SIXTEEN
Dans toute l’Europe il n’y a qu’un cris [sic]:a [sic] bas l’infâme famille des RothschildNEMESIS
Le peuple se vengera!
Le peuple ne veut pas l’argent qu’il a perdu . . . mais le peupleveut le [sic] peau de les [sic] infâmes juifs.
—ANONYMOUS LETTER TO NEW COURT, MARCH 1848
The only thing we must aim at, is to maintain our name in honour, & for that purpose, one house must support the other with all its means & power, for the dishonour of one reflects on the other.
—ANSELM TO HIS LONDON COUSINS, APRIL 1848
“[T]here is no error so vulgar,” wrote Benjamin Disraeli in 1844, “as to believe that revolutions are occasioned by economical causes. They come in, doubtless, very often to precipitate a catastrophe; very rarely do they occasion one.” The succeeding four years were to prove him badly wrong.
Unheralded by economic crisis, the 1830 revolution had seemed to the Rothschilds like a bolt from the blue. By contrast, the 1848 revolution came after such a protracted period of economic depression that they almost grew weary of waiting for the storm to break—and perhaps even began to imagine that it never would. If they did ultimately fail to prepare themselves adequately for what was the greatest of all nineteenth-century Europe’s political crises, the reason perhaps lies in the timing of the revolution. The economic nadir of the 1840s in fact came in 1847; by the spring of 1848 the worst was over. With hindsight, historians can infer that it was precisely at this point that political instability was most likely to occur, as popular expectations rose; but to contemporary bankers that was far from apparent.
Another difference between 1830 and 1848 was the Rothschilds’ own position as targets of revolutionary action. In 1830 James had been sufficiently distanced from the regime of Charles X to allow a relatively easy switch to the Orléanist side. Eighteen years later he and his brothers had become much more closely identified with the established regimes not only in France, but throughout Europe. As bankers not only to the Austrian imperial government itself but also to numerous smaller states in Germany and Italy, they appeared—especially to the nationalist elements within the revolutionary movements—as the paymasters, if not the masters, of the Metternichian system. Eduard Kretschmer’s 1848 cartoon, Apotheosis and Adoration of the Idol of our Time, portrays “Rothschild” seated upon a throne of money, surrounded by kneeling potentates (see illustration 16.i)—a popular image of the period. At the same time, the Rothschilds’ financial commitments to these various states made it difficult for them to welcome the radical redrawing of Europe’s boundaries implied by the first principle of political nationalism—that political and ethnic or linguistic structures should be congruent. Writing in 1846, the poet Karl Beck lamented “Rothschild’s” refusal to use his financial power on the side of the “peoples”—and particularly the German people—instead of their detested princes.
16.i: Eduard Kretschmer (after Andreas Achenbach), Apotheose und Anbetung des Götzen unserer Zeit (1848).
Nor was it as easy for the Rothschilds to contemplate defecting to the side of the revolution when that now implied a republic rather than merely a dynastic change. And not only a republic: for the 1848 revolution was, unlike its predecessor, as much concerned with social as with constitutional issues. For the first time, socialist (as well as ultra-conservative) arguments against economic liberalism were voiced alongside—and sometimes in contradiction to—the older arguments for political liberalism and democracy. Not only were the revolutionaries concerned with rights (to free speech, free assembly and a free press) and with representation in constitutionally secured legislatures; some among them were also concerned to combat the widening material inequality of the early industrial era. In many ways the Rothschilds had come to personify that inequality. Nothing demonstrated that better than the explosion of anti-Rothschild sentiment in the wake of the accident on the Nord railway: while third-class passengers perished, the critics suggested, “Rothschild I” callously counted his state-subsidised profits. Another cartoon of 1848 which depicted Rothschild as the object of royal (and papal) veneration also featured, kneeling in the foreground, a ragged, starving family; and in the background a group of students marching under the banner of liberty (see illustration 16.ii). When the Russian revolutionary Alexander Herzen wished to define the bourgeoisie in 1847, he called it “a solid estate, the limits of which are the electoral property qualification below and Baron Rothschild above.” For Herzen liberalism was propagating a “malicious irony” when it claimed that “the destitute man enjoys the same civil rights as Rothschild,” or that “the sated is . . . the comrade of the hungry.”
As in the 1820s and 1830s, those who inveighed against the Rothschilds as capitalists could rarely resist making a connection with their Judaism. Typically, Karl Beck too could not resist alluding to “Rothschild’s . . . interest-calculating brethren,” “filling the insatiable money-bag for themselves and their kin alone!” Nor is it surprising that minor figures like Beck were doing this when the man who would ulti-mately prove the most influential of all the period’s revolutionaries had done exactly the same in February 1844 in an essay “On the Jewish Question” (though at the time, of course, there was little to distinguish Karl Marx from the numerous other radical hacks churning out anti-Rothschild abuse):
What is the secular basis of Judaism? Practical need, self-interest. What is the worldly religion of the Jew? Huckstering. What is his worldly God? Money . . . We recognise in Judaism, therefore, a general anti-social element of the present time . . . In the final analysis, the emancipation of the Jews is the emancipation of mankind from Judaism.
16.ii: Anon., Anbetung der Könige (1848).
