The rothschilds, p.5
The Rothschilds, page 5
3. Round Three: The Giant Gold Smuggle
“The East India Company,” Nathan would reminisce at a dinner party near the end of his life, “the East India Company had 800,000 pounds’ worth of gold to sell. I went to the sale and bought it all. [Nearly eight million dollars!] I knew the Duke of Wellington must have it. The government sent for me and said they must have the gold. I sold the gold to them, but they did not know how to get it to the Duke in Portugal. I undertook all that and sent it through France. It was the best business I have ever done.”
This sums up rather gruffly an enormous, incredibly cunning operation. Basic to it is the fact that Napoleon played handmaiden to the family one more time.
In 1807 he had produced for them an ideal goods shortage; in 1810, just the perfect kind of poor investment situation. Now he obliged with an exquisitely placed front line. The Emperor’s marshals were fighting Wellington behind the Pyrenees, far away from English supply lines. To feed his army, the Duke had to issue drafts on the English treasury. A whole mob of Sicilian and Maltese financiers cashed these at outrageous discounts and pushed them along laborious paths to London for redemption. Sporadically the Rothschilds had participated in the traffic. But until 1811 this had been a sideline.
Now 800,000 pounds’ worth of gold waited for Nathan in a vault. What scores of bankers had done by way of IOU’s and notes seeping toward London, he and his brothers wanted to accomplish alone by hard money seeping to Spain. By profitable commission from His Majesty’s Government, Nathan became, in effect, chief broker and paymaster general to England’s most important army.
There was only one way to route the cash: through the very France England’s army was fighting. Of course, the Rothschild blockade-running machine already had superb cogs whirring all over Germany, Scandinavia and England, even in Spain and southern France. But a very foxy new wheel was needed in Napoleon’s capital itself.
Enter Jacob—henceforth called James—the youngest of Mayer’s sons. On March 24, 1811, he registered with the French police on his arrival in Paris, his domicile being 5, rue Napoleon. Undoubtedly he was helped by Grand Duke von Dalberg, a high Napoleonic dignitary who had just been given a most advantageous loan by old Mayer. Probably James knew Paris a little from some previous visits. But he was only nineteen. He had lived in the ghetto most of his life; he spoke only German and Yiddish. Yet he moved through the sleek, treacherous ground of French high finance with a blinding speed and a sure-footed virtuosity that matched any exploit of Nathan’s.
Two days after his official arrival, Mayer’s youngest was already the hero of a report by the French finance minister to Napoleon. “A Frankfurter named Rothschild,” wrote the minister, “is now staying in Paris and is principally occupied in bringing British ready money from the English coast to Dunkirk. He is in touch with bankers of the highest standing in Paris…He states that he has just received letters from London…according to which the English intend to check this export of gold…”
In fine, the minister had been fed some very carefully edited gossip, which gave away the existence of a gold stream but kept him in strict innocence of its destination. He had swallowed James’s “letters” and other custom-tailored evidence showing—the exact opposite of the truth—that Britain feared being weakened by the outflow of money.
James calculated well. What the British enemy seemed to fear, Monsieur le Ministre automatically desired. In the space of a few hundred hours Mayer’s youngest had not only gotten the English gold rolling through France, but conjured a fiscal mirage that took in Napoleon himself. A teen-age Rothschild tricked the imperial government into sanctioning the very process that helped to ruin it. What had happened to Bethmann Brothers would now happen to an empire.
The family machine began to hum. Nathan sent big shipments of British guineas, Portuguese gold ounces, French napoleons d’or (often freshly minted in London) across the Channel. From the coast James saw them to Paris and secretly transmuted the metal into bills on certain Spanish bankers. South of the capital Kalmann materialized, took over the bills, blurred into a thousand shadowed canyons along the Pyrenees—and reappeared, Wellington’s receipts in hand. Salomon was everywhere, trouble-shooting, making sure the transit points were diffuse and obscure enough not to disturb either the French delusion or the British guinea rate. Amschel stayed in Frankfurt and helped father Mayer to staff headquarters.
