The House of Rothschild

by Ferguson, Niall

  Monetary policy, he and Alphonse argued, could be a matter for the Banque alone; confidence would evaporate if the convertibility of its notes were threatened; its conduct should resemble as far as possible that of the Bank of England, with the important exception that silver should continue to enjoy equal status with gold in the Banque’s reserve. The Pereires sought to strike back, blaming their difficulties on the Banque’s high discount rate and the drain of French capital abroad orchestrated by the Rothschilds. As Emile Pereire put it in November 1865:There are people at the Banque who wish me ill ... [But] it was not me who financed the Zaragoza and Alicante railways; it was not me who financed the Lombard lines; it was not me who was responsible for the 1,500 million of Italian loans, Belgian loans, Austrians, Romans, Spanish; and yet the signature which these operations all bear is among those which accuse us of having impoverished the national wealth for the benefit of foreigners!

  But the Rothschilds could follow the death throes of the “Mob.” with detached Schudenfreude. James even indulged in a casual speculation in Credit Mobilier shares, though he was probably not responsible (as some contemporaries believed) for their last great rise and fall in 1864. The “old” bank had become the new; the “new” bank had become the old.

  In fact, the monetary difficulties of the early 1860s were not solely due to uncontrollable global economic forces; they were partly a consequence of the government’s fiscal policy. The Italian war had necessitated an increase in public borrowing: in 1859, for example, the Banque had to lend the Treasury 100 million francs against rentes and also discounted treasury bills worth 25 million. These sums, however, were just a small fraction of the regime’s total borrowings throughout the 1850s, which—even without the costs of the Crimean and Italian campaigns—had totalled approximately 2 billion francs. The decision of the former Minister of State Achille Fould to set himself up as the leading critic of this policy paved the way for an unlikely political realignment which would have been unthinkable a decade earlier.

  It was a rapprochement of erstwhile foes visible at first only in the countryside. As early as November 1860 it was reported that the Emperor was “hunting at St Germain with Messrs Fould and Rothschild”; the following October rumour had it that “Messrs Fould, de Germiny [the Banque Governor] and Alphonse Rothschild have held long conferences on the financial situation with the Emperor at Compiègne.” A month later, however, came the announcement in Paris of Fould’s return to office as Finance Minister—an announcement conspicuously welcomed by the Rothschilds and the bourse as a whole. “I am glad to note that... your good friend ... Fould has followed your wise counsel not to reduce the Banque’s discount rate,” wrote James in a letter to Alphonse just a few weeks later. Alphonse should “go to Fould and quite openly and freely chat with him a bit” and intimate that “we would very much like to work hand in hand with him.”

  Substantial proof of this new harmony between Rothschild, Fould and Bonaparte came in January 1862 with the conversion of the (relatively few) 4.5 per cent rentes into 3 per cents. Although James, who was wintering in Nice, had some minor reservations about the transaction, in the end Fould was able to count on complete Rothschild support, not only at the Banque de France but at the rue Laffitte itself. In the first phase, the Paris house lent the government 30 million francs (for four months at 5 per cent interest) to push up the price of 3 per cents. In addition, Alphonse agreed to purchase 85.9 million francs of thirty-year government debentures, which were also to be gradually converted by the government into 3 per cent rentes. The conversion was a success for the government; for his part, James was delighted to have reasserted the Rothschilds’ traditional predominance in French public finance.