Marx was not one to name names, of course, when he could couch his argument in Hegelian abstractions. But that he had the Rothschilds in mind is evident from the passage he quoted from the pamphlet by Bruno Bauer he was (ostensibly) reviewing:
“The Jew, who in Vienna, for example, is only tolerated, determines the fate of the whole Empire by his financial power. The Jew, who may have no rights in the smallest German states, decides the fate of Europe.” This is no isolated fact [continued Marx]. The Jew has emancipated himself in a Jewish manner, not only because he has acquired financial power, but also because . . . money has become a world power and the practical Jewish spirit has become the practical spirit of the Christian nations. The Jews have emancipated themselves insofar as the Christians have become Jews.
Only when society had “succeeded in abolishing the empirical essence of Judaism—huckstering and its preconditions” would “the Jew . . . become impossible.” In fact, the socialist argument could stand unsupported by racial prejudice, as Marx came to appreciate (after all, he himself had been born a Jew, as had Karl Beck); it would be other revolutionaries of 1848 like Richard Wagner who would later develop and refine this line of argument. Either way, the Rothschilds were extremely vulnerable to radical calls for redistribution of wealth and greater regulation of the capitalists/Jews who possessed it. This made the 1848 revolution much more dangerous to them than that of 1830.
Though politically close to Marx at the time of the 1848 revolution, Heine subsequently made fun of the early socialists’ motivations. In his last jottings, he wrote:
The main army of Rothschild’s enemies is made up of have-nots; they all think: “What we don’t have, Rothschild has.” They are joined by the main force of those who have lost their fortune; instead of ascribing their loss to their own stupidity, they blame the wiles of those who managed to hold on to what they had. As soon as a man runs out of money, he becomes Rothschild’s enemy.
And he adapted a traditional Jewish story in order to provide James with a possible reply to the socialist threat: “The communist . . . wants Rothschild to share out his fortune of 300 million francs. Rothschild sends him his share, which comes to exactly 9 sous: ‘Now leave me alone!’ ” In practice, however, it did not prove quite so easy to see off the threat of expropriation. In his first surviving letter (dated 1843), a young radical named Wilhelm Marr had made exactly the argument satirised by Heine. “The time is ripe,” he told his father, “to share Rothschild’s property among 3,333,333.3 [sic] poor weavers, which will feed them during a whole year.” The roots of Marr’s later Anti-Semitic League lie in the 1840s.
A few voices, as we have seen, were raised to defend the Rothschilds. One ingenious writer in the Paris Globe pointed out in 1846 that “no one today better represents the triumph of equality and work in the nineteenth century than M. le Baron de Rothschild”:
What is he, in fact? Was he born a Baron? No, he wasn’t even born a citizen; he was born a pariah. At the time of his birth, civil liberty, and even less political liberty, did not exist for Jews. To be a Jew was to be less than a lackey; it was to be less than a man; it was to be a dog that children chased in the street, hurling insults and stones. Thanks to the holy principle of equality, the Jew has become a man, the Jew has become a citizen; and once his intelligence [and] his activity . . . allowed, he could rise within the social hierarchy. What better or more incontrovertible evidence could there be that the principle of equality has prevailed? Yet it is democrats who close their minds and eyes to this spectacle! Nominal democrats, no doubt. Sincere democrats would have applauded this Jew who, beginning at the bottom of the social ladder, has arrived by virtue of equality at the highest rung. Was this Jew born a millionaire? No, he was born poor, and if only you knew what genius, patience, and hard work were required to construct that European edifice called the House of Rothschild, you would admire rather than insult it . . . You tactlessly cite Figaro, without understanding that Figaro was one of the privileged by comparison with M. de Rothschild, since Figaro had only to be born in order to see before him the vast and open battlefield of labour. At his birth, M. de Rothschild found this battlefield closed to him and yet he has, aided by freedom, climbed higher than you. To abuse M. de Rothschild is to blaspheme against equality.
Yet such reminders of the Rothschilds’ origins in the Judengasse were rare in the 1840s. Only in England, where the issue of the parliamentary representation of the Jews was to play such an important role throughout the revolutionary period, did it really seem relevant. The continental revolutionaries did not think of the Rothschilds languishing in the Judengasse, but imagined them luxuriating in châteaus like Suresnes and Grüneburg. In Joseph Eichendorff ’s allegorical comedy Liberty and her Liberators, for example, Amschel is once again satirised in the character of Pinkus, a self-made “cosmopolitan” (misheard by a page as Großhofpolyp) who acquires the title of baron and with it a castle and garden. Pinkus cannot abide Nature, preferring to impose strict uniformity (complete with steam engine) on the garden; whereas Libertas wishes to set the plants, birds and animals free. When she tries to do so, Pinkus has her arrested by his “armed forces”; but the spirits of the primeval forest come to her rescue, throwing Pinkus’s repressively ordered garden into chaos.
