The House of Rothschild, Volume 1

by Niall Ferguson

  1 In 1836, Betty told a guest who admired her house: “If you had seen the hotel of M. Solomon Rothschild (which is next door), you would think our house was only the stables attached to it.”

  2 Interestingly, the Rothschild passion for horses appears to have begun with the brothers’ wives. With the exception of James, the brothers regarded horses exclusively as a means of getting from A to B, and were baffled when James began riding for pleasure.

  3 On the coat of arms Salomon initially requested the following arms: “First quarter, or, an eagle sable surcharged in dexter by a field gules; second quarter, gules, a leopard passant proper; third quarter, a lion rampant; fourth quarter, azure, an arm bearing five arrows. In the centre of the coat a shield gules. Right hand supporter, a greyhound, a symbol of loyalty; left supporter, a stork, a symbol of piety and content.” This was to be surmounted by a seven-point crown and a lion rampant. This design was substantially modified by the Vienna heralds: the final version featured only the eagle and the hand grasping four arrows; there were no supporters, and the shield was surmounted by a helmet, a three-pointed crown and another eagle. The version registered by Nathan in 1818 was slightly different: the arms consisted of “Azure a lion passant guardant erminois grasping with the dexter forepaw five arrows the pheons downwards or; And for the crest on a wreath of the colours out of a crown vallery gules a demi lion erminois holding between the paws five arrows as in the arms.” The motto, “Concordia, integritas, industria,” was incorporated later.

  4 In “The Baths of Lucca,” a ball at Salomon’s house is described: “Such stars and orders! The Order of the Falcon, the Order of the Golden Fleece, the Order of the Lion, the Order of the Eagle—and there was even a child, I assure you, a tiny tot, that wore the Order of the Elephant.” When Macaulay dined with “the Jew” (i.e. Nathan) he “did not see one Peer, or one star, except a foreign order or two, which I generally consider as an intimation to look to my pockets.”

  5 It is worth noting that Nathan’s grandson dropped the “de” on receiving a British peerage, a usage followed by his descendants—hence the fact that there are “Rothschilds” as well as “de Rothschilds” today.

  6 Other paintings in Nathan’s possession were gifts from government clients, like the portraits of Francis I of Austria, Frederick William III of Prussia, William I of Holland, John VI of Portugal and the Empress Alexandra of Russia seen by Prince Pückler.

  7 The Family of W. N. [sic] Rothschild, Consul General of his Austrian Majesty at the British Court was commissioned to mark Nathan’s appointment as Austrian consul general. Hobday was paid £1,000 for the work, which was shown at the Royal Academy in 1821 and then hung for a time at Austrian Consulate, before being moved to Gunnersbury. It can now be seen in the main hall of N. M. Rothschild & Sons at New Court.

  8 Hannah also found the atmosphere less tolerant when she went there in 1841: “[T]he Place is too orthodox to be an agreeable residence for any other sect beside Protestant. Bibles and other religious Books are placed in the different apartments of the Hotel we are in but the Inhabitants are civil and attentive.”

  EIGHT Sudden Revolutions (1830-1833)

  1 The utopian socialist Owen had known the Rothschilds since at least 1818.

  2 “Above all fill his purse, O king,

  With ample funds for travelling,

  And give him a letter of credit to greet

  The Rothschild brothers in Rue Lafitte.

  “Yes a letter of credit for a million or two

  Of golden ducats should seen him through;

  And Baron de Rothschild will say of him, then,

  “This elephant’s surely the best of men!” ’

  3 As James later noted, “regarding Polignac, I had been forewarned on several occasions as far back as six months before. However, I did not want to believe it. I had a gut feeling.”

  4 Greville, Memoirs, vol. I, p. 279: “Went to Esterhazy’s ball; talked to old Rothschild who was there with his wife and a dandy little Jew son. He . . . offered to give me a letter by his brother, who would give me any information I wanted, squeezed my hand, and looked like what he is.”

  5 Stendhal, Lucien Leuwen. Leuwen also has no objection to his son leaving the family firm to pursue a military or political career, something James would never have countenanced.

