International Capital Markets in 1800
At the end of the eighteenth century the international capital markets as we know them today had begun to emerge. At their heart was Amsterdam, which was by far the most important market, where volumes had risen significantly since the 1750s although the origins of bond issuing in this market by sovereign clients can be traced back to an earlier time.
The leading Amsterdam house was Hope & Co which had captured the best bond business and retained it until the outbreak of the European Wars in 1793. At about this time the London capital market began to grow and by 1800 was overtaking Amsterdam. Here Barings was the dominant force. From the 1790s the two houses worked closely together by doing business on joint account. By 1803 both had built powerful links with the USA. Barings, for example, had established a resident agent in Philadelphia in 1796 and was well connected with US businessmen and politicians. In 1803 the firm became financial agents in Europe for the US Government and, shortly afterwards, for the (first) Bank of the United States which Secretary of the Treasury Alexander Hamilton had developed in 1791.
Hopes, on the other hand, had issued some of the first US government bonds marketed to European investors. An important source of their influence was Hopes’ and Barings’ client, Senator William Bingham, reputedly the wealthiest man in the USA whose two daughters had married Alexander Baring and his brother Henry. When news reached them of the proposed sale of Louisiana by France both houses were excited by the prospect of undertaking a lucrative transaction. They were the world’s leading merchant banks, standing astride the Amsterdam and London markets, and no transaction of this magnitude could be undertaken without their participation.