The French did catch a few whiffs of the truth. Sometimes the suspicious could be prosperously purged of their suspicion. The police chief of Calais, for example, suddenly was able to live in such distracting luxury that he found it difficult to patrol the shoreline thoroughly. On the other hand, the commissioner of the Paris police proposed more than once that young James be arrested. But the protection of the finance ministry proved stronger.
While Napoleon struggled his might away in the Russian winter, there passed through France itself a gold vein to the army staving in the Empire’s back door.
Soon the Rothschilds became England’s lifeline not only to Wellington but also to her allies. During the final years of the Napoleonic war, Britain appropriated immense subsidies for Austria, Prussia and Russia. Yet she had no convenient means with which to effect payment. The shipping of bullion involved a prohibitive risk. Issuing single huge drafts on the British treasury would ruin the sterling rate. John Herries, the Exchequer officer in charge of foreign financing, knew one sure answer: let Nathan do it.
Nathan and his brothers did it by operating simultaneously from their variously shifting bases. Between them, Mayer and boys established the first great international clearinghouse. They expedited most of the fifteen million pounds Britain advanced to her friends. With so light a touch were these stupendous transactions juggled, with such soundless grace, that the sterling rate never suffered a dent. The only perceptible commotion was the abacuses clicking in the counting houses. To this day the Rothschild commissions are unknown and incalculable.
But even all that was just the beginning.
4. Round Four: The Scoop of Scoops
The Battle of Waterloo established England as the foremost European power. To the Rothschilds, her chief financial agents, Waterloo brought a multimillion-dollar scoop. The fame of that scoop has endowed it, in later years, with carrier pigeons and other legendary appurtenances. But like most family feats, it was based on very hard work and very cold cunning.
The hard work had started a long time before. As soon as the boys had fanned out from Frankfurt, they had started sending each other industriously, endlessly, items of commercial or general interest. Soon a private news service developed. (At the London house it survived down to World War II in the form of a dozen blue-clad couriers ready to fly off at a moment’s notice to Rio, Melbourne or Nairobi.)
Rothschild coaches careered down highways; Rothschild boats set sail across the Channel; Rothschild messengers were swift shadows along the streets. They carried cash, securities, letters and news. Above all, news—latest, exclusive news to be vigorously processed at stock market and commodity bourse.
And there was no news more precious than the outcome of Waterloo. For days the London ’Change had strained its ears. If Napoleon won, English consols were bound to drop. If he lost, the enemy empire would shatter and consols rise.
For thirty hours the fate of Europe hung veiled in cannon smoke. On June 19, 1815, late in the afternoon a Rothschild agent named Rothworth jumped into a boat at Ostend. In his hand he held a Dutch gazette still damp from the printer. By the dawn light of June 20 Nathan Rothschild stood at Folkstone harbor and let his eye fly over the lead paragraphs. A moment later he was on his way to London (beating Wellington’s envoy by many hours) to tell the government that Napoleon had been crushed. Then he proceeded to the stock exchange.
Another man in his position would have sunk his worth into consols. But this was Nathan Rothschild. He leaned against “his” pillar. He did not invest. He sold. He dumped consols.
His name was already such that a single substantial move on his part sufficed to bear or bull an issue. Consols fell. Nathan leaned and leaned, and sold and sold. Consols dropped still more. “Rothschild knows,” the whisper rippled through the ’Change. “Waterloo is lost.”
Nathan kept on selling, his round face motionless and stern, his pudgy fingers depressing the market by tens of thousands of pounds with each sell signal. Consols dived, consols plummeted—until, a split second before it was too late, Nathan suddenly bought a giant parcel for a song. Moments afterwards the great news broke, to send consols soaring.
