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Deutsche Bank and the building of the U.S.

6 May, 2009

Of all the German banks that received money from AIG, Deutsche Bank has the closest ties to the history of the U.S.  It is a complex history, but I hope you find it interesting.

AIG payments to  Deutsche Bank $11.8 billion

In 1870, a gentleman named Adelbert Delbrück, and several other bankers, were granted a license to create a bank.  It was a time when industrialization was requiring banking services that traditional banks were unable to provide.  According to the bank’s statute,

“The object of the company is to transact banking business of all kinds, in particular to promote and facilitate trade relations between Germany, other European countries and overseas markets.” The direct aim was to challenge the hegemony of British banks, which continued to dominate the financing of German foreign trade. The bank pioneered the idea of accepting cash deposits, which helped it build a foundation for its expansion during the 1880’s. From the outset, international business was built up steadily. Between 1871 and 1873 Deutsche Bank opened five branches: in Bremen, Yokohama, Shanghai, Hamburg and London. The bank also acquired a private bank in NY (Knoblauch & Lichtenstein), but it had to liquidated during the 1880’s.  (here)

Here is where this bank’s history will split until the next post. One of the two original members of the Managing Board of Directors of Deutsche Bank was Georg von Siemens, a man who already had knowledge of foreign business.. That last name should be familiar to you. Georg Siemens was a second cousin to Werner von Siemens who created the telegraph construction company of Siemens and Halske. (which later became Siemens AG)).  After Georg completed his military service, he joined Siemens and Halske and in 1868 became the lead negotiator [all bold emphases mine]

“in London and Tehran for the construction of the Indo-European telegraph lines.” It was here that Adalbert Delbrück, head of the traditional private bank Delbrück Leo & Co. in Berlin, took note of Georg von Siemens because of his great skill in negotiations. At that time, Delbrück was engaged, together with the national-liberal politician and monetary expert Ludwig Bamberger, in founding a bank for foreign trade and was looking for a director. Delbrück proposed Siemens although he was entirely without experience until then in banking for the direction of Deutsche Bank, newly founded in 1870. And thus an experienced banking expert, Hermann Wallich, was appointed to work alongside Siemens.

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[Following acquistion of several shares in other banks,] a banking group was created with which Siemens could also propose larger financing projects. Especially noteworthy among these was the involvement in creating the German electrical industry.He also provided his experience to the undertakings of Siemens & Halske AG. Deutsche Bank was concurrently involved in a number of important electricity plants and tramway companies. Siemens also played a decisive role in working on the establishment of Berlin’s tram and underground. (here)

Here’s a quick list of some of Siemens AG early accomplishments:

  • 1874  company formed to manufacture the Werner Siemens pointer telegraph
  • 1848 wins contract to build first long distance telegraph from Berlin to Frankfurt
  • 1853 start expanding the Russian telegraph network from Finland to the Crimea
  • 1855 Werner discovers the dynamo-electric principle which allows for development and conversion of electricity for public and private use.
  • 1870 begins construction of the Indo-European Telegraph from London to Calacutta
  • 1874 laying of first direct transatlantic telegraph cable
  • 1879 have developed the first electrical railroad; but the man focus is lighting and drive technology
  • more information about the company’s history  is available (here)
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