The House of Rothschild, Volume 1

by Niall Ferguson

  All this meant that the Rothschilds were in a position to provide a unique news service to the European elite. Major political events as well as confidential information could be relayed from one city to another well ahead of official channels. Nathan’s early news of the outcome of Waterloo was only the first of many such coups. As early as 1817 James was offering to relay details of French diplomatic despatches from Paris to London—made available by a “friend” in government circles—so that they reached Nathan before the despatches themselves reached the French ambassador. The British ambassador in Paris also began to rely on Nathan for advance news from London. In 1818 a British diplomat bound for the Aix Congress was “struck very much” by Nathan’s “correct information as to the details of our party and his knowledge of the persons likely to compose it, some of whose names I believe had not even transpired at the Foreign Office.” When the duc de Berry was assassinated in February 1820, it was the Rothschilds who broke the story in Frankfurt and Vienna. Likewise, when Queen Caroline died in 1821, it was again the Rothschilds who spread the news to Paris. Canning, as we have seen, disliked the fact that the Rothschilds constantly scooped British ambassadorial reports; but he could hardly afford to ignore news like the Turkish capitulation at Acker man. By 1830, as Talleyrand observed, “The English Cabinet always obtain their information by [Rothschild] ten or twelve hours before the arrival of Lord Stuart’s despatches, and this is not to be wondered at, seeing that the vessels which carry Rothschild’s couriers belong to that firm, they take no passengers, and start at all hours . . .” Villèle too had to heed Rothschild information, even though he (like Canning) strongly suspected the brothers were manipulating the news to influence the stock market.

  That of course was the whole idea; or rather the principal aim of Rothschild communications was, by getting political news first, to buy or sell securities before the news had influenced the markets as a whole. Yet this was not always achieved. The fact that the Rothschilds broke the news of the French revolution of July 1830 not only to the British Foreign Secretary Lord Aberdeen in London but also (via Frankfurt) to Metternich in Bohemia is well known. But it is worth pointing out that their reports were not at first believed. And, as we have seen, the outbreak of the revolution caught the Rothschilds themselves completely by surprise, plunging the French house into an economic crisis from which it was only with difficulty extricated.

  Bankers’ Diplomacy

  The Rothschild letters reveal the extent and limitations of this communications system in the turbulent years after July 1830. In Paris, James’s political connections were second to none. “I am constantly being consulted about everything,” James told Nathan in 1831, and that never really changed: just as he later claimed to Countess Nesselrode, he really did see the King, his ministers and the principal ambassadors on an almost daily basis. Nathan too seems to have had access to senior government figures, notably the diplomat Frederick Lamb, in addition to key foreign diplomats in London like Talleyrand, Esterházy and Bülow; but there is no question that his influence was less than it had been under the Tories. In Vienna, Salomon continued to enjoy direct access to Metternich, and relayed copies of his brothers’ letters to him whenever they contained diplomatically important information. By comparison, the Frankfurt and Naples houses were somewhat out of the great power “loop.” Influence in the other key capitals—St Petersburg and Berlin, as well as Brussels and the Hague—was limited to that which could be exercised through agents (for example, Gasser in Russia and Richtenberger in Belgium) or by occasional personal visits.

  The first diplomatic question to be discussed via Rothschild correspondence in 1830 was whether the great powers would actually recognise Louis Philippe as king or intervene against the new regime. On July 31 James wrote to Nathan: “I hope to God that your Government is not thinking of intervening, for if they do so, then we will get a general war.” Lionel summed up the argument for recognition a fortnight later:

  [O]nly one thing that is completely requisite is that the king should be immediately recognised, if it is not done soon, one cannot say what may be the end . . . Until the king is recognised the neighbouring provinces may always wish to join this Governmt.[;] this will encourage also the disturbances there . . . France only wishes peace, wants nothing from other countries and knows that it only has to cultivate its own resources to be one of the greatest nations[;] at present there are in France 1,500,000 men in the National guard, all armed fit for service, besides these the whole army[;] what use [would] it be for other powers to think of making an attack on this country[?] . . . Uncle James was with the king today, being a member of a company who paid their respects to him[;] the king gave him the highest assurances of peace and of his good wishes, and of his hopes that everything will go on in the best way possible.

