Merchants of War
Britains's loss of its American colonies was one of the most significant events in political history.It marked the beginning of the end of one empire and heralded the world's first superpower, the United States of America.
The causes of the difficulties between the colonies and the mother country are well documented. As the tensions grew wise counsel in Britain and America endeavoured to find a pragmatic solution that would allow America to find a role as a self-governing "state" within the greatest empire the world would have seen.
All each colony wanted was to be left alone to pursue its own ideals. What each colony did not want was a British government determined to to exert ever increasing control or to be taxed to pay for British soldiers to defend the British Empire against the old enemy, the French. On the other hand Britain was struggling to balance its books after the war with France and perhaps rightly felt that its increasingly wealthy and troublesome colonies should at least make some contribution.
The Boston Massacre and the "coercive" measures that followed led the thirteen colonies to set aside their own differences and address the common enemy - now Great Britain! The first Continental Congress was convened in 1774 in Philadelphia and made a last appeal to King George before resorting to arms, in the hope that this bluff would not be called. Congress resolved to meet again in May of 1775, but in April of that year a brigade of British regulars "without provocation" fired on and killed six New England militiamen. Britain and America were now at war.
The second Continental Congress duly met in May 1775 and appointed George Washington to the post of "Commander-in-Chief of the Continental Armies". However, Congress was a talking shop - had no money, no equipment and no military, executive, political or intelligence infrastructure. And whilst political will had brought the colonies to this position, political will alone was unlikely to de-rail the world's dominant power.
What were to become "these United States of America" took on Britain and won their independence - but how did they actually do it? The names of of America's founding fathers are immortalised, but those merchants, bankers, buccaneers, spies and adventurers on both sides of the Atlantic who turned the aspiration into reality are largely forgotten, or in some cases mysteriously air-brushed from history.
By 1783 the revolutionary war was over, and whilst Britain and the United States forged their own separate political futures, the merchants, bankers and adventurers got back to business to finance the development of the "new world", with many fortunes made and lost in land and currency speculations in the process.
When in 1803 president Thomas Jefferson stumbled on the opportunity to acquire not only New Orleans but the entire Louisiana Tract from Napoleon Bonaparte, he turned to three men with some remarkable connections who could raise the $15 million - in gold - that would settle the deal that set the stage for the super power that the United States was to become. The three men were Sir Francis Baring and his son Alexander, and Senator William Bingham.
Against this historical backdrop "Merchants of War" explains how and by whom the revolutionary war was managed and traces the early years of Baring Brothers Bank in Britain and William Bingham and his influential associates in America - indeed President John Adams wrote in 1813 that "he, Washington and the country had really been governed by William Bingham and his family connections"
In 1775 Baring Brothers Bank was just one of many London counting houses, but by 1804 had become bankers to the United States, and by 1818 were described by the first minister of France, Richelieu as "the sixth power in Europe, after England, France, Russia, Austria and Prussia"
"Merchants of War" describes in compelling fashion how this happened - where the money came from - and where it went!
"MERCHANTS OF WAR" – A COMMENTARY
As I have said, I have to admit that I rather stumbled on this story whilst researching the events of a century later, but decided to try and answer the questions that stemmed from the later research - what factors catapulted John and Francis Baring & Co to pre-eminence in the world of banking; who was the Senator from Philadelphia and how did their families, and of the Hope’s of Scotland and Holland intertwine to produce such formidable results that changed the history of the times. I have presented the facts as accurately as my research resources have allowed and I will leave it to the reader to judge whether I have answered the questions satisfactorily. There are still many loose ends that should be followed up at some stage.
At the same time I have also tried to write two stories superimposed on each other, that is the evolution of the merchant and banking operations on the one hand and the human story of the people and families that were caught up in the events from the American War of Independence to the Louisiana Purchase.
