At the moment we could get 4½% at par, the moment war threatens, we would lucky to get 90, therefore we cannot expect a better moment … Bleichröder tells me that Rothschild will take the issue in its entirety and in 10 days the silver would be in the state treasury.168
In fact negotiations hit a snag. Carl Meyer von Rothschild offered Otto von Camphausen (1812–1896), President of the Seehandlung,169 to purchase 9 million thaler of unissued bonds at 98 or 99 but Camphausen insisted on par, that is, 100 per cent of the face value.170 The margin may seem small but a 1 or 2 per cent ‘turn’ on a large sum of bonds makes a difference to the profitability of the transaction. Bismarck regretted very much that ‘we had not got the money much earlier … Now we lose a lot if the break comes before the money.’171 Here again we see that Bismarck contemplated the possibility of ‘the break … before the money’, in other words, he knew that he could make his move if it seemed opportune.
In the end, more than enough money came from an unexpected source. The Cöln-Mindener Eisenbahn-Gesellschaft, founded in 1842, had received money from the Prussian finance ministry in exchange for shares and an agreement that the railway would revert to the government after thirty years. The directors of the line had tried in vain to buy out the government and been refused on several occasion. The summer of 1865 gave them their chance. The directors wanted the state holding back and Bismarck’s government needed money urgently. Dagobert Freiherr von Oppenheim (1809–89), a member of the famous Cologne private banking family, had become President of the railway172 and he approached the government in the summer of 1865. On behalf of the directors, he offered the government 10 million thaler for the shares and suggested that he might be interested in a buy-back of all state claims. The Finance Ministry eventually squeezed the company for 13 million for the shares and another 15 million for the claims. The total sum exchanged amounted to 28,828,500 thaler and the agreement signed on 18 July, notarized on 10 August, was approved by the company on 28 August and the Crown on 13 September. As James M. Brophy explains, ‘on three occasions in 1865 officials in the finance ministry demonstrated the illegality of signing a deal that involved the sale of equities in the Guarantee Fund without the legislature’s approval, but these legal considerations were overlooked. Bismarck now knew—but not exactly when—that there would be cash in the bank for his war; for the company it meant ‘nothing less than salvation’.173
On 27 July the Austrian delegation led by Count Blome arrived at Bad Gastein to negotiate a new settlement for the Duchies. Gustav Lehngraf von Blome (1829–1906) had been born Protestant in Hanover but became a Catholic in 1853. He ‘seriously underestimated’ Bismarck, writes his biographer,174 and Bismarck thought him an idiot with his ‘outmoded Byzantine-Jesuitical method of negotiating, full of tricks and dodges’.175 Bismarck played cards with him at night, as he told his secretary Tiedemann years later, to scare him by the violence of his play.176 Bismarck wrote himself to Moritz von Blanckenburg to report that the Austrians were leaning toward peace and the King would probably meet the Kaiser in Salzburg. ‘Until then I have to tack and weave. From here on we cannot be crude’ but to Eulenburg he wrote more openly:
As long as the King is here, and as long as we have not carried out our money operations, I have to be glad to let things hang tolerably in mid-air, because the moment we move in Schleswig-Holstein, the ball starts to roll and the stock market sinks.177
By this time Bismarck knew that there would be money for a war if he needed it but the arrangements had not been finalized. A letter from Roon to Moritz von Blanckenburg on 1 August confirms that reading of Bismarck’s intentions:
There is money there, enough to give us a free hand in foreign policy, enough if necessary to mobilize the entire army and to pay for an entire campaign. … Where is the money to come from? Without violating the constitution, chiefly through an arrangement with Cologne-Minden railway, which Bodelschwingh and I think is very advantageous.178
Blome who had gone to Vienna to get new instructions returned on 1 August with a new proposal which in fact Bismarck had suggested to him—that the dual powers should divide the Duchies: Prussia to assume sovereignty over Schleswig and Austria over Holstein. The Austrians disliked the word ‘sovereignty’ and reduced it to ‘administration’. Lauenburg was to be sold to Prussia outright. Bismarck agreed and Blome returned to Vienna for final consultations. On 10 August Bismarck wrote to Eulenburg that he had to stall as long as possible. ‘We will need time to make money and secure France … [we have] a stopgap tolerable for us … with which for the time being we can live honourably without the war running away with us …’ He asked Eulenburg to tell Bleichröder ‘that if any part of my account with him is still invested in securities, which I don’t know here, he should by no means unload these because of some premature fear of war.’179 In the meantime, an Austrian diplomat in Berlin had found out about the money operations and wrote to Mensdorff in Vienna:
These financial operations … can be justified only by an urgent political necessity, not from an economic point of view and [it is doubtful] that the Diet will approve them … [Prussia had acquired] such an important supply of money as one usually keeps in readiness only in anticipation of a war.180
On 14 August Bismarck and Blome initialled an agreement which was signed formally in the Episcopal Palace at Salzburg.181 A few days before the formalities Bismarck with his usual casual attitude to matters of secrecy told Eulenburg the gist of the agreement:
In Schleswig therefore from 1 September we rule alone and as sovereign. Nobody will be able to get us out again and it begins to look as if Austria might be willing to sell us Holstein. That we shall get it one way or the other, I no longer have any doubt.182
In the end the Austrians had no choice but to seek peace. The political situation in Austria had worsened and on 20 September 1865 Emperor Franz Joseph revoked the constitution, a move which made it much more difficult to find a way to cover a budget deficit of 80,000,000 gulden. During the summer and autumn of 1865 Austrian diplomats in Paris and London had desperately tried to entice the Rothschilds to float a loan to cover the yawning budget deficit. They found the Rothschilds very unwilling to form the syndicate and eventually by the intervention of Napoleon III himself a consortium of big French banks brought a 90,000,000 gulden loan to the Paris bourse on 27 November 1865. The loan sold out on the first day, because it carried a 9 per cent rate of interest, a sign of the fragility of Austrian credit. The loan worth 90,000,000 gulden to Vienna would need 157,000,000 to repay and while the investors bought it at 69, the Austrians only received 61¼. The banks made 28,500,000 gulden.183 The Austrian Empire’s bonds might be called ‘sub-prime’.
Meanwhile, the Middle States watched these developments with alarm mixed with complacency. In the summer of 1865, the Budissiner Nachrichten warned the Saxons that they should beware of getting involved in ‘Great Powerdom’:
We have a constitutional life, the like of which neither Prussia nor Austria enjoys. As a result, concord reigns between King and people. We have prosperity, low taxes and healthy finances … Higher political and cultural goals are not neglected here.184
The Saxons should mind their own business, the paper urged, and stay out of an Austro-Prussian war. They also had to be careful about the mounting enthusiasm for the creation of a German national state, a possibility which would reduce the Middle States, even those which were kingdoms, to mere provinces in a German Reich.
Schleswig could not enjoy such peaceful complacency. The agreement between Prussia and Austria gave the Prussians sovereignty in their duchy. The acquisition of Schleswig meant that a governor of the territory had to be appointed and Bismarck suggested General Edwin von Manteuffel. The King appointed him on 24 August 1865. It was a happy solution to a perennial problem. The influential general would be in Kiel and not in the King’s antechamber and his ego would be gratified by his new vice-regal status. Stosch could not understand the choice as he wrote to a friend, ‘I cannot
understand how they can send Manteuffel to Schleswig. He will always take orders from the King alone and never from the Ministry …’185 Bismarck hardly minded that, as long as the King took orders from him and so far he had. On 16 September 1865 the King elevated Bismarck to the rank of count.186
While Bismarck negotiated with the Austrians, Moltke had begun to draw lessons from the Danish War, not all of them happy ones. The Prussians had done less well than the official propaganda suggested. The Danes had very effectively used trenches and fortified works and by concentrating their fire had inflicted heavy casualties on the Prussians and Austrians. ‘Now that a cannon could hurl a shell seven kilometers and an infantry rifle could bring a man down at 1,000 paces, it would be difficult to redirect a regiment from an enemy’s center to his flank in the heat of battle.’187 Moltke also became convinced that the size of the modern army meant that traditional Napoleonic doctrines of concentrated forces must lead to disaster, a kind of military traffic jam. During the 1850s the General Staff and the railways cooperated more and more closely so that in time of war the army could count on good transport arrangements.188 The gradual extension of military control of railroads meant that Moltke could work on a very different mobilization timetable and hence a different deployment of troops. The slogan getrennt marschieren, gemeinsam schlagen (march separately, strike together) came to be associated with Moltke’s bold innovation—to have his armies deploy separately but come together to fight. Great enveloping movements became possible and one of them led to the greatest victory of 1866. The King, who understood military matters, gave Moltke the same ability to experiment that he gave Bismarck, and it is a remarkable fact that the greatest diplomat and the greatest strategist of the nineteenth century served the same monarch and the same state. In addition, the two generals without whom Bismarck could not have unified Germany, Roon and Moltke, came from untypical Prussian backgrounds, Moltke from Denmark and Roon more distantly from Holland. Neither had personal wealth and neither owned estates.