The Rothschilds were far from oblivious to the animosity they were incurring. Indeed, it might be said that they took positive steps to counteract it by making generous—and ostentatious—charitable gestures. In the very dry summer of 1835, Salomon offered 25,000 gulden towards the construction of an aqueduct from the Danube to the Vienna suburbs. When Pesth and Ofen were badly flooded three years later, he hastened to offer financial assistance for the victims. He donated 40,000 gulden to found an institute for scientific research in Brünn. And when Hamburg was ravaged by fire in 1842 he and James made substantial donations to the fund which was set up to assist the victims. Before the 1830s the Rothschild brothers’ charity had been largely confined within the Jewish communities of Frankfurt, London and Paris. Now Salomon made a point of contributing to causes which were regarded as good by the Habsburg elite. Baron Kübeck recorded in his diary how the elite responded. At a dinner for Count Kolowrat in 1838, Salomon declared expansively that his guest’s presence had:
“given me as much pleasure today as if I had been given a thousand gulden, or had given them to a poor man.” Thereupon Count Kolowrat replied, “Very well, give me the thousand gulden for a poor man who needs help, and has applied to me.” Rothschild promised to do so and after dinner Count Kolowrat was given the thousand gulden.
So frequently did Salomon act in this way that it was possible for a sentimental novella of the 1850s to portray him as a kind of Viennese Santa Claus, benignly siding with a carpenter’s daughter who wants to marry her rich father’s gifted but poor apprentice. The high point of this mawkish work is a description of the throng of Schnorrer in the antechamber of Salomon’s Renngasse residence: the man who claims to be God’s brother-in-law (he is sent packing); the man who wants Salomon to be the godfather to his child (he gets 50 gulden); and the woman whose five-year-old daughter can recite seventy-two poems from memory (whose reward is not recorded). That they are all drawn to the house of Rothschild is explained not just by his wealth, but by his universally acknowledged wisdom and generosity. At one point, genial old Rothschild even delivers a homily to a young Frankfurt banker on the need for those who are rich to be generous.
It may well be that this was the way Salomon wished to be regarded. But not everyone who came into contact with him would have endorsed this characterisation. Moritz Goldschmidt’s son Hermann—a boy in the 1840s—remembered him as an impetuous, impatient, despot: “a brutal egoist, a man without wisdom or education, who despised those around him and took the opportunity to treat them ruthlessly [just] because he was rich.” He ate and drank to excess. He was habitually rude to everyone from his barber to the Russian ambassador and surrounded himself with sycophants. He had a lecherous passion for “very young girls,” his “adventures” with whom had to be hushed up by the police. Above all, Salomon was extravagant. He habitually dressed in a blue suit with gold buttons and nankeen or white stockings and, when he needed a new suit or hat, bought twelve at a time for good measure. He drove around Vienna in a luxurious carriage with a liveried servant. In 1847—in the depths of the economic slump—he spent immense sums building a new residence and office in the Renngasse. To be sure, Goldschmidt was looking back in anger when he wrote; but his hostility towards Salomon was probably not so different from that felt by many of his more politically radical contemporaries.
The Frankfurt Rothschilds too sought to allay popular hostility by acts of public benevolence. In May 1847 Amschel distributed bread ration cards to the poor of Frankfurt at a time of acute food shortages in the town. But, although he received “a unanimous vote of thanks” from the Frankfurt Senate, this does not seem to have done much to enhance his popularity. As his nephew Anselm observed when his uncle raised the possibility of buying British grain for the German market, “We must be very careful in Germany about corn; there were a great many riots all & everywhere against corn dealers, & if the public would know that we are indirectly interested in corn transactions there might be a burst out [sic] against us.”
Perhaps the most successful gesture of public-spiritedness at this time was made by the English Rothschilds in response to the catastrophic potato blight and famine in Ireland—the worst of all the calamities of the 1840s, which cost the lives of around 775,000 people and drove a further two million to emigrate. Ireland was not a land with which the Rothschilds had many dealings; yet as early as 1821, hearing rumours of an impending famine there, Nathan had alerted Lord Liverpool to the possibility of buying “American and East India Rice before speculators come into the market, the price of which is at present low and the Stock large and which in case of a deficiency of the Potato Crop would supply the numerous Poor of that Country with a wholesome food during the Winter.” When Peel used the Irish famine twenty-five years later to justify repealing the Corn Laws (thus freeing the import of grain into the British Isles, but also bringing down his own government) the Rothschilds were ambivalent. While Alphonse viewed Peel’s conversion to free trade “without admiration” as an “utter revolution,” his father “very much regretted” Peel’s fall—though probably more for the diplomatic implications of Palmerston’s return to office.
Lionel, by contrast, was a thorough-going Free Trader; but he understood that free trade alone would not alleviate the famine in Ireland, because of the general European cereal deficit. In the absence of a more than half-hearted official relief effort, he therefore took the lead in setting up at New Court the British Association for the Relief of the Extreme Distress in the Remote Parishes of Ireland and Scotland, which raised some £470,000 in the course of its existence—even soliciting a contribution from that ardent Hibernophobe and Protectionist Disraeli! The Rothschilds themselves contributed £1,000 to the fund, the second biggest donation after the Queen’s £2,000 and on a par with the Duke of Devonshire’s. In this instance, contemporaries were sincerely impressed by the Rothschild effort. As he declared to a friend, it did the heart of the future Liberal Irish Secretary W. E. Forster “good” to see “Rothschild, Kinnaird, and some dozen other millionaire city princes meeting every day, and working hard. A far greater sacrifice to them than mere gifts of money.” Lionel personally involved himself in “regulat[ing] the purchase and shipment of provisions to Ireland and the formation of depôts around the coast and in the interior of the country.” Though it is possible that this activity was partly designed to win Catholic votes at the 1847 election (in which he was a Liberal candidate), his mother’s letters on the subject testify to the sincerity of the family’s response to the Irish disaster.
