James responded to these demands with a mixture of threats and blandishments, as Charlotte recorded in her diary:
The failure of the House of Rothschild would be a terrible disaster for France. It would be to kill the goose that lays the golden egg with a single blow and to abandon forever the chance of [its performing] any public or private services. The government could not auction off the family’s golden houses: Ferrières could not be sold; the hôtel Florentin stands empty and could not be let under the present circumstances. If, however, they spare our uncle’s life—by which I mean only his financial life—then he could be of service not only to the state, but to individual members of the government . . . In England, they say, no one is grateful for favours received. We certainly do not expect that, but I think one can count on recognition for favours still to be granted. Our uncle has just granted favours to M. de Lamartine, M. Caussidière and Crémieux.
At the same time, if the immediate repayment of the money owed by the Nord was demanded, “thirty or forty thousand workers would be deprived of the employment the government had guaranteed them and the expenditures of the national Treasury on unemployment would increase considerably.”
Not everyone was convinced by James’s protestations that his “financial life” was at stake. In a good illustration of the way “socialism” made itself felt even in the financial sector, the clerks at de Rothschild Frères protested when James justified cutting their salaries on the grounds that “my business has been reduced.” “Yes, you have lost nothing,” declared one of them. “You are richer than anyone and we won’t [accept a pay cut].” But, if nothing else, James had bought himself valuable time. By the time the government’s commission had decided in favour of the state’s repurchasing the concessions from the companies, it was the third week of May. Just over a month later, the political position in Paris was transformed by the brutal suppression of the “June days” (22-28 June)—an apparently spontaneous eruption of working class rioting—by troops under the command of General Eugène Cavaignac.
Marx’s bitter diagnosis of the “June days” and their aftermath was that the “bourgeoisie” as a whole had thrown in its lot with authoritarianism and militarism in order to crush the proletarian revolution. In contrast with the revolution of 1830, however, the Rothschilds did little, if anything, to promote the restoration of “order” (just as they did little to promote resolutions of the various diplomatic conflicts of the revolution). They did no more than welcome—cautiously—the arrival of Cavaignac. Indeed, they positively avoided making a direct contribution to his efforts: James packed Alphonse off to Frankfurt to ensure that he did not take part in the fighting, which he would have done had he stayed. The military restoration of “order” thus had the aspect of a deus ex machina. It was the same story in Naples, where Ferdinand dispensed with parliament and successfully reclaimed Sicily in August; and in Vienna, where Windischgrätz bombarded the revolutionaries into surrender in early November.
Still, the Rothschilds knew how to swim with the turning political tide. For the reconstruction of the republican regime under Cavaignac provided the perfect opportunity not only to bury the railway nationalisation project but to reschedule the Nord’s debts to the state and to resolve the question of the 1847 loan. It was later alleged that the Paris house had been “refloated” by the government at this juncture—to the great ire of James’s grandchildren, who took pains to deny that their bank had ever relied on state intervention. The word “refloated” is misleading but—like the related accusations levelled at the government of excessive generosity—not without an element of truth. In essence, James had adopted the stance which Balzac had years before anticipated: that of the indispensable debtor who owes his creditors so much that they dare not let him fail. Fearing that he might otherwise be unable to resume his payments to the Treasury, the government felt obliged to renegotiate the terms of the 1847 loan. The decision was understandable: in threatening them with the death of the “golden goose,” James was implicitly threatening the collapse of the French financial system. As Mérimée suggested at the time, the government’s financial position was “diabolical”; the collapse of de Rothschild Frères would have made matters worse still.
