Baring Brothers history

A British banking house founded in 1763, originally as a merchant business specializing in textiles and commodities. The firm shifted to the merchant banking business under the guidance of Francis Baring in 1776. The partnership served as the major banker to the gentry, British businesses, and the Crown of England. By the time of the Napoleonic Wars, the bank was called the “sixth great power” in Europe along with the major European governments.

Baring was a major factor in British-American trade in the late 18th and 19th centuries. The bank served as banker and often principal in many major financial transactions, including the Louisiana Purchase. It was the major conduit for British funds to be invested in the United States, often through local agents. Local bankers with ties to the bank acted as investment agents, and substantial funds were invested. It often acted as intermediary for the British Crown, which had funds invested in the United States. In the late 18th and early 19th centuries, many Americans feared the influence of Baring because it was assumed that the bank represented the interests of George III, whose mental state deteriorated after the loss of the American colonies. The British remained major suppliers of capital to the United States until the 1890s.

Among Baring’s agents in the United States were David Parish of Boston, Kidder Peabody & Co. of Boston, and Lee Higginson & Co., also of Boston. After the Civil War, Kidder was its main agent and helped funnel British funds into railroad investments as well as property and farms. Its major competitor as supplier of funds to the United States was another well-established European bank, the House of Rothschild, whose agent in the United States at the time was August BELMONT.

Baring’s influence began to wane after the bank failed during a financial crisis in 1890. It had become heavily invested in South American bonds and was saved only by a bailout by the Bank of England. After that incident, the bank’s influence in the United States began to wane as it retrenched its operations. The bank continued to operate in Britain until 1995, when a major trading scandal in its Singapore office forced it to close its doors. It was absorbed by the Dutch financial services group ING and operates as a subsidiary of that company presently.

The main contribution of Baring to the development of the American economy was as a conduit for British overseas investment throughout the 19th century. The strength of the European bankers in this respect illustrated how dependent the United States was on the inflow of long-term investment capital for much of that century, until its own financial markets became developed. The American merchant banks that served as its principal agents in the United States also became major banking institutions until the House of Morgan began to supercede them in the 1890s and early 1900s.

See also FOREIGN INVESTMENT; ROTHSCHILD, HOUSE OF.

Further reading

• Hidy, Ralph W. The House of Baring in American Trade & Finance. Cambridge, Mass.: Harvard University Press, 1949. 
• Ziegler, Philip. The Sixth Great Power. New York: Knopf, 1988.