What concerned the Rothschilds much more, however, was the possibility that, like his uncle before him, Louis Napoleon would pursue an expansionist foreign policy which might plunge Europe once again into a general war. From the moment that Bonaparte’s star began to wax in mid-1848, when he was elected to the Chamber of Deputies, it was this which coloured the Rothschilds’ judgement. Identifying him as the ally of the “friends of disorder and unrest,” they assumed that his popularity presaged war. As James put it, Louis Napoleon would
spend a nice bit of money to ensure that they have him as President and in my opinion—I who have never believed in war—the situation looks blacker now, because the people now have to . . . make war. At the bourse everyone was horribly black, because they say that the working class will supposedly back him, because he is a socialist and draws his support from the most common people . . . I am trying to liquidate.
Although they came to revise this assessment in the succeeding months, as the likelihood of his victory in the presidential election grew, they were far from delighted at this prospect, regarding Cavaignac as “decidedly better.” Both camps directly approached James to ask for support, but he told them that “not being French he was withholding all influence in this serious matter and would not support either of the two candidates, that he was waiting for the country to make its decision and would not oppose to whichever president was preferred by the majority.” Privately, he expected Louis Napoleon to defeat Cavaignac. But he found the new President “dull and with no charisma whatever,” despite his flattering request that James should “visit him often and eat with him in the morning.” In the immediate aftermath of Bonaparte’s victory in December, he and Betty nervously anticipated a return to the “June days,” and even the outbreak of war between France and Prussia.
Such fears were only increased by the assumption—which can be detected as early as January 1849—that Louis Napoleon would “not rest till he has made himself Emperor, & that the votes of the Army and Peasantry combined will be enough to secure his success.” James had no doubt that this would be “a great mistake.” Throughout the first months of 1849 he watched with anxiety for signs of a “forward” French foreign policy which might reinforce such pretensions. In particular, the continuing instability of the situation in Italy seemed to invite some kind of French intervention. In James’s words, “This question is the one which interests us the most: whether [or not] we will have peace.” Every flicker of unrest in Paris seemed to increase the likelihood of a gamble on war by the new government. “It will end with war,” predicted James on June 9. “We are in the hands of God. We have [not only] Asiatic cholera [but also] political and financial cholera . . . I do not believe rentes will go up.”
The realisation that Napoleon intended to intervene in Italian affairs on the side of the Pope—who had been forced to flee Rome in November—rather than the Roman republic therefore came as a welcome relief, even if Anthony could not at first see “how they can enter & put the Pope on the throne if they have a Republic here.” In fact, prolonged debates on the subject meant that this ended up being the last of the foreign interventions against republicanism which finally brought the revolutionary period to an end. The first blow was dealt in March by the second, decisive Austrian victory over Piedmont, which was followed by the occupation of republican Tuscany in May. In April it was the turn once again of the Frankfurt Rothschilds to pack up their valuables as a last wave of popular unrest swept through South Germany, only to be crushed by joint action between Prussia, Saxony and Hanover. As before, the Rothschilds could do little more than stand on the sidelines cheering. Anselm enthusiastically welcomed the Russian intervention in Hungary, conscious that Windischgrätz alone could not win.
Only when the military defeat of the various enclaves of revolution was sure did the Rothschilds seriously think about resuming their traditional loans business. On July 4, Anselm began to talk more positively about the Austrian loan, as well as urging the Paris house to provide the Russian army in Hungary with financial assistance via the Paris house. He also began to involve himself in the efforts to stabilise the Austrian exchange rate, which war and the suspension of silver convertibility had seriously weakened. By mid September, a small Austrian loan had been arranged in the form of a 71 million gulden issue of treasury bills; although most of these were absorbed by the Vienna market, around 22 million were taken up and sold by Amschel in Frankfurt.
Naturally, these transactions implied an explicit commitment to the forces of monarchical reaction, something which caused a degree of disquiet to members of the family in France and London, where support for Hungary was widespread. Betty can hardly have been indifferent to the bitter sentiments expressed in Heine’s pro-Magyar poem, “Germany in October 1849,” a copy of which he sent her. But Anselm had no time whatever for his English cousins’ “uneasy” expressions of pro-Hungarian feeling, advising “your good English folks [to] stick to Ireland & its Potato crop, & keep their arguments for their objects.” Carl’s suggestion of a loan to the Pope could also be seen as lending sustenance to the counter-revolution. To the disappointed revolutionaries of 1848—not least Marx—the moral was plain: “Thus we find that every tyrant is backed by a Jew, as is every Pope by a Jesuit. In truth, the cravings of the oppressors would be hopeless and the practicability of war out of the question, if there were not an army of Jesuits to smother thought and a handful of Jews to ransack pockets.”
