The House of Rothschild, Volume 1

by Niall Ferguson

  The great benefit is that, partly because their letters were so hard for outsiders to read, the Rothschilds were able to write to one another with more or less complete candour. As a result, their correspondence has a uniquely direct and intimate quality. The partners were frank—sometimes even abusive—with one another, and made no secret of their opinions of the monarchs and ministers they had to deal with, which were rarely flattering. Their tone is colloquial, sometimes crudely so. The contrast could hardly be greater with the formal, functional business letters sent from one Rothschild house to another, or the much more carefully crafted letters they addressed to political friends and business associates outside the closed circle of the partnership and family. When used in conjunction with the other archival sources listed in the bibliography, the Rothschild letters reveal a reality which is in many ways more fascinating than even the most fantastic myth.

  V

  Academic historians like to contribute to historiographical debates. The Rothschilds are relevant to so many that it would be tedious to do more than merely list them, which I dutifully do now. The five Rothschild houses constitute an early version of what later became known as the “multinational:” business historians may find it illuminating to learn more about the way in which the firm worked as an international private partnership. Economic historians have for many years sought to assess the contribution of banks to industrialisation; there is ample material here on that question, especially as regards the role of the Rothschilds in the development of continental railways. The history of the Rothschilds also helps to illuminate the long-running debate about the differences between British, French and German banking, for the obvious reason that the various Rothschild houses worked in similar though not identical ways in each country. There is some new light too on the much-debated question of European capital export: those still concerned with the Hobson/Lenin paradigm may like to contrast it with the realities presented here. I would like to think that the book will also contribute, albeit indirectly, to some of the more technically sophisticated debates in the still-young specialism of financial history. I fear this is not a “model” history of a bank. I am conscious that I have not written anything about “asymmetrical information,” “credit rationing” and “portfolio management,” but I hope that those interested in such things will not be wholly disappointed by the sections of the book which concentrate on profits, losses and balance sheets. If nothing else, these data can now usefully be compared with those in other published bank histories—a task I have been able only to begin here.

  Social historians will find this, I hope, a useful contribution not only to the old debates about class, but also to more voguish controversies about family structure and relations between the sexes within the wealthy elite: although the partners in the bank were exclusively male, I have taken care not to neglect their mothers, wives and daughters, who were often (as Miriam Rothschild recently pointed out) as capable as the Rothschild men, if not more so.

  Specialists in Jewish history may be suspicious of yet another book written about a family which has always loomed uncomfortably large in their field; I can only hope that as an atheist from a Calvinist background I have not misunderstood too much the exceedingly complicated relationship between the “exceptional family” and their “co-religionists.” I do not think I am guilty of overestimating the very important role the Rothschilds have played in modern Jewish history. Though it is not my forte, I have endeavoured to satisfy cultural historians by paying due attention to the contemporary allusions to the Rothschilds in high and low literature, and by doing my best to summarise the family’s contribution as art collectors and as patrons of some of the nineteenth century’s most distinguished architects, writers and composers. The book should also be of use to political historians, especially those with an interest in France, Britain and Germany. I am conscious that I have probably misinterpreted some of the more obscure allusions to the high politics of nineteenth-century France in the letters of James and his nephews; but I look to French historians to correct me by doing their own research on the relevant correspondence. Perhaps, on reflection, the book will give most satisfaction to those unfashionable scholars who continue to be interested in diplomatic history. There is more here than I had originally expected to write about Belgian neutrality, Schleswig-Holstein, the Eastern Question and the origins of the various wars which were fought (or averted) in the century between Waterloo and the Marne. But after finance—or rather inseparable from it—diplomacy was what the Rothschilds themselves regarded as important.

  To all these different readerships, I offer apologies for sins of omission: because the book was supposed to be written in three years (it took nearer five) there are letters which I did not read, books I merely skimmed, archives I did not visit. In deciding what not to do, I have tried to give priority to documents hitherto unknown or only partially known. Where an archive has apparently been well sifted by a previous historian, I have elected not to re-sift, at the risk of perpetuating error. This volume should thus be regarded as something of a research agenda: the London archive in particular cries out for further investigation, and I hope to see a steady stream of monographs in the coming years, correcting my broad-brush interpretations and doubtless many points of detail.

