Lifeboat week
ONLY the comma, and the word that comes after it, now mark the scar on Baring Brothers and Co., Limited. A century ago the Barings' merchant banking partnership had to be rescued by its rivals, manning a lifeboat sent out by the Bank of England. That was the lifeboat's maiden voyage, but the rules which were then improvised still hold good. The Roth- schilds and Hambros were not trying to help their competitors, they were salvaging the system to which they belonged, for if Barings failed, they might all fail. What they gave Barings was time — the credit and liquidity to keep the bank going until it could put its own house in order. A bank's depositors may find themselves rescued, not for their sake but the system's though their rescue never could or should be guaranteed. (A risk-free ride for deposi- tors destroyed the American 'thrift' institu- tions.) As for the owners, theirs is the ultimate risk and reward, so nobody need rescue them. (Some American bank shares now change hands for no more than option money.) The Barings sold their best houses and pictures, came through and learned their lesson. Twice, Argentina had nearly ruined them. Now Argentina owes a hope- less $53 billion, but none of it to Barings.
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