The contrast with the Paris house’s role is striking. The French food crisis was, of course, far from being as disastrous as the Irish: as Nat wrote in 1847, “They talk terribly of the misery of the poor devils in the provinces but I don’t believe it approaches that of Ireland—it cannot be compared to it.” Nevertheless, the 1846 wheat harvest was an exceptionally bad one: 15 per cent lower than the average of the previous ten years, it was the worst since 1831. James first began purchasing grain as early as January 1846 in anticipation of a bad harvest throughout Europe. A year later he was urging the French government to make purchases of Russian grain, and in the spring of 1847 he offered “to buy abroad 5 millions of francs worth of corn and flour for the consumption of Paris at our risks & peril and in the event of any loss accruing we s[houl]d bear it & the profit to be distributed in bread tickets to the poor.” Besides being philanthropic, James genuinely feared the social and political consequences of food shortages: as he told his nephews in November 1846, “[T]he situation with our grain, which really isn’t good, does scare me a lot.” For this reason, there is no doubt that he wished to be seen to be alleviating distress—Salomon wrote explicitly of “making our name popular” with “the masses” by providing cheap bread and salt.
Yet James had meant the grain purchases only to be non-profit-making; he had not intended to lose money outright. His assumption in early 1847, for example, was that prices would remain high; and when the improved harvest that year partly confounded that expectation he and Nat could not conceal their annoyance. “There never was anything so stupidly managed as this corn operation,” grumbled Nat: “to buy up all the corn in the world & to get it just as the harvest is coming on, we shall lose a great deal of money & in future we shall be more careful.” This may partly explain why James received little if any credit from ordinary consumers in Paris. As Nat had predicted, “I fancy the philanthropic feelings of our good Uncle will cost a little money. If people don’t attribute a wrong motive it will be all very well & charitable, but in Paris where nobody can imagine anything done disinterestedly I should not be surprised if it were said we do it for the sake of getting rid of what we have got at very high prices.” Violence of the sort which broke out in the faubourg Saint-Antoine in May 1847 was partly directed against grain merchants; James was widely perceived to have acted as little more. Indeed, it was rumoured that Rothschild bread was laced with ground glass and arsenic. Here perhaps was the origin of Heine’s imagined Rothschild nightmare: “He dreams he gives 100,000 francs to the poor and becomes ill as a result.”
What made the agrarian crisis doubly worrying for the Rothschilds was its impact on the European banking system. All countries which found themselves obliged to import grain from relatively remote markets like Russia and America experienced a drain of gold and silver which had a direct impact on their monetary systems. The most dramatic case was that of Britain. The effect of the shift to free trade was to increase immensely the import of corn to Britain, from 251,000 tonnes in 1843 to 1,749,000 tonnes in 1847. The success of Peel’s policy was thus not in reducing the price of bread, but in averting what would have been a very substantial price increase if the Corn Laws had remained in force. But the policy had an unexpected side-effect on one of Peel’s other great legislative achievements, for it forced the suspension of the Bank Charter Act of 1844. It did this because the act had reinforced the link between the Bank of England’s gold reserve and the British money supply. As corn imports flooded in and gold flooded out, so the reserve dwindled: from £15.8 million in 1844 to £9.8 million four years later. The Bank was obliged to increase its interest rates in steps from 2.5 per cent (March 1845) to a peak of 10 per cent (October 1847), thus causing a drastic monetary squeeze and finally forcing suspension. No other European economy permitted such a large outflow of specie; but Britain’s financial dominance of the continent at this period ensured that the contraction was felt everywhere. Only the grain exporters were spared, which partly accounts for the very different Russian experience in this period.
First to suffer was Frankfurt. As early as April 1846 Anselm reported: “The volume of business in Frankfurt is more and more shrinking, without a downpour of gold from heaven, I do not know how this place can recover”—a verdict echoed by James when he visited in July. Soon came the inevitable casualties, this time uncomfortably close to home. In 1847 the house of Haber collapsed, threatening to take with it the Beyfus brothers’ bank. As two of Mayer Amschel’s daughters (Babette and Julie) had been married to the Beyfuses, it was felt necessary to bail them out—to the tune of 1.5 million gulden—though this was done with extremely bad grace. The younger generation in London and Paris had little time for “old Mad Beyfus.” “If we are to pay because they chose to swindle,” complained Nat, “the Lord knows to what interest they may draw upon our cash box . . . the only regret I experience is that our worthy relatives have thought it fit to come to their assistance.” In fact, it seems to have been James who insisted on rescuing “so near a relation,” despite the grumblings of Amschel, Salomon and Carl—a good illustration of his ultimate leadership on familial matters at this time. Yet the fall of the Habers—to whom the Beyfuses were also related by marriage—attracted much more attention than the survival of the Beyfuses. Once again, there were articles in the press “attributing to us the ruin of . . . German industry.” “These attacks were so violent,” wrote Anselm, “that we found ourselves compelled to answer these libels by a declaration signed by us and inserted in the principal papers of Germany.” In the Bade nese parliament, a liberal deputy denounced the Rothschilds in terms which, Anselm reported, “aimed at nothing less than mobilising the masses in a religious crusade against our House, representing it as a vile monetary power . . . sitting [on] . . . all the kings, all the peoples.” It was even alleged that Lionel had agreed to bankrupt South German industry in return for a promise from Palmerston of a seat in the House of Commons.
