Predictably, this somewhat confused policy was grist to the satirists’ mill. We have already seen the various references to “Don Miggel’s monish” in the cartoons of 1828. Brazil’s financial difficulties were also ridiculed in The Hue and Cry, a cartoon published in the wake of Pedro’s default on the earlier 1823 loan (see illustration 5.v). Here Nathan is pictured advising Dom Pedro not to pay the British bondholders—represented by John Bull prostrate on the ground. “If you pay them you’ll want more monies,” says Nathan to Pedro, “and that is not convenient just now.” The devil whispers in Nathan’s ear: “Tell him to call it political expediency—you know how easily John Bull is humbugg’d.”
The Rothschilds were equally in accord with Wellington when, against Nathan’s expectations, Russia renewed hostilities against Turkey in 1828. A Russian request for a loan was politely turned down, much to Metternich’s delight, and the broth-ers continued to hope for Russian military reverses throughout the campaign. When, to their chagrin, the Russians won and imposed a modest indemnity on the Turks under the terms of the Treaty of Adrianople (September 1829), the Rothschilds hastened to offer their services to facilitate the payment. Their sole anxiety throughout this, the first of many Eastern crises they would have to weather, was that Wellington might feel obliged to intervene against Russia. As over Portugal, the Rothschild view was now overtly pacifist, as Nathan emphasised to Salomon:
There are some here who want us [meaning Britain] to quarrel . . . with [the Russian ambassador] Lieven . . . and want us to send angry Notes . . . I must tell you Wellington and Peel would like to quarrel with Russia, but in the end we should have to go to war. I am not for demonstrations, and we must see to maintaining peace. What’s the good of quarrelling? The Russians have gone too far, and the world will be angry with us and will say: Why didn’t you do it twelve months ago? If England now says, Yes, we are angry and want to go to war, Austria and France will say, We will remain out—they will leave us in the lurch, and we shall be involved alone. I went to Wellington and congratulated him on peace. He said: “Peace is not yet. It is not yet ratified.” . . . There is dissatisfaction with the Russian Peace in every respect. [But ] the Cabinet has now decided for the present to remain quite calm and not to write a word to Russia, to keep quiet and to let come what may.
5.v: “Sharpshooter,” The HUE and CRY; or JOHN BULL between two Knaves, Stools, and the Heads of Police called to rescue him from Pickpockets. Dedicated to the holders of Foreign Bonds in General (1829).
James neatly summed up the rationality of this pacifism: “If England were earnestly to attack [over] the [Turkish] issue then I assure you that we will suffer a fall of at least 5 per cent over here. If on the other hand the reports from there turn out to be better, then we could get a small improvement.” The connection between international peace and bond market stability was to become a first principle of Rothschild policy in the decade to come.
Strings of Influence
It was not only a shared view of foreign policy which united the Rothschilds with politicians like Wellington or Metternich, however. Where the conspiracy theorists of the 1820s came closest to the mark was when they suggested that private financial interests also played a part.
We have already seen that it was common practice for European politicians of the period to accept favours—ranging from investment tips to outright bribes—from bankers. At the Congress of Aix-la-Chapelle, it was the fact that Baring had sold stakes in his impending French reparations loan to most of the ministers present that made them so eager to postpone the loan when the market unexpectedly crashed. The Rothschilds were adept at playing the same game. Indeed, Amschel was “convinced that we as Jews could not get by without bribing and that the Gentiles have the advantage.” In 1818, for example, the Frankfurt house distributed shares of the Rothschilds’ new Prussian loan not only to other Frankfurt bankers like Bethmann and Gontard, but also to their old sleeping partner Buderus, the Austrian representative at the Bundestag, Count Buol, and a number of other members of the diplomatic corps. In Paris, the political figures who were offered Prussian bonds included Talleyrand.
