As we celebrate the sixtieth anniversary of the reign of Her Majesty the Queen in 2012, we modern Elizabethans feel that we have much to be proud of. The condition of the people has unquestionably improved; London still has a pretty good claim to be called the greatest city on Earth. Real incomes are far higher than in 1952, and we have the Internet, the iPod and the Snickers ice cream bar.
Perhaps someone, trying to take the shine off these successes, will propose to look back at the last time a British monarch was on the throne for sixty years. Comparisons will inevitably be drawn between the second Elizabethan age and the age of Victoria—and I am not at all sure that the parallels will be comforting.
Man for man, woman for woman, pound of flesh for pound of self-mortifying flesh, I reckon you could argue that the Victorians beat all previous generations for their energy, their ambition and their achievements; and on the face of it you could argue that they beat us, too.
Sometimes I think that the Life of London is like a giant tadpole, and so far we have been sliding down the long tail of history until suddenly we have come to the head: the vast bulging dome of Victorian intellect and personalities that made London the caput mundi, the modern Rome. It is impossible to do justice to the range of characters or their interests, though others, such as writer A. N. Wilson, have done excellent work.
Perhaps because they lived more obviously in the shadow of death, the Victorians seem more gluttonous for life than we are today. They got up earlier, they walked greater distances, they cooked more complicated meals. They wrote bigger novels, they scribbled longer and more confessional diaries, they grew bushier beards and moustaches than any previous generation. They were more scandalised and more hypocritical and therefore (arguably) more excited about sex, and they had more children. They did more watercolours and they played more pianos and generally busied themselves more in the lives of others—especially the less fortunate—than the middle classes of modern Britain.
Perhaps because they were at least superficially more religious than any previous generation of Londoners, the Victorians assumed that they were doing God’s work; and like the Roman imperialists on whom they consciously modelled themselves, they took their success to be a sign of divine favour. They had conquered huge parts of the Earth because that was what God wanted, and they lorded it over India and Africa because that was—seriously—part of His plan.
Compared to our own times, it was an age of superhuman self-confidence. It was typical of the Victorian era that when in 1854 Isambard Kingdom Brunel built the Great Eastern, she was not only a ship of revolutionary design, capable of carrying enough coal to make a round trip between England and Australia, at 19,000 tonnes she was the biggest ship ever built by a factor of four, and—this is the main point—she was bigger than any ship built for the next forty years. It was true that she blew a monumental gasket on her maiden voyage, but never mind: Brunel got ten out of ten for effort.
Under the Teutonic influence of Prince Albert, the Victorian leisured classes were the most intellectually serious people in the world. It was a hedge-bearded Victorian sage, sitting in the London borough of Bromley, who formulated the theory of evolution, perhaps the most significant scientific breakthrough of the last two hundred years. If you have the chance to go to Bromley and meet its inhabitants, and to behold their physical and intellectual advantages, you will understand how Charles Darwin formulated the doctrines of natural selection and the survival of the fittest.
The Victorians invented or codified just about every form of game or sport. It was Victorian taste and imagination and engineering dynamism that shaped the city we see today. I remember as a student having an argument with a distinguished American professor, at the height of the 1980s boom. I was arguing that Britain and London were on their way back. “Tchah,” he said dismissively. “You guys are still living on Victorian capital.” He was very largely right.
Look at London’s most exuberant architecture, from the Royal Courts of Justice in the Strand to the Albert Memorial or the Natural History Museum. Suppose you want to find a single shorthand image for London, the postcard image of the city that instantly tells a global audience we are talking about Britain. You pick the Barry and Pugin masterpiece that is the House of Commons; and when you look at Victorian architecture, with its colour and intricacy and warmth, it is no wonder that people love it, and will pay ever more for it today.
Look at the gorgeous gilded panelling of the House of Lords—or look at the elegance and ceremony of just about any Victorian town hall—and then look at the sterile grey steel and concrete ovoid that is the present headquarters of the Greater London Authority. Look on it and weep.
We aspire to live in Victorian terraced homes of the kind that Mr. Pooter was mocked for, with door scrapers and vaguely classical pediments above the lintel and dinky little gardens at the back. We pump our effluent daily into the titanic Victorian interceptor sewers, groined beneath London by the genius of Joseph Bazalgette. We go down into Tube stations that were built by the Victorians before anyone else had an underground railway, and we disappear into the very tunnels that they bored. When we arrive at a mainline station in London, we are beholding (in almost every case) a piece of Victorian industrial archaeology.
It was said of some city in America that it was built on rock and roll. Modern London was built on brick and rail—and Victorian brick and rail at that. But there was one resource that made possible this Victorian splurge of construction; one device that allowed the engineers to throw their viaducts across Holborn and dig their tunnels under the river.
It was a piece of technical know-how that was more important than the steam engine or the harnessing of electricity. It was the lending of money at a reasonable rate of interest, in the confidence that the investment would produce a return—and all the associated skills that go with the management of money and risk. There were in London expert people who bought the debt, people who sold the debt and then as now people who made money by gambling on whether the debt would be paid.
