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| From the Editor: Worthy Notions |
Untarnished Reputations
Dwight Cass
01/01/2004
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As he penned the lines below, English journalist Walter Bagehot was surveying the financial landscape of the Victorian world, when private bankers operated at the apex of their energies and influence. Those rarified 19th-century limited partnerships that financed wars, bridged diplomatic chasms, and delivered nations from recurring financial crises—all while nurturing the fortunes of the era’s industrial barons—were indeed family businesses, handed down from father to son.
 Today’s private banks share little with the storied houses to which Bagehot referred, beyond an increasingly threadbare taxonomy. Private ownership was essential to the discretion and reputation of the great merchant and private banking houses of the 19th century and marked them as a breed apart from the publicly held, commercially minded High Street banks. Today, however, private banks that remain under the control of one family are rare relics indeed.
A free-market liberal like Bagehot might be tempted to ask, "So what?" The discipline that arises out of shareholder scrutiny and the greater transparency generally required of public companies is crucial, he might argue, to the proper allocation of capital in an economy. A meritocracy driven by stiff competition to provide a wide range of products and services to clients has replaced Bagehot’s banking aristocracy.
All of which is fine, but there are aspects of the old regime that may have served us better. Few of the titanic banking organizations that stand behind many private banks today live and die by reputation alone, as their forebears did. For those of us trying to achieve the financial goals that buttress our larger plans for our families, philanthropies and communities, the crucial aspect to our private banking relationships, whether with large conglomerates or small independent firms, is trust.
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