by Colin Brown
New Court, St Swithin’s Lane – the HQ of NM Rothschild – where first news of Waterloo arrived. (Author)
His father, Mayer Amschel Rothschild, began the family banking business almost by accident, trading in antique coins with some of Europe’s wealthiest aristocrats. His family rose from the Jewish ghetto in Frankfurt and established its name across Europe in a single generation. Nathan, the third son, left the family business in Frankfurt in 1798 at the age of 21, complaining there was not enough space for him with his four brothers. He sailed to England to set up business as a textile trader in Manchester, exporting cloth from weavers in the north of England to Europe.
He had a natural feel for business and quickly realised there were three ways to make profits from textiles: on the raw material, the dyeing and the manufacturing. He began to supply the material and dye to a manufacturer to produce the finished cloth so that he got three profits instead of one. In six years he made himself a major player in exporting textiles from the mills of Lancashire and Yorkshire to Continental Europe. He boasted how he quickly turned £20,000 into £60,000 – enough to build a substantial town house next to his own warehouse at 25 Mosley Street, Manchester, which is now offices with a tramway in the heart of the city. Nathan’s textile export business flourished until Napoleon imposed a blockade on British trade in 1807, leaving Nathan no option but to engage in smuggling textiles to the Continent to turn a profit.
Smuggling was to prove very useful when his business turned to banking during the Napoleonic Wars. He married Hannah Cohen, the daughter of a prominent London Jewish merchant, in 1806 and they had a son, Lionel, born in 1808. The Rothschilds’ house was in the commercial centre and just around the corner from St Peter’s Field, which was to become infamous in 1819 for the slaughter of protestors demanding Parliamentary reform, including one man who had fought at Waterloo.
Nathan struggled against Napoleon’s trade embargo for a couple of years before moving, lock, stock and many barrels, from Manchester to London with his wife and son. Nathan and Hannah brought much of their furniture with them, transporting it to London by canal, though it would not be long before Hannah had the money to replace it with finer things.
Nathan bought the lease on a large house at No. 2 New Court, St Swithin’s Lane in the heart of the old city for £750 in 1809. It had three floors, each lit by about nine large sash windows with extensive garrets above; it was modest and slightly shabby, rough stone fronting below and red brick above, with a simple front door onto the square under a plain stone lintel with four steps. It was not elegant but it was all that Nathan needed to run his expanding business with room for his equally rapidly expanding family – Hannah was pregnant with Anthony, born in 1810. Like his property in Manchester, the house had an attached warehouse so that he could continue his business as a merchant. On the south side of the house was a stone colonnade and a stone wall leading up to a large house in soft yellow sandstone, with a third house, also of yellow stone, enclosing the square. There was a fourth house opposite No. 2 in red brick and soon it, along with the other houses, would be filled with Nathan’s extended family and business associates. Across the centre of the square was a black iron railing to keep the dogs out. There were familiar faces around Nathan, as many of his household and business staff came with him from Manchester.
The bustling St Swithin’s Lane, which had hardly changed since the medieval period, ran along the side of the house with a full complement of tradesmen – a tailor, hairdresser, wine merchant, cheesemonger and general merchants. Behind the house was the churchyard of St Stephen Walbrook, a classical Wren masterpiece with a dome echoing Sir Christopher’s design for St Paul’s. It was started in 1672 as London was being rebuilt after the Great Fire of 1666. It still stands next to the Mansion House at the east end of Poultry, the site of the City slaughterhouse and pens for the livestock, which had been known since medieval times as the ‘Stocks Market’.
The stone colonnade adjoining No. 2 New Court overlooking the little churchyard of St Stephen Walbrook was a place where someone could sit and reflect, but Nathan was not much interested in introspection. His passion was his business. He is reported to have said of his own children:
I wish them to give mind, and soul, and heart and body and everything to business – that is the way to be happy. It requires a great deal of boldness and a great deal of caution to make a great fortune; and when you have got it, it requires ten times as much wit to keep it.
Victor, the late Lord Rothschild, in his history of N.M. Rothschild, described Nathan as ‘short and fat, with blue eyes, reddish hair and a strong German accent’.1 A silhouette of Nathan produced as a lithograph on his death shows him in a tailcoat and knee-length breeches, standing by his favourite pillar at the Royal Exchange like a corpulent robin in a top hat. He is holding four keys to symbolise the succession of his four sons. It was called The Shadow of a Great Man.
Lord Rothschild said it was all the more remarkable that this unprepossessing Jew with a German accent (he could not speak English when he landed) should have made his mark so fast in a hostile city. It was certainly not because of his charm.
Nathan was not interested in titles or high living, although he wished intensely to be accepted by the City of London and was brusque to the point of rudeness. Lord Rothschild said he acquired the ‘more abrasive and even churlish side to his character’ during those early years when he was struggling to establish himself as a figure to be counted at the Exchange: ‘Even after he had established himself as a financial potentate both in England and on the Continent of Europe, he remained a master of the wounding phrase.’