  6 Hannah, Paris, to Nathan, London, Aug. 24, 1830: “You must look at it coolly, dear Rothschild. It will blow over. Salomon and James do not like the fall, you may easily suppose, but they are very cool and not frightened. Our attention is so engrossed with the funds that I can dwell upon nothing else.”

  7 According to Lionel, Hottinguer said: “Our credit is no more so good, and this last six months we have lost much in the public opinion; we shall not find so many more followers when we wish to make any loans.”

  8 The Times, Aug. 4, 1836: “This contract was more detrimental in proportion to his subscribers than to himself, as the greater part was distributed among them, and it was at the time a matter of severe reproach against him that he did on this occasion leave his friends completely in the lurch. But this was answered by the remark that he had always been in the practice of dealing liberally with his subscribers in sharing his contracts among them, and that the revolution which followed and made this so ruinous an operation was one that could not possibly have been foreseen by him.”

  9 Frederick William had made a morganatic marriage to Gertrud Falkenstein, the divorced wife of a Prussian lieutenant. In 1831 he elevated her to the rank of Countess von Schaumburg, and later Princess of Hanau. When he was in Frankfurt, the couple and their five children regularly “took their midday meal quite en famille with their good business friend.”

  10 On July 17, 1832, Thomas Raikes recorded in his journal that a Dutch broker had asked “Rothschild yesterday . . . if he would advance money on stock; the old Jew refused him, saying, ‘In these times I shall not advance money to any one by Got; who knows what may happen? you may be dead tomorrow. ’ It so happened that the poor man was seized with the cholera that very evening, and the next morning he was dead.”

  NINE The Chains of Peace

  1 The existing links between the House of Saxe-Coburg and the Rothschilds explain why the marriage of “your little Queen” to Albert prompted a message of congratulation from Salomon’s son Anselm to his London cousins.

  2 Of crucial importance was the French government’s unequivocal commitment to the two protocols of January 1831, and its refusal to accept the Belgian offer of the crown to Louis Philippe’s son the duc de Nemours, or to support Belgian resistance against the territorial provisions of the protocols. Needless to say, it was good news from a Rothschild standpoint that Leopold of Saxe-Coburg emerged as the successful candidate for the Belgian throne.

  3 James opposed the use of the brusque phrases “evacuez immédiatement Bologne” and “evacuez promptement Bologne.” “I shall ensure,” he told his brothers, “that the offending phrase is omitted.” James’s hope that the Austrians would refer the matter to an international conference in Rome was fulfilled, but it was not until July that their troops were withdrawn. The fact that Périer did not make withdrawal a casus belli was therefore significant.

  4 Salomon assured the Prussian government that “he had the honour of his House particularly in view, as he attached the greatest value to demonstrating to the Royal Government of Prussia that the consolidation of its public credit, and the fulfilment of the assurances which his House had given in this matter, were of more importance in his eyes than any considerations of private profit.” This proved all too true, despite Nathan’s decision to send Anselm to Berlin to secure modifications to the deal. In essence, the £3,809,400 of 5 per cent bonds still outstanding from the 1818 loan were to be exchanged for 4 per cents issued to the same amount at 98 in the course of two and a half years from March 1830 until September 1832. As James realised even before the agreement was concluded, the issue price was certainly too high given the growing political un
certainty in France and the commission of 1.5 per cent too low. Interestingly, however, he seems to have regarded it as preferable that the Rothschilds undertake the risk, the extent of which he quite accurately gauged: “The worst, the very worst is that we stand to lose 15 per cent, God forbid, which amounts to £200,000 which is quite liable to ruin someone [else].”

  5 The outstanding £850,000 of 5 per cents were finally redeemed in 1834.

  6 The money was earmarked for the construction of fortresses on the Franco-German border; that was evidently not Metternich’s purpose in borrowing it.

  7 The 5 per cent loan was initially issued at 94. Altogether 11 million francs were earmarked for the payment of compensation to Turkey; the parallel with the Belgian-Dutch separation is striking.

