The House of Rothschild

by Ferguson, Niall

  Finally, it is important to bear in mind the anger felt in London and Paris towards the Vienna house after the débâcle of 1848. At times, James talked as if even he would not be sorry to sever his links with Vienna. “I have no interest in Vienna,” he wrote to New Court in December 1849. “While others speculate against the government there, our people in Vienna are not so smart and are unfortunately poor businessmen. They always think they are doing business for the good of the state.”

  Yet in the end the partnership was renewed in 1852 with relatively limited alterations to the 1844 system and continued to function with as much success as ever in the following two decades. Why was this? The best explanation for the survival of the Rothschild houses as a multinational partnership lies in the vital role played by James in bridging the generation gap and binding the increasingly divergent branches of the family together again. As Charlotte remarked when she saw her uncle in Frankfurt in 1849, James had emerged from the crisis of 1848 with his lust for life and business undiminished:I have seldom seen such a practically shrewd man, so worldly and canny, so mentally and physically active and indefatigable. When I reflect that he grew up in the Frankfurt Judengasse and never enjoyed the advantages of high.culture in his childhood and youth, I am amazed and admire him beyond words. He has fun and takes pleasure in everything. Every day he writes two or three letters and dictates at least six, reads all the French, German and English newspapers, bathes, has a one-hour morning nap, and plays whist for three or four hours.

  And this was James’s routine when he was away from Paris. The James whom the young stockbroker Feydeau encountered in the rue Laffitte was as much a force of nature as he had been in Heine’s heyday; if anything, age made James only the more formidable.

  For all his youthful vigour, James nevertheless remained deeply imbued with the familial ethos of his father’s day. Even before 1848, he had been worried by the signs of dissension between the five houses. Disagreements about the accounts, he warned Lionel in April 1847, were leading “to a state of affairs that in the end everyone deals for himself and this then creates a great deal of unpleasantness.” “It is only the reputation, the happiness and the unity of the family which lies close to my heart,” he wrote, echoing the familiar admonitions of Mayer Amschel, “and it is as a result of our business dealings that we remain united. If one shares and receives the accounts every day, then everything will stay united God willing.” It was to this theme that James returned with passionate urgency in the summer of 1850—a letter of such importance that it deserves to be quoted at length:It is easier to break up a thing than to put it back together again. We have children enough to carry on the business for a hundred years and so we must not go against one another ... We must not delude ourselves: the day when a [single] company no longer exists—when we lose that unity and co-operation in business which in the eyes of the world gives us our true strength—the day that ceases to exist and each of us goes his own way, then good old Amschel will say, “I have £2 million in the business [but now] I am withdrawing it,” and what can we do to stop him? As soon as there is no longer majority [decision-making] he can marry himself to a Goldschmidt and say, “I am investing my money wherever I like,” and we shall never stop reproaching ourselves. I also believe, dear Lionel, that we two, who are the only ones with influence in Frankfurt, must really aim to restore peace between all [the partners] ... What will happen if we are not careful is that capital amounting to £3 million will fall into the hands of outsiders, instead of being passed on to our children. I ask you, have we gone mad? You will say that I am getting old and that I just want to increase the interest on my capital. But, firstly, all our reserves are, thank God, much stronger than when we made our last partnership contract, and secondly, as I said to you on the day I arrived here, you will find in me a faithful uncle who will do everything in his power to achieve the necessary compromise. I therefore believe that we must follow these lines of argument and do everything possible—make every sacrifice on both sides—to maintain this unity which, thanks be to the Almighty, has protected us from all the recent misfortunes, and each of us must try to see what he can do in order to achieve this objective.

  These were themes James harped on throughout 1850 and 1851. “I assure you,” he told Lionel’s wife Charlotte (whom he had identified as an ally), “the family is everything: it is the only source of the happiness which with God’s help we possess, it is our attachment [to one another], it is our unity.”

  It is in the light of James’s campaign for unity that the partnership contract of 1852 should therefore be understood—not as weakening the ties between the houses, but as preserving them through a compromise whereby the English partners dropped their demands for full independence in exchange for higher rates of return on their capital. As early as 1850, James had outlined the terms of this compromise: in Nat’s words, he proposed “that the rate of interest on the capital for us should be raised,” provided always that the London house was more profitable than the others. This was also the thrust of his letter to Lionel quoted above; and it was the system finally agreed to in 1852. The British partners received a variety of sweeteners: not only were they permitted to withdraw £260,250 from their share of the firm’s capital, but the interest on their share (now 20 per cent of the total) was increased to 3.5 per cent, compared with 3 per cent for James, 2.625 per cent for Carl and 2.5 for Amschel and Salomon. In addition, the rules governing the joint conduct of business were relaxed: henceforth, no partner could be obliged by the majority to go on business trips, while investments in real estate were no longer to be financed from the collective funds. In return for these concessions, the English partners accepted a new system of collaboration. Clause 12 of the agreement stated that “to secure an open and brotherly co-operation and the advancement of their general, reciprocal business interests” the partners would keep one another informed of any transactions worth more than 10 million gulden (c. £830,000), and offer participations of up to 10 per cent on a reciprocal basis. Otherwise, the terms of all previous agreements not specifically altered by the new contract remained in force including, for example, the procedures for common accounting. This undoubtedly represented a measure of decentralisation. But considering that the alternative (seriously discussed the following year) was the complete liquidation of the collective enterprise, it represented a victory for James.