  The famous visit of the Emperor to hunt at Ferrières on December 16, 1862, needs to be seen in this context. Historians have often represented this as symbolising the reconciliation of Bonaparte with (if not his surrender to) the old Orléanist haute finance; and so it seemed. Accompanied by Fould, his Minister of State (and cousin) the comte de Walewski, the English ambassador Earl Cowley and Generals Fleury and Ney, Napoleon travelled by rail to Ozouer-la-Ferrières, where he was met by James’s four sons at 10.15 a.m. Having walked across the green velvet carpet embroidered with golden bees which had been rolled out across the station platform, the Emperor and his party were then transported to the chateau itself in five carriages decked out in the Rothschild colours of blue and yellow. On his arrival, imperial flags were flown from all four towers. The rest of the family (including Anthony, Natty and his sister Evelina) were then introduced in the main hall, and the Emperor paused to admire the pictures by Van Dyck, Velasquez and Rubens hanging there. He then stepped outside to plant a commemorative cedar tree in the gardens, after which he was served a lavish breakfast. “The service of silver plate made from models which were immediately destroyed to preserve it unique,” reported The Times in reverent tones, “was accompanied by the celebrated service of Sèvres porcelain, every plate of which bears an authentic picture by Boucher.” The hunting itself was also pronounced a success: some 1,231 head of game were reported killed. The afternoon concluded with a buffet in the hall, accompanied from the gallery by the senescent Rossini’s specially composed “Chorus of Democratic Hunters” (sic), a piece of nonsense scored for tenors, baritones and basses, accompanied by two drums and a tam-tam. At 6 p.m., the imperial party returned to the station, their way illuminated by “keepers, huntsmen and other persons employed on the domain, holding torches.”

  Yet the extent to which this most ostentatious of all displays of Rothschild hospitality represented a genuine reconciliation with Napoleon is doubtful. Although quite favourably impressed by the Emperor himself, Natty captured something of the uncomfortable reality of the day in his account to his parents:I must say it was one of the most disagreeable rides I ever had as the road [from the station] was like a pane of glass... If it had been in England the populace would have been much more enthusiastic; as it was the cries of Vive l‘Emperor were for the greater part uttered by paid agents ... After breakfast, which lasted some time and would have been excellent if it had only been warm, the sportsmen adjourned to the Park. There was an enormous show of game, but as most of the shots had drunk 10 or 12 different kinds of wine they shot very badly. Altogether some 800 pheasants were murdered; they ought to have killed 1500.

  Moreover, according to one account, James could not resist a barbed parting shot as he bade the Emperor farewell. “Sire,” he supposedly said, “mes enfants et moi, nous n‘oublierons jamais cette journée. Le memoire nous en sera cher”: with the masculine article, “mémoire” means “bill,” suggesting a pun at the Emperor’s expense (in both senses). Like the Goncourt brothers, for whom Napoleon was just the latest French sovereign “to pay a state visit to money,” the contemporary German cartoonists who portrayed Napoleon as hunting the golden calf or fat “bags” of money were wide of the mark (see illustrations 3.iii and 3.iv); but they all sensed the essentially bogus nature of the occasion. The Ferrières reception was nothing if not a bid for Anglo-French reconciliation—hence the presence of Cowley and no fewer than four English Rothschilds. Yet no such reconciliation ever came. On the contrary, each diplomatic crisis seemed to drive France and England further apart.

  Publicly, the Bonapartes and Rothschilds were now on friendly terms, and James and his relatives were regularly invited to court social functions. In January 1863, for example, he was spotted by the Goncourts at a soiree given by the Emperor’s cousin Princess Mathilde. A few months later, Alphonse went to Compiègne once again to discuss monetary policy with the Emperor, noting with satisfaction that “HM appears to understand the necessity to take rigorous measures.” He and his wife returned there just four months later for an evening of charades—a favourite imperial pastime-in which Leonora appeared as “Judith with the head of Holofernes,” complete with “three or four millions in diamonds on her head and neck.” The following year, Fould specifically asked James to discuss th
e monetary situation with the Emperor, fearing that the Pereires might yet persuade Napoleon to abandon convertibility. Instead, James sent Alphonse, whose only complaint was that the Empress was rather garrulous and “wanted to know too much about the Jews.” In November 1865 Leonora was again asked to join the amateur theatricals at Compiègne. She and her husband, along with Gustave and his wife Cecile were also present at the Emperor’s celebrated fancy-dress ball in February 1866, at which the Empress somewhat ominously appeared as Marie-Antoinette.