  The fact that a book can at least pretend to be relevant to so many different spe cialisms should in itself reassure the non-academic reader, who I hope will forgive those passages of the book which betray the author’s profession, just as those readers who are themselves bankers or Jews will forgive the errors and false notes which doubtless remain. If this book does something to help reintegrate economic, social, cultural, political and diplomatic history, and in the process to make both the nineteenth century world and the “exceptional family” more intelligible, it will have got the author from Point A, where he began, to Point B, where he wished to end up.

  I

  Father and Sons

  ONE

  “Our Blessed Father”: Origins

  Yes, my dear fellow, it all amounts to this: in order to do something you must be something. We think Dante great, but he had a civilisation of centuries behind him; the House of Rothschild is rich but it has required more than one generation to attain such wealth. Such things all lie deeper than one thinks.

  —GOETHE, OCTOBER 1828

  A traveller arriving in eighteenth-century Frankfurt, as he passed across the main Sachsenhäuser Bridge leading to the Fahrtor Gate, could hardly miss the Judensau —the Jews’ Sow (see illustration 1.i). An obscene graffito on the wall, it depicted a group of Jews abasing themselves before—or rather beneath and behind—a fierce sow. While one of them suckled at her teats, another (in rabbinical garb) held up her tail for the third (also a rabbi) to drink her excrement. The “Jews’ devil” watched approvingly. If the traveller looked up, he could also see a second and still more repellent image: that of a dead baby, its outstretched body punctured by countless small knife wounds and beneath it nine daggers. “On Maundy Thursday in the year 1475,” read a caption, “the little child Simeon, aged 2, was killed by the Jews”—an allusion to the case of Simon of Trent, who had allegedly been a victim of “ritual murder,” the fictional practice whereby Jews murdered Gentile children in order to put their blood in unleavened bread.

  Such a graphic expression of anti-Jewish sentiment was by no means unique: the image of Jews worshipping a pig can be found in numerous woodcut and printed versions dating as far back as the fourteenth century, while the myth of ritual murder gained currency in Germany in the fifteenth. What made the Frankfurt pictures remarkable—at least in the eyes of the city’s most celebrated son, Johann Wolfgang Goethe—was that they were “not the product of private hostility, but erected as a public monument.” The Judensau and the murdered child were officially sanctioned symbols of a long-standing tradition of hostility to an enemy within the free imperial town.1

  The first records of a Jewish community in Frankfurt date back to the mid
dle of the twelfth century, when it numbered between one and two hundred. Its history was one of periodic persecution by the Gentile populace. In 1241, more than three quarters of the Frankfurt Jews were massacred in the so-called “Battle of the Jews” (Judenschlacht). The community re-established itself over the subsequent decades, but just over a century later, in 1349, there was a second pogrom. In both cases, popular millenarianism played a part: in the first “battle,” fears that the Jews were in league with the Mongol horde; in the second, fears instigated by members of a fla gellant order that the Jews would attract the plague to the town.

  1.i: Anonymous early-eighteenth-century print of Simon of Trent and the Judensau.

