Francis Baring (1740-1810) was the founder of Baring Brothers and Company, England's oldest merchant bank. Esteemed as a trustworthy and stalwart financier, Baring rose to a position of great influence during the reign of King George III. His wealth grew commensurately with his stature.
An 1810 obituary written by one of his contemporaries, Lord Erskine, in Gentleman's Magazine called him "unquestionably the finest merchant in Europe; first in his knowledge and talents, and first in character and opulence." The Baring firm survived for another 185 years until insider fraud was uncovered in 1995 and the bank collapsed after more than $1 billion in losses. It was a tragic end for a firm whose success had long been attributed to the estimable character of its founder.
Thriving Exeter Merchants
The Baring clan originally came from Germany. Baring's grandfather had been a Lutheran pastor in the north German city of Bremen, but he died shortly before his son, christened Johann, was born. As a result, the boy was raised by his mother's family, who were wealthy cloth merchants in Bremen. Johann Baring was sent abroad in 1717 to apprentice with the English cloth merchant with whom they did business, and liked it so much that he decided to stay and become a cloth importer himself. Settling in Exeter, he became a British citizen in 1723 and married Elizabeth Vowler, the daughter of an English tea and coffee wholesaler. John Baring, as he was now called, amassed a small fortune from his business dealings and real estate holdings to become one of the wealthiest commoners in his city.
At their modest manor home outside Exeter, Francis Baring was born on April 18, 1740. He was the third of five children, and was slightly hard of hearing from an early age. In 1748, his father died, and his formidable mother then took over the family's wool import business. Baring was sent to London around 1755 as an apprentice to a trader there. He proved himself an academically gifted and common-sensical youth who earned accolades from the adults who knew him. He was also remembered for an ability to calculate large sums in his head. Unfortunately, he was not first in line to take over the family business; his two older brothers, John and Thomas, did so. However, Thomas died in 1758 and the youngest Baring son, Charles, who was also an apprentice in London, was recalled to Exeter to help out. However, Francis Baring liked living in London and was happy to remain there until his apprenticeship ended in 1762. An opportunity to prove himself arose when the family's longtime agent in London suggested that he take over the work upon the older man's imminent retirement. In an agreement signed with John and Charles, Baring set up the new firm as a separate but equal branch of the family's Exeter business. He purchased materials for Exeter, and looked for new markets for its goods. He also did the same for other Exeter manufacturers, and even traded goods himself.
Business Grew with International Economy
In 1767 Baring married Harriet Herring, who came from a wealthy family. By the time they began their own branch of the family business, his offices were located in Mincing Lane within The City, as London's financial district is known. The Barings would have twelve children in all, two of which died. Many of them were born at home in quarters located above the Mincing Street offices. The Baring firm's evolution into merchant banking came about when the office collected money that was due clients in Exeter, or secured credit for others. It also pioneered the practice called "acceptances," by which Baring, acting as trusted middleman, guaranteed both a price and the payment between a merchant in the colonies and a London wholesaler. Popular commodities of the time were cargoes of tea or cochineal, a South American insect that yielded a brilliant red dye for cloth.
From 1763 to 1777 Baring remained in partnership with his brothers in Exeter, but lost money in eight of those years. Even his mother disapproved of his business dealings, but Baring realized his errors came from inexperience, and sought to learn from his errors. His brother Charles, however, was known for leading the Exeter branch into spectacularly unprofitable deals. After one ill-advised scheme to build mill factories in Devonshire with partners of questionable financial stability, Baring suggested that Charles be cut loose. The ties between the Exeter and London Baring firms were severed, but John Baring remained a part of both for a number of years. Baring himself, however, earned a reputation for honesty and perception among his fellow merchants and traders, and his profits expanded along with his reputation.