Another way of securing political influence by financial means was by lending money to such individuals. The most eminent of all French recipients of Rothschild loans in this period was Louis XVIII himself, whom Nathan had advanced £200,000 on behalf of the British government to meet the costs of his return to France in 1814. This did not much endear Nathan to the Bourbon family, however, for he insisted on repayment with interest three years later. By contrast, the loans made in the 1820s to the duc d’Orléans (the future Louis Philippe) were a more long-term investment which paid ample dividends in the subsequent decade. Prussian recipients of loans included the son-in-law of Prince Hardenberg. More routine banking facilities like current accounts were offered to other Prussian officials—notably the ambassador in London, Wilhelm von Humboldt, and the key official during the 1818 loan negotiations, Rother. Because these usually led to the granting of generous overdrafts, however, such accounts often performed the same role as loans. No sooner had Caroline von Humboldt been introduced to Salomon than he asked her point blank “whether he could be of any use to me in the matter of money, and said that his purse was at my disposal.”
Finally, when a more subtle approach seemed appropriate, the Rothschilds gave presents to those they wished to cultivate. As Carl put it, “One must have something when going to see the great and good, either gossip or something to show them.” The roots of the family’s later penchant for collecting art and natural curiosities can be found here; for the brothers prided themselves on their ability to find exotic gifts for jaded palates. They had an advantage in Nathan’s access to the London market, by far the best in the world because of the growing superiority of British trade and manufacturing. In 1816, for example, Nathan sent Amschel two tortoises, one of which he suggested be given to the Elector of Hesse-Kassel. (When they arrived dead, Amschel had them stuffed and presented them to William anyway.) Other luxury goods requested by his brothers for prospective clients included jewelled caskets for the Elector, a horse suitable for a lady and “a carving knife and fork with ivory handles” for “someone who helped us.”
The first British official to benefit materially from his relationship with Rothschilds was, as we have seen, Herries. Though the full extent of his personal stake in the firm’s wartime operations is impossible to ascertain, he was a regular participant in post-war loans like the 1817 loan to the city of Paris. Herries—“your own Buderus over there”—was, as Salomon put it, one of the “important people whose favours are essential.” Another was Lord Stewart, Castlereagh’s brother, the British representative in Paris in the post-war years. He first asked Salomon and James to “speculate for him in rentes” in October 1817, and thereafter became “very friendly with us. Between ourselves he likes to gamble,” reported Salomon, “and I let him share in our business . . . to the amount of 50,000 francs rentes.” This was the case which reminded Salomon of his father’s precept that “if a high-placed person enters into a [financial] partnership with a Jew, he belongs to the Jew.” When Stewart came to them asking for assistance with his English affairs, Salomon urged Nathan to oblige him: “We must routinely accede to this minister’s wishes, as he is everything here, and is helping us to get the loans, the liquidation [of French reparations] and everything, and is the English minister.” Twenty years later James gave the Prime Minister Lord Melbourne’s brother Frederick investment tips during his time as ambassador in Vienna. “Well, Lamb is of the opinion that there will not be any war,” he wrote in a typical letter. “I told him that if he sees that rentes are rising over there then I will buy 24,000 francs of rentes for him in order to resell them at a profit, for he currently has some £30,000 to his credit in London.” British officials who directly borrowed from the Rothschilds included George Harrison and Charles Arbuthnot at the Treasury: the former owed Rothschilds over £3,000 in 1825; the latter borrowed four ti
mes as much.
It should be stressed that such relationships were not in themselves illegal—the Rothschilds had every right to extend banking services to politicians and civil servants. However, the brothers privately referred to “bribery” as a feature of their relations with Arbuthnot and with numerous foreign officials, notably the Russian Gervais. And, as the case of Herries illustrates, allegations of corruption in the press could be highly damaging to the career of the politician concerned. Indeed, the brothers had been anticipating a political row of the sort which blew up in 1828 for more than a decade, ever since they first began to worry that their wartime accounts with Herries might not bear close parliamentary scrutiny.