The easier alternative was to work in partnership with “the Baron.” Thus, when Lionel visited Paris in July, he found James closeted—as of old—with the Finance Minister. He was “now a great favourite and as there is no other Banker or person with money or disposition to come forward, he is naturally very much looked up to.” Yet the expedient adopted by the new Finance Minister Goudchaux—to convert the 3 per cent bonds of 1847 into 5 per cents—was probably over-generous, in that it effectively turned a loss of 25 million francs into a profit of 11 million. The fact that Goudchaux was a Jew (like another moderate republican linked to James, Crémieux) merely added to the radical suspicion of a conspiracy to prop up Rothschild. In truth, James had probably exaggerated the danger of his own financial collapse in order to minimise his losses on the 1847 loan. Far from being in cahoots with Goudchaux, the Rothschilds regarded him as “not a practical man by any means” who knew “no more about the bourse than the man of [sic] the moon.”
The Rothschilds’ position had in fact been stabilising for at least a month before the “June days.” As early as the last week of May, it was possible for Charlotte to affirm her belief in “in a bright, European and Rothschildian future.” When Nat went to Frankfurt in June, he found Amschel still furious with Lionel, but financially quite secure, with a balance of at least 26 million gulden and a bullion reserve of £400,000. Indeed, the English Rothschilds were surprised to find Amschel selling on to the Vienna house silver he had received from the London house only weeks before. Another sign of normalisation was the resumption in earnest of negotiations for a new mercury contract in Spain (where Baring was mounting a serious challenge). This coincided with excited reports from Davidson about new discoveries of silver in Chile and Peru which were likely to boost the mercury market. By August matters were sufficiently far advanced for James, Lionel and Anselm—now the family’s dominant triumvirate—to meet at Dunkirk to take stock of the combined accounts. It was not until some time later, however, that it was apparent to those outside the family that the Rothschilds had survived. When the radical Tocsin des Travailleurs devoted a leader to the subject in August, its tone was ironical; yet a genuine undertone of admiration is unmistakable in its appeal to James to lend his miraculous financial powers to the cause of the republic.
You are a wonder sir. In spite of his legal majority, Louis-Philippe has fallen, Guizot has disappeared, the constitutional monarchy and parliamentary methods have gone by the board; you, however, are unmoved! . . . Where are Arago and Lamartine? They are finished, but you have survived. The banking princes are going into liquidation and their offices are closed. The great captains of industry and the railway companies totter. Shareholders, merchants, manufacturers, and bankers are ruined en masse; big men and little men are alike overwhelmed; you alone among all these ruins remain unaffected. Although your House felt the first violence of the shock in Paris, although the effects of revolution pursue you from Naples to Vienna and Berlin, you remain unmoved in the face of a movement that has affected the whole of Europe. Wealth fades away, glory is humbled, and dominion is broken, but the Jew, the monarch of our time, has held his throne[.] [B]ut that is not all. You might have fled from this country where, in the language of the Bible, the mountains skip about like rams. You remain, announcing that your power is independent of the ancient dynasties, and you courageously extend your hand to the young republics. Undismayed you adhere to France . . . You are more than a statesman, you are the symbol of credit. Is it not time that the bank, that powerful instrument of the middle classes, should assist in the fulfilment of the people’s destinies? Without becoming a Minister, you remain simply the great[est] man of business of our time. Your work might be more extensive, your fame—and you are not indifferent to fame—might be even
more glorious. After gaining the crown of money you would achieve [your] apotheosis. Does that not appeal to you? Confess that it would be a worthy occasion if one day the French Republic should offer you a place in the Pantheon!
Even this struck some as premature: as late as November rumours were still circulating that James intended to go into liquidation. But the Rothschilds had indeed survived. We now know how they did it. We can also see why, at the time, their escape seemed well-nigh miraculous.
Tranquillity and Order
Another important difference between 1830 and 1848 was the Rothschilds’ lack of diplomatic influence. Though they fretted constantly about the danger of a European war, for most of 1848 they were far too preoccupied with their own financial problems to play their familiar part in great power politics. When the Austrian government asked Salomon to help “end the Italian difficulties” by sending “a member of his House in order to start negotiations in this sense in the name of the Austrian Government,” the younger Rothschilds were reluctant to become involved. As Mayer Carl put it:
[I]n my opinion we should not mix in politics, because, however things turn [out], it is harlequin who gets the kicks and harlequin, that is us. Also I don’t believe that Lombardy is going to pay anything to Austria. The Italian cause has aroused too much sympathy for any solution not to be inimical to Austria’s interests. Also everybody [would] say that we make God knows how much out of this. People are used to assuming that Rothschild does nothing without getting something.
