3 So damaging was the Alvensleben convention to Bismarck that Bleichröder arranged a special code with which he would notify the Paris Rothschilds of his resignation.
4 The crisis in Poland had sparked a major debate within the British Jewish community, in which Lionel emerged as a leading opponent of intervention on the Poles’ behalf.
5 Characteristically, James also asked Bleichröder “to keep an eye out for old paintings or other antiques because the war against the poor Danes probably has brought many beautiful and interesting pieces on the market.”
6 The government also recovered control of a guarantee fund which had been set up for certain minor lines associated with the Cologne—Minden. Payment was to be partly in cash (3 million thalers on October 1, 2.7 million by January 2, 1866) and the rest in new Cologne-Minden shares.
7 The terms of the Lombard deal were complex: the government guaranteed a 6.5 per cent return on the bonds of the Italian part of the line, extended the concession to ninety-nine years, and freed it from the levy on foreign bonds until 1880. In return the company agreed to construct new lines worth 9 million francs, to reduce its fares and to undertake the expansion of the port facilities at Trieste and Venice at a cost of 15 million gulden, to be repaid over twelve years. Alphonse described the costs of this deal to the company as “almost illusory.”
8 According to The Times, the Austrian Minister of State Count Richard Belcredi “put forth the notion of requiring the Jewish congregations to organise several battalions of volunteers at their own expense. Now as the Jews necessarily undertook the obligations of military service in common with other citizens Count Belcredi’s plan was neither more nor less than an extraordinary tax levied on the Jews, a disguised renewal of the special Jews’ tax.” Anselm wrote to him “that he would close his offices, break off all financial negotiations with the Government and leave Austria if the Minister persisted in carrying out a project which would be so injurious to the Jews. His letter had the desired effect.” When Betty suggested that money be raised for Austrian soldiers who were Jews, Anselm (according to his son Ferdinand) “answered that the money was [to be] equally divided between all soldiers, quite regardless‘of creed, and that a distinction would create a bad effect.”
FIVE Bonds and Iron (1867-1870)
1 The lack of detailed accounts for the period 1852-79 makes it difficult to be sure when the Paris house made its dramatic leap forward ahead of the other houses in terms of capital. We do know that in the five years to 1868 the Paris house made profits in excess of £4 million, an annual average of £800,000. This was very nearly double the average figure for the entire period 1852-79, suggesting that much if not all the credit for the growth of de Rothschild Frères should go to James.
2 Altogether, James left Betty lump sums and annuities worth around 16 million francs, the house at 19 rue Laffitte and its contents, the house at 7 rue Rossini and its contents, as well as use of the houses at Boulogne and Ferrières. Ownership of Ferrières James wished to pass to his eldest son Alphonse and to carry on through the male line according to the rule of primogeniture. This was at odds with French law (which favoured partible inheritance), but James explicitly requested his descendants to put his wishes first! In addition, Alphonse was given 100,000 francs a year for the upkeep of the Ferrières. However, most of the other real estate (Boulogne, 21, 23 and 25 rue Laffitte, 2 rue Rossini, 2 and 4 rue St Florentin, 267 rue St Honoré, the three houses in the rue Mondovi and the Lafite estate) was divided equally between his three sons, with the remainder going to Charlotte and Hélène. On attaining his majority, Edmond was to receive various sums amounting to around 3 million francs. The rest of James’s fortune, including his share in the bank, was divided between Alphonse, Gustave and Edmond (c. 26 per cent each) and Charlotte and Hélène (11 per cent each). Various codicils distributed further sums to his children (400,000 francs), their spouses (300,000) and Salomon James’s widow Adèle (100,000).
3 It was a sign of the widening gulf between the government and the Rothschilds that the loan was underwritten by the Société Générale.
4 The London and Paris houses jointly advanced £1.7 million to the Spanish government, which was to be repaid over twenty years. This debt was then converted into 5 per cent bonds with a nominal value of £2,318,000. As Lionel was heard to observe in January 1870, “whatever might be the condition of the Spanish government as regards money matters it could always raise funds... in England. This is certainly not the result of the peculiar honesty of Spanish administration, but of a vague tradition of the ancient wealth of Spain ...”
