The rothschilds, p.10
The Rothschilds, page 10
The ancient woman, covered in stiff lace, moved little. Her face under the sheitel (the wig worn by an orthodox Jewish wife) hardly smiled. But her tongue was humorous, sharp, alive. When a grandee observed that Frau Rothschild would probably outlive all her guests, she answered, in arch imitation of her sons’ stock-market language, “Why should God take me at a hundred when he can have me at ninety-four?” When another Highness offered her his personal physician, a wizard guaranteed to make his patients twenty years younger, Frau Rothschild said, “People always think I want to grow younger. I don’t. I want to grow older.”
At Amschel’s signal, the state visit departed. Later Frau Rothschild’s words would be retold in the best drawing rooms. But her most famous phrase was spoken just after one of those splendiferous assemblies had vanished into its equipages. A ghetto neighbor ran into the house, worried about her sons who had just come of military age. She asked Frau Rothschild if there had been any news from the great personages? Would there be peace or war?
“War?” Gutele said simply. “Nonsense. My boys won’t let them.”
As usual she was right. “My boys won’t let them” summed up much of the invisible politics of the nineteenth century.
* * *
* Gules is the heraldic word for red.
* She died, at the age of ninety-six, when Amschel was seventy-five.
VI
Running Europe
1. The Peacemongers
Gutele’s sons had soared during Napoleon’s wars. But now that they had so superbly ridden a tiger, they proscribed tigers. Upheavals are exhilarating for ambitious youths, not for established men. Rothschild was now banker to empires and continents—to all the principal European countries, to Eurasian Russia, to the Americas, to the Indies. It has been estimated that the London house alone placed 6,500 million dollars’ worth of foreign loans during the first ninety years of its existence. In Paris, in Vienna, in Frankfurt and Naples, the titanic brother branches were just as busy. Upon Rothschild vaults converged the credit of the Western World.
Quite naturally, the investments of Gutele’s boys depended on the stability of nations. “We have a holding of 900,000 rentes [18 million francs nominal],” wrote James to Salomon in 1830. “If peace is preserved they will be worth 75 per cent, while in case of war they will drop to 45…”
Thus the brothers became the most militant pacifists ever. Of course, it takes a great deal more power, ingenuity and statesmanship to promote peace than to preach war. The Family needed all the strength it had. While the ladies glittered in manse and park, while their sons rode to hounds with the finest lordlings in the land, the men worked as hard as ever, intercepting lightning bolts from the chancelleries.
They were helped by their astounding, unshakable solidarity. The Yiddish-German code they had used as five striplings working under father Mayer was the code that now flitted back and forth between the five great national institutions. (Just as Landgrave William of Hesse had once been called “Herr Goldstein,” so the Chancellor, Prince Metternich, was now termed “Uncle.”) The common-courier system carrying their messages had grown into a mighty continental network operating by land, sea and air. Waterloo was not the last, but the first, of the system’s big scoops.
On February 13, 1820, the Duke de Berry, heir presumptive to Louis XVIII, was assassinated outside the Paris opera. Instantly James triggered messengers to London, Vienna, Frankfurt. Long before their governments or their stock-exchange rivals got wind of it, the Houses Rothschild knew that the Bourbon hope was dead. In 1830 James’s carrier pigeons outraced any other news-bearers of the July Revolution. And Nathan appears to have been the first man in London to know of King Louis Philippe’s ascent to power.
If the breeze didn’t carry Rothschild pigeons, it pushed Rothschild sails. “The English ministry,” wrote Talleyrand to Louis Philippe’s sister, “is always informed of everything by Rothschild ten to twelve hours before the dispatches of the British ambassador arrive. This is necessarily so because the vessels used by the Rothschild couriers belong to that house; they take no passengers and sail in all weathers.”
