¹ (Cambridge, Mass., 1949). Another significant book on British financial firms in the nineteenth century is Jenks, Leland H., The Migration of British Capital to 1875 (New York, 1927)Google Scholar. However, as the title suggests, Jenks is primarily concerned with long term investments and not the financing of trade.

² Alexander Brown & Sons Papers (Library of Congress). The collection contains 266 volumes deposited with the library in 1954. Hereafter the collection will be referred to as AB&SP.

³ There are a number of secondary sources on the family and its business enterprises. The following are arranged in reverse chronological order: Kouwenhoven, John, Partners in Banking: An Historical Portrait of a Great Private Bank, Brown Brothers Harriman & Co., 1818–1968 (Garden City, N.Y., 1968)Google Scholar; Brown, Cynthia, “The Business Activities of Alexander Brown and His Sons,” (Unpublished manuscript, Columbia University, 1966)Google Scholar; Davis, Henry A., “The Brown Partners in the Commerce and Politics of the Civil War,” (Unpublished manuscript, Princeton University, 1965)Google Scholar; Ellis, Aytoun, Heir of Adventure: The Story of Brown Shipley & Co., Merchant Bankers (London, 1960)Google Scholar; Kent, Frank R., The Story of Alexander Brown & Sons (Baltimore, 1925)Google Scholar; Brown Brothers & Company, Experiences of a Century, 1818–1918 (n.p., 1919), the story of the Philadelphia branch written by the partners; Mary E. Brown (Mrs. John Crosby), Alexander Brown and his Decendents (n.p., 1917); and Brown, John Crosby, A Hundred Years of Merchant Banking (New York, 1909)Google Scholar.

⁴ Clapham, John, The Bank of England: A History (Cambridge, 1944), II, 158Google Scholar.

⁵ Myers, Margaret, The New York Money Market (New York, 1931), I, 65Google Scholar.

⁶ For more information on the Browns see Barrett, Walter, The Old Merchants of New York City (New York, 1872)Google Scholar. In a recent article, D. M. Williams has shown the importance of the Liverpool branch in the early cotton trade. In the years 1820, 1830, and 1839 the firm was either the first or second largest importer of cotton. In 1839 they headed the list of importers and had their largest market share, 7.2 per cent. See Williams, D. M., “Liverpool Merchants and the Cotton Trade, 1820–1850,” in Harris, J. R., ed., Liverpool and Merseyside (London, 1969), 182–211Google Scholar. Additional information on the Browns' important role in financing cotton can be found in Woodman, Harold D., King Cotton & His Retainers (Lexington, Ky., 1968)Google Scholar.

⁷ He sold his share of the firm to his brothers for a reported $1,150,000. Kouwenhoven, Partners in Banking, 230.

⁸ Catton, William Bruce, “The Baltimore Business Community and the Secession Crisis, 1860–1861,” (Unpublished master's thesis, University of Maryland, 1952)Google Scholar.

⁹ Livingood, James W., The Philadelphia-Baltimore Trade Rivalry, 1780–1860 (Harrisburg, Pa., 1947)Google Scholar.

¹⁰ An excellent book on the effects of the depression in England is Hughes, J. R. T., Fluctuations in Trade, Industry, and Finance: A Study of British Economic Development, 1850–1860 (Cambridge, 1960)Google Scholar. For a study of the United States see Van Vleck, George W., The Panic of 1857 (New York, 1943)Google Scholar.

¹¹ Graham to Brown, Shipley & Co., January 2, 1860, AB&SP.

¹² In addition to the material in the Library of Congress, there is a collection of business records, mostly account books and ledgers, of Brown Brothers & Co., N. Y., in the New York Public Library; hereafter abbreviated BB&CP. Although there are few letterboooks among the papers, one includes all the letters sent by the New York partners to Graham between September 1859 and January 1860. Another New York source is the historical files of the surviving partnership, Brown Brothers Harriman & Co., which contains financial statements and some of the partners’ correspondence marked “private and confidential.”