The answer to the first question, with hindsight, is fairly straightforward. Before the Seven Years War and the American Revolution government finance was all about current income and current expenditure and the taxation (or overseas plundering) to pay for the hostile activities that were so popular at the time. The Dutch banks, in particular Hope & Co, as a result of republican political stability through most of the eighteenth century, and a population interested in and prepared to invest in joint stock enterprises, made the first big leap towards government loans funded by individual investors.
What Francis Baring did above all was to recognise this potential and add this activity to the financing of trade rather than trade itself which was his first big idea, and started to set him apart from the others. It was not as simple as it sounds and he had some very helpful and influential associates along the way, which led him to the second big idea – the combination of trade and politics.
One of those useful associates was, of course William Bingham, and we now know who he was. Also key to Francis Baring’s success were Henry Hope and his political patrons on both sides of the Atlantic, in particular the Earl of Shelburne and Rufus King in America.
On the assumption that all these assertions are correct, why do we know so little of the individuals concerned? Why is there no Bingham monument in Philadelphia or memorials to Francis and Alexander Baring in Trafalgar Square, or a Henry Hope plaza in Amsterdam?
In the case of William Bingham, he was simply overwhelmed by time and tide of events. He had made a great deal of money, and the manner with which he flaunted it was at odds with the changing times. His main Federalist political allies such as Washington and Hamilton were gone; John Adams never had much time for him and Thomas Jefferson despised him. He had missed out the great offices of State and the diplomatic posts, even the Governorship of Pennsylvania, at any of which he would probably have excelled; there seems to be no doubt of his political and intellectual ability and his communication skills were faultless.
The death of his wife Anne was the real turning point, though. He left America in haste to be with Alexander Baring and Ann Louisa and his grandchildren, leaving his infant son, William, behind, but he clearly intended to return at some stage, if only to tidy up his business affairs.
Although he left much of his wealth behind in America, it was largely in real estate and the “richest man in America” tag faded over the years. His children were now in England or France, where they became part of British or French history, not that of the United States. Some of his close allies, such as James Wilson and Robert Morris were also under something of a cloud; Thomas Willing’s influence was waning, and Thomas Jefferson and James Madison had no time for him or for The First Bank of the United States that he did so much to create. Phildelphia’s social elite, The Republican Court was now history, and its Queen and the brief Federalist society that went with it was gone.
By the middle of the nineteenth century William and Anne Bingham had become footnotes to the history of the Federal era of the early years of the United States. But without Bingham* (and his connections) Alexander Baring would not have acquired the agency of the United States, and without that they may have been overtaken by Rothschild as the world’s banker much sooner than they eventually were. In the histories of Barings that have been written so far Bingham is characterized as a “rich Senator from Philadelphia” without any real attempt to find out more. The Barings have not been known for acknowledging the influence of non-family members in the success of the enterprise, and as a result William Bingham was effectively assimilated into Baring history.
Francis Baring was already the “first merchant in Europe” when the British government, and in particular William Pitt recognized his contribution in re-structuring the East India Company and in raising money to fight the French, but a Baronetcy was the greatest honour available to a mere merchant in the reign of George III, and you will not see his likeness on a plinth anywhere in London. Control of Baring Brothers Bank effectively passed to Alexander Baring in the early years of the nineteenth century, and he remained the senior partner from 1804 until he retired to his vast estate at the Grange in Hampshire in 1830. He was considered the greatest banker of his generation, and possibly of the nineteenth century. His mastery of the art of government financing and of world trade earned him the peerage in 1835, as Lord Ashburton that his father never acquired. But no statue to Alexander Baring exists either. It was the “political” Barings that emerged from the banking Baring wealth that are captured forever in bronze.
Hope & Co, and in particular Henry Hope were critical in the emergence of Barings, by introducing them to the opportunity to finance foreign governments as well as world trade. Perhaps in the end they were less cohesive as a family; they had already made a great deal of money, enjoyed the good life, were weakened by the political events in Holland at the end of the eighteenth century, and in the end ran out of family members prepared to carry on. By 1814 the “principle assistant in Mr Hope’s counting house”, as Alexander Baring was described by Major William Jackson, had swallowed Hope & Co whole.
