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The Origins of Modern Merchant Banking
A chance encounter, the toss of a coin and
two opportunities seized – the early years of
Close Brothers were characterised by a spirit
of adventure and fierce determination.
The chance encounter came in 1876,
when William Brooks (WB) Close, a
23-year-old Englishman found himself
in Philadelphia, Pennsylvania, where
he had been invited to take part in a
rowing regatta.
A stomach bug prevented him from racing so
he took to the banks of the Delaware River to
socialise with spectators, including one Daniel
Paullin and his family from Illinois. Paullin had
made a fortune buying up public land in Iowa
and Illinois and selling it in plots to settlers
moving west in the post-Civil War era. The
Paullin family were much taken by WB and, at
the close of the regatta, invited him on a tour
of Iowa. The meeting and the resulting trip
had a profound effect on him.
Two years later, in 1878, WB set up Close
Brothers with his siblings, Fred and James, to
begin investing in America’s Heartland. Their
first major transaction was the purchase of
15,000 acres of farmland in Iowa.
At a price that worked out at less than $2.50
per acre, this deal became the basis of the
bank’s fortunes. Some land they simply
sold on, but they kept ownership of a large
proportion leasing it to young Englishmen
whom they recruited and then trained at their
own agricultural college.
This model served Close Brothers well until
the depression of the 1890s put a squeeze
on profits, and new areas of investment were
needed. This is where the toss of a coin

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