When Radetzky “gave a good licking” to the Piedmontese armies at Custozza, Anselm and his cousins were delighted, but poorly informed about Austrian diplomatic intentions, assuming that Austria would still relinquish most of her Italian territory. Although James came to realise that Bastide, the new French Foreign Minister, was unenthusiastic about Northern Italian unification, and that therefore Palmerston’s efforts in that direction were unlikely to succeed, his nephews remained convinced for some time that Lombardy and Venetia would be able to buy their independence: it was, wrote Anthony, “only an affair of money.” Their sources of information in Germany were not much better. Mayer Carl, for example, seems to have expected Frederick William IV to accept the German crown when it was offered by the Frankfurt parliament in March, and—even more improbably—that this would help Austria and Prussia “pull together.” (In fact, he contemptuously spurned what he called a “diadem moulded out of the dirt and dregs of revolution, disloyalty and treason.”) It was not until late February 1849 that Anselm began to receive the kind of inside information about Austrian diplomacy which his father had for so long taken for granted. He was soon following in Salomon’s footsteps by siding enthusiastically with Schwarzenberg in the second war with Piedmont—a tendency which his father’s return in April may have reinforced.
In practice, of course, the Rothschilds could not hope to exercise political influence as long as they themselves were financially weak. The traditional leverage exerted by the Rothschilds had, after all, been based primarily on the granting of loans. But throughout 1848 the British Rothschilds used their new predominance over the continental houses to veto numerous suggestions of loans to the post-revolutionary regimes in Austria, Hungary, Rome, Lombardy, Prussia, Baden and elsewhere. (Incredibly, Salomon seems to have suggested lending money to allow the Hungarians to buy guns in England—this even as he was lamenting the collapse of the Habsburg Empire!) It was not until late September that anything resembling “business as usual” was contemplated, though talk of a loan to Austria proved premature. The trouble was that the revolution refused to lie down and die. No sooner had “red republicanism” been defeated in Paris, Vienna and Berlin than it burst forth again in Italy. No sooner had it been defeated in Italy than it had a last lease of life in South Germany.
As long as political uncertainty remained, the Rothschilds held back. When the Austrian government approached Anselm with a 60 million gulden loan proposal in March, he was cautious, dismissing it as “a great nonsense” and “a stupid project.” The following month, when James was asked by the city of Paris to make a 25 million franc loan, he “refused it & said it three times, he did not wish to do any business.” This hesitation reflected above all the difficulty of deciding what was to be done with the Vienna house which, even after Anselm’s skilful salvage operation, still owed the Frankfurt house the immense sum of £1.7 million, as well as a smaller sum to the Paris house. It was not until the summer, after a succession of meetings between the principal partners (including a full “congress” at Frankfurt in the spring), that the decision was taken to preserve the Vienna house by writing most of this money off. The extent to which the London partners wished to restrain their uncles is obvious from Alphonse’s comment that the “true goal” of the “congress” would be:
to modify the bases of our house, and, with respect to the London house, to free them reciprocally from a solidarity incompatible with the political activities and the ardent business spirit of the first generation. Our good uncle [Amschel] cannot bear the reduction of our fortune, and, in his desire to re-establish it on its old basis, would not hesitate to plunge us into hazardous enterprises.
It was symptomatic of the mistrust engendered by the crisis of 1848 that the London partners began to distinguish between letters they would allow their uncles to see and those they kept to themselves. Considering that the circulated private letters had up until this point been the very life blood of the partnership this was a revolutionary suggestion—though it is impossible to be sure how far the London partners went in this direction since so much of their correspondence has been lost or destroyed.