  Yet contemporaries could not help noticing the ambivalence of the relationship. Compared with James, Napoleon was still young: he was fifty-four when he visited Ferrières, James seventy. Yet the Emperor’s health was indifferent, depriving him of energy at critical moments, whereas James—though his eyes were deteriorating and his hands increasingly arthritic—had lost little of his prodigious vigour. When Charlotte called to see her uncle in the rue Laffitte in 1864, she “found him at luncheon, eating first beefsteak with potatoes and then an enormous helping of lobster. One must be well or nearly so to venture upon such heavy diet.” She was equally impressed by his “excessively exhausting” lifestyle, “perpetually oscillating between Paris and Ferrières,” not to mention Boulogne, Nice, Wildbad and Homburg. He remained the dominant force in the Paris house until the last year of his life, indefatigably corresponding and rushing from one meeting to the next, driven by a work ethic his younger relatives could not hope to match. In August 1867 Anthony gave a pained account of a visit by James to London:This morning I needed to go to the Ex[change]—at 9.00 comes the Baron[,] I must go with him to-the P[rince] of W[ales]—to the Duke of Cambridge & then the V[ice]roy of E[gypt] then the Sultan so that one is as confused & then if one is not at the office [one is] blown up [told off] so it is quite impossible to write as one ought.

  Nevertheless, James still found time to build up an unrivalled collection of wild-fowl at Ferrières and to conduct a protracted flirtation with the comtesse Walewska, the minister’s wife. Nor should the long periods he spent each year at such spas be taken as a sign of failing strength: for it was precisely when he went to take the waters that he seemed “more juvenile, more frisky than ever,” “din[ing] at the public table, and speak[ing] with every lady, provided she is pretty and young.“ When the French press carried exaggerated reports that his sight had failed altogether in 1866, James was:irate and most impatiently anxious to give the flattest contradiction to all the penny-a-liners, who had lamented his supposed blindness. So he made a point of going the round of the theatres with his sons, of sending countless glances to all the actresses, as many to the fair occupants of stalls and boxes, and of ending his day by playing whist and winning at the clubs, and giving a faithful account of all the partridges, pheasants and chevreuils [deer] brought down by his own unerring gun.

  3.iii: Das goldene Kalb (1862).

  Supremely self-confident, and perhaps now a little reckless in his old age, James felt free to give vent to that sardonic humour which in the past he had tended to suppress. Some of his jokes were the stuff of stock exchange lore: “At the bourse, there comes a time when, if you want to succeed, you have to speak Hebrew”; “You ask, do I know what causes the bourse to rise and to fall? If I knew that I would be a rich man!” Asked by an eager young broker if he thought installing a turnstile and charging admission to the bourse would affect the price of rentes, James, deadpan, responded: “My fiew is that it vill cost me tventy sous a day.” But his most famous jokes—like the pun on “mémoire” at Ferrières—subtly mocked the Emperor. “L‘Empire, c’est la baisse” defies translation: literally “the Empire means a falling market,” this pun on Napoleon’s famous claim that the Empire meant “la paix” was to prove a damning epitaph for Napoleon’s regime.

  3.iv: Ferrières: Auf der großen Jagd bei’m Rothschild (1862).

  Small wonder, then, that contemporaries reverted to the old Orléanist joke that he and his family were the real rulers of France. Those most malicious of contemporary diarists, the Goncourt brothers, pictured a gathering of seventy-four Rothschilds at Gustave’s wedding:I imagine them on one of those days Rembrandt invented for synagogues and mysterious temples, lit by a sun like the golden calf. I see all those male heads, green with the sheen of millions, white and dull like the paper of a banknote. A fete in a bank cavern... Pariah kings of the world, today they covet everything and control everything, the newspapers, the arts, the writers and the thrones, disposing over the music hall and world peace, controlling states and empires, discounting their railways as the usurer controls a young man, discounting his dreams... Thus they rule in all walks of human life, including the Opera itself... It isn’t the captivity of Babylon, but the captivity of Jerusalem.