In this context, it is not entirely surprising to find that the Duke of Wellington also banked for a time with Rothschilds. Indeed, it was Stewart who formally introduced the Duke to Salomon and James. The importance of this relationship was probably small in financial terms: the surviving 1825 balance sheet suggests that Wellington did not make much use of his overdraft facility. But in Salomon’s eyes the prestige of being “Wellington’s bankers” was what mattered:
It is a great honour . . . You may say, “What does honour matter? Honour is not money.” As an honest man I tell you that now I prefer honour to money. One cannot do more [with money] than to eat [from the proceeds] and we have enough to eat. [But] food does not taste good without honour. Wellington stands here higher in public esteem than the king himself.
Just two months later, James was already boasting of his influence with the Duke, whom he had “already given various things.”
Wellington, however, was not the most senior British political figure to whom the Rothschilds “gave things.” It is extraordinary to find that the family’s interest in the financial affairs of King George IV predated his accession to the throne by as much as fifteen years. The earliest document referring to “bills of exchange from Prince George to the nominal amount of 150,000 Frankfurt gulden” is in Mayer Amschel’s hand and is dated 1805. Two years later they figure in one of his earliest surviving balance sheets, entered with a discounted value of just over 127,784 gulden—though even this figure he regarded as questionable. For, even as the heir to the throne and Prince Regent, George was regarded as a singularly unreliable debtor. How did Mayer Amschel, then the father of an obscure Manchester textile merchant, come to acquire a bill on the Prince Regent? The likeliest answer is that he bought it from the Elector of Hesse-Kassel, who had made a number of loans to the sons of George III in the 1790s. Ten years later, with Nathan firmly established as a banker in London, the sons of Mayer Amschel turned to these other royal debts with the intention of making Nathan—in Amschel’s somewhat old-fashioned phrase—“court banker” in England. All told, the Prince Regent owed £109,000, the Duke of York £55,000 and the Duke of Clarence £20,000, making a total of £184,000. Only the Prince Regent had ever paid interest on his loan. After protracted negotiations with the Elector’s advisers—and despite the objections of Buderus—the Rothschilds succeeded in buying these debts in return for the equivalent of their face value in consols. Superficially, this was far more than they were worth. In reality, it was an inspired investment—another of Nathan’s “master-strokes.” As Salomon commented: “This makes me a very powerful man.” “There is luck attached to everything English,” he enthused. “Everything touching them turns out happily. So it is with the court of our Elector. The two courts fit together.”
The value of these old royal debts was that, by making Nathan one of the Prince Regent’s creditors, they brought him into direct contact with the officials charged with managing the future King’s troubled financial affairs. And not only his financial affairs: by the end of 1817 Nathan was asking Salomon and James to gather information which might be of assistance to the so-called “Milan commission,” set up to gather evidence against “the great man’s wife”—Princess Caroline of Brunswick—whom he was determined to divorce. In 1822, just after George had finally ascended the throne, a loan of £50,000 was arranged with Nathan, secured on the revenues of his Hanoverian possessions. A year later a further £125,000 was requested. It was at around this time that he came into contact with Sir William Knighton, though the key figure in the loan negotiations was George Harrison, who assured the King of Nathan’s “great loyalty and honesty towards your Majesty . . . in everything relating to this transaction.” As we have seen, Harrison himself borrowed several thousand pounds from Nathan not long after this.
Nor was George IV the only member of the British royal family to whom Nathan lent money in the 1820s. In 1824, for example, he lent £10,000 to the Duke of York on the security of some jewels, as well as giving him 100 complimentary shares in the Alliance Assurance Company.7 The Rothschilds also looked ahead to the next generation. In 1816 the only child of the Prince Regent, Princess Charlotte, was betrothed to a minor German prince, Leopold of Saxe-Coburg, the youngest son of Duke Francis Frederick. The brothers at once recognised Leopold’s potential importance (his new father-in-law was, after all, in his fifties and notoriously sybaritic). When he passed through Frankfurt on his way to England for the wedding, Carl made his move: “We went to see him. He is a good man. We gave him a bill for £700 on you against gold as well as a letter of credit . . . He intends to buy jewellery. Please offer him your services.” Nathan needed no further prompting. By April he was being entrusted with delivery of Leopold’s private correspondence to Germany, and by August a loan of 10,000 gulden was being discussed.