Banking crises have a domino effect: the problems of Haber served to exacerbate the difficulties of one of the major Vienna banks, Arnstein & Eskeles. Trouble had been brewing in the Vienna market since early 1847, prompting Metternich to request Salomon to return urgently from Paris “to contrive some plan which would ward off the crisis of the market.” By the end of September it seemed that he had succeeded in “averting” an “immeasurable calamity.” However, the failure of Haber proved to have potentially disastrous implications for Eskeles, whom he owed 1 million gulden. It may be that Salomon was already heavily committed to Eskeles, with whom he had acted in close partnership for many years in issuing Austrian government bonds. Alternatively, he felt morally bound to intercede on his behalf. At any event, he informed the Frankfurt house on December 23 that Eskeles had
visited me a few hours ago and most frankly informed me that at present he does not need anything, however as soon as he does, he is in a position to transmit mortgages as a security to the full amount. I have in my portfolio 1,520,000 gulden drafts upon Eskeles of which 1,185,000 gulden are of Haber, the remaining with good endorsements.
In effect, he and Sina had agreed to bail Eskeles out, just as Salomon had wanted to rescue Geymüller six years previously. This time, however, Salomon had acted without consulting his brothers (remembering perhaps their refusal to agree to the Geymüller rescue). Naturally, he hastened to reassure them that there was no risk involved and that Sina was “caution itself.” He urged Anselm to remain “calm”: “With God’s help we shall remain the Rothschilds.” If his brothers—and son—suspected that a grave mistake had been made, Salomon had no inkling. The full gravity of his error would become apparent within the month.
In Paris, the Banque de France faced a “crisis in the supply of money” (James) from as early as October 1846. On previous occasions (in 1825 and 1836-9), it had been the Banque which had come to the assistance of the Bank of England; now the Bank repaid the debt by selling its counterpart silver worth 25 million francs. As in the 1830s, Rothschild attempts to play a part in this transaction were abortive: although James made a personal visit to London in December, the business was finally arranged by Hottinguer, and James’s subsequent offer of an additional 5 million francs was rejected by the Banque Governor d’Argout. The bad blood between New Court and Threadneedle Street since Nathan’s death had yet to be purged.
Nor was Lionel successful in his attempts to mediate between St Petersburg—rich in bullion from Russian grain exports—and the Banque de France. Benjamin Davidson was packed off via Riga to the Russian capital with several carriages filled with gold, apparently with the intention of establishing a new agency. But his expedition was a failure. Having endured a gruelling journey on snow-covered Russian roads, Davidson found himself effectively unable to do business as a foreign Jew. When the Russian government came to the Banque de France’s rescue by buying 50 million francs of rentes from its securities reserve, the Rothschilds were mere onlookers. In fact, the 1846-8 crisis proved a remarkably good opportunity for the Banque to enhance its power over the French monetary system: it was not sorry to see the collapse of Laffitte’s ambitious Caisse Générale, nor that of the various regional banks of issue Laffitte had encouraged in his time as Banque Governor. Nat summed up Rothschild feelings towards the Banque at this time succinctly: “They are a set of shits & behave to us as badly as possible, but it is not [in] our interest to quarrel with them.”
The position was not very different in London. As James put it in April 1847, with Bank rate climbing inexorably upwards, “Your Bank is the Master and driver of the situation. It is in a position to press its will on the world and so gold will have to be sent back.” Yet the Chancellor of the Exchequer, Sir Charles Wood, was less confident that the Bank would be able to master the crisis without breaching its legal gold reserve requirement. He and the Prime Minister were singularly unimpressed when they sought Lionel’s views on the matter. As Wood told his confidant, Samuel Jones Lloyd, “I saw at Lord John [Russell]’s, Lionel Rothschild & [Joshua] Bates [of Barings] this morning & (low be it spoken) I am utterly confounded at the ignorance they displayed, of facts & circumstances which I should have thought every merchant in the City must have known. They really had little or nothing to say for themselves, & admitted that things were proceeding rapidly.” If Nat’s views give any indication of what Lionel said, the Rothschild position perhaps struck Wood as politically naive. The Bank’s policy, he wrote, was “illiberal—I must say I can not understand their policy, they do all in their power to stop trade & the country will pay very dear indeed for their gold.” Wood knew that; what he wanted to know was how to suspend the 1844 rules without acquiring the reputation of a Vansittart. When he turned for advice (and whitewash) to the architect of the Bank Charter Act himself, Peel agreed that Lionel was not among “those who really understood the question of currency, whose prepossessions were in favour of the principles on which the Bank act was founded—and in favour of the Bank act itself.” It was, Peel told him, not “Rothschild, Masterman, Glyn and the leading men of the City—but . . . those with whom he had conferred in private [who] were the very persons . . . deserving of his confidence in the matter, Jones Lloyd, W. Cotton, Norman and the Governor of the Bank.” This bipartisan depreciation of Lionel’s expertise testifies to the Rothschilds’ loss of influence over monetary policy since Nathan’s death.