Nathan upset his father so much with his angry letters home that the patriarch of the Rothschilds appealed to him: ‘My dear Nathan you must not be angry with your father …’ One of Nathan’s brothers-in-law, Myer Davidson, wrote from Amsterdam in 1814 to chide him:
I was embarrassed for your own brother when I found these serious insults in your letters. Really, you call your brothers nothing but idiots. This, my dear Mr Rothschild, is in all sincerity unjust on your part. It also has a negative effect on the big transactions between the brothers. It makes your brothers completely confused and sad. Now God gave you the good fortune to carry out large scale transactions such as I think no Jew has ever done before …
Solomon wrote in June 1814: ‘Your letters make me feel ill … To put it quite bluntly, we are neither drunk nor stupid.’
The Rothschilds’ arrival was followed by the gradual influx of an entourage of friends and business associates who filled up the adjoining houses in New Court. Nathan acquired the leases of Nos 3 and 4, New Court. The first he sub-let to a succession of merchants. Into No. 4 moved the young Moses and Judith Montefiore, Hannah’s sister and her husband (at that time a budding stockbroker, and later to become a noted philanthropist). The close family ties of the Rothschilds – and the secrecy they naturally shared – was an integral part of their business success.
Neighbours noted that the level of activity in the area increased dramatically once Rothschild was in place, with despatch riders charging up the cobbled lane at all hours of the day and night. It was an ideal base for an ambitious young man ready to break into stock broking at the Royal Exchange.
His early will shows he was devoted to his wife, and he was not without, perhaps, a Jewish sense of humour. When a German nobleman was irritated at having to wait while Nathan was working on his accounts, Rothschild said ‘Take a seat.’ The nobleman said: ‘I do not think you heard who I am. I am Prince Puckler Muskau.’ Rothschild snapped: ‘Take two seats.’
So how did this tubby Jew with the German accent, who did not suffer fools gladly, make it in the City? Rothschild launched himself in London with a spectacular financial coup, as he told dinner guests at a state banquet with the Lord Mayor of London at Ham House in 1834:
When I was settled in London, the East India Company had £800,000 worth of gold to sell. I went to the sale and bought it all. I knew
the Duke of Wellington must have it. I had bought a great many of his bills at a discount. The Government sent for me, and said they must have it. When they had got it, they did not know how to get it to Portugal. I undertook all that and I sent it through France; and that was the best business I ever did.2
It was a characteristically bold financial gamble, but it was also a carefully calibrated risk. Napoleon famously said an army marched on its stomach but the emperor generally fed his army on plunder. Wellington, anxious to avoid alienating the people he was liberating, paid locally for supplies of food for his men and fodder for the horses as they marched through Portugal and Spain and to do that he needed gold.
By bringing off that financial coup, Nathan broke into the bullion shipping business. His second big breakthrough came in 1811 when he was 33 – the year before his father died. John Charles Herries, a family friend through a Leipzig connection, was appointed Commissary-in-Chief in charge of pay for the British Army in the Peninsula and became Nathan’s key to government business.
Herries, 36, was a rising star in the Treasury and sponsored Nathan’s business with the government. It is likely that Nathan paid ‘commission’ to Herries to secure the business. Commission or bribery – ‘our friend Baksheesh’ as the Rothschilds described it – is an offence today, but it was common practice in Europe for most of the nineteenth century. That is how a previously obscure German-Jew became Wellington’s paymaster. There were other bankers who were more established, not least the Baring brothers, but with his own brothers already in place in key capitals in Europe and with plenty of experience in smuggling, Nathan Mayer Rothschild won Herries’ confidence to deliver bullion to Wellington’s army. It was a daunting task, which might have put off others – Nathan had to agree to a contract that meant he shouldered the risk for any losses of his precious cargo in transit – but Nathan never lacked self-confidence. Herries gave a glowing account of Nathan’s ability to Sir George Burgman, the British paymaster in Amsterdam: ‘Rothschild has executed the various services entrusted to him admirably well and, though a Jew, we place a good deal of confidence in him.’
Their business was mutually advantageous, and not merely financially. Herries built a reputation for his own competence, partly thanks to Rothschild’s ability to deliver bullion to Wellington’s army and Britain’s allies, and was later to become Chancellor of the Exchequer. The Duke was haunted by the fear that he would not have enough money to pay his troops and Nathan supplied an answer. Wellington needed £100,000 a month to finance his armies in the Peninsula and pay subsidies to the Portuguese and Spanish. It is largely forgotten now but Britain also paid huge subsidies to the German states, Austria, Russia and Prussia, for sustaining the war against Napoleon, all shipped through N.M. Rothschild. At the end of 1815, N.M. Rothschild’s total account with Herries amounted to a colossal £9.7m and two-thirds of it was in subsidies to other countries.