5 The syndicate included Fould, Pillet-Will, Credit Lyonnais, the Banque Franco-égyptienne, Oppenheim, the Société Générale and the Banque Impériale Ottomane—one of the heterogeneous combinations so characteristic of the period after 1870.
6 Erroneously, Alphonse described Amadeo as “of all the candidates, the most dangerous.”
7 James’s death considerably enhanced Nat’s influence in Paris; he became the senior figure to whom Alphonse, unaccustomed to taking decisions for himself, turned for counsel.
8 An exemption from the new tax, which would have cost the company around 4 million lire a year, could be bought only by giving the government an advance payment of 22 million lire.
9 Whenever a government imposed a tax on securities—and it happened increasingly often after 1866—the Rothschilds were outraged, predicting collapsing bond prices if not national bankruptcy. Yet, as Alphonse himself on occasion admitted, the effect of such taxes, if they served to reduce a government’s budget deficit, could actually be to strengthen bond prices. This paradox perplexed “practical men” like Alphonse and Natty, so they generally ignored it and continued to denounce such taxes.
10 The Times, Feb. 21, 1867, p. 7, quoting “a mercantile letter from Frankfort”: “This choice was not influenced by party feeling. Baron Rothschild can do a deal of good for our commercial interests, and particularly by insisting on the maintenance of the florin currency, which is essential to our commerce with the South ... There has rarely been such general enthusiasm for a candidate, and all was done without any previous understanding, and even without a regular committee.”
11 After lengthy negotiations, Mayer Carl had secured a 12 million thaler share of this operation. Undaunted, Hansemann revived the scheme by floating the bonds exclusively outside Germany, but the Paris Rothschilds declined to participate, to Mayer Carl’s annoyance.
12 According to Mayer Carl, he and Hansemann “first applied for the concession in 1867”; Oppenheim became involved only ”after all the work has been done by Mr Hansemann and myself.“
SIX Reich, Republic, Rentes (1870-1873)
1 It is worth asking whom Gustave referred to when he used the pronoun ”on.“ The answer would seem to be that this was not just bourse gossip but a Rothschild version of ”sources close to the government,“ if not the government itself.
2 It cannot be entirely coincidental that three days later Lionel sent Gladstone two tickets for the Derby via Granville.
3 The London Rothschilds also intimated to the Prussian ambassador Bernstorff that war would be ”inevitable“ if Leopold accepted. By the 11th, Gustave was writing to Bleichröder ”as if the war between France and Prussia had already broken out.“
4 Lionel told Disraeli that ”the cabinet had been completely taken by surprise: none of them knew anything of foreign affairs except Granville: and Gladstone really believed Cobden’s theory that men were growing to civilised for war.“
5 It is worth noting, on the other hand, that Gustave had himself mentioned the possibility of French designs on Belgium less than two weeks before.
6 ”[Disraeli] gives me the Rothshild view of the war: his friends fear it will be long... they think the Prussians well armed and well prepared; and that neither is a decisive result to be expected for the present, nor can either party acquiesce in a defeat which is not decisive.“
7 It was a sign of Gladstone�
�s growing wariness towards the Rothschilds that in March 1871 he declined to provide them with ”inside information“ about the international conference then being held in London to discuss this old question.
8 The reparations imposed on France in 1815 had been 700 million francs, in the region of 7 per cent of gross national product. The figure of 5,000 million demanded by Germany in 1871 represented around 19 per cent of GNP.
9 At this stage, communications were so poor that it was impossible to involve the Frankfurt and Vienna houses—that at least was Alphonse’s excuse for not doing so.
10 Unlike the later payments, this was not an especially profitable transaction for the banks; Alphonse felt compelled by the circumstances to charge a low commission of just 0.5 per cent and grumbled that he was only acting under duress.
11 The interest amounted in the end to 301 million francs, slightly less than the value of the railways (325 million), so the final total paid was in fact 4,976 million.
12 Bismarck himself had proposed ”the phased withdrawal from the occupied territory in proportion to the sums paid.“
13 The Prussians agreed to accept gold, silver, banknotes from the central banks of England, Prussia, Holland and Belgium, cheques on the same banks and immediately payable first-class bills of exchange on London, Amsterdam, Berlin or Brussels. In May it was also agreed to accept a further 125 million in French banknotes. From the outset Bismarck and the German bankers opposed the idea of accepting French rentes.