¹³ Buck, Norman S., The Development of the Organization of the Anglo-American Trade (New Haven, Conn., 1925).Google Scholar

¹⁴ See Ralph Hidy's articles, “The House of Baring and the Second Bank of the United States, 1826–1836,” Pennsylvania Magazine of History and Biography, LXVIII (1944), 269–285Google Scholar and “The Organization and Functions of Anglo-American Merchant Bankers, 1815–1860,” in The Tasks of Economic History, a supplement to the Journal of Economic History, I, (1941)Google Scholar. Other sources on the Second Bank era are Hammond, Bray, Banks and Politics in America: from the Revolution to the Civil War (Princeton, 1957)Google Scholar; Smith, Walter B., Economic Aspects of the Second Bank (Cambridge, Mass., 1953)Google Scholar; and Redlich, Fritz, The Molding of American Banking (2nd. ed., New York, 1968)Google Scholar. An excellent contemporary source is Gibbons, J. S., The Banks of New York: Their Dealers, the Clearing House, and the Panic of 1857 (New York, 1859)Google Scholar.

¹⁵ Goschen, George J., The Theory of the Foreign Exchanges (London, 1863)Google Scholar.

¹⁶ Albion, Robert G., The Rise of New York Port, 1815–1860 (New York, 1939)Google Scholar.

¹⁷ For information on the effect of improved communication on firms dealing in foreign exchange and active in international trade there are three essential articles. Two are by Cole, Arthur H., “Evolution of the Foreign-Exchange Market of the United States,” Journal of Economic and Business History, I, (1928–1929), 384–421Google Scholar, and in the same journal “Seasonal Variation in Sterling Exchange,” II, 203; the third is Davis, Lance E. and Hughes, J. R. T., “A Dollar Sterling Exchange, 1803–1895,” Economic History Review, XII (1960), 52–78Google Scholar.

¹⁸ At present, for example, national banks have contingency liability limits of 150 per cent of capital.

¹⁹ Graham to Browns & Bowen, June 26, 1860, AB&SP.

²⁰ Brown Brothers & Co., N. Y., to Graham, November 12, 1859, BB&CP. The customer referred to was C. Morton Stewart, a Baltimore importer.

²¹ By 1859, George Peabody had begun to expand his operations again. Graham wrote the New York branch on the subject in early April: “I notice some coffee coming here under McKim & Co. on George Peabody & Co. … I understood they determined after 1857 to stop issuing credits.” April 6, 1859, AB&SP.

²² Graham to Brown Brothers & Co., N. Y., January 13 and February 17, 1858, AB&SP.

²³ Graham believed Lambert Gittings, a Baltimore coffee importer, might have been using credits “on other houses which are cheaper than ours. Perhaps Drake, Kleinwort & Cohen are only charging ½% like Fruhling & Goschen do instead of 1%.” There is no evidence that these credits were originally opened in Baltimore, and I believe they were not taken out until the importer reached South America. Graham to Brown, Shipley & Co., December 12, 1859, AB&SP. Graham sometimes mentioned that Ross Campbell, a local commission merchant, who was the agent for Stuart & Co. in Philadelphia, had opened credits for importers. Newspaper advertisements were helpful in pinpointing some marginal competitors in foreign exchange but not in the issuance of letters of credit.

²⁴ Rutter, Frank R., South American Trade of Baltimore (Baltimore, 1897)Google Scholar and Pratt, E. J., “Anglo-American Commercial and Political Rivalry on the Plata, 1820–1830,” Hispanic-American Historical Review, XI (August, 1931), 302–335CrossRefGoogle Scholar.

²⁵ Graham sent the following letter dated August 31, 1859 to H. Upman & Co., Havanna: “You are authorized to draw on our N. Y. house at sixty days sight against the account of Jacob Heald & Co. of Baltimore and your drafts shall meet due honor.” AB&SP.

²⁶ Shelia Marriner gives an excellent account of this firm's business activities in Rathbones of Liverpool, 1854–73 (Liverpool, 1961)Google Scholar.

²⁷ Graham to Brown Brothers & Co., N.Y., December 28, 1858, AB&SP.