Deflationary monetary policies had direct effects on European industry. For the Rothschilds, it was their impact on the French railway companies which was most troublesome. It was not that railway investment and construction ceased: to the extent that these were pre-programmed by political and commercial decisions taken before the crisis, the problem was more that they were difficult to stop.1 The strain was therefore taken by the railway companies’ bankers and investors: as work proceeded, the banks found themselves being asked for loans to finance the inevitable cost overruns, while investors could only watch gloomily as the monetary squeeze drove down railway share prices. In truth, James had been over-optimistic, just as his English nephews had feared. On the very eve of the crisis, he and his son had confidently assured their relatives that, in addition to their economic benefits, the railways tended to make people politically “conservative and pro-government” too. “Every thing is calm in France,” Alphonse told Mayer Carl in January 1846, “there is a strong majority for the administration. Industrialism and the railroads absorb all thoughts and divert from politics. Please God that we may enjoy for many years to come the blissful peace.” Within a matter of months they were singing a different tune. “Well,” James confided in Anselm that August, “I must admit that when I think about the many commitments that the world has taken upon itself for the payments to be made everywhere for the railways, money which will not so quickly return into the hands of the business people, then I find myself trembling.” By October, he was having to reschedule payments due to the government for the Nord concession and to intervene to prop up the share price.
While Nat savoured his own vindication, James’s response to the crisis was to concentrate Rothschild attention on the Nord and extricate himself from the other lines in which he had a smaller interest. “If,” he told his nephews, “we can’t assume that when the railways draw monies from us we will then be able to get it back again, then I view the situation as being potentially very dangerous.” Accordingly, when “that blackguard fellow Talabot” requested additional funds for work on the Avi gnon-Marseille line, he was roundly rebuffed. Shares in other companies were also sold off. Nor did James commit more money of his own to the Nord: when the company required new funds for construction, he appealed directly to shareholders. Like so many malcontents in 1847, the Rothschilds themselves blamed the government for their problems. “The gov. must change their manners of doing business,” complained Anthony, “they have completely ruined their credit by the manner that they have behaved to the Railroad Companies. You can have no idea how every person cries out about losing their money & they all attribute it to the gov. & certainly they are very much to blame.” Of such grievances, multiplied a thousand-fold, are revolutions made.
The paradox was that even as they grew more and more disgruntled with the European governments’ economic policies, the Rothschilds continued—as if reflexively—to act as their lender of first resort. The transmission mechanism which linked the economic crisis of 1847 to the political crisis the following year was fiscal. All over Europe, the combination of rising expenditures (first on railways, then on social palliatives, finally on counter-revolutionary measures) and falling revenues (as earnings and consumption slumped) led inevitably to government deficits. Between 1842 and 1847, for example, the Austrian budget rose by 30 per cent. So deeply ingrained was his habit of lending to the government that, when he was approached for a new loan of 80 million gulden in February 1847, Salomon “thanked God” for “an extremely good business.” It was to prove anything but that. Along with Sina and the ailing Eskeles, he had taken on 2.5 and 5 per cent bonds worth 80 million gulden (nominal), in return for which the bankers had to pay the government 84 million in cash in instalments spread over five years. This would have been a good business only if five years of peace and prosperity had been at least probable.
Ostensibly, this loan was needed to finance new railways: that was what Salomon told Gasser when he tried to sell “a considerable sum” of the new bonds to the cash-rich Tsar. By November 1847, however, Austria was arming in preparation for intervention in Lombardy and Venetia, where insurrection seemed imminent. Salomon knew this because Metternich had told him, yet instead of being alarmed, he went so far as to offer more financial assistance. Incredibly, he agreed to lend a further 3.7 million gulden in return for 4 per cent bonds, which he furthermore pledged not to sell on the already stretched market: they would, he promised Kübeck, remain “in his own safe,” in return for interest of 4.6 per cent. With short-term rates in London at this time standing at 5.85 per cent and the price of 5 per cent metalliques already ten points lower than they had been three years before, this was an extraordinary (not to say suicidal) decision. Even as Salomon’s proposal was being discussed, Kübeck was warning that intervention in Italy would lead to “the complete breakdown of our finances.” “We are on the verge of an abyss,” he told Metternich presciently, “and the increasing demands on the Treasury arising out of the measures necessary to combat foreign revolutionary elements have led to increased disturbances within the country, as is indicated by the attitude of the provincial Estates, and by the literary outbursts in the Press of our neighbours.” Metternich was undaunted. When Salomon began to get cold feet in January, he angrily told him: “Politically, things are all right; the exchange is not. I do my duty but you do not do yours.”
As with his advance to Eskeles, Salomon’s undertakings to the government were made without reference to the other Rothschild houses. “We have very curious letters from Vienna,” Nat wrote to New Court at around the same time. “Our good Uncle is full of Austrian Metallics 2[.5]% & 5% & how he will get out on such markets the Lord knows—Prince Metternich takes our good Uncle in so that he may continue his financial operations, I fancy the F’furt house will find a little difference in their balance the next time they make it up.” This was to prove a serious understatement. When the first efforts were made to compute Salomon’s commitments in February 1848, the total approached 4.35 million gulden (around £610,000). That was more than double the capital of the Vienna house in 1844. Notionally, as Nat suggested, the Frankfurt house remained responsible for its Vienna branch; but it too had been accumulating the bonds of other German governments in the course of the 1840s, notably those of Württemberg and Hanover, and there was talk of a new loan to Prussia as late as March 1848! When Anselm finally arrived from Frankfurt to set the Vienna house in order, he was in no mood for filial generosity. His relationship with his father was to be one of the first Rothschild casualties of 1848.