  To the Goncourts, James was “a monstrous figure... the most base, [with] the most terrifying frog-like face, his eyes bloodshot, eyelids like shells, a mouth like a purse and drooling, a sort of golden satyr.” But those, like Feydeau, who saw James in his “natural element”—his office—could not help but be impressed by the sheer life force he exuded:He had the singular and precious ability to concentrate his thoughts, to become inwardly absorbed, even in the midst of the most infernal brouhaha. Often, when about to conclude the most important transactions, he would close his door and receive no one; often too, he used effortlessly to conduct the most important and the most trivial operations at one and the same time, charging one of his sons, usually the eldest, to receive in his main office the clerks from the bourse, while he, huddled in a corner of the same room with some minister or ambassador, happily discussed the conditions of an operation involving hundreds of millions ... He sometimes broke off in the middle of discussing the terms of a loan which stood to earn him several dozen millions, to exact from some hapless courtier, who could not but agree, a concession which can only have been worth about fifty francs on some miserable little deal... This financial genius had the redoubtable ability to see everything and do everything himself ... This Titan ... read all the letters, received all the despatches, and found time in the evening to perform his social duties despite devoting himself to business from five in the morning. And you had to see how everything in his immense banking house ran like clockwork! What marvellous order throughout! What obedient employees...!

  Thus, even as Napoleon began to loosen his own grip on political power, James became more and more the absolute monarch of Parisian finance. Before this “holi est of holies of money,” as the Goncourts put it, “all men were equal, as absolutely as before Death itself!”

  The question remains: how far did Rothschild power actually undermine the Bonapartist regime, as some contemporaries believed it did? If James seemed at least ambivalent towards the imperial regime in public, in private he and his family remained downright hostile. His French relatives, Natty felt, were “more ridiculously Orleanist than ever, finding fault with every thing and every body connected with the emperor,” a view echoed by Benjamin Davidson after an encounter with Betty.4 James at first gave the shift towards a more parliamentary constitution a cautious welcome, but half expected Napoleon to resort to another coup d‘état. When Alphonse resolved to follow his uncle Lionel’s example and stand for election it was as an opposition candidate—though James had reservations about making Rothschild opposition so “overt.”

  But why were the Rothschilds opposed to a regime which, by the 1860s, was scarcely unfavourable to their business? More important than lingering Orléanist sentiment, James and his sons saw a fundamental contradiction between the supposed new era of sound finance under Fould and the Emperor’s foreign policy, which remained as adventurous—and in their eyes dangerous—as ever. The early 1860s saw a succession of international crises in which Napoleon seemed tempted to “make mischief”; and each time he showed signs of doing so, the expectation of increased military expenditure and yet more government deficits tended to depress the price of rentes. As early as July 1863, there was talk of a new French loan, for example; the recurrent mone
tary difficulties of the Banque could also easily be attributed to the effects of imperial foreign policy on financial confidence. Even before the Italian war, as we have seen, James had formulated his theory of Bonapartist politics: “No peace, no Empire.” The events of the subsequent years only made him the more sure of this, and his letters abound with references to the connection between financial weakness and diplomatic room for manoeuvre. “There won’t be no war [sic],” he assured his‘nephews in October 1863. “As I said, the Emperor should speak terribly peacefully. He has to if he wants to get money [and] if indeed a loan is to be made.” “I believe,” he wrote in April 1865, “that the weak bourse will help to keep the Emperor in a more peaceful frame of mind.” And again in March 1866: “We will maintain the peace for some time, as the great man [Napoleon] cannot [afford to] make war.” His recurrent anxiety was that internal political weakness might nevertheless tempt Napoleon to gamble on foreign adventure. The more Napoleon confirmed this fear, the more James foresaw financial trouble: that was what he meant when he said that the Empire had come to mean “la baisse” rather than “la paix.”