²⁸ Brown Brothers & Co., N.Y., to Graham, November 15, 1859, BB&CP.

²⁹ Graham to Brown Brothers & Co., N.Y., April 4, 1859, AB&SP.

³⁰ Graham to Hopkins, Hull, and Atkinson, June 22, 1859, AB&SP. Graham wrote to the local dry goods merchants that he was forced to restrict their credit to three months in order to conform with the instructions of the Liverpool branch, but he assured them an extension could easily be arranged later.

³¹ Brown Brothers & Co., N.Y., to Graham, December 23, 1859, BB&CP. The firm in question was Spence & Reid, a local importer.

³² Graham to Brown Brothers & Co., N.Y., November 12, 1858, AB&SP.

³³ Only two of Graham's customers imported under this arrangement. See Graham to Brown Brothers & Co., N.Y., November 16, 1859, AB&SP.

³⁴ Graham to L. McKenzie, March 3, 1859, AB&SP. Graham wrote to the president of the Alexandria, Loudoun, & Hampshire Railroad and told him to be sure the insurance policy on the rails was made payable to Brown Brothers & Co. No set policy existed on “effecting” the insurance; it might be the responsibility of the customer, Graham, the Liverpool branch, or shared by all three.

³⁵ Graham to Brown Brothers & Co., N.Y., March 9, 1859, AB&SP.

³⁶ Hidy, The House of Baring, 346. Hidy states that the Browns were the great innovators in the use of documentary bills, or bills with the bill of lading attached.

³⁷ Brown Brothers & Co., N.Y., to Graham, November 19, 1859, BB&CP.

³⁸ Graham to Brown Brothers & Co., New Orleans, March 15, 1860, AB&SP.

³⁹ Graham to Brown, Shipley & Co., July 2, 1858, AB&SP.

⁴⁰ Brown Brothers & Co., N.Y., to Graham, October 10, 1859, BB&CP.

⁴¹ For a good contemporary discussion of this matter see Story, Joseph, Commentaries on the Law: Bills of Exchange (Boston, 1843), 538–555.Google Scholar

⁴² Graham to Brown Brothers & Co., N.Y., December 2, 1858, AB&SP.

⁴³ Graham to Brown, Shipley & Co., September 16, 1859, AB&SP.

⁴⁴ Graham to Brown, Brothers & Co., N.Y., April 4, 1859, AB&SP.

⁴⁵ For example, Boulton, English & Brandon was rated a “3 still take B/L.” Brown Brothers & Co., N.Y., to Graham, November 25, 1859, BB&CP.

⁴⁶ Brown Brothers & Co., N.Y., to Graham, November 10, 1859, BB&CP.

⁴⁷ Ibid., November 12, 1859.

⁴⁸ Maxwell Wright & Co., the Rio de Janeiro coffee house, received special consideration; they were charged interest at the Bank Rate and, in addition, paid commissions of only .5 per cent at a time when others were paying 1 per cent for identical credits.

⁴⁹ Graham to Brown Brothers & Co., N.Y., May 14, 1859, AB&SP.

⁵⁰ Most of the information in the statement comes from the historical files of Brown Brothers Harriman & Co. To construct an income statement, I estimated revenues from the branch's exchange operations. I knew the actual volume of sales and settlements, and it was only a question of estimating profit margins. The branch usually bought sterling at .5 per cent, or two cents, less per pound than its current selling rate. Over a year, however, the profit margin was probably slightly better than .5 per cent because the southern agents were able to buy some sterling for the northern branches at discount prices. I have, nonetheless, conservatively estimated the profit margin on sales at the minimum .5 per cent. I was similarly conservative in estimating the profit margin on settlements at .25 per cent since much of the time the settlement rate equaled the selling rate.

⁵¹ In the summer of 1860 the commission was reduced to 1 per cent. This was due in part to increasing competition. The Barings offered to handle the credits for 1 per cent and Huth & Co. offered to do the same for .5 per cent.

⁵² Brown Brothers & Co., N.Y., to Graham, January 9, 1860, BB&CP.