  What the 1852 agreement did not do was to decide the succession in Frankfurt (other than to rule out Adolph): henceforth, Anselm, Mayer Carl and Wilhelm Carl were all to sign for the Frankfurt house. (It also gave Alphonse and Gustave the right to sign for the Paris house.) Only after the deaths of James’s brothers in 1855 did the new structure of the firm emerge (see table 1 a). Despite the provisions of his will, all Salomon’s share of the collective capital passed to Anselm (an outcome which, for reasons which are obscure, James challenged only half-heartedly on his wife’s behalf). Carl’s share was divided equally between his sons after the deduction of a seventh, which went to his daughter Charlotte. Finally, and decisively, Amschel’s share was divided up in such a way that James and Anselm each received a quarter, as did the sons of Nathan and the sons of Carl. The net effect of all this was to give close to equal power to Anselm, James and the English-born partners, while reducing the influence of Carl’s sons. Their influence was further reduced by the decision to put Adolph in charge of the Naples house, and leave Frankfurt to Mayer Carl and his pious brother Wilhelm Carl.

  Table 1a. Personal shares of combined Rothschild capital, 1852 and 1855.

  Sources: CPHDCM, 637/1/7/115-120, Socieräts-Übereinkunft, Oct. 31, 1852, between Amschel, Salomon, Carl, James, Lionel, Anthony, Nat and Mayer; AN, 132 AQ 3/1, Undated document, c. Dec. 1855, reallocating Amschel and Carl’s shares.

  It was a compromise which worked in practice. After 1852, James was prepared to show a much greater degree of deference to his nephews’ wishes than in the past. New Court no longer took orders from James—as can easily
be inferred from the diminished length of his letters to London after 1848. Increasingly, he scribbled no more than a postscript to Nat’s despatch and often concluded his suggestions about business—as if to remind himself that there was no longer a primus inter pares—with the telling phrase: “Do, dear nephews, what you wish.” This was doubtless gratifying to Lionel. Yet the compromise of 1852 meant that the pre-1848 system of co-operation between the five houses was in fact resumed with only a modest degree of decentralisation. The balance sheets of the Paris and London houses reveal a rate of interdependence which was less than had been the case in the 1820s, but it was still substantial. To give just one example, 17.4 per cent of the Paris house’s assets in December 1851 were monies owed to it by other Rothschild houses, principally London.

  Moreover, the London partners’ assumption that their house would be more profitable than the others proved over-confident. Although the Naples and Frankfurt houses tended to stagnate (for reasons largely beyond the control of Adolph and Mayer Carl), it was James who made much of the running after 1852, expanding his continental railway interests so successfully that by the end of his life the capital of the Paris house far exceeded that of its partners. Anselm too proved unexpectedly adept at restoring the vitality of the shattered Vienna house. It turned out to be far from disadvantageous for the London partners to share in these continental successes. The new system thus inaugurated a new era of equality of status between the London and Paris houses, with Vienna reviving while Frankfurt and Naples declined in their influence.

  As in the past, it was not only through partnership agreements and wills that the Rothschilds maintained the integrity of the family firm. Endogamy continued to play a crucial role. The period between 1848 and 1877 saw no fewer than nine marriages within the family, the manifest purpose of which was to strengthen the links between the different branches. In 1849 Carl’s third son Wilhelm Carl married his cousin Anselm’s second daughter Hannah Mathilde; a year later, his brother Adolph married her sister Julie; and in 1857 James’s eldest son Alphonse married his cousin Lionel’s daughter Leonora at Gunnersbury. To list the rest here would be tedious.3 With a single exception in the years before 1873, those who did not marry other Rothschilds did not stray far from the Jewish “cousinhood.”4 In 1850 Mayer married Juliana Cohen—defeating a rival suit from Joseph Montefiore—while his nephew Gustave married Cécile Anspach in 1859. If Wilhelm Carl had not married a Rothschild, he would have married a Schnapper—a member of his grandmother Gutle’s family.