But supplying gold bullion – usually in gold guineas in casks – in war to an army on the move was fraught with dangers and logistical difficulties. As a result, the Commander-in-Chief resorted to issuing bills, like IOUs, which could be cashed at the Bank of England, but by 1812 the market in Portugal was so saturated with his bills that Wellington bitterly lamented the ‘patriotic gentlemen at Lisbon will give us no money or very little for the draughts on the Treasury.’ Which was also why he complained so petulantly to Bathurst in July 1813 from Huarte near Pamplona in Northern Spain about the ‘scum of the earth’ in his ranks. He was constantly complaining to Lord Bathurst about his money troubles. In November 1813, he protested to Bathurst in a letter datelined St Jean de Luz, a town on the coast, just over the French border with Spain, south of Biarritz: ‘Unless this army should be assisted with a very large sum of money at a very early period, the distress felt by all the troops will be most severe.’ He told Lord Bathurst that his success depended on ‘moderation and justice and upon the good conduct and discipline of our troops’. The Spaniards were in such a poor state, he said, that it was hardly fair to expect them not to carry out looting as they entered France as conquerors. ‘I cannot venture to bring them back into France unless I can feed and pay them.’
In December 1813, as he pursued Napoleon’s fleeing army into France, Wellington moaned to Bathurst again:
We are overwhelmed with debts and I can scarcely stir out of my house on account of the public creditors waiting to demand payment of what is due to them. Some of the muleteers are 26 months in arrears, and only yesterday I was obliged to give them bills upon the Treasury for a part of their demands or lose their services …
The Chancellor, Vansittart, responded by writing to Herries on 11 January 1814 authorising:
that gentleman [N.M. Rothschild] in the most secret and confidential manner to collect in Germany, France and Holland the largest quantity of French gold and silver coins, not exceeding in value £600,000 sterling which he may be able to procure within two months from the present time …
Vansittart added:
It will be distinctly understood by Mr Rothschild, not only that he is to take upon himself all risks and losses which may occur prior to the delivery on board His Majesty’s ships, but that he will be held responsible for any deficiencies which may be discovered upon the final delivery and inspection of the packages to the consignee …3
In February 1814, Wellington’s position, quite suddenly, was transformed by shipments on British warships of bullion by the barrel load. The Duke wrote to Lord Bathurst again, this time saying: ‘I am obliged to Your Lordship for the supplies of money which are very ample.’
The big change was that Herries had handed over the entire responsibility for the shipments of Wellington’s bullion to Nathan Mayer Rothschild. It is therefore impossible to discuss Wellington’s great victories without the man who financed them – N.M. Rothschild. The firm of N.M. Rothschild made money out of the shipments of bullion to Wellington in a number of ways. First, Rothschild was paid a commission of around 2 per cent. Then, in concert with James in Paris and his other brothers, Rothschild bought Wellington’s bills of exchange at a discount of up to 25 per cent, smuggled them back to England and cashed them at the Bank of England at a profit. He also made a profit on the fluctuating currency rates.4 They traded in such large quantities of currency that they were able to influence the exchange rate between the French franc, sterling and other European currencies.
To stay ahead of their rivals, the five Rothschild brothers had developed an intelligence network across Europe to be the first with the news that could move markets. It is hard to imagine in today’s world of instant satellite broadcasts and 24/7 news how difficult it was to get reliable news. Nathan Rothschild paid couriers and ships’ captains to cross the Channel with reports from his brothers or agents in the other European capitals; he set up agencies in the Channel ports, including Lathom Rice and Co. in Dover and James Leveaux in Calais. He also bought a stud farm, Burmarsh Farm, near Hythe on the coast in Kent, to supply his messengers with a relay of fresh horses at stables along the main routes from the coast to his counting house in St Swithin’s Lane. He paid rewards on a fixed tariff to captains of the packet boats and the guards of the Royal Mail coaches to exert themselves in speeding his despatches to his agents.
Nathan was naturally secretive and developed his own system of codes using Yiddish and code words for cities – London was Jerusalem, transfers of bullion were called Rabbi Moses and consignments referred to as children, beer or fish. His messages would have been baffling to the French if they were intercepted.
The end of the war in 1814 put a brake on the big bullion shipments for the Rothschilds. But then Darquin, the clerk to James Leveaux, Rothschild’s agent in Calais, brought the first news of Napoleon’s escape from Elba to New Court and Nathan assumed it would be back to business as usual. He ordered his brothers to buy gold again. His daily trades in gold would be worth many millions today.
The first inkling of a decisive victory by Wellington may have a
rrived at New Court as early as Monday night, 19 June. In the weeks before the Battle of Waterloo, Nathan had taken the precaution of sending his brother-in-law, Moses Montefiore, to Dunkirk to organise a fresh news agency there, with an express service from Brussels. The route by road was about 100 miles, slightly longer than to Ostend – the main port for shipping gold bullion to Wellington and British subsidies to Russia and Prussia – but the sea crossing was much shorter and Nathan gambled that this would give him the advantage with news from Brussels.
Bulletins about the progress of the fighting were printed in ‘gazettes extraordinary’ by the Dutch government in Brussels, where there was a panic at the prospect of Napoleon’s forces plundering the city. Four of the bulletins were issued on Sunday 18 June and at 3 a.m. on Monday 19 June, No. 5 reported the injured Prince of Orange had been brought in to Brussels. It referred to the ‘victory of yesterday’ as having been ‘bloody but brilliant’, which is thought to have been reported in a bulletin that no longer exists. It is believed a small sheet called L’Oracle briefly carried the news at midnight on 18 June in Brussels proclaiming the ‘Great Victory of the English’. 5