The Family developed a dispatch organization even more reliable than that of other great powers. Various countries began to use its international postmen. A rather piquant situation developed. In the nineteenth century, as in our own, the mails were not only an instrument for carrying letters but also for inspecting them. The Austrian postal service showed a special inquisitiveness. A detective postmaster wrote to Vienna: “I have often noticed that the Rothschild couriers who travel from Naples to Paris…take with them all the dispatches of the French, English and Spanish ministers accredited in Naples, Rome and Florence. In addition, they also deal with the communications passing between the courts of Naples and Rome and their legations throughout Europe…These Rothschild couriers travel via Piacenza. As we have an Austrian garrison there…it might be possible to induce one or another of these clerks to hand over their dispatches for our perusal…”
The matter was deemed important enough to be brought to the Chancellor’s attention. A most delicate dilemma confronted Metternich. On the one hand, it would be delicious to read not only foreign diplomatic mail, but, particularly, the confidential exchanges of his dear, inscrutable friends the Rothschilds. On the other hand, the Chancellor himself often used The Family’s blue-and-yellow-capped supermessengers. His own high secrets might be revealed to a subordinate postal official.
Metternich was not for nothing Europe’s most intricate diplomat. He issued the following order:
“The couriers of the House of Rothschild passing through Lombardy between Naples and Paris are to be regarded and treated as official Austrian couriers when carrying dispatches with the [Austrian] Imperial and Royal seal…If, however, they should be found carrying letters which have nothing to indicate that they are of an official [Austrian] nature, such letters shall be subject to the usual regulations in force.”
But The Family outfoxed the fox. It knew that some of its mail was being tapped. It also realized that Metternich would believe some otherwise unconvincing statements if he thought he was not meant to read them. The brothers, of course, had a vested interest in peace, especially between Austria and France. And so there would travel from Paris to the Vienna house an intrafamily letter of supposedly “strictest secrecy” which went on and on about the flattering remarks the French King had made about the Austrian Chancellor: The Family had certain messengers who were excellent at being intercepted.
The Family also had a marvelously changeable shape. Its couriers bound it tightly together; but when it received an awkward request—say, for armament funds—it could sprawl on the instant into five widely separated and quite disorganized brothers. “Your Excellency,” the reply of spokesman Amschel would read, “…your Excellency will be graciously aware that I can act in this matter only in consultation with my absent brothers…and will therefore attempt to inform them of your request.” Unfortunately, it would develop that Salomon was deep in the toils of a health cure; that communications to Carl had been cut off by an Italian mutiny; that James was traveling, and Nathan bedded by the grippe.
The five could play infinite tricks with their fivefoldedness. Bismarck discovered that his gardening friend Amschel had the nerve to support Austria financially against Prussia. He protested. Amschel became unwell—that is, inaccessible. Bismarck remonstrated with the other Rothschilds, and the other Rothschilds declared themselves ever so astonished, perplexed, puzzled by misguided, senile old Amschel.
Then there was the case of Nathan, who backed the liberal, and therefore anti-Metternich, party in the Spanish civil war. Metternich fumed. Thereupon James complained to Salomon, in a neatly intercepted letter, that Nathan had been led astray by his radical wife and father-in-law, and how such transgressions must be prevented in future. Metternich forgave.
No maneuver was too devious for The Family to force the peace. During the tension between quasi-liberal France and ultraconservative Austria, it hatched pacifist plots in most of the government palaces in Europe. Its pipelines reached everywhere. Nathan in London was very close to the Duke of Wellington and to the innermost British circles. Salomon had the eye, ear and purse of Metternich. James saw the French King every few days. Carl kept check on the masters of Italy, from Naples to Sardinia. Quite often it happened that the chief executive of an important power wanted to convey some crucial thoughts to his counterparts elsewhere without committing himself officially. The five brothers were perfect vehicles—if such transmission suited their purpose. After talking to friends in Downing Street, Nathan would send off certain observations, which James produced at St. Cloud, Salomon cited in Vienna’s Hofburg…Ostensibly, these were scribblings from Rothschild to Rothschild. Actually, they had the force of privy communications between governments.
At one point Nathan opined that “if France takes action against the Austrian side, we in England shall join the Austrians. If the Austrians take action, we shall join France.” That little Family chat made an enormous impression by the Seine and by the Danube. It helped leash the two empires for the time being.