But maybe the real reason that history has “lost” these bankers is because politicians tend to write history. Before the War of American Independence, there were merchants, and there were governments with their treasuries. By the time Messrs Baring, Bingham and Hope had financed the Louisiana Purchase there were merchant banks, capable of financing governments, perhaps the first and certainly the foremost was Baring Brothers Bank, set up in 1762 in London by second generation German immigrants, and from that day to this the merchant banker, or as we would say today the investment banker is never far from the centre of government.
There seems little doubt that the main characters in this book were clever and resourceful men, and may well have changed the world on their own, but it is fascinating to reflect on the unlikely circumstances that brought them together in such an effective way.
Looking back at the key event for Barings for its growth during the nineteenth century was the acquisition of the agency of the New United States. In 1774 very few observers would have tipped John and Francis Baring & Co to be the foremost merchants and bankers in the world, but in 1774, of course, the United States did not exist.
It would seem that Francis Baring and William Bingham were on some kind of pre-ordained and inevitable collision course; If William Duer, and as result, Henry Knox had not been in financial difficulties in the property fever in America in the 1790’s, Bingham would not have had the opportunity to acquire the Maine lands. If Napoleon Bonaparte had not invaded Holland, Hopes and Francis Baring would not have sent Alexander Baring to America to invest the money they were sheltering from the French. If Alexander Baring had not fallen for Ann Louisa Bingham he would have returned to London; without William (now Senator) Bingham he would not have had the introductions to the political heart of the United States Government, particularly James Madison and Albert Gallatin that would lead to the agency of the United States and the Louisiana Purchase. Today it seems quite staggering that Baring, Bingham and Hopes could find $11 million dollars in gold (admittedly in staged payments), with absolutely no security other than the trust in Jefferson, Madison and Gallatin that the United States would pay it back.
But then, further back in time, if Thomas Willing and Robert Morris and Henry Hope had not become correspondents of Francis Baring, William Bingham would not have targeted Baring to sell the Maine lands. And without the Revolutionary War Bingham would not have made the fortune in Martinique, and elsewhere, that enabled him to speculate so boldly.
And if Benjamin Franklin and Robert Morris had not sent Bingham to Martinique there would have been no fortune to make.
Without the patronage of the Earl of Shelburne, Francis Baring would not have reached the highest echelons of British government, and a whole host of other connections including Rufus King would probably not have been made.
If Shelburne (by then Lansdowne) had not sent Talleyrand (who was escaping to America from the French Terror) with introductions to Bingham in Philadelphia, the two of them would not have been in a position to discuss the wider possibilities of the Louisiana Purchase in 1803.
So how have these events of over two hundred years ago changed the course of history, assuming that they have?
Politically, the independence of the United States is the most significant event of the time. The pressure for independence in the American colonies came from merchants concerned about the effect that British measures were having on trade, and lawyers and politicians offended by the infringement of their rights and liberties. The decision to assert independence was made, in the end by politicians, but it was achieved by merchants and soldiers, and the soldiers needed the merchants to finance and supply them.
The loss of the American colonies, disastrous as it seemed at the time for Britain, triggered a new British Empire that would be financed by our new breed of merchant bankers, and set in motion the creation of a super power; and the Louisiana Purchase made sure of it.
As we have seen, in the overall scheme of things, history has not treated our triumvirate of Barings, Binghams and Hopes particularly well, but it can be argued that their influence at the time matched the political names that we do remember. They were present and involved, like Forest Gump, in some of the most critical events of the period, but they seem somehow to have been air-brushed away. Perhaps it is because they were merchants and bankers, motivated above all by the creation of wealth, at which they were successful almost without parallel, but as we have seen in very modern times that is not the way to a nation’s heart.
They did, however, change the world.