London’s Victorian greatness was built on the City’s preeminence in banking. As Walter Bagehot pointed out in Lombard Street in 1873, the City’s great contribution to the world was to draw private wealth into the banking system. “English capital runs as surely and instantly where it is most wanted, and where there is most to be made of it, as water runs to find its level.” Thanks to the London merchant banks and discount houses, the savings of Somerset cider growers or little old ladies in Lincolnshire could be used to build a railway in America or in Prussia—and they were.
London bankers supplied the guarantees that greased the wheels of world trade. In 1858 a select committee was told, “A man in Boston cannot buy a cargo of tea in Canton without getting a credit from Messrs Matheson or Messrs Baring.” London didn’t become the centre of international financial services because it was at the heart of a growing world empire, or because it was the biggest city on Earth, or because it was well plugged into other capitals—with undersea cables at least partly laid by the limping Great Eastern herself. All these qualities were important, but the key thing about banking is to be found on every banknote you handle.
It is all about a promise to pay, and that requires trust; and trust is easier when things are calm. London’s most attractive quality as the home of international moneymen was that it was the capital of an island that faced no external threat and that enjoyed peace and stability, certainly by comparison with the rest of Europe. It was also in many important respects a thoroughly agreeable place in which to live, with a freedom of expression and association that was hard to find elsewhere.
Ever since the Middle Ages, banking had been very largely the profession of outsiders, in particular Jews; and in the convulsions of the Napoleonic era, increasing numbers of talented newcomers started to arrive in the city. There they found the Barings, who were always keen to point out that in spite of their vaguely Ger
manic name, they were not—repeat not—Jewish but the descendants of a Lutheran pastor who had first settled in Exeter.
They liked to claim primacy, since John Baring came to London in 1763; by the nineteenth century his family had no fewer than five peerages, as well as castles, grouse moors, racehorses, elegant wives and unrivalled connexions with government that continued right up until 1995, when Barings was spectacularly blown up by a rogue trader in Singapore named Nick Leeson.
Then there were the Sephardic Jews who left Amsterdam after it was conquered by the French in 1795, and there were Jews and Gentiles from German cities that had fallen to Napoleon’s armies: Schröder, Brandt, Huth, Frühling, Göschen. There were Greek bankers who came to London in flight from the Turkish persecution. Hambros arrived from Germany and Denmark in 1840, Bischoffsheim and Goldschmidt came in 1846, Kleinwort came in 1855. There were Americans like George Peabody and J. S. Morgan, father of J. P. Morgan; and there were the Rothschilds.
The Rothschilds were not just a family; they were a joint enterprise, bound together by the ties of religion and DNA. They were an empire, and with a Rothschild presence in all the key capitals of Europe it was not surprising that there were anti-Semitic comparisons to a gigantic octopus wrapped around the globe (an image that has recently been picked up in descriptions of Goldman Sachs, though in today’s banker-bashing climate the octopus has become a vampire squid wrapped around the face of humanity).
Through hard work and a grasp of mental arithmetic, the Rothschilds became the richest people in the world. By some calculations they knocked Midas and Croesus into a cocked hat: they were the richest people that had ever been. They made their first millions from the seismic conflicts of the Napoleonic period.
War is the father of all things, says Heracleitus, and war was certainly the progenitor of the international bond market. If Napoleon and Wellington were good at mobilising troops, the Rothschilds were brilliant at mobilising money. In the words of one admiring contemporary, they were the “finanzbonaparten”—the Bonapartes of finance; and London was their main centre of operations.
The story can be traced back to 1577, when a man called Izaak Elchanan Rothschild lived in the Judengasse, the Jewish alley, in Frankfurt. Jews in those days were severely restricted in what they could do. They couldn’t trade in weapons, spices, wine or grain. They had to stay in the ghetto on Sundays or on Christian festival days. They traded coins and lent money, but there were always limits to how rich they could become.
It was the spread of the French Revolution, in 1789, that liberated the Frankfurt Jews from these captivities—and gave one Mayer Amschel Rothschild his chance. Mayer Amschel got rich essentially by acting as the fund manager for the Elector of Hesse-Kassel, who had been exiled by Napoleon, and he discreetly but effectively collected the interest on his assets.
Mayer was a tough old buzzard and taught his sons various useful precepts, such as “It is better to deal with a government in difficulties than one that has luck on its side”; and “If you can’t make yourself loved, make yourself feared”; and, most spookily, “If a high-placed person enters into a [financial] partnership with a Jew, he belongs to the Jew.”
One son in particular learned these lessons well. He was Nathan Mayer, who was sent first to Manchester to import textiles and then moved to London in 1804, when he founded the bank N. M. Rothschild. He was soon helping to finance the British war effort against Napoleon. When Spanish and Portuguese victuallers wouldn’t accept paper money to provide for Wellington’s troops in the Peninsular War, Nathan smuggled bullion across the Channel. By 1815 the N. M. Rothschild account with the British government stood at £10 million, and Lord Liverpool described him as a “very useful friend.”
He was already recognised by then as a giant of the Stock Exchange, and an anonymous description of the period describes how he would lean against the “Rothschild pillar” and how “he hung his heavy hands in his pockets and began to release silent, motionless, implacable cunning.”