In late September the annual royal manoeuvres took place. Major Stosch wrote to his friend that the King had been very pleased with the efficiency of the army’s deployment. He recorded, as closely as he could reconstruct it, a conversation between Bismarck and the Crown Prince about prospects for Schleswig-Holstein:
CROWN PRINCE: ‘do you want to annex them?’
BISMARCK: ‘If possible, yes, but I do not want to start a European war over them.’
CROWN PRINCE: ‘And if one threatens?’
BISMARCK: ‘Well, then I confine myself to the February demands.’
CROWN PRINCE: ‘And if these are not accepted?’
BISMARCK: ‘Prussia needs to fear no war over these; the February demands are our ultimatum.’
CROWN PRINCE: ‘And what is happening about Duke Frederick?
BISMARCK: ‘That depends on how the cards fall.’
STOSCH CONTINUED: ‘At the end the conversation took on a very violent character … Bismarck’s ruthlessness makes him many enemies in the aristocracy and increases the ranks of the opposition.’189
Shortly after the manoeuvres Bismarck left for a holiday in Biarritz with his family. On 4 and 11 October 1865 Bismarck met Napoleon III in Biarritz, though what they actually discussed has never been clearly established. Bismarck would certainly have kept his French options open and would have hinted at the unstable character of the Gastein Convention. Wawro and Eyck argue that Bismarck actually offered Napoleon Luxembourg as compensation for his eventual neutrality in an Austro-Prussian War. Pflanze regards that as unlikely. Whether he promised the Emperor more or less than that we do not know.190
Early in the new year, 1866, Bismarck had a visit from Ernst Ludwig von Gerlach, one of his early patrons, which Gerlach recorded in his diary. It was to be a disturbing occasion. This painful meeting showed Gerlach that Bismarck had abandoned any semblance of the rigorous Christian morality which the two brothers Gerlach and many others thought they had discerned in the young Bismarck.191 Perthes too had concluded that he was cynical and believed in nothing, a cold, calculating rationalist. The next ten years in which Bismarck unleashed two wars, trampled on the sovereignties of the German princes, invoked the ‘revolution’ in the form of universal suffrage, declared war on the Roman Catholic Church, and introduced secular marriage, divorce, and school inspection into the very heartlands of Junker piety might suggest that he had indeed no religious scruples but—as always—Bismarck defies simple categories. He kept religious and devotional literature by his bedside and strongly denied that he had no faith. His colossal achievements often seemed to him to have been God’s work. His abandonment of Gerlach’s Protestant Neo-Pietism could not, however, be denied.
