Carroll Quigley, Tragedy and Hope: a history of the world in our time, publication date 1966, https://en.wikipedia.org/wiki/Tragedy_and_Hope
page 49 (pdf page 64)
In this continuing process, Britain's early achievement of industrialism gave it such great profits that these, combined with the profits derived earlier from commercial capitalism and the simultaneous profits derived from the unearthed rise in land values from new cities and mines, made its early industrial enterprises largely self-financed or at least locally financed. They were organized in proprietorships and partnerships, had contact with local deposit banks for short-term current loans, but had little to do with international bankers, investment banks, central governments, or corporative forms of business organization.
page 50 (pdf page 65)
This new stage of financial capitalism, which continued to dominate England, France, and the United States as late as 1930, was made necessary by the great mobilizations of capital needed for railroad building after 1830. The capital needed for railroads, with their enormous expenditures on track and equipment, could not be raised from single proprietorships or partnerships or locally, but, instead, required a new form of enterprise ── the limited-liability stock corporation ── and a new source of funds ── the international investment banker who had, until then, concentrated his attention almost entirely on international flotation of government bonds. The demands of railroads for equipment curried this same development, almost at once, into steel manufacturing and coal mining
─
page 50 (pdf page 65)
financial capitalism, 1850-1931
page 51 (pdf page 66)
The men who did this, looking backward toward the period of dynastic monarchy in which they had their own roots, aspired to establish dynasties of international bankers and were at least as successful at this as were many of the dynastic political rulers.
pages 51-52 (pdf pages 66-67)
In concentrating, as we must, on the financial or economic activities of international bankers, we must not totally ignore their other attributes. They were, especially in later generations, cosmopolitan rather than nationalistic; they were a constant, if weakening, influence for peace, a pattern established in 1830 and 1840 when the Rothschilds threw their whole tremendous influence successfully against European wars. They were unsually highly civilized, cultured gentlemen, patrons of education and of the arts, libraries, and museum collections still reflect their munificence. For these purposes they set a pattern of endowed foundations which still surround us today.
page 52 (pdf page 67)
Even after these banking families became fully involved in domestic industry by the emergence of financial capitalism, they remained different from ordinary bankers in distinctive ways:
(1) they were cosmopolitan and international;
(2) they were close to governments and were particularly concerned with questions of government debts, including foreign government debts, even in areas which seemed, at first glance, poor risks, like Egypt, Persia, Ottoman Turkey, Imperial China, and Latin America;
(3) their interest were almost exclusively in bonds and very rarely in goods, since they admired "liquidity" and regarded commitments in commodities or even real estate as the first step toward bankruptcy;
(4) they were, accordingly, fanatical devotees of deflation (which they called "sound" money from its close associations with high interest rates and a high value of money) and of the gold standard, which, in their eyes, symbolized and ensured these values; and
(5) they were almost equally devoted to secrecy and the secret use of financial influence in political life. These bankers came to be called "international bankers" and, more particularly, were known as "merchant bankers"in England, "private bankers" in France, and "investment bankers" in the United States. In all countries they carried on various kinds of banking and exchange activities, but everywhere they were sharply distinguishable from other, more obvious, kinds of banks, such as savings banks or commercial banks.
page 52 (pdf page 67)
This risky status, which deprived them of limited liability, was retained, in most cases, until modern inheritance taxes made it essential to surround such family wealth with the immortality of corporate status for tax-avoidance purposes.
page 52 (pdf page 67)
As a consequence, ordinary people had no way of knowing the wealth or areas of operation of such firms, and often were somewhat hazy as to their membership.
page 53 (pdf page 68)
This firm, like others of the international banking fraternity, constantly operated through corporations and governments, yet remained itself an obscure private partnership until international financial capitalism was passing from its deathbed to the grave.
page 53 (pdf page 68)
to be trusted with control of the money system; accordingly, the sanctity of all values and the soundness of money must be protected in two ways: by basing the value of money on gold and by allowing bankers to control the supply the money. To do this it was necessary to conceal, or even to mislead, both governments and people about the nature of money and its method of operation.
page 53 (pdf page 68)
As a consequence, many persons, including financiers and even economists, were astonished to discover, in the 20th century, that the gold standard gave stable exchanges and unstable prices.
page 54 (pdf page 69)
If we regard the relationship between money and goods as a seesaw in which each of these was at opposite ends, so that the value of one rose just as much as the value of the other declined, then we must see gold as the fulcrum of the seesaw on which this relationship balances, but which does not itself go up or down.
page 54 (pdf page 69)
Since it is quite impossible to understand the history of the 20th century without some understanding of the role played by money in domestic affair and in foreign affairs, as well as role played by bankers in economic life and in political life, we must take at least a glance at each of these four subjects.
Carroll Quigley, Tragedy and Hope: a history of the world in our time, publication date 1966, https://en.wikipedia.org/wiki/Tragedy_and_Hope
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