French spending had also been rising steadily. By 1847 the budget was 55 per cent higher than it had been twelve years before, not least because of the various state subsidies to the railway companies. As early as the autumn of 1846 there was talk of a loan to fund the government’s deficit; by the summer of the following year the difficulty of placing treasury bills on the struggling money market made such a new issue of rentes imperative. Needless to say, the Rothschilds had no intention of leaving the business to others, despite the periodic anxieties of James’s nephews about French financial stability. As in Vienna, so in Paris: government loans had become a matter of course, regardless of economic conditions. True, James drove what seemed to be a hard bargain. The terms he secured looked generous: of the 350 million francs nominal to be raised, the Rothschilds took 250 million in the form of 3 per cent rentes priced at just 75.25, some two points below the market price. Indeed, his rivals could with justice have complained of double-dealing. It seems likely that the auction of the new rentes was rigged by the Finance Minister so that James’s bid was exactly equal to the Minister’s supposedly secret minimum. As Nat candidly told his brothers beforehand, Dumon had “let the cat out of the bag”: “[He] said he could not commmunicate his minimum as it was necessary for him to be able to state in the Chamber that his sealed letter had remained a secret for every body, but on pourrait se mettre à peu près d’accord.”
Yet Nat was fundamentally right to regard the loan as “a most dangerous & disagreeable concern.” James was less rash than Salomon, but he did not follow his bearish nephews’ chorus of advice to “get out of our loan famously.” Some of it was sold to investors ranging from the Tsar to Heinrich Heine. But not all of it. According to a number of accounts, he decided to sell only a third at once to the market, holding on to the remaining 170 million francs in the expectation that the price of 3 per cents would rise above 77. Meanwhile, of course, James had bound himself to pay the Treasury 250 million francs in instalments spread over two years. It was to prove another expensive miscalculation.
In England too there was an ill-judged loan on the eve of the storm. The £8 million so-called Irish Famine Loan of March 1847 was raised ostensibly to finance the cost of aid to Ireland, though it may reasonably be assumed that there were other reasons for the government’s deficit in this period. The combination of Britain’s unique credit-rating and the good cause supposedly being funded boded well, and Rothschilds and Barings—who shared the underwriting equally—had no difficulty in finding buyers. Indeed, James himself complained about being given only £250,000. Yet the price quickly fell from the issue price of 89.5 to 85, much to the consternation of the investing public and the embarrassment of the underwriters.
Even in Italy, where the revolution may be said to have begun, the Rothschilds toyed with the possibility of state loans in 1846-7. In Naples, Carl appears to have been keen to agree a loan to the government, and was saved from doing so only by the Bourbon regime’s own chronic indecisiveness. In Rome too there was talk of a loan. After the advances which had been made on the basis of Rothschild loans in the 1830s, the finances of the Papacy were once again in disarray: the deficit for 1847 was double that of the previous year and Roman 5 per cents dropped below par for the first time since 1834. Yet James had been intrigued by the election of Pius IX in 1846—“supposedly a liberal,” as he rather acutely put it—and he ordered a halt to sales of Roman bonds in the expectation of “some really positive changes.” This probably referred to the position of the Jewish community in Rome, whose case for better treatment Salomon once again took up. Only a stark warning from their new Italian agent Hecht “who represents the state of the Papal domains in the blackest colours & thinks that a revolution is at the eve to break out [sic]” deterred the Rothschilds from taking up Torlonia’s proposal of a new loan. When Adolph visited the Holy City in January 1848, he was unnerved by the combination of political debate and military preparation he encountered. For the same reason, the London house’s amazingly ill-timed suggestion of a loan to Piedmont—in January 1848!—was thrown out by Alphonse, who pointed out gently that this was “a country which can be considered as . . . already in full revolution.” The only other country whose request for a loan was turned down at this time was Belgium—ironically, one of the countries least affected by the revolutionary upheavals which were about to begin.
“The Worst Revolution That Ever Happened”
To say that the 1848 revolutions began in Italy is perhaps not strictly true: civil wars in Galicia and in Switzerland were harbingers of the cataclysm, as were the abortive United Diet (Landtag) summoned—in conformity with the 1819 State Debt Decree—by Frederick William IV in Berlin in 1847, and the stirrings of liberal enthusiasm in South Germany. But, though they followed these events carefully, the Rothschilds were not worried by them. Indeed, the annexation of Cracow by Austria looked like just another Polish partition: as on previous occasions, “the poor Poles” were “very much to be pitied.” “I suppose lots of them will be shot,” remarked Nat dispassionately; his uncle Salomon’s sole concern was that foreign governments should not challenge the Austrian move. It was the outbreak of an artisans’ revolt in Sicily in January 1848 and the granting of a liberal constitution by Ferdinand II which made the Rothschilds for the first time afraid. It was, commented Nat, “stinking news” (which the Rothschilds were, as usual, the first to hear).
