Saturday Book Review: The Merchant Bankers

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The Merchant Bankers

The Merchant Bankers, by Joseph Wechsberg, had a tremendous impact on the way I think about my business. Because it is written well before the housing crash of 2008 that sullied many merchant banker’s names (notably Lehman Brothers), like 42 years before, it does not address many of the issues regarding modern business and political processes.

But, what was it that inspired me and I think will inspire others by reading this book?

5 Things to Learn from The Merchant Bankers

Learn to Trust Your Intuition

Although much banking is based on numbers, Wechsberg interviews and studies multiple houses of merchant banking families (3 in England, 1 each in the United States, Italy, Germany, and then he covers the Rothschilds). Through interviews and research, he tells about how much of a merchant banking operation is based off of the intuition that comes from many mistakes combined with an innate sense of relationships. Whether building a business or teaching a classs, writing a book or digging a ditch, I think that we can learn to treat our mistakes as necessary parts of learning a business and learn that the people we interact with are more important than the numbers on a spreadsheet.

Never Forget Your Core Values

Wechsberg mentions in the chapter on Lehman Brothers how they loaned money to a company that lost their Chief Administrative Officer. Lehman Brothers sent one of their managers to work without charge to the company until a replacement could be found. Contrast that to the attitude of unbridled greed selling bad loan certificates in the 90’s and 00’s and you will see that when a business or group of individuals forgets what made them great in the first place, they will cause catastrophes.

The Rich Are People Like Us

Reading the history of some of the most elite families in the history of humanity in terms of riches and power associated with those riches, I was struck with the fact that they really are not that different from us. People who take a risk, make mistakes, and grow something of value can be found on any corner of any street throughout this world. Some may say the rich are just lucky, but as I read the stories of these families and individuals, I realized that the rich generally do certain activities to get rich, and avoid activities which don’t increase their income and profits.

In the same manner, many people I know consistently choose activities which will increase the value of their friends and family over the value of their wealth. I have many poor friends who are surrounded by richer culture and relationships than any of the merchant bankers I read about. On the other hand, I know people who are rich in computer games and poor in just about everything else.

History is a Valuable Study

Do you read historical books? Do you understand who the major players were in world history? Your nation’s history? The merchant bankers Wechsberg studied were well versed in their respective histories; they were steeped in it. Even the West German merchant banker, Abs, who lead the way to economic recovery after the devastation of World War II, made a purposeful choice to acknowledge the history of his people that lead to the rise of the German Reisch and then depart from that history.

Other merchant bankers would tell stories of the time their ancestor ran supplies through the lines in this war or that one, and all the time, they reinforce the values and strategies that made their homes great.

Free Market Capitalism Has Nearly Died Out

I know that people talk about how capitalist a society we are, but reading the analysis of a dying breed of business in the 60’s that has become almost extinct today, I was reminded that our modern society is more socialist than not. Because the government controls the money supplies and the private banks, the type of entrepreneurial spirit and desire for return on capital that we saw in the past has been nearly regulated out of existence.

It is a sad thing, but many people say it is a necessary thing.

If you want an interesting look at bygone eras in western finance and European culture, I highly recommend reading through The Merchant Bankers.

 

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