On goes this sulphurous account, in the same vein. “Eyes are usually called windows of the soul. But in Rothschild’s case you would conclude that the windows are false ones or that there was no soul to look out of them,” and so on. Nathan, according to this version, was the first to hear of Wellington’s victory. One of his messengers had hopped on a boat from Ostend; Nathan ran his eye over the opening lines and then went to tell the government what had happened.
Alas, he was not believed, because the London government had just heard of the English defeat at Quatre Bras. He then went to the Stock Exchange. Now another man, it was said, would have bought government stocks—consols—on the grounds that they were sure to rise when the happy truth eventually dawned. Not Nathan: he was too wily for that.
He leaned against his pillar, an unreadable expression in his leaden eyes. Instead of investing in British government consols, he sold. He dumped them. He sold them so fast that a panic started to run round the Exchange. Nathan Rothschild must know something, the traders concluded: he must have heard from his network of agents that Waterloo was lost.
“Waterloo is lost!” went the whisper. Nathan kept selling; the price of consols plummeted, until a second before it was too late, when he switched. He bought. He bought a giant hoard of British consols for an absolute song—like Eddie Murphy and Dan Aykroyd cornering the market in frozen orange juice in the climax of Trading Places.
It was only moments afterwards that the news broke of Wellington’s famous victory—and consols soared again, and the roller coaster he had generated earned him between £20 million and £135 million. “We cannot guess the number of hopes and savings wiped out by this engineered panic,” said a sniffy 1960s history of the Rothschild family. This was the version, as you might expect, that was peddled in 1940 by Joseph Goebbels, though he added the detail that the oleaginous Rothschild had bribed a French general to lose.
The reality was somewhat different. Like Aeschylus feasting on the scraps from the banquet of Homer, I am indebted in this account to Niall Ferguson’s wonderful one-thousand-page extravaganza, The House of Rothschild. Waterloo was very nearly a disaster for the Rothschilds, he points out, because they had amassed huge quantities of bullion in the belief that the war would go on for much longer. It was true that the Rothschilds’ intelligence system had enabled them to get the scoop on Waterloo—but it didn’t matter when they got the news: it was bad for them.
The armies would now be disbanded. There would be no more troops to victual. The price of gold would slump: they were staring at a shattering loss. So Nathan Mayer Rothschild had another idea—by no means as unpatriotic (he was a naturalised Briton) as the Goebbels version, but just as cunning. He reckoned that the end of the war was basically good news for the British government since its debts would be reduced; and he calculated that British government stock would therefore rise.
So he bought more consols; indeed he kept buying them long after his rivals assumed that the stock could rise no higher and when his brothers were urging him to be more cautious. He kept buying for a whole year, until the price of consols was 40 percent higher than when he had begun; and then he sold, and then he did indeed make a stupendous profit, of about £600 million.
The Barings looked on in wonderment and respect. “Money is the God of our time,” said the German Jewish poet Heinrich Heine, “and Rothschild is his prophet.” When N. M. Rothschild died in 1836, he had put his family at the centre of European politics. He had the ear of every prince and prime minister on the Continent, and his role in financing governments was so crucial that it was said a war could not begin without the consent of the Rothschilds. His personal fortune was 0.62 percent of British GDP.
He and his family lacked one thing; and if you think of the smears and slanders that surrounded the coup after Waterloo, it is easy to imagine what it was. He lacked acceptance. There were the casual snubs and slights that successful
Jewish bankers had come to expect, and then there was institutional discrimination. By the third generation the Rothschilds were determined to stamp it out.
Nathan Mayer’s son Lionel now spent the next ten years in a campaign for the rights of Jews—starting with himself—to be admitted to the best club in London, the House of Commons. Under ancient custom and practice, it was necessary for new MPs to swear an oath of allegiance of a specifically Christian variety. This plainly no observant Jew could perform. With the support of the Liberal Party and the press, Lionel now decided to test the matter.
In the summer of 1847 he stood for election in the City of London. John Thadeus Delane, the editor of the Times, was so supportive as to write his election address. The Economist also backed him. The ever-so-slightly bigoted Thomas Carlyle claimed that Lionel had offered him generous remuneration to write a pamphlet in favour of Jewish emancipation and that he had refused. “A Jew is bad, but what is a Sham-Jew, a Quack-Jew? And how can a real Jew, by possibility, try to be a Senator, or even a Citizen, of any country except his own wretched Palestine, whither all his thoughts and steps and efforts tend?”
Carlyle’s venom was irrelevant. Lionel applied the usual solvent to the problem. Large sums were paid to an electorate that had been intermittently bribed, after all, since the days of John Wilkes, and he was sent proudly to parliament, coming third in the multimember constituency. As his brother Nat said, it was “one of the greatest triumphs for the family, as well of the greatest advantage to poor Jews in Germany and all over the world.”
There was only one snag. In order to take his seat he still had to take the oath “upon the faith of the Christians.” It was not enough to get elected as a Jew; Lionel had to persuade parliament to change the system of swearing-in. Now Disraeli took up the cause with great boldness.
Johnson's Life of London Page 24