Around this time, Baring became an investor in the East India Company, a trading company chartered by the British crown in 1600 to trade with Asia. It secured exclusive privileges from Mogul emperors that allowed British merchants to export textiles and tea. It was a vastly profitable operation, and had even evolved into a formidable political force by this time. There were problems within the organization, however, and Baring became one of its directors in 1779. He was also achieving some measure of political clout through his brother-in-law, John Dunning, the onetime Solicitor General of England. Dunning introduced Baring into political circles that included the Earl of Shelburne, later Lord Lansdowne. During Shelburne's tenure as prime minister between 1782 and 1783, he began consulting with Baring on financial questions relating to Indian affairs.
Baring won a contract with the Crown to supply victuals for British military forces in the final years of the War for American Independence. His deal saved the government money and earned him a profit at the same time. His firm was experiencing a period of tremendous growth; its capital, listed at 20,000 pounds in 1777, more than tripled to 66,000 pounds by 1793. The press sometimes criticized Baring for his profits, and England's landed aristocracy viewed bankers as a whole as somewhat suspect. Lord Lansdowne urged Baring to enter politics, which he argued would elevate him above his profession and create a more impressive aura for his name. Both of Baring's brothers had tried to win election to England's House of Commons, but had failed; Baring succeeded in 1784 as a Whig candidate from Grampound, and later held seats from Chipping Wycombe and Calne. In all, he served as a Member of Parliament for much of the next 22 years, where his reasoned, well-informed views on finance and trade matters earned him the respect of colleagues. An ardent supporter of free, unrestricted trade, Baring even wrote a book on the matter, The Principle of the Commutation Act Established by Facts, published in 1786.
Baring was made chair of the East India Company from 1792 to 1793, which he found the most difficult job in his career. "The more I work, the greater degree of jealousy and difficulty I have to encounter amongst the Directors, who are in general composed of either Fools or Knaves," he wrote Lansdowne. For his services, however, he received a baronetcy, which added the title of "Sir" to his name. The connections with the company also allowed him to place his sons abroad for important training: Thomas went to Bengal in the early 1790s, followed by Henry's departure for China. Both sons were being groomed to take over the Baring firm, and its founder relied heavily upon other family connections to give the bank its insular, sober atmosphere. The larger Baring clan had produced a number of nephews, who entered the firm as junior staffers. Among the older generation, Baring's brother John was involved until 1793. Eight years later Baring was asked to disentangle his brother John and the problematic Charles' messy financial situation. He used the opportunity to write Charles and excoriate him for years of business blunders that brought the end of their father's original wool import business. "Your unceasing projects, by absorbing so large a part of the family and of the Bank, hung as a dead weight and impeded my progress for many years," he wrote his brother.
The Next Generation
Baring named his eldest son, Thomas, as a partner after his return from Bengal in 1801. Despite his years with the East India Company, the younger Baring was disinterested in the family business, and made no secret of his plan to collect art and spend much of his time on his country estate. Two younger sons, Alexander and Henry, showed more promise and aptitude. A fourth boy, William, died in 1806. The youngest of Baring's five sons, George, gambled heavily before deciding to become an Anglican cleric. He then went on to found his own sect, went bankrupt by 1827, but was rescued by his brothers and sent away to Italy, where he lived a dissipate life.
Baring retired at the age of 63 in 1803, passing control to Thomas, Alexander, and Henry. He himself became a country gentleman in 1796 when he bought a manor house called Lee, near Lewisham, Kent, which possessed an admirably distinguished pedigree. In 1801, Baring acquired an even grander estate near Micheldever in Hampshire. He spent his retirement years collecting art-particularly works from Dutch Masters like Rembrandt and Rubens-and tended to his large farm on the estate as well as a prized flock of sheep. He was said to have longed for a peerage, which would have given the family a perpetual seat in the House of Lords, but such an honor was still unlikely for a banker in the era. He died at his Lee home on September 11, 1810, and was buried in a family vault at Micheldever nine days later. After beginning life with a legacy of just 2,000 pounds that were inherited from his father, he left an estate valued at 625,000 pounds.
Ziegler, Philip, The Sixth Great Power: A History of the House of Barings, 1762-1929, Knopf, 1988.
Economist, February 24, 1996; July 3, 1999.