  Louis Philippe’s message to James at that meeting—“My most ardent desires are centred upon the peace of Europe, and I hope that the states will resume their former friendly relations with France”—was duly passed on to Metternich through the Austrian ambassador Apponyi.

  However, recognition of Louis Philippe did not, as Lionel had hoped, prevent revolutionary outbreaks elsewhere. From the moment news reached Paris of the “full-blown revolution” which had broken out in Brussels on August 25, a new possibility arose: that the spread of revolution outside France would precipitate a war between France and one or more of the conservative powers, Prussia, Russia and Austria—and perhaps even England. This was a far more plausible scenario than the possibility of direct foreign intervention in France for two reasons. Firstly, the other powers had not only treaty obligations (dating from 1814-15) but also strategic interests in Belgium. Secondly, foreign intervention in Belgium, or anywhere else where revolutions broke out, was likely to move the French regime to the left, because of the historic link between republicanism and revolutionary internationalism. Metternich was not the only one who remembered the 1790s, when France had combined domestic “anarchy” with dramatic military expansion.

  James’s first action on hearing of the Belgian revolt was thus to broker a meeting between the French Foreign Minister Molé and the Prussian ambassador, in the hope of averting a military confrontation between the two powers. He also urged Nathan to oppose any British-sponsored intervention on behalf of the Dutch King, having concluded (along with Hannah and Lionel) that Belgian claims to independence were practically (and perhaps also in principle) defensible. At the same time, fearful that the revolutionary spirit might spread to Naples and Spain (as it had in the 1820s), James relayed a veiled warning from Louis Philippe to Metternich that “he was opposing revolutionaries in all countries as far as his position as a constitutional monarch allowed him to do, but . . . that he was compelled in his position to show a certain regard for Liberal aspirations”; the King of Naples should therefore make “a few concessions in the general interest of the country and in accordance with the progress of contemporary ideas.” A few days later Molé told James that France might be prepared to go to war if France were “surrounded by a large number of [Prussian and Austrian] troops,” a fear of “general war” echoed by a number of foreign diplomats including Lamb, who raised the possibility of British intervention.

  There was relief when, after discussions between Talleyrand and Aberdeen, the whole Belgian question was referred to arbitration by representatives of the great powers in London. However, even before an armistice had been reached between the Belgians and the Dutch, news arrived that a revolt had broken out in Warsaw against Russian rule. In fact, it may well have been this development which did most to prevent war over Belgium, as prior to the revolt the Tsar had been preparing to send troops from Poland to support Holland. The fact that it took the Russian army from February until October 1831 to crush the revolt may well have been the main reason there was no general war. But at the time the spread of revolution eastwards seemed only to increase the chances of international conflict. The protracted arguments about the extent of the new Bel
gian state, its neutral status and the choice of its king served only to prolong uncertainty throughout the first half of 1831, with the Rothschilds once again relaying proposals and counter-proposals from Paris to London.2 Then came the news of revolts in Italy: not, as had been feared, in Naples, but in the duchies of Modena and Parma (February 1831) and the Papal states (March).

  Between March 1831 and March 1832 there was a series of “flashpoints” when war involving more than one of the great powers seemed to come perilously close, and on each occasion the Rothschilds worked frenetically to diminish the tension. The first crisis raised the possibility not only of Austrian intervention in the Papal states but also of French moves in support of the revolutionaries. James and Salomon were much involved in the war of words which duly broke out between Paris and Vienna. Ultimately, Austria did intervene, not only in Modena (which the French tacitly accepted) but also in Bologna in response to an appeal from Gregory XVI; action which, after much prevarication, elicited a more or less direct threat of war from the French government—relayed, yet again, by James. This was probably the moment at which a general war came closest; it was undoubtedly the moment when both the British and French bond markets touched their lowest points. Here the evidence of Rothschild involvement in inter-government communication is especially strong, with James taking a hand in the drafting of a crucial French note to Austria calling for international arbitration (on the Belgian model).3 By mid-April, James was sure that “the crisis in Italy [was] over” and that Anglo-French unity would avoid war over Belgium.