  There were, however, worldly reasons why both the Holy Roman Emperor—who declared the Jews “servi nostri et servi camerae nostri” in 1236—and the municipal authorities were inclined to encourage Jewish settlement. The Jews were a source of tax revenue and credit (given their exemption from the laws prohibiting usury) who could be offered “protection” and restricted privileges in return for hard cash. But protection and restriction went hand in hand. In 1458, at the order of the Emperor Frederick III, the Jews were confined to a ghetto (from the Italian borghetto or suburb): a single, narrow street on the north-eastern edge of the town at both ends of which gates were erected. To the 110 Jews living in the town, this capitivity in what became known as the Judengasse (Jews’ Lane) suggested a “New Egypt.” On the other hand, the persistent risk of popular violence could give the ghetto the character of a sanctuary. Allegations of ritual murder in 1504 and an attempt to declare the Jews heretics five years later provided a reminder of the vulnerability of the community’s position, as did the conversion of the majority of the town’s population to Lutheranism in 1537, given the avowed hostility of Luther towards the Jews. The Judengasse provided sanctuary of sorts in a perilous world; and between 1542 and 1610 its population grew from around 400 to 1,380 (an increase which was paralleled by Huguenot migration to Frankfurt from the Netherlands). The economic and social tensions which coincided with—or were caused by—these influxes culminated in yet another outbreak of popular violence against the Jewish community: the “Fettmilch riots,” named after their shopkeeper leader Vincenz Fettmilch. However, wholesale looting of the Judengasse was this time not accompanied by mass murder (the Jews were expelled from the town) and, after a brief period of popular rule, imperial troops quashed the insurrection. Fettmilch and the other leaders of the revolt were hanged and the Jews marched back into the ghetto, their status as protégés of the Emperor reaffirmed.

  In practice, as before, “protection” meant extraordinarily tight regulation, the details of which were set out by the Council in the Stättigkeit, a statute which was read out each year in the main synagogue. Under its terms, which remained in force until the very end of the eighteenth century, the Jewish population was restricted to just 500 families; the number of weddings was rationed to just twelve a year and the age of marriage fixed at twenty-five. No more than two Jews from outside were allowed to settle in the ghetto each year. Jews were prohibited from farming, or from dealing in weapons, spices, wine and grain. They were forbidden to live outside the Judengasse and, until 1726, were obliged to wear distinctive insignia (two concentric yellow rings for men and a striped veil for women) at all times. They were confined to the ghetto every night, on Sundays and during Christian festivals; at other times, they were forbidden to walk in the town more than two abreast. They were barred from entering parks, inns, coffee houses and the promenades around the town’s picturesque walls; they were not even allowed near the town’s ancient cathedral; and had to enter the town hall by a back door. They were permitted to visit the town market, but only during set hours, and were forbidden to touch vegetables and fruit there. If he appeared in court, a Jew had to swear a special oath which reminded all present of “the penalties and maledictions which God imposed on the cursed Jews.” If he heard the words “Jud, mach mores!” (“Jew, do your duty!”) in the street, he was obliged—even if they were uttered by a mere boy—to doff his hat and step to one side. And if he had occasion to go outside Frankfurt—for which a special pass was required—he paid double the amount of toll paid by a Gentile when entering the town. In return for this supposed “protection,” every Jew also paid a poll (or “body”) tax.

  All this meant that the Frankfurt Jews spent most of their lives within the high walls and gates of the Judengasse. Today virtually nothing remains of this prison-cum-street. All but a couple of houses were demolished by the Frankfurt authorities in the course of the nineteenth century, and what little remained was flattened by American bombers in May 1944. However, the foundations of a part of the old street have recently been excavated, and these give at least a rough idea of the inordinately cramped conditions of life in the ghetto. Curving from the Börnheimer Gate in the north towards the Jewish cemetery in the south, it was just a quarter of a mile long and no more than twelve feet wide—in places less than ten. Having originally been designated a ghetto at a time when the Jewish population was little more than a hundred, the lane was horribly overcrowded: by 1711 there were no fewer than 3,024 people living there. Accommodating them all in such a small area required a high degree of architectural ingenuity: houses were just eight feet wide and had up to four storeys, and behind each row an additional row was constructed. Fire was an inevitable hazard—indeed, all or part of the Judengasse was destroyed by major conflagrations in 1711, 1721 and 1774. This meant that life there was both dear and cheap: dear because the demand for housing far outstripped the supply, so that a four-room house in the north of the Judengasse cost as much as Goethe’s father paid for his twenty-room mansion in the Grosse Hirschgraben; cheap because lack of sanitation, light and fresh air reduced life expectancy. In the 1780s it was estimated that average mortality among Jews was 58 per cent higher than among Gentiles. A traveller in 1795 observed how “most of the people among the Frankfurt Jews, even those who are in the blooming years of their life, look like the walking dead . . . Their deathly pale appearance sets them apart from all the other inhabitants in the most depressing way.” Later, after the walls around it had been partly demolished, the Judengasse was to some extent romanticised by artists like Anton Burger; indeed, it became something of a Victorian tourist attraction (Charles Greville and George Eliot were among the English visitors). At the time, it struck the young Goethe as a hellish slum:

