(^264) THE WEALTH AND POVERTY OF NATIONS
the Crédit Mobilier got the leavings. Nor did French industrial firms
turn to the new investment banks, preferring the discretion of the old-
style merchant houses. A company that resorted to long-term bank fi
nancing, with its concomitant surveillance and interference, was
probably in deep trouble.* None of this helped the new-model insti
tutions; the great Crédit Mobilier went bust in 1867.
In Germany and farther east, the development bank came into its
own, founding and financing industry, supervising performance, pro
moting innovation. These new institutions combined investment, com
mercial, and deposit banking (hence the appelation "universal banks").
The best of them gathered technical intelligence and served as con
sulting bureaus. Such a mix of functions struck British bankers as a vi
olation of sacred writ. How could one safely combine short-term, even
demand, liabilities with long-term immobilization of funds? Surely a
recipe for disaster.
The answer lay, first, in the rapid growth of the German economy
from the 1830s on—the kind of thing that makes everyone look good;
and second, in the preference of these banks for "well-heeled" cus
tomers. (The two essentials of successful banking are, first, other peo
ple's money, and second, lending to the rich.)^7 The ability of these
universal banks to find well-heeled customers and offset risks became
legendary. The best and biggest were the famous D-Banken (so-called
because their names all began with the same letter): the Darmstadter
Bank, Discontogesellschaft, Deutsche Bank, Dresdner Bank. Two of
these (Darmstadter and Dresdner) started in provincial centers and
moved to Berlin; one finds similar transfers in Britain and France. They
signal the strength of local enterprise and capital. Between 1870 and
1913, book value of assets of these mixed banks rose from about 600
million to over 17.5 billion marks—from 6 to over 20 percent of the
stock of industrial capital.^8 Most of the shares were in heavy industry.
Smaller enterprises found help elsewhere; the business of big banks
was big business.
But what if the country was too poor to finance the banks needed
to finance industry? Well, then the state might step in, either by pro
moting financial intermediaries or by direct investment and participa
tion. Here the west-east gradient took the form of increasing
intervention. At one end, in Britain, enterprise got nothing from the
- Yet even now much of the literature, echoing a theme that goes back almost a cen
tury, continues to stress the critical contribution of the Crédit Mobilier. It did serve as
example, but not in France, where it was if anything a counterexample.