On 19 February 1866 the new British Ambassador Lord Loftus presented his credentials to King William I. Lord Augustus William Frederick Spencer Loftus (1817–1904), according to the Oxford Dictionary of National Biography, ‘was an adequate rather than an able diplomatist, promoted a little beyond his level’ but neither ‘absurd’ nor ‘mischievous’, as Disraeli described him.192 He got along well with Bismarck and brought to his new post considerable experience at other German courts. He gained Bismarck’s confidence and later in the year witnessed several dramatic moments. There is a passage in his memoirs which is worth quoting at some length because it describes the Prussian court in terms that most commentators have not:
There is no Court more brilliantly maintained, and no Court where more courtesy and hospitality are shown to strangers than the Prussian. Every member of a royal house in Europe, on arriving at Berlin, is lodged at the Schloss, and royal carriages and servants are placed at his disposal during his stay. All the expenses of the Court—the appanages of the Royal Family, and the maintenance of the numerous palaces and residences in all parts of the kingdom, always ready for occupation—are kept up by the Sovereign, and are defrayed out of the Crown estates (termed Kronfideicommis) which are considerable. These revenues are entirely under the administration of the Sovereign, and are independent of Parliament. All the members of the Royal Family receive the dotations appointed to them by the King from the Crown estates without being subjected to any vote or approval of Parliament.193
Loftus arrived as the tensions between Austria and Prussia had begun to increase. The King held a Crown Council on 28 February 1866. Everybody who mattered at the apex of the military, political, and diplomatic branches attended and Manteuffel came as Governor of Schleswig.194 The official Provincial Correspondence reported on the event and subsequent meetings between the King and Chief of the General Staff but the paper denied rumours that aggressive intentions lay behind the meeting. It noted that ‘the old jealousies on the part of the Austrians had gained ground in Vienna and that the Prussian government would in future be forced to give consideration to its own interests in its deliberations.’195 At the council Bismarck had made it clear that ‘a forceful appearance abroad and a war undertaken for Prussia’s honor would have a beneficial effect on the solution of the internal conflict.’196 Moltke reported Austrian troop movements into Bohemia but he emphasized that Austrian units in Venice ‘were not yet in the stage of war readiness … and he emphasized that there had been no signs of horse purchases.’ In 1866 120,000 horses were mobilized, so that early mobilization began with large purchases of horses. During the Franco-Prussian War of 1870, 250,000 horses were mobilized by Prussia and more than 300,000 by France. Hence in early 1866 Moltke could safely reckon that the Austrians had not started to mobilize.197
On 7 March 1866 Lord Clarendon, British Foreign Secretary, wrote in great distress to Loftus,
In the name of all that is rational, decent and humane, what can be the justification of war on the part of Prussia? She cannot possibly plead her desire for territorial aggrandizement, and she cannot with truth say that the administration of Holstein by the Austrian authorities has been of a kind to constitute a casus belli, although Bernstorff has just told me that the license allowed in Holstein by General G
ablentz and the hostile articles of newspapers under the inspiration of Austria have produced a state of things intolerable to Prussia …198
Even Bismarck at this stage recognized that no ground for war had yet been found. Again it would take stupefying ineptness by Count Mensdorff, Austrian Foreign Minister, to give Prussia even a shred of justification but he had done nothing yet. Mensdorff’s well-informed sister-in-law, Countess Gabriele Hatzfeldt, wrote mockingly of Bismarck as a mere subaltern in a Prussian guards regiment and added,
There is unanimity here that Bismarck is simply mad and has so jammed himself up in domestic and foreign affairs that he has lost his head and wants war à tout prix, to get himself out of the affair and maintain his position.199
Even Bismarck’s friend Roon had begun to worry about his mental and physical health. On 26 March 1866 he wrote a gloomy letter to Moritz von Blanckenburg:
Things are not good here. Our friend Otto Bismarck in Herculean day and night efforts has worn down his nerves … The day before yesterday he suffered such hefty stomach cramps and was a result yesterday so depressed, so irritable and annoyed—apparently by little things—that I am today not without anxiety, because I know what’s at stake. … Complete freedom of thought does not combine well with a bad stomach and irritated nerves.200
These symptoms, which varied over time, mark the beginning of a pattern that made Bismarck unique in another way: no statesman of the nineteenth or twentieth century fell ill so frequently, so publicly, and so dramatically as Otto von Bismarck. Bismarck trumpeted his suffering and all his symptoms to everybody. He complained loudly and without discretion from the 1860s to his retirement that the vexations of office had ruined his health and disposition, and in a sense they had. His colossal will to power combined with his fury at anybody—friend or foe—who blocked him literally made him sick and he knew it. Yet the very situation in which he operated gave him no choice. The enemies at court, especially the Queen, the Crown Prince, and Crown Princess, worked against him and did everything to undermine and undo his hold on the King. Rage combined with impotence at the ‘high persons’ whom he could neither convert nor remove ate away at his peace of mind and physical health. He hated them with the intensity of a man in physical and mental pain but he could only escape the agony by surrendering power. That he could never do. Roon saw, as all those close to him confirm, the increasing irrationality, irritability, and intolerance and many like von Below, his old friend, realized that the sickness lay primarily in the mind not in the body.
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