It was misleading, however, to portray the Rothschilds as the financiers of reaction, as they had so often been portrayed in the past. For one thing, as Lionel reported from Wildbad in August, the revolution had made erstwhile liberals more conservative: “The Liberal party in Germany is very different from the liberals in England. All persons of property or who are in business are for the old state of things.” James’s paramount concern was to resume normal business activity—as he reminded his nephews in London, he was “a friend of business” and wanted to “keep the wheels turning.” Provided international stability could be relied upon, he was relatively uninterested in the political complexion of the regimes he lent to. Before it was confirmed that the Pope would be restored with French support, for example, James was perfectly willing to do business with the Roman Republic. Indeed, when the Republic’s representative approached him with a small deposit in March 1849 to ask whether he “would do their business,” he accepted it “as I am [now] a Republican”—an ironic aside from a man who at other times referred to it as the “accursed republic.” And when the position of the Papacy was restored at the end of June, James informed Carl that he had no desire to “run after” the Vatican for business. Adolph too showed little respect for the Pope—“His old Pious-ness with all his nonsense.” Any loan, insisted his French cousins, was to be conditional on the granting of civil rights to the Roman Jews. For, as Anselm said,
the Pope who was once so liberal and who brought Italy such misfortune through his overhasty reforms, is now not just wholly reactionary but, following the example of the Popes of the dark Middle Ages, intolerant in the highest degree, I am tempted even to say inhuman. If the Pope could do business with any other house, he would certainly break with us, and so compliments to the holy gentlemen are not in order.
Nor were James and Lionel willing to allow the Vienna house to resume its traditional role as a more or less unquestioning supporter of the Habsburg regime. In December, both expressed strong objections to Salomon’s efforts to support the Austrian currency when their rivals were profiting from speculating against it.
This political neutrality was most obvious in the case of Piedmont, which had been among the principal troublemakers of 1848. As Anselm pointed out, the Piedmontese indemnity to Austria promised to generate “a beautiful and safe piece of business” in the form of a loan to Piedmont as well as the transfer of part of its proceeds to Vienna. Nat was initially sceptical—as Charlotte observed, the “more sensible” members of the family had not forgotten the “fearful per
iod” of the previous year—but even he could see the appeal of such a transaction. As for James, his interest in Piedmont was so great that Anselm feared he might give the Turin government the impression of “excessive keenness.” This underestimated James’s skill as a negotiator. He had begun by sounding out the government in advance of the peace agreement with Austria, though without committing himself. Then he hinted at a deal with the Italian bankers who hoped to float the bonds themselves in order to shut out rivals from Paris and Vienna. In September he went in person to Vienna and Milan to offer an advance of 15 million francs on the Piedmontese indemnity due to the Austrian government. Finally, in Turin, he succeeded in securing control of more than half the 76 million franc Piedmontese loan, leaving just 8 million to the Italian bankers and the rest to public subscription.
This was not just because he wished to see Austria get her indemnity. As he assured a young and ambitious financier named Camillo di Cavour, he was “very anxious to have dealings with this country; he has repeatedly told me that he regards Piedmont as established on a much sounder basis than Austria.” For his part, Cavour was shocked by the way James had “bamboozled” the Piedmontese Finance Minister Nigra. Convinced that Piedmont should not allow herself to become dependent on “this cunning old rascal Rothschild,” Cavour would prove a formidable obstacle to Rothschild ambitions in Italy in the future.6 But, for the time being, James appeared to have established an important foothold, with the possibility—as he put it—that this would lead to a financial “marriage” with Italy as a whole. In a similar way, the Frankfurt house made approaches at around the same time to German states like Württemberg and Hanover (where a liberal ministry under Johann Stüve remained in power until November 1850), though these were rebuffed.
James’s success in Turin brought to an end over a year of immobility induced by the revolution. Even Lionel and his brothers were now ready to contemplate new business, although they were still more interested in revolutionless Spain and America than in Central Europe. Mercury, cotton, gold, tobacco—even Nicaraguan canals and African groundnuts—seemed safer fare than loans to politically volatile states.
In Paris itself there was also a slight relaxation in Rothschild attitudes. The main barometer of financial opinion—the price of rentes—points to a growing (though not unqualified) confidence in the presidential regime in the course of 1849: in the year after December 1848, 5 per cents rose from 74 to 93, and with them Nat’s spirits. This was in part a reflection of Napoleon’s restrained foreign policy. As Nat remarked when the expedition to Rome was first bruited, “In general when troops begin to move bondholders are frightened; in this case as it is for the re-establishment of order, perhaps & I trust it will produce a good effect.” The return of financial confidence also reflected a growing awareness that Louis Napoleon was far from being the ally of the radical left. Although he still thought the President “a little ugly fellow,” Nat was favourably impressed by the evidence of social restoration he witnessed one evening at the President’s palace: “The ladies were beautifully draped in jewellery and when the carriages were called the titles were not omitted.” “If we remain quiet,” he added hopefully, “there will be no difference between the republic and the monarchy.” This was over-optimistic: in strictly financial terms, rentes never recovered to pre-war revolutionary levels under the Republic, suggesting continued doubt about the stability of the regime—witness Anthony’s alternate warnings that Louis Napoleon would go the way of Louis Philippe or that the republicans would succumb to a Bonapartist coup. Yet there was confidence enough for the Rothschilds to raise the inevitable subject of a new loan to France herself.