14 At Alphonse’s initiative, and with an eye to ”public opinion,“ the Banque had reduced the interest it charged the government from 6 per cent to 3 per cent.
15 There was never any serious discussion of other possibilities such as amortisable bonds or a lottery loan; rentes were what investors in London and Paris expected from a French government.
16 The main obstacle to this was the existence of an alternative monarchist party around the Bourbon claimant, the duc de Chambord. To draw another Weimar parallel, Alphonse was, on balance, a ”Ver nunftsrepublikaner“; he spoke disparagingly of crypto-monarchists he had to deal with on the Seine et Marne council.
17 This raises the possibility that he never intended to allow Bleichröder or Hansemann into the underwriting syndicate and that the negotiations described by Landes were a sham. That would certainly explain the numerous garbled telegrams. Alternatively, the Berlin bankers wanted their rentes at too low a price.
18 The underwriting syndicate in London was simply a duopoly of Rothschild and Baring and I have assumed that they shared the total of 325 million francs equally; in Paris, the underwriting shares were distributed as follows: de Rothschild Frères 248 million; haute banque (twelve houses, including Fould, Mallet Frères, Hottinguer and Pillet-Will) 362 million; Société Générale 60 million; other joint-stock banks 65 million. The Société Générale was given preferential treatment because of the French Rothschilds’ common railway interests with Talabot.
19 This should be regarded as an upper limit; it seems unlikely that the Rothschilds acted in quite this optimal way. By way of comparison, the Crédit Lyonnais made only 5.7 million francs from the 1871 operation.
20 The desire to minimise the influx of bills on London reflected fears of pressure on the thaler. It is worth noting that Mayer Carl failed to persuade the Seehandlung to entrust the London house with the remittance of money from London to Berlin.
21 In January 1872 the Banque de Paris merged with the Amsterdam-based Banque de Credit et de Depots des Pays Bas to form the Banque de Paris et des Pays-Bas, usually known as ”Paribas“ for short.
22 Bleichröder was convinced that Hansemann was conspiring against him with Harry von Arnim, the Prussian ambassador in Paris. Bismarck certainly disliked Arnim (as did the Rothschilds) and used Bleichröder to communicate indirectly with Thiers via the French ambassador in Berlin, Gontaut-Biron; but the financial significance of this was minimal.
23 The rejection of Hamburg bills reflected the pressure within Berlin to put Germany on to a new gold currency; the Hamburg ”marc banco“ was silver-based.
SEVEN ”The Caucasian Royal Family“
1 A fourth son, Anselm Alexander, had died in 1854 at the age of eighteen; scarcely anything is known about him.
2 Disraeli remembered him fondly as ”a thoro[ugh]ly good hearted fellow, the most genial being I ever knew, the most kind-hearted, and the most generous.“
3 Delane, who had retired in 1877, also died in 1879, though it is possible that he wrote Lionel’s obituary while still working: as today, obituaries were often written well in advance of an eminent figures death.
4 Bleichröder’s son Hans noted sourly that ”few people genuinely mourned because Lionel did not know how to make himself liked and did next to nothing for the poor.“ This is not borne out by the obituary in the Middlesex County Times, June 7, 1879: I am grateful to Lionel de Rothschild for this reference.
5 Carriages were also sent by the Duke of Wellington, Disraeli (now the Earl of Beaconsfield), the Duke of Manchester, the Duke of St Albans and the Duchess of Somerset, to say nothing of numerous ambassadors.
6 To speak of ”generations“ presents problems because of the extent to which the Rothschild generations overlapped: in the period 1827 to 1884 when the fourth generation was born, six members of the third were also born and ten members of the fifth. I am grateful to Lionel de Rothschild for his assistance on this and related points.
7 These premature male deaths were somewhat ”counterbalanced“ by the premature deaths of six Rothschild women: Clementine in 1865 (aged twenty); Evelina in 1866 (aged twenty-seven); Georgine in 1869 (seventeen); Hannah in 1878 (thirty-nine); Bettina in 1892 (thirty-four); and Bertha in 1896 (twenty-six).