  The second flashpoint came in August 1831 over Belgium. After months of uncertainty about the election of Leopold of Saxe-Coburg as King of the Belgians (exacerbated by continued fighting in Poland and news of Austrian reprisals against Italian liberals), the Dutch invasion of Belgium raised the possibility of a general war once more. But again the powers drew back. Neither Prussia nor Russia supported the Dutch move and the British government—after some tense negotiations—sanctioned the French decision to send an expeditionary force to Belgium, provided it withdrew once the Dutch had been driven out. It was only during October that the danger of war over Belgium gradually receded; though even the signing of the 24 Articles by Belgium on November 15 was far from the breakthrough it initially seemed, as Prussia, Austria and Russia took until May 1832 to ratify them, and the Dutch King continued to withhold his signature.

  The third war scare came in February 1832 as a result of fresh unrest in the Papal states. Once again Austrian troops were called in, and once again the French sought to take a hand. Indeed, this time a French force was actually sent to occupy the port of Ancona—“a serious blunder” in James’s view. However, this was far less serious than the earlier crises (as the muted reaction of the markets testified) and there was never any real prospect of a serious breach between Paris and Vienna. The final war scare of the post-revolutionary period came in the autumn of 1832, when France pressed once again for military intervention to force the Dutch to accept the 24 Articles. Even when Britain agreed to act jointly against Holland, this once again raised the spectre of a Prussian or Russian retaliation. The Convention of London of May 1832 was a stopgap, as it left the Belgians in Luxembourg (apart from its fortress) and Limburg (apart from Maastricht) in breach of the 24 Articles. But it sufficed to preserve the peace until the definitive international settlement of 1839.

  Throughout these periods of crisis, the Rothschild letters were the channel through which the views of kings, ministers and diplomats could most rapidly be exchanged. But they also allowed the Rothschilds to make their own views known not only to one another but to the political figures to whom appropriately translated copies were circulated. A central leitmotif of the brothers’ own commentary was their awareness of the potentially explosive interaction between international and domestic politics. This was especially pronounced in Paris, where fear of war was inseparable from fear of a radicalisation of French domestic politics. “The Government here in France is all for peace,” warned James on September 29, 1830, “but if they are threatened too much, then the king says that he would no longer be master of his house and the people don’t want to be threatened like little children.” James constantly fretted that, if the other powers were too aggressive in countering revolution in Belgium or elsewhere, more bellicose politicians would come to power in France. The difficulty was that even those ministers to whom he and Lionel gave their qualified backing were sometimes obliged to assuage public feeling by speaking in a bellicose manner themselves; hence the repeated reassurances from James that such utterances were only for domestic consumption and should not be taken literally abroad. When Sebastiani was appointed Foreign Minister in Laffitte’s new government (November 1830), James immediately rushed to see him. In fact, the message he was able to relay to London and Vienna was much the same as the King’s a few weeks before: “If they are looking for an excuse to wage war against us, then we are fit and ready for them but we will make every possible effort to prevent it from happening.” However, James concluded optimistically that “there is every likelihood that peace will be maintained.” Provided Russia did not think of intervening on behalf of Holland, France would tell the Belgians “that they shouldn’t eliminate the House of Orange from their calculations and that they will not be able to count on our support if they behave stupidly.” The difficulty was that, as James admitted, the government was simultaneously “asking for eighty thousand men [while] saying ‘we are all for peace’ . . . [T]here has been such a degree of fervour and activity at the War Department over here that it would seem that they already planned to make war in fourteen days’ time. Our newspapers are now furiously screaming for war and yesterday the whole world thought that war was about to break out.” Nevertheless, he still maintained that Laffitte was “for peace and he is only asking for the army so as to be able to defend peace.” Talk of war was merely to “keep the public mind occupied.” It was for this reason that James urged the Banque de France to avert Laffitte’s bankruptcy in early 1831; a change of government in France, he was convinced, would increase the danger of war. Throughout January he assured his brothers of the government’s peaceful intent, despite the increasingly febrile mood in Paris.