Yet he and the rest of the family continued to think primarily in diplomatic terms, wondering whether the Neapolitan crisis would harden the Austrian resolve to intervene (something Salomon anxiously denied). In his letters to Lionel and Alphonse, Anselm joked about Adolph’s hand shaking as he wrote his letters, suggesting that he shared his father’s nervous, not to say pusillanimous temper. But this was just banter. Carl’s initial reaction in fact suggests sang-froid: as early as February 19 he was once again discussing the possibility of a loan to the Bourbon regime. When Anselm commented on liberal attacks on Ludwig I’s government in Munich, he little realised how soon his diagnosis would apply to all Europe: “That is the way it is, alas: in the highest politics just as in the most lowly social relations, the people imposes its will and dictates the law to the higher power.” He could still hope that “the unrest there” would “soon pass”—and with it the slump in the price of the Rothschilds’ “low loans.”
As in 1830, it was the outbreak of revolution in France which turned disquiet into panic. Of course, the Rothschilds had never had unqualified confidence in the July Monarchy. The death of Louis Philippe’s eldest son in 1842 had reinforced their pessimism about the future: the King himself confided “that after his death . . . the Revolution of 1830 would begin again.” “I assure you it has given me the stomach ache,” commented Anthony uneasily. “I do not think that there is any danger as long as the present King lives—but what will take place after his death God knows & I hope to God that the good old gentleman will live for a mighty time and that everything will go on well—nevertheless we must be prudent.” This explains the Rothschilds’ fear of a successful assassination attempt against the King. When James himself received a death threat in 1846, he passed the letter on to the government, remarking: “The man who wants to shoot at me could just as well shoot at the King, or vice versa.” When Louis Philippe survived yet another attempt on his life the following April, Nat pronounced him “one of the most admirable men that ever existed.”
The growing extra-parliamentary pressure for electoral reform in the course of 1847, however, raised the possibility that 1830 might repeat itself even with Louis Philippe still living. Nat’s reports from Paris in January and February 1848 show that he saw the crisis coming: “[G]ood folks speak exactly as they did just before the revolution of 1830,” he remarked on February 20, two days before the fateful Reform banquet was scheduled to take place, in defiance of a government ban.
I think a change of ministry wd. remedy the evil but in the mean time it is impossible to say what will occur—no one can tell how a french mob will behave & when the [president?] of the chamber of deputies associates with the common people it is a hazardous thing to say how far they will go and when they will remain quiet—We must hope for the best, in the mean time my dear Brothers, I really recommend you most strongly to sell stocks & public securities of all sorts and descriptions.
Yet the very next day he was more optimistic:
The nasty banquet continues exciting the public . . . It is really very much the same sort of thing as in 1830 & nevertheless I can not help thinking it will all blow over and leave us [far?] behind.—This country is so well off and in general people are so greatly interested in the maintenance of things that I believe a revolutionary movement [to be] out of the question . . . The end will be a change of ministry & Guizot will in all probability go out on the Parliamentary reform question.—I shall be very glad when that takes place, it wd. make our rentes get up and set matters right again.
“I have however no doubt that as soon as the affair of the banquet is over we shall see a great improvement,” he added in another letter. “All our friends assure us there is no need of anxiety on acct. of any revolutionary demonstration on the part of the dep[utie]s of the Gauche—in my opinion their banquet will be a complete failure.” “People have much too great an interest at stake in the maintenance of order to kick up rows,” he concluded in his final despatch before the date set for the banquet, “& I don’t think that emeutes will be again à l’ordre du jour at least p[ou]r le moment—” The temperamental pessimist had picked the worst possible moment to look on the bright side.
Even in his letter of February 23, with barricades in the street and signs of mutiny in the National Guard, Nat still underestimated the gravity of the situation, hoping nervously that a change of ministry would suffice to dampen unrest:
The ministry has changed, Guizot has just declared in the chamber of Depts. that he had sent in his resignation to the king and his majesty was at the present moment closeted with Molé—We must hope that between them they will cook up a good government but it is a dangerous experiment to yield to the wishes of a factious minority and of a turbulent set of national guards—The great fault was in not sending off Guizot sooner, the people had got up the reform cry and it is impossible to resist public opinion any where nowadays.—The emeute in itself was not of a very serious nature, very little real fighting and few if any killed—but what really made the king anxious was the manifestation of the national guard in favour of reform and against Guizot . . . The emeute by all accounts is over, now they have got reform I do not see what they have got to fight for & I suppose we shall hear of illuminations and the Lord knows what else. I know one thing and that is your humble servant will not hold much French stock in future . . . [I]t’s a dangerous job to give way to a mob incited by the National [Guard].
This must have been written just hours before the fateful confrontation in the rue des Capucins, in which fifty demonstrators were shot dead by soldiers guarding the Foreign Ministry. The next day, in the face of what he called “a moral uprising,” Louis Philippe abdicated in favour of his grandson and fled to England, leaving the various opposition parties to form a provisional government, including the lawyer Alexandre Ledru-Rollin, the poet Alphonse de Lamartine, the socialist Louis Blanc and a token worker named Albert. The following day a commission was set up in response to unemployed building workers’ assertion of their “right to work.” Nat’s next despatch was short and to the point: “We are in the midst of the worst revolution that ever happened—You may perhaps see us shortly after this reaches [you].” Already he and James had sent their wives and children to Le Havre to take