  TEN The World’s Bankers

  1 The cartoon is usually dated 1848 or 1849 but the political allusions are to the political events of 1840.

  2 The Royal Exchange (not to be confused with the Stock Exchange at Capel Court) was essentially a market for commercial bills and foreign exchange, though in Nathan’s time bonds began to be traded there too. On the ground floor, the south-east corner was formally allocated to Jewish traders, behind the Spanish and Portuguese.

  3 Among other things, the brothers resolved to withdraw their deposits at New Court and to sell their holdings of the 1818 Prussian loan. They also agreed to ensure that they had between them sufficient liquid funds to make available the 9 million gulden of French reparations deposited with them by the German Confederation, and to circulate monthly balance sheets for this purpose. It is not clear whether the agreement was acted upon or whether it was simply intended as a shot across Nathan’s bows.

  4 Anselm immediately became entitled to a fifteenth of the profits, though he did not formally acquire a share of the capital until 1828, when a million gulden was invested in his name in the Paris house. His grandmother Gutle’s inheritance from Mayer Amschel was invested in the Frankfurt house, but she had no status as a partner and her share was not included in the total capital for accounting purposes.

  5 A clause was added, however, which stated that if the profits of the Paris, Frankfurt, Naples and Vienna houses exceeded those of the London house to the point that 22.5 per cent of their total profits exceeded 60 per cent of the London house’s, then the division of the profits would revert to the old system of equal shares of the whole.

  6 There was a threat to give Warburgs priority in 1848, but this seems not to have been carried out.

  7 Another apocryphal anecdote has the roles reversed, with a wily stockbroker bursting into Nathan’s house, feigning drunkenness, overhearing sensitive information and rushing back to the exchange to make a killing.

  8 In the 1840s the Railway Times referred to the “notorious fact that in all loan transactions of the late Mr Rothschild, The Times invariably, aye systematically, came in for a share of the pickings.” Alsager’s career ended disastrously: he left the paper after a large “inconsistency” was discovered in the accounts, and committed suicide shortly afterwards.

  ELEVEN “Il est Mort” (1836)

  1 The marriage was apparently unconsummated, for reasons which can easily be inferred. “It appears,” commented James crudely, “that the red King would not permit him to spit roast the bird despite the fact that he had caught it in his net.” Lionel was more delicate: “Till now there is not much to relate as you well know that the fright has generally such an effect upon the young ladies that they are immediately troubled with some thing that pays them very often a visit. I can only say that she is a most beautiful person in every respect.” The different language illustrates nicely the difference between the generations; at the same time, the fact that both men saw fit to allude to the subject shows how few secrets there were between members of the family.

  2 Powers of attorney had to be sent to allow senior clerks to act in the absence of family members—a rare if not unprecedented circumstance at this time.

  3 “I looked about me. Every minute a small door opened and one Bourse agent after another came in, uttering a number in a loud voice; Rothschild going on reading, muttered without raising his eyes: “Yes—no—good—perhaps—enough—” and the number walked out. There were various gentlemen in the room, rank-and-file capitalists, members of the National Assembly, two or three exhausted tourists with youthful moustaches and elderly cheeks, those everlasting figures who drink—wine—at watering-places and are presented at courts, the feeble, lymphatic suckers that drain the sap from the aristocratic families, and shove their way from the gaming table to the Bourse. They were all talking together in undertones. The Jewish autocrat sat calmly at his table, looking through papers and writing something on them, probably millions, or at least hundreds of thousands.”

  TWELVE Love and Debt

  1 The house was demolished on Mayer Carl’s death in 1886 and the grounds given to the City of Frankfurt.

  2 There appears to have been some sort of financial constraint imposed on Anselm by his father, who perhaps wished his son to reserve his energies for the Austrian estates he would one day inherit. When Anselm spotted an attractive property at Emmerich near Frankfurt in 1843, he had to ask James to put up the money and sought to justify it as a speculative investment. Revealingly, Amschel was to act as “paymaster” for the new house at Grüneburg.

  3 Despite his confessed “bad opinion” of Jews in general, Thackeray became friendly with Anthony’s wife Louisa and Lionel’s wife Charlotte after a chance meeting in 1848.

  4 In late 1849 Heine sent her a copy of his post-revolutionary poem which contains a passionate denunciation of the powers which had crushed the Hungarian rising. The Rothschilds’ support for the Russian-sponsored reaction was well known.