  Yet James was soon forced to acknowledge a growing appetite for war over Belgium even within the government, an appetite which was only whetted when the news reached Paris of the revolutions in Modena and Parma. James reacted promptly. According to his own account, he told Louis Philippe:

  You are being pushed into a state of war, even though you have no interest in any Belgian [territory] . . . and is it wise for the French to take on such a proud stance? And now do you want us to go ahead and declare war on the foreigners? Your Majesty, you are being deceived. Your ministers have lost the confidence of the public. You should appoint Périer and then all the people, including the wealthy section of the population, will support him, and this will demonstrate that you mean business.

  Laffitte, he told his brother, was bent on a course of “complete anarchy”:

  This morning I was at Laffitte’s and he said to me, “If France does not declare war on Austria, then, in a matter of three weeks, the king will no longer be king and will lose his head.” I told him, how could he possibly give such bad advice to the king, to which he replied that the king no longer consults with him. In short, Laffitte views the situation as already lost . . . Tomorrow, I will ask the king and perhaps I might even go to see him today.

  It would appear that James’s “talking to the king had the desired effect”: Laffitte resigned just over a week later.

  James’s support for Périer was thus inseparable from the idea that he would pursue a peaceful policy; by the same token, James knew that he would be able to survive in office only if the other powers made concessions too. This was the strategy on which he pinned his hopes of stabilisation in France. In a characteristic letter intended for Metternich’s eyes, James urged Salomon that Austria should “support” Périe
r as the French politician least likely to go to war:

  Now, my dear Salomon, you must see that if my friend Périer takes office his ministry is supported, for thirty-two million people making a revolution are a danger to all countries. “And,” Périer said to me, “if people want to do something for the king, they should try to give France a piece of Belgium; that would really strengthen the king’s position, but he does not press for it.” . . . Now I tell you that when Périer is in the saddle it depends on the [other] powers whether they have war or not . . . I tell the whole world that the powers only want peace . . . [W]e can’t say yet what will happen, but I am confident because of Périer, as if we have war, he will suffer losses on his properties and factories; for that reason I believe in peace . . . When we are certain of peace abroad we shall have peace at home.

  “Périer,” he assured Nathan, “is a stroke of luck from God, as he will maintain peace, or at least I hope he will.” He and Lionel were even led to believe that “if Périer comes in, it is to be one of his conditions, that Austria should be allowed to interfere in the Italian affairs without any notice being taken of it.” As soon as Périer’s appointment was confirmed, James repeated his appeal for Austrian backing:

  [W]e have a ministry which wants peace, and they want to do all that is in their power for peace to be maintained. [But] if the powers want peace to be maintained, then they will have to strengthen the “Peace ministry” and enable it to demonstrate [to the public] that the powers have no intention of attacking France. It would now be very helpful if both Russia and Austria were to issue a declaration that they will remain on the sidelines, and that they will not attack France, and such a move would calm the populace, for over here they firmly believe that as soon as Russia has resolved its problems in Poland, they will then turn their attention to France . . . I went to the king and pointed out to him that my whole fortune and family were in France and, consequently, I would not dream of misleading him and lulling him into believing that the foreign powers wanted peace when, in truth, they were planning to make war and, anyway, for whose benefit would such a ploy be? . . . If they should opt for Périer, then their credit will rise and everything will improve . . . Well, all now depends on the foreign powers and you will have to make every effort towards that end, for, should we be unsuccessful in maintaining peace, then no power will be able to preserve its credit.