* In 1813 President John Quincy Adams wrote that “the Presidency, the capital and the country had been governed by William Bingham and his family connections
My wife and I were walking part of Devon’s South West coast path along a section that had been described to us as Lord Revelstoke’s carriage drive. A passing interest in who Lord Revelstoke might have been and why he should build this splendid drive led to a series of connections which took me back in time to Philadelphia in 1774 and the first Continental Congress.
Lord Revelstoke, it turned out was Edward Charles Baring, who had acquired the Membland Estate in 1876, whilst he was senior partner of Baring Brothers Bank. His fellow senior partner in the Bank and cousin, Henry Bingham Mildmay, had also acquired the adjacent estate of Flete at much the same time. The two Barings men had married sisters who had grown up at Flete before the estate (and that of Membland) had been lost to their family through some distant financial disaster. The question of why and how the two London bankers would marry two Devon sisters was still hanging when I read of the Barings Bank Crash of 1890 – the one that preceded the Nick Leeson affair by almost 100 years, and in its time of equal magnitude, if not with quite such devastating results.
Barings Bank crashed in 1890 because of one speculative investment too far in Argentina – the partners seemed somehow distracted in Devon. Only reluctant but decisive action by the Bank of England with support from, amongst others, Lord Rothschild, saved a run on British and European Banks. Barings, as was the custom at the time for merchant banks was a partnership and the liabilities of the partners unlimited. The quid pro quo imposed by the Bank of England on the partners, in particular Lord Revelstoke and Henry Bingham Mildmay was draconian – in effect putting both men into bankruptcy, and requiring the disposal of the Devon estates, the Mayfair townhouses and the sale of their sumptuous contents.
I resolved to write that story, perhaps as a piece for local TV (it eventually became “Same Old Game!”), but as the research continued I felt that I needed to know more of the early history of Barings Bank, the Baring family, and merchant banking in general.
From relatively humble roots in the wool trade in northern Germany, they (Barings) were to become possibly the first and certainly the most successful merchant bank in the world. Francis and John Baring established their merchant house in 1762 in London, just one of many attempting to service the huge expansion of world trade at the end of the 18th century. They were finding their feet and beginning to turn a profit in the years running up to the American War of Independence. And yet little more than 25 years later they had financed, in association with the Dutch bank, Hope & Co, the Louisiana Purchase, and were described later by Richelieu as the “Sixth greatest power in Europe after Britain, France, Russia ,Austria and Prussia”. This change from just another merchant house to pre-eminence happened around the time of and just after the American War of Independence and the creation of the United States. Was it a coincidence? And who was this Senator from Philadelphia, William Bingham who appears in the Baring family tree in 1798 and who’s descendent, Henry Bingham Mildmay, was so publicly involved in the crash of 1890?
Researching William Bingham led inevitably to his clandestine role in supplying Washington’s army as agent for the Continental Congress in French Martinique and his connection with Philadelphia merchants Thomas Willing and Robert Morris. The firm of Willing & Morris was deeply involved in the financing and organisation of the revolutionary war. Barings Bank acquired the agency of the United States in 1804. President John Adams said (after his term of office) of William Bingham “that he, Washington and the country had really been governed by Bingham and his family connections”.
To answer these questions, I started with the definitive and scholarly history “The Sixth Great Power, Barings 1762-1929” by Philip Ziegler. This led in turn to Robert C Alberts’ biography of William Bingham “The Golden Voyage”, and then to Marten G. Buist’s history on Hopes Bank, “At Spes Non Fracta”. From this research it became clear that the American War of Independence was a critical part of the story, but not for the reasons I had expected.
I also decided that these three source documents were like ships passing in the night, each dealing with part of the story, so I set out to go back as far as possible using original documents to get a fuller picture of events. Reflecting on the times I thought that perhaps gun-running or slave trading might have been the secret for success that I was looking for, but time spent in the Baring archive did not identify any smoking guns or slave ships. However, Francis Baring’s General Ledger for the year 1775 revealed the name of Philadelphia’s foremost merchants, Willing & Morris, and as it turns out, this was the critical connection.