  5 James may have attended the second, disastrous performance.

  THIRTEEN Quicksilver and Hickory (1834-1839)

  1 The Rothschilds had lent the Portuguese government £88,688 for four months to pay the interest due on its 3 per cent bonds. As a security, the government handed over “Regency bonds” to the nominal value of £600,000. When the government failed to repay the £88,688, the London house sold these bonds, but the Portuguese government claimed that it had unnecessarily delayed this sale in order to collect more interest. The final judgement went in favour of the Portuguese government on a technicality.

  2 Interestingly, Metternich made it clear that he had no objection to the Rothschilds covertly participating in Spanish business in partnership with other firms. His concern was that the name “Rothschild,” if publicly associated with the Regency of Maria Christina, would strengthen its position. The warnings of Broglie to James are not easy to reconcile with his talk on March 8 of a French-backed loan to integrate Spain “dans l’ensemble des finances de l’Europe, lesquelles forment en ce moment une sorte de République, une sorte de fédération, qui sont jusqu’à un certain point solidaires les unes des autres et se soutiennent mutuellement dans une certaine mesure.” When asked to define the nature of the French backing, he changed his tune.

  3 According to Villiers, Mendizábal hoped for a “stroke of generosity” from “the Leviathan” (meaning Nathan). The diplomatic correspondence shows how little contact there was between the Rothschilds and Palmerston at this time.

  4 Lionel to Anthony and Nat, July 22. “Every person here laughs at their want of decision and at their not knowing which cause they ought to take up. Why do they not interfere regularly and send 50,000 men; they would finish the war in three months, or why do not they propose to send some French Generals?” wrote Lionel angrily. “It is disgusting to see two powers like England and France so afraid of the despotic Government”—meaning Metternich. James, Paris, to his nephews, London, Sept. 11; same to same, Dec. 25. Palmerston made a similar point in arguing against a guaranteed loan of the sort urged by Villiers: “Men would say that if money was the chief want of the Queenites a loan might set them on their legs, but that the Rothschilds will not contract to supply military skill
and willingness to fight and honesty of purpose, and common sense, and without all these things the loans would only enrich a few more generals.

  5 Because the Banque could not directly lend money, the operation had to be done indirectly: Baring drew three-month bills to the value of 48 million francs on a syndicate composed of Hottinguer, Delessert, d’Eichthal and Périer and d’Argout, then discounted the bills; Baring then made the cash available to the Bank.

  FOURTEEN Between Retrenchment and Rearmament (1840)

  1 “On David’s throne, once it is restored, there will sit that financial dynasty which all European recognises and to which all Europe submits. . . .”

  2 “He talked to me with great apparent earnestness on the subject of restoring the Jews to their own land . . . The country, he said, had ample natural capabilities: all it wanted was labour, and protection for the labourer: the ownership of the soil might be bought from Turkey: money would be forthcoming: the Rothschilds and leading Hebrew capitalists would all help: the Turkish empire was falling into ruin: the Turkish Govt would do anything for money.”

  3 I am grateful to Professor David Landes for this point.

  4 Significantly, the Mayer de Rothschild hospital set up then was wholly controlled by the Rothschilds, and had been established under the supervision of James’s son Gustave.

  FIFTEEN “Satan Harnessed”: Playing at Railways (1830-1846)

  1 Pseudo-scientific racial definitions of Jewishness were of course primarily devised by anti-Semites in order to get at apostates or the issue of “mixed marriages.” Because the Rothschilds remained Jewish in the religious sense, they could be attacked in traditional terms too.

  2 The Austrian government’s inertia is well illustrated by the failure of a scheme to raze the city walls to ease the development of traffic between the centre and the suburbs.

  3 As in England, the first French railways strictly speaking were built to transport coal in mining areas: the Saint-Etienne line built in the early 1830s was the analogue of the Stockton—Darlington line built a decade previously. But the development of the railway network proper—in the sense of a service for both freight and passengers, and reliant on steam locomotives rather than horses—should be dated from the construction of the Paris-Saint-Germain line.