There were also the first signs of a revival of the railway mania of the 1840s (Léon Faucher’s appointment as Minister for Public Works was especially encouraging). In February 1849 the Pereires revealed their most ambitious scheme to date: a railway to link Paris, Lyon and Avignon, which would then fuse with the line from Avignon to Marseille (the forerunner of the Paris-Lyon-Marseille line). The aim was to revive the system on which the Nord had been based, with the state investing 147 million francs in the initial construction of line between Paris and Lyon and guaranteeing the company a 5 per cent return, while the company put up 240 million francs to operate the concession for ninety-nine years. In fact, it would seem that the Pereires were now seeking to emancipate themselves from the Rothschilds. To raise the money for the new company, they had initially approached Delessert and through him Barings—a first hint of the breach which lay ahead. James was well aware of what was going on and in May fired his first shot back by forcing Isaac Pereire off the board of the Nord. No one should think “that the Pereires are [the same as] Rothschild,” he told Anthony. “You have no idea what scoundrels these little fellows are. They are always trying to exploit our name.” But “when these people don’t need you, they give you a kick in the arse.”
In a symbolic reassertion of his position as railway king, James had made a point of appearing alongside Napoleon and Changarnier when a new stretch of the Nord line was opened in July. In November he sought to force his way into the Paris-Lyon-Avignon concession negotiations, buttonholing Louis Napoleon on the subject over dinner and haggling tenaciously with the new Finance Minister Achille Fould thereafter. From the Pereires’ point of view, however, this may have been an unwelcome reminder of their association with “Rothschild Ier.” There was fierce opposition to their plan, which one critic warned would lead to “a vast consortium Pereire-Rothschild dominating the country from Marseille to Dunkirk and from Paris to Nantes, controlling the coasts of the Mediterranean, those of the Channel and almost all those of the Atlantic, master of the French isthmus.” By comparison, the more modest rival proposal put forward by Talabot and Bartholony to link Paris and Lyon seemed less monopolistic. There was similar opposition to the Pereire plan for a line linking Paris and Rennes in the west, which they hoped to link to their Rive Droite terminus. Still, the very notion that he was striving for such a “railway hegemony” testified to the extent of Rothschild recovery. As James put it in a letter to Anthony: “Above all, it is good that people realise that nothing gets off the ground without us and when we demand something, then it is a case of giving Rothschild all he wants.”
Nothing could better express how far things had come full circle than this renewed self-confidence—except perhaps the deeply paradoxical friendship which James formed in 1849 with Alexander Herzen. As one of the founding fathers of Russian socialism—the man who coined the phrase “Land and Freedom”—Herzen had left Russia for Paris in January 1847 and, after a brief trip to Italy, returned there at the height of the revolution in May 1848. He had already suffered internal exile as a young man for his liberal inclinations, but by the time he reached Paris his views had moved closer to those of revolutionary socialists like Michael Bakunin and Pierre-Joseph Proudhon (author of another famous aphorism of the period, la propriété, c’est la vol ). Indeed, Herzen personally financed Proudhon’s short-lived journal the Voix du Peuple to the tune of 24,000 francs while the latter was in prison. A less likely person to become a favoured Rothschild client would be hard to imagine. The fact that he did sheds light on James’s political outlook, and perhaps substantiates Heine’s earlier assertion that he was at heart more a revolutionary than a reactionary.
Though born illegitimate, Herzen had inherited a substantial fortune from his aristocratic father, so it is not wholly strange that the Rothschilds obliged him with minor banking services while he was in Italy and helped him invest some 10,000 roubles when he began to sell off his Russian property. Herzen later recalled how he
made the acquaintance of Rothschild, and proposed that he should change for me two Moscow Savings Bank bonds. Business then was not flourishing, of course, and the exchange was very bad; his terms were not good, but I accepted them at once, and had the satisfaction of seeing a faint smile of compassion on Rothschild’s lips—he took me for one of the innumerable princes russes who had run
into debt in Paris and so fell to calling me Monsieur le Comte . . . By Rothschild’s advice I bought myself some American shares, a few French ones and a small house in the rue Amsterdam which was let to the Havre Hotel.
However, when the Russian government sought to prevent Herzen raising more cash by mortgaging his mother’s estate at Komostra, less orthodox financial assistance was called for. According to Herzen’s own account, James agreed to accept a bill drawn to the value of the anticipated mortgage and, when the Russian authorities refused to authorise the mortgage, “grew angry, and walked about the room saying: ‘No, I shan’t allow myself to be trifled with; I shall bring an action against the bank; I shall demand a categorical reply from the Minister of Finance!’ ” Despite receiving warnings about his new client from the Russian ambassador Count Kiselev, James now took up the cudgels on Herzen’s behalf, drafting a stiff letter to Gasser in St Petersburg which threatened the Russian government with legal action and exposure in the press.
The House of Rothschild, Volume 1 Page 81