We cannot guess the number of hopes and savings wiped out by this engineered panic. We cannot estimate how many liveried servants, how many Watteaus and Rembrandts, how many thoroughbreds in his descendants’ stables, the man by the pillar won that single day.
5. Round Five: Conquering the Victors
The climax of Waterloo was followed by peace—and a bleak surprise. During the war the Rothschilds had been irresistible. Now a snag developed, perhaps because someone indispensable had passed from the scene.
On September 16, 1812, on the Day of Atonement, old Mayer prayed and fasted the entire day in the Frankfurt synagogue. The next morning an old wound from an operation broke open. He had barely enough strength to dictate a new will, which placed his business exclusively in his sons’ hands.
…my daughters, sons-in-law and their heirs having no part whatsoever in the existing firm M. A. Rothschild und Söhne…nor the right to examine the said business, its books, papers, inventory etc…I shall never forgive my children if they should against my paternal will take it upon themselves to disturb my sons in the peaceful possession of their business.
Any violator of family harmoniousness was to be limited to the legal-minimum share of a total estate probated at far below its real value.
Then, the last dynastic chore completed, initialed, notarized, at 8:15 P.M. on September 19, 1812, he died in Gutele’s arms, the last truly Biblical patriarch of our time.
What he could not bequeath to his sons was his personality. They had no pliant dignity, no easy graciousness, no savoir-vivre with which to beguile a prince or flirt in a salon. Their fortune was the product of elemental vigor and precision-timed craft. These had served them well during the urgencies of war. But now older values resumed their accustomed place. One didn’t smuggle at the Congress of Vienna. One danced. The Rothschild boys were not dancers; ergo, they would not do as bankers.
The economics of post-Napoleonic Europe centered largely on the efforts of various countries to tap financial resources from within; that is, to float national loans. Here the Rothschilds, with all their immense new capital, found themselves treading air.
Only little Prussia let them handle a loan. Austria, the big plum, preferred more genteel company. Its ancient court lived on precedent and punctilio. Already back in 1800 there had been a brush with those pushy Frankfurters. They had signed a letter “k.k. Hofagenten” (Imperial-Royal Court Agents) when actually entitled to merely one “k.” (Imperial only). Now in 1816 the brothers were multimillionaires. Yet only after the strongest pressure from John Herries, their particular supporter in the English treasury, would Vienna accept an English subsidy managed by these grabbers of the extra “k.”
The boys, trying hard for a good impression, acquitted themselves with special subsidiary brilliance. By devising ways of waiving commissions and interest charges, they saved the Austrian treasury several millions. As a result, in 1817 Vienna threw them the little “von,” much as one throws a dog a bone.
But the Rothschilds were not the kind to be fobbed off with a distinction by no means singular even for Jews. Nathan asked for the honorary Austrian consulship in London. He was answered by evasions. The five brothers together worked out far-reaching and favorable propositions. There was no real reply at all.
In France the situation seemed even worse. Here Louis XVIII had literally borrowed the splendor of the Bourbon restoration from Nathan and James Rothschild. They had advanced him British drafts to finance his magnificent entry into Paris. But that had been in 1814, with cannonades still a palpable memory. Now, three years later, the old patrician bankers were back, calling the tune from their drawing rooms. Compared to their manners, any move from the Rothschilds sounded like a hopelessly rude noise.
The new French government prepared a great loan of 350 million francs and entrusted it to Ouvrard, a distinguished French financial name, and to Baring Brothers, fashionable English bankers. To these, Mayer’s sons were “simple coin changers.” The loan, sans Rothschild, became a huge success.
In 1818 negotiations began for an additional issue of some 270 million francs. Again Ouvrard and Baring were front runners; the Rothschilds, futile haunters of the finance ministry. This loan, though, was to liquidate the French war indemnity. Its ultimate disposition would take place at a conference with the victorious powers at Aix-la-Chapelle.