  The lack of space, the dirt, the throng of people, the disagreeable accents of the voice—altogether, it made the most unpleasant impression, even upon the passer-by who merely looked through the gate. It was a long time before I dared to go in there alone, and I did not return there readily when once I had escaped from that multitide of people, all of them with something to hawk, all indefatigably buying or selling.

  One who knew it more intimately was the poet Ludwig Börne, who (as Juda Löw Baruch) grew up there in the 1780s and 1790s. Looking back in anger rather than nostalgia, he remembered a

  long dark prison, into which the highly celebrated light of the eighteenth century has not yet been able to penetrate . . . Stretching ahead of us lay an immeasurably long street, near us just enough room to reassure us that we could turn around as soon as the wish overcame us. Over us is no longer sky, which the sun needs in order to expand in his breadth; one doesn’t see sky, one sees only sunlight. An evil smell rises everywhere around us, and the cloth that is supposed to shield us from infection serves also to catch the tears of compassion or to hide the smile of malice from the gaze of the watching Jews. Tramping laboriously through the filth slows our pace down enough to permit us the leisure for observation. We set our feet down skittishly and carefully so that we don’t step on any children. These swim about in the gutter, creep about in the filth innumerable as vermin hatched by the sun from the dungheap. Who would not indulge these little boys in their small desires? . . . If one were to consider play in childhood as the model for the reality of life, then the cradle of these chil
dren must be the grave of every encouragement, every exuberance, every friendship, every joy in life. Are you afraid that these towering houses will collapse over us? O fear nothing! They are thoroughly reinforced, the cages of clipped birds, resting on the cornerstone of eternal ill-will, well walled up by the industrious hands of greed, and mortared with the sweat of tortured slaves. Do not hesitate. They stand firm and will never fall.

  As Börne commented, even at a time of supposed “enlightenment,” when other German cities were relaxing the restrictions imposed on Jews, Frankfurt held out, refusing to implement the Emperor Joseph II’s Edict of Toleration (1782) and confiscating copies of Ephraim Lessing’s philo-Semitic play Nathan the Wise. When the Jewish community petitioned in 1769 and again in 1784 to be allowed to leave the ghetto on Sundays, the request was rejected as an attempt “to put themselves on an equal footing with the Christian residents.”2 As in the past, this policy was to some extent forced upon the Council by the majority of the Gentile townspeople. Typically, when a Jewish mathematics teacher was granted permission to live and teach outside the ghetto in 1788, there was such a popular outcry that the licence had to be revoked; and a similar request by a Jewish doctor in 1795 was turned down flat. For much the same reason—as a letter of complaint signed by seven leading Jewish merchants makes clear—the rules governing travel outside the Judengasse on holidays and Sundays were made more rather than less restrictive in 1787, with the introduction of a complicated system of identity cards:

  As a human being, every Jew has the same rights as any other and a just claim for protection by his sovereign. Unfortunately, the lower classes are still so bound to the prejudices of their fathers as to doubt that a Jew is a human being like themselves. They mistreat [the Jews] in all sorts of ways and many an old man seems pleased when his son is mistreating a Jew. Even soldiers indulge in this punishable tyranny. Would they not take [the new system] as an invitation for countless acts of harassment? They would use the smallest difference in clothing, hair, beards and the like as an excuse to perform the most stringent examinations at the town gate. The slightest deviation [would] enable them to arrest the Jew and march him off to the main guard house like a common thief.