Word: merchant
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...this series of essays, New Yorker Correspondent Joseph Wechsberg examines seven of the world's leading merchant or investment bankers. Though he is himself the son and grandson of bankers, Wechsberg ignores a lot of the basics of the business and, with the exception of a chapter on Wall Street's Lehman Brothers, shortchanges the potent U.S. bankers to concentrate on those of London's City. But his stories have a richness of color and some details of remarkable deals that have turned money into factories, jobs and useful products for everybody's compound interest...
...Funds, Long Terms. Unlike commercial bankers, who take deposits and specialize in short-term loans, modern merchant bankers are intermediaries between those who have big money to invest and those who need it, often for long terms. They finance entrepreneurs and foreign governments by selling bonds or other securities to the public or to such wealthy institutional investors as insurance companies, pension funds, and even the Church of England...
...merchant banker's prime asset is his experience in sizing up situations, measuring men and calculating risks down to one sixty-fourth of 1 %. But very often, as Wechsberg notes, he relies on instinct. One day in 1932, Swedish Match King Ivar Kreuger tried to interest the Lehman Brothers in a complicated financial deal. Kreuger talked and talked about his grandiose schemes, while Philip Lehman made a few notes. Then Lehman turned him down: "I have a rule, Mr. Kreuger. If I cannot understand something by reading my notes on the subject...
Brokers & Fighters. Today the Rothschilds are backers of 100 major ventures as varied as the Transalpine Pipeline and the Churchill Falls Hydroelectric Project in Canada (TIME, Oct. 14); the Barings help to bankroll such clients as Britain's Courtaulds textile empire and the government of Portugal. Merchant bankers are the business world's greatest merger brokers and proxy fighters. Nobody profits more from this than London's Siegmund Warburg, German-born dollar scion of the 400-year-old banking clan, who in 1958-59 counseled Reynolds Metals in its successful fight with Alcoa for control of British...
Wechsberg's main point is that the merchant bankers nowadays are increasingly branching out of traditional finance to become all-round consultants and father-confessors. Germany's Hermann Abs, for example, is a director of 24 companies. The Lehman bankers, besides sitting on 200 corporate boards, have an investment advisory service handling accounts worth $2 billion. Nobody with less than $500,000 need apply...