8 She continued to comment adversely on his shyness even when he was in his twenties.
9 History was his strong suit. Disraeli once remarked: ”If I want to know a date in history, I ask Natty.“
10 Honours in the ”Little Go“ required knowledge of one of the Gospels in Greek, prescribed Latin and Greek texts, William Paley’s anti-Deist Evidences of Christianity, the first three books of Euclid and arirh metic as well as the fourth and sixth books of Euclid, elementary algebra and mechanics.
11 It has been claimed that Alfred was obliged to decline re-election in 1890 after taking the illicit liberty of looking at the account of someone from whom the National Gallery was considering buying a painting; the difference between what the seller was asking and what he had originally paid he considered ”out of all proportion to convention and decency“ His interest supposedly stemmed from his role as trustee of the National Gallery However, the Bank of England archives do not corroborate this. In fact, Alfred seems to have retired because of ill health despite an attempt by the Governor to persuade him to stay on.
12 Though Flower later married a Rothschild, he appears to have been a homosexual and the intimacy of his friendship with Leo evidently perturbed Charlotte.
13 Leo was elected to the Jockey Club in 1891 and was one of the founders of a motoring club which later became the Royal Automobile Association.
14 To judge by her descriptions of his parents’ intense grief, Salomon was something of a favourite. Natty and Alfred ”found the whole deeply afflicted family awfully calm, with the exception of poor Uncle James, who burst into tears when he saw the travellers, and sobbed convulsively; it was quite dreadful to hear him.—Addy’s intense sorrow is quite alarming, she is so fearfully quiet, and utterly unable to shed a single tear—she speaks—never a word of herself—only of her husband’s qualities; she thinks he was too good to live... Aunt Betty thought he might be in a trance, and would not hear of the last mournful ceremony taking place...“
15 Its extent is usually said to have been 15,000 acres in this period, but a figure of 30,000 seems more likely. In fact, Ferdinand had initially tried to persuade his father to buy him an estate in Northampton shire, but Anselm dismissed the idea, making the very Rothschildian point that the yield of E
nglish agricultural land was 1.5 per cent lower than that of Austrian. It was only after his father’s death that he was able to buy Waddesdon (for £220,000 from the 7th Duke of Marlborough).
16 The others were: Charlotte (Nat’s widow)’s medieval abbey des Vaux-de-Cernay at Auffargis, restored for her by Félix Langlais; Gustave’s château de Laversine at Saint-Maximin (Seine-et-Oise), designed by Alfred-Philibert Aldrophe after 1882; James Edouard’s château des Fontaines (Oise), again by Langlais (1878-92); his widow Thérèse’s maison Normande built there by Girard in 1892; as well as a new seaside villa at Cannes (for Betty). Mention should also be made of château de Vallvère à Mortefontaine (Oise), built by Aldrophe for the duc and duchesse de Gramont (Mayer Carl’s daughter Margaretha) in 1890.
17 Leo’s at 5 Hamilton Place, designed by William Rogers of William Cubitt & Co. in the French style; Alfred’s at 1 Seamore Place, purchased from the courtier Christopher Sykes; Ferdinand’s at 143 Piccadilly ; Edmond’s at 41 rue du Faubourg-Saint-Honoré, reconstructed by Langlais after 1878; baronne Salomon James’s at 11 rue Berryer, designed by Léon Ohnet in 1872-8; Nathaniel’s Vienna ”hôtel“ at 14-16 Theresianumgasse; and Albert’s at 24-26 Heugasse (later Prinz Eugen-Strasse), the latter built by Gabriel-Hippolyte Destailleur in 1876.
18 The architect Franz von Hoven took a number of liberties with the original house, moving it back several feet, replacing the old slate front with more picturesque oak timbers and effectively merging what had originally been two very narrow houses, though the interiors were more faithful to the early part of the century. It has been suggested that it was a conscious effort to imitate the Goethe house in Grosser Hirschgraben, which had been renovated in 1863 and had become Frankfurt’s main tourist attraction. In 1890 Von Hoven was also asked to alter and extend the Bockenheimer Landstrasse house, once Amschel’s.
The House of Rothschild Page 90