I have used countless other sources to get a broader perspective on this remarkable story. I have been allowed access to the Barings Archive in London and studied hundreds of documents from sources in Britain and America, to write the book which uncovers the secret of Barings Brothers Bank's success and the connections that contributed to the rise of the American nation.
“Merchants of War” covers events that took place well over 200 years ago that have shaped the modern world and in particular laid the foundations for a super power – the United States of America, and forced Britain to create another Empire elsewhere in the world.
This history comes to an end in 1804, but opens the door for the next one, "Same Old Game!", which was actually the first one, which ends in 1900. And the last story, “Finale” ends, not surprisingly in 1995................
My interest in the story came from my curiosity about the estates in Devon acquired by the Barings Bank partners and their sudden loss in 1890. I did not realise at the time that the family had grown from humble roots in the wool trade in Devon.
John Baring, the first in the line, had made enough money from the family wool business to send his second son Francis, to London to be educated and apprenticed as a merchant. Francis Baring became the pre-eminent merchant and banker in London, became the first identifiable “merchant banker”, financed the US government’s Louisiana Purchase in 1803 and acquired the agency of the United States soon after.
How did all this happen so fast? The official histories of Barings were not much help, but Robert C. Alberts in his biography of William Bingham, the Golden Voyage, got very close but did not pursue the story, after all his subject was Bingham and not Baring.
So I decided that I would go back to as many original documents as I could find, and find the answer to my question myself.
I contacted the Baring Archive and asked permission to look at any documents that might exist for the very early years of John & Francis Baring, which opened its doors in 1762, a turbulent time at the end of the Seven Years War which established Britain as the dominant maritime nation in Europe, and through the East India Company, the world.
The only documents in the Baring archive that have survived from that period are the General Ledgers for each year that show the accounts with all the firm’s correspondents, and for those early years are in French, for which I was not properly prepared. (At the time French was the language of commerce, and employing a French scribe was de-rigeur)
I had no idea what I was looking for – I had the notion that financing/supplying arms to the rebellious American colonies might be the answer and would fit in with the timescale – Barings grew rapidly from 1775 onwards, so I trawled for names.
I had my eureka moment when in the Ledgers for 1775 and 1776 I found the names of Philadelphia merchants Willing & Morris, French aristocrat and composer Caron de Beaumarchais, and American founding father Benjamin Franklin! I had found some vital clues but was a long way from working it all out. And in the Ledgers for 1784 and 1785 I found the name of William Bingham, a wealthy merchant and would-be politician from Philadelphia.
By now I knew that Willing & Morris were the most significant merchants in Philadelphia and probably the whole of the colonies, and were key in financing George Washington’s Continental Army. Thomas Willing and Robert Morris were members of the Committee of Correspondence that conducted the war with Britain.
Caron de Beaumarchais assisted personally with raising funds for the American cause against Britain, and in encouraging the French government to do the same.
Benjamin Franklin, by this time had returned to America after failing to convince the British government to improve the rights of the colonists, and was immediately appointed to the Committee of Correspondence, and created and chaired the Committee of Secret Correspondence which conducted the war politically and strategically. To this end Benjamin Franklin sent a very young merchant to French Martinique in the Caribbean to act as agent for what had now become the rebellious United States of America. The young agent was William Bingham, and he appears in Barings Bank records in 1784.
It looked as though the next stage of the story would be in America so spent some time at the Historical Society of Pennsylvania, Philadelphia, at the Winterthur Museum in New Jersey, and the Smithsonian in Washington DC. And so it was.
I now know how Barings Brothers Bank became the world’s first merchant bank, financed the Louisiana Purchase, and how its family members dominated British politics for more than a hundred years.
All the answers will be found in "Merchants of War" - Barings & Bingham, Revolutionary Bankers from the War of Independence to the Louisiana Purchase, and now available in paperback from the Amazon Bookstore.
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