Two additional factors tended to diminish Rothschild political influence. Firstly, their relations with Palmerston remained as tenuous as ever. Charlotte denounced Palmerston’s policy in 1848 as “laughable,” and it seems reasonable to assume that Lionel shared his wife’s view; there was evidently little communication between the Rothschilds and Palmerston at this time. In Nat’s view, “any change in the Foreign Affairs will be an improvement on Ld. P[almerston],” a view “heartily” endorsed by his uncle James. To Betty, Palmerston was “the bad genie, breathing fire everywhere and sheltering behind political puppets whom he knows how to station at the front door.” Indeed, the Rothschilds seem to have based their assessments of British policy more on defence estimates than on first-hand ministerial intelligence—a reflection perhaps of Lionel’s preoccupation at this time with the question of Jewish representation in Parliament. Secondly, they miscalculated the political future in France. James overestimated the durability of “respectable, moderate” republicanism. Assuming that Cavaignac and his fellow general Nicolas Changarnier (who combined command of the National Guard with the military governorship of Paris) would remain the key figures of the new regime, he set to work to ingratiate himself with them. Meetings with Cavaignac and other ministers to discuss French foreign policy became frequent. “Our little friend” Changarnier was invited to hunt at Ferrières and was a frequent Rothschild dinner guest. So close did relations become that the Austrian ambassador in Paris was able to report gossip about Changarnier’s “sentiment de coeur” for Betty. As it turned out, James was backing a loser, though his reason for doing so is understandable. For the alternative to the generals was Louis Napoleon Bonaparte, the nephew of the former Emperor.
Throughout the nineteenth century, no figure of political importance was viewed by the Rothschilds with more suspicion, not to say contempt, than Louis Napoleon. This was partly because of his disreputable past—the escapades at Boulogne in 1836 and Strasbourg in 1840, the idiosyncratic books, the English mistress—and the louche lifestyle which he never wholly abandoned. In April 1849, for example, Anthony reported that his aunt and uncle were “disgusted with L. N. They say he gets drunk every night & God knows what else he does.” His relationship with Mrs Howard was also a subject for sardonic comment: in Anthony’s words, all Louis Napoleon wanted was “plenty [of money] so that he can roger co
mfortably & get drunk when he likes.” James regarded him as “a stupid ass” but, pragmatic as ever, was prepared to put his personal aversion to one side and sup with him as early as January 16—just eighteen days after he had been sworn in as President of the Republic. “I could not refuse his invitation,” he explained to his nephews apologetically. Indeed, he seems to have taken the precaution of lending Louis Napoleon 20,000 francs shortly before his election. Nevertheless, this was to be no repeat of the regime change of 1830, when James and Louis Philippe had translated a private, financial relationship into a public, political one almost overnight. As soon as Louis Napoleon had access to public funds, James cut off his credit, ordering Anthony “to give Napoleon no more money, he has no credit with us . . . I promised him 20,000 francs before his budget was passed but now he is getting money from the government, so I don’t want to throw away our money and so I won’t give him a penny more.”
His wife felt an even deeper dislike, partly based on a lingering loyalty to the deposed Orléanist royal family. Disraeli recalled Betty inveighing against Napoleon “whom she hated” to Macaulay, who sought vainly to persuade her that he might be Augustus to his uncle’s Julius Caesar. She was unimpressed: France was “floundering between a nobody and a head garotted by a subversive, useless minority.” If Cavaignac won it would be “a disaster” as he had shown “neither candour nor capacity in power.” But if Louis Napoleon won it would be “a humiliation” as he was “that ridiculous flag from a wonderful past existence, a political nothing who has no other value than as a negative power, a polished socialist hiding roughness beneath the pretence of pleasant politesse.” France’s “love affair” with him, she predicted, “could be just like a happy love affair at the beginning of a novel; lovers in this case always end up hating each other, or by being violently separated.” His victory was a “distress signal around which diverse and opposing opinions rally to protest against the country’s upper crust.” From the outset she assumed that “a parody of the Empire” would be restored. Until April 1849 she stayed away from the President’s receptions.
The House of Rothschild, Volume 1 Page 80