In terms of family history, the forgotten congress at Aix is a much more important landmark than the still notorious scoop of Waterloo. Aix marked the first social confrontation between the great world and the newly great Rothschilds. It began as a round of banquets and soirees à la Congress of Vienna, with the Rothschilds fascinated and frozen out like children before a Christmas window. It climaxed with a furious thunderclap. And when the roar subsided, the children were in possession of the store.
Nobody foresaw this development during the first week, possibly not even Salomon and Kalmann, who attended as family representatives. To begin with, England had sent Lord Castlereagh instead of John Herries, their old friend. Salomon and Kalmann must have felt at sea in a world so charged with antique protocol, with such finely beveled compliments. Their natural habitat was the stock exchange, not the ballroom.
Still, the most expensive tailors had fitted them vests and cravats of the finest material. Their coaches glittered. Their horses shone. What if their grammar was a little primitive? Furthermore Kalmann had just married Adelheid Herz, of the most soigné Jewish family in Germany. The bride was to spearhead the family’s bon ton.
Yet it was all no use. Whenever the brothers wanted to see Prince Metternich, he was just being feted by the Duke de Richelieu. Lord and Lady Castlereagh could not be found, since they kept driving about with Prince Hardenberg. The Rothschilds were left out of all these cordialities. Baring and Ouvrard, their rivals, seemed included everywhere.
Only secretaries were available, and the secretaries smiled coolly: Yes, negotiations with Baring and Ouvrard were proceeding toward a conclusion. Why change partners in midwaltz? Hadn’t Baring and Ouvrard succeeded with the 1817 loan? Weren’t the bonds of the 1817 loan rising on the Paris bourse that very moment?
The Rothschilds decided to try once more. They completed their purchase of Friedrich von Gentz, a brilliant publicist, friend to Metternich, and man-about-congress. They took a big option on David Parish, a stylish young banker sporting good connections with Baring. They bought every buyable social grace in sight. They checked and rechecked the impeccability of their trousers and frocks, of the servants’ livery. Everything was in order.
Nothing worked. In the salons, one was amused by the puzzlement in Kalmann’s face, by the Levantine frowns of Salomon. Unnoted in the general merriment went another circumstance: the couriers who entered and left the brothers’ residence with growing frequency.
Through October, 1818, Aix bowed, gamboled, promenaded and ignored those Rothschild clods. On November 5 something strange happened. The French government bonds, the famous loan of 1817, began to fall after a year’s steady rise. Day after day they dropped more steeply. And not only that—other securities wavered. Tempests came down out of a blue sky. A crash loomed, not just in Paris, but in bourses all over Europe.
The music stopped at Aix. The noble gentlemen stood about dazed in the suddenly suspended splendor. After all, one had made one’s little investments.
It was the princes who frowned now while, curiously, Kalmann and Salomon smiled. A rumor shivered through the drawing rooms. Could those Rothschilds have…
Those Rothschilds had. With their boundless reserves they had bought the rival-issued bonds for weeks and weeks, bulling the paper while secretly cornering it. And then, in one relentless swoop, the boys had dumped the whole appalling load. Across the entire Continent the underpinnings of finance groaned. The great world knew now what it meant to cut a Rothschild.
Metternich, the Duke de Richelieu, Prince Hardenberg did what must be done. A stern interview ensued between them and Ouvrard and Baring, in whose (as yet unborn) new loan they had already reserved parcels on their own account. One talked; one parted; the loan-to-be dissolved into nothing.
Then Salomon and Kalmann were bowed into the presence, and lo! their clothes were now the very eye of fashion, their money the darling of the best borrowers.
And as the music began again, and two princesses obediently took the arms of two stout, round-faced men, everyone knew that it had happened at last. Europe had become richer by a great name. The boys had become The Rothschilds.
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* This translation into today’s dollars—like all others in this book—is necessarily a rough calculation; the establishment of exact dollar equivalents is in most cases impossible.