Only the effort Nathan put into cultivating Leopold can explain the brothers’ extraordinary reaction in May the following year to the news that Princess Charlotte had died, apparently extinguishing Leopold’s hopes of power in Britain. “We are unable to write you fully today,” wrote Salomon to Nathan,
because of the heartbreak caused by that disaster, the death of Princess Charlotte. We lost our heads. I still cannot make myself believe that the noble woman died. We received the bad news on Saturday afternoon at five o’clock. We were negotiating with Baring for another million of rentes and we arranged with him that we are going to give him a final answer on Sunday . . . But when he came on Sunday for the answer, our consternation was so great that we told him that we could do nothing for the time being, we are far too confused for it. Unfortunately, we are losing terribly much, my dear Nathan. It is terrible, my heart breaks when I speak about it . . . I can’t write anything about business. We did not do any. We should . . . draw the moral of it: money, honours are worth nothing, we are all only dust; man should give up his pride . . . he should not make himself believe anything; we are mud and dust. It pains me very badly, this unfortunate event.
“Believe me,” Salomon added two days later, “I was so horrified [at the news], that since then I have had no appetite. It is as if my stomach has shrunk and I have never-ending pains in the joints.” Nathan, he assumed, would also be “thrown off his feet” and “made ill” by the news. Yet the brothers were always quick to come to terms with adversity. “Nobody is immortal,” reflected Salomon, “and we have to get over this . . . Unfortunately, our sorrow and sadness cannot bring her back.”
Another bank might have been tempted to end Leopold’s privileged status now that he was a mere widower. Salomon urged Nathan to do the reverse: “According to the English papers the Prince of Coburg will stay in England and is going to remain an important person there. We should show even more friendship towards a man who fell on hard times than before. I ask you to show him more feeling than hitherto.” This accounts for the subsequent efforts of Nathan to arrange life insurance not only for Leopold but for his father, and for the fact that Carl happily put Leopold up at his Naples villa in 1826.
It was to prove an extremely shrewd strategy. For the link forged in these years between Nathan and the man James called “your Coburg” was to prove enduring and mutually beneficial. Not for nothing did one anti-Rothschild writer of the 1840s point out the similarity between the House of Rothschild and the House
of Saxe-Coburg-Gotha, those two extended German families which were to rise from obscurity to glory in the course of the nineteenth century. Indeed, theirs was to be an almost symbiotic relationship. The 3.5 million gulden lent to the Saxe-Coburgs by the Frankfurt house between 1837 and 1842 was only one aspect of the connection. Of greater importance was the support which the Rothschilds gave to those members of the family who left Coburg in search of new thrones elsewhere.
Not that the Rothschilds lost interest in the question of the British succession following Princess Charlotte’s death. When the Prince Regent’s brother, the Duke of Kent, set off for Germany to marry Victoria of Saxe-Coburg, he took with him a letter of credit on the Frankfurt Rothschilds. When the marriage produced a daughter, Victoria—who at once became next-in-line to the throne—Nathan hastened to offer the proud father financial advice and his exclusive messenger service. In 1823 he also lent a substantial sum (400,000 gulden) to the Prince of Leiningen, the Duchess of Kent’s son by her first marriage. Nathan’s sons continued to act as the Duchess’s banker after the Duke’s death, occasionally relaying money to her brother Ferdinand of Saxe-Coburg.
Yet even the English royal family were not the most influential of the Rothschilds’ clients and “friends” in this period. For, as historians generally agree, this was an era in which European politics were to a large extent dominated not by Britain but by Austria. As we have seen, the man who made Austrian policy between 1809 and 1848 was Metternich; and he too banked with Rothschilds. Indeed, the relationship which developed between Metternich and Salomon Rothschild may be seen as in some respects the prototype for the relationship which later developed between Bismarck and the Rothschilds’ associate in Berlin, Bleichröder—except that Metternich came to feel far closer to his banker emotionally and intellectually than Bismarck ever did.
The House of Rothschild, Volume 1 Page 27