparation for the end of East India Company dominance the following year. Russell and Magniac already had a close association from which Barings could profit as financial intermediary. If all this were not ample for a huge advantage in the east on the cusp of East India reform, Bates’s cousin by marriage, Russell Sturgis, added to Barings’ clout when he established a branch of the family firm, long based in Manila, at Canton on 1 May 1834.224 (Austin 66)

 

Russell Sturgis and Company as stated above was absorbed by Russell and Company in 1839. Russell Sturgis after haven established a branch of the family firm in 1834 became a prominent member of Baring Brothers by 1851.[2] So, Baring Brothers one of the earliest banks arguably the first if not Berenberg Bank was tied to Russell and Company, Russell Sturgis, and Jardine, Matheson and Company right around the time of the end of the monopoly on trade held by the British East India Company.

 

We have explored how governments, corporations or merchant and trading houses, churches, and now the banking and finance community are indeed working together and have for quite some time. As discussed in an earlier blog post, the connection between corporations and banks also can lead to corporate heads assisting in the establishment and even the directorship of banks.

Heard’s was among the firms of ‘repute and distinction’ convened by Thomas Sutherland to establish The Hongkong and Shanghai Banking Corporation in 1864: Albert Heard served as a member of the provisional committee and as a director of the Bank (1865-67). Later George was also a director and served a term as chairman.” (Gillian Bickley)

 

As we continue down this rabbit hole the discovery of connections between entities are immense.

 

Until next time …



 What Matters - Augustine Heard & Co. (google.com)

What Matters - Sir Thomas Sutherland and the Board of HSBC (google.com)

References

Austin, Peter E. Baring Brothers and the Birth of Modern Finance. Ed. Robert E. Wright. London: Pickering & Chatto (Publishers) Limited, 2007. Book.

Gillian Bickley, Peter E Hamilton and George Cautherley. "Augustine Heard & Company, major American 19th century China trading house with its headquarters in Hong Kong from 1856." Dictionary of Hong Kong Biography 1 November 2011: 544. website. 17 3 2023. <https://industrialhistoryhk.org/augustine-heard-company/>.



[1] First a merchant house, then a bank, Barings had built a high reputation since its founding in 1763.” (Austin 2)

[2] Russell Sturgis became partner of the House of Baring in 1851. (Austin 219)

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