  The brokering of these alliances was, as it had been for nearly two generations, a major preoccupation of the female members of the family. Charlotte made no bones about their rationale. As she enthused on hearing of her brother Wilhelm Carl’s engagement to Hannah Mathilde, “My good parents will certainly be pleased that he has not chosen a stranger. For us Jews, and particularly for us Rothschilds, it is better not to come into contact with other families, as it always leads to unpleasantness and costs money” The idea that either the pious groom or the musical bride was making a spontaneous choice was, in this case, nonsense. Charlotte’s cousin Betty saw the match in a very different light, reporting to her son that “poor Mathilde only determined regretfully to marry Willy.” Now she was “preparing herself with a truly angelic resignation for the sacrifice of her young heart’s dearest illusions. It has to be said that the prospect of being Willy’s lifelong companion wouldn’t entice a young woman brought up as she has been and blessed with a cultivated mind.” The question which remained to be resolved was whom Betty’s sons Alphonse and Gustave should marry. It seems that Hannah Mathilde had in fact set her heart on the latter, while her sister Julie had hoped to marry Alphonse. But, after teasing her son on the subject, Betty reported that:Papa, frank and honest man that he is ... brought up the subject without beating about the bush. He expressed all his regrets to the poor mother ... and he undeceived her of illusions that the desire for success might encourage wrongly, and he asked her in her own interest and for the happiness of her daughter to look elsewhere.

  This was good news for Charlotte, who was planning a similar double match between Betty’s sons and her daughters Leonora and Evelina. In her diary, she coolly weighed up the respective merits of the two putative sons-in-law:Gustave is an excellent young man. He has the best and warmest heart and is deeply devoted to his parents, brothers and sisters and relatives. He has a strongly developed sense of duty and his obedience could serve as an example to all young people of his generation. Whether he is talented or not, I could not in all honesty say. He has enjoyed the great benefits and advantages of a good education, but is, he claims, stupid, easily intimidated and unable to string ten words together in the company of strangers. They say he has acquired considerable skill in mathematics but I am ignorant of that subject and cannot pass judgement.

  His brother, Alphonse, combines the extraordinary energy and vitality of our uncle [James] with Betty’s facility for languages. He is a good reader, listener and observer and he remembers everything he absorbs. He can converse on the topics of the day with an easy manner, without pedantry, but always in a direct, penetrating and amusing way, touching upon every subject in the most agreeable fashion. He cannot be relied upon for an opinion, since he never voices one, indeed, perhaps does not have opinions; but it is a pleasure to hear him, for he speaks without emotion in the most engaging and lively tone.

  Mrs Disraeli calls Gustave handsome; I do not know whether I agree with her. He is the only one of the Jacobean line who can boast this advantage with his large, soft, blue-green eyes. In his early years they were apparently weak like all the Rothschild eyes, but now there is no trace of the childhood trouble, except a certain quality which one might almost call languishing. His eyebrows are finely drawn; his brow well formed, fair and clear; he has a full head of dark brown, silky hair; his nose is not oriental; he has a large mouth which, however, cannot be praised on account of its expression which is good natured at best and reveals neither understanding nor depth of feeling. Gustave is slim, his bearing is easy and his manners those of the highest society. I should like to see his profile at the altar.

  She was only half-successful: nine years later it was Alphonse’s profile she saw at the altar, alongside her daughter Leonora. By that time, moreover, she had revised her opinion of the bridegroom. Now he seemed “a man, who perhaps for ten of fifteen years has run the round of the world—is completely blase, can neither admire nor love—and yet demands the entire devotion of his bride, her slavish devotion.” Still, she concluded, it was “better so—the man whose passions are dead, whose feelings have lost all freshness, all depth, is likely to prove a safe husband, and the wife will probably find happiness in the discharge, in the fulfilment of her duties. Her disenchantment will be bitter but not lasting.” In any case, her daughter attached “much importance to a certain position in the world, and would not like to descend from what she fancies to be the throne of the R’s to be the bride of a humbler man.”5 Such sentiments were doubtless based on Charlotte’s own experience, and tell us much about the distinctive quality of such arranged marriages.

  The extent to which parental choice was decisive should not, of course, be exaggerated. The fact that Charlotte failed to secure Alphonse’s brother for her other daughter suggests that parents were less able to impose their choices of spouse on their children than had previously been the case. Anselm’s daughter Julie also successfully repelled the advances of her cousin Wilhelm Carl, as well as those of a more distant relation, Nathaniel Montefiore. On the other hand, her final “choice” of Adolph was strictly governed by her father and future father-in-law, who spent months drawing up the marriage contract; and although such negotiations often involved sums of money being settled individually on the bride-to-be to give her a measure of financial independence, this should not be mistaken for some sort of proto-feminism.6 There were limits to what the Rothschilds were prepared to inflict on their daughters, as became apparent when old Amsc
hel announced shortly after his wife’s death that he wished to remarry none other than his own grand-niece, the much sought-after Julie (who was not yet twenty). The rest of the family—backed up by his doctors—closed ranks against this idea. But it is not known how far their opposition was actuated by fears for his health as opposed to the happiness of the young lady in question: James for one appears to have worried that, if Amschel’s proposal were rejected too abruptly, he might withdraw his capital from the firm and marry a stranger.