The brothers knew that sometimes it was not diplomacy they must wield, but unvarnished power. In 1831 Louis Philippe, the semirevolutionary King of France, persisted in abetting the semirevolutionary new Italian states against the Habsburg Empire. Austria talked about defending legitimacy to the last drop of blood. France swore to die for freedom. James in Paris seized on the one chance for peace: Casimir Périer, a prudent financier like himself, must be premier. “I informed his Majesty,” James wrote to Salomon, “that if he took Périer into his ministry, his credit would rise.”
Périer received his appointment. Austrian troops, however, marched into Bologna. The French government, under strong popular pressure, was about to express itself in perilous language. The credit of France now intervened directly. “Yesterday,” James wrote Salomon, “the note was drafted which France is about to send. It contained the phrase: ‘évacuez immédiatement Bologne.’…I shall see that this is left out.”
It was. France made do with Platonic indignation, and war was staved off.
On other occasions the brothers Rothschild waxed blunter still. In 1839 King Leopold of new-born Belgium wanted to wrest by force the provinces of Luxembourg and Limburg from the Netherlands. Gutele’s boys would not let him.
“The Belgian government,” Salomon declared openly, “will not get a half-penny from us, although they have been begging for money for months. Difficult though I found it to keep refusing, I shall feel compensated if Belgium yields and peace is restored.”
Belgium yielded. Rothschild loaned.
“It is in the nature of things,” Bismarck advised an aide who was trying to get Prussian armaments financed, “that the House should do everything possible to prevent war from breaking out. This fact shows how delicate one must be in dealing with Rothschild.”
2. Short-Term and Long
Bismarck, not ordinarily a delicate type, did at last get some wars in against Austria and France. But in the end, as another chapter will show, the Rothschilds gave him their own brand of comeuppance.
Just the same, Bismarck had his way. The Family’s international veto power waned in the second half of the nineteenth century. In part this must be ascribed to The Family’s own success. It had helped to stimulate the economy of the various countries so briskly that they were now beyond dependence on any one group of financiers, however powerful.
The boys’ ultimate historical performance proved what any stock-exchange connoisseur knows: short-term consequences of a Rothschild move are usually the very opposite of its long-term effect. The immediate impact of those five brothers was neither sweet nor happy, nor anything but ruinous to competitors. The quintet was not the kind to bother about the social good. They were called Jews of the Bourbons, Coffers of the Reaction, Usurers of Metternich. Some of those epithets seemed hard to refute. And yet all that unprecedented ruthlessness and craft had an eventual positive result.
The efficiency which powered Mayer’s sons brought on enormous economic spring cleaning; a sweeping away of fiscal dead wood; a renovation of old credit structures and an invention of new ones; a formation—implicit in the sheer existence of five different Rothschild banks in five different countries—of fresh money channels via clearinghouses; a method of replacing the old unwieldy shipping of gold bullion by a worldwide system of debits and credits.
One of the greatest contributions was Nathan’s new technique for floating international loans. Before, the English investor had been hesitant about foreign projects. He didn’t much care to receive dividends in all sorts of strange and cumbersome currencies. Now Nathan attracted him—the most powerful investment source of the nineteenth century—by making foreign bonds payable in pounds sterling.
Altogether, the Rothschild work and the Rothschild name (with Napoleon’s, the greatest self-made image) served to supplant the era of title and pedigree with the era of money and ability. In one of his more dined-and-wined moments at rue Laffitte, Heine would think of the five brothers as great revolutionaries: Hadn’t they usurped the last pretensions of feudalism? Hadn’t they abolished the stiff, stagnant pre-eminence of land ownership? Hadn’t they created instead the investor’s domain of money, capital and state bonds which anyone could possess at any time? Weren’t these the most flexible, equitable, productive ruling instruments yet invented? And weren’t the Rothschilds the archdemons of progress?
We needn’t be so carried away as Heine to concede a fact: Mayer’s boys helped abolish the very absolutism which had at first used them for its tool. However un-wittingly, the Rothschilds supplied more soil for the flowering of bourgeois democracy than any other five individuals in Europe.
Railroads were a case in point. The Family, more than any other group, brought the locomotive to Europe. As usual, what they saw was the income promised by those shining rails. At the same time, the iron tracks were to become the lifeline of commerce. Hitherto travel had been the privilege of aristocrats and soldiers; now worker and peasant gained a mobility they had not known before.
Yet the Rothschilds practically had to force railroads on a suspicious continent. It was to be the most hotly contested venture in Family history.
3. The Railway Madness
(a) Austria
The railways were born in England, as George Stephenson’s “steam-coaches,” right under Nathan’s nose. But by the time he began to smell the lucre in their soot, they were no longer buyable. Other bankers had gotten there first. Nathan, of course, would not touch what he could not own or control. He contented himself with alerting his brothers on the Continent.
In Vienna, Salomon picked up the idea. It was a brave move. Austria, the most dashingly backward empire of its time, thought that horseless carriages were almost as weird as socialism. To prepare a more hospitable climate, Salomon dispatched a fact-finding committee to England; it was composed of von Wertheimstein, his general manager, and Professor Franz Riepel of the Vienna Polytechnic Institute, an early advocate of the horseless madness.
The two returned a report full of technical and financial enthusiasm. Nevertheless, they could not very well overlook the resistance to the chimneyed freaks even in liberal Britain. In some English counties a postillion had to ride fifty yards ahead of the locomotives to warn local inhabitants, with cries and trumpet blasts, of the approaching abomination. The gentry, who were fond of their horses, thought it was all a horrid bore. One of Nathan’s best friends, the Duke of Wellington, remarked that “railroads will only encourage the lower classes to move about needlessly.”
Salomon read the report and paused. In 1830 the July Revolution in Paris produced business vagaries which needed all his attention. But in his mind the conviction grew that enormous profits could be made with a North Austrian railway transporting Galician salt and Silesian coal to Vienna.
Business settled down in 1832. Salomon struck formidably and quietly, as was his wont. For a closer introduction to the transport business he bought the horse-tramway network (operated by Emile Zola’s father, of all people) in the Austrian provinces. He also hired a battalion of expert engineers who surveyed, foot by foot, the whole route of the projected line.
Soon afterward (in April, 1835) a great poetic and public-minded document reached the desk of Ferdinand II of Austria. It began with “Most Excellent and Most Puissant Emperor! Most Gracious Emperor and Lord!” and sang ardently the “benefits to the state and to the public weal” a railroad between Vienna and Galicia would bring, begged his Majesty’s most gracious sanction and ended, “your Majesty’s most true and humble servant, S. M. v. Rothschild.”
Prince Metternich favored the application. And since his Most Puissant Majesty was a signature-writing device operated by the Chancellor, the application received All-Highest approval. On November 11, 1835, Rothschild pocketed the concession to build the European Continent’s first sizable railway—sixty miles of track from Vienna to Bochnia in Galicia. (The Imperial Postal Service exacted a clause from Baron Rothschild insuring reimbursement if his iron beasts ate up too much mail business.)
The project was estimated at twelve million gulden, and Salomon immediately proceeded to provide it. He issued 12,000 shares at 1,000 gulden each—retaining 8,000 for himself, offering 4,000 on a first-come, first-served basis. Attracted by the confluence of two myths, Rothschild and railroad, the investing public came in droves.
But a general public existed, too. If the railways caused resistance in top-hatted England, they provoked revulsion in shako’d Austria. Salomon was broadly damned for foisting twentieth-century fiendishness on a peaceful eighteenth-century state. The Vienna press began to seethe with terrors and prophecies. Experts proved the madness of Rothschild’s scheme. The human respiratory system, they said, could not stand a speed exceeding fifteen miles an hour. The lungs were likely to collapse, and the organs of circulation jolted out of place. Blood would spurt from the travelers’ noses, eyes, ears and mouths. Any tunnel more than sixty yards long would suffocate all the riders in all the carriages; the train would rush out at the other end, a driverless berserk hearse. Certainly no passenger should take a steamcoach trip without being attended by his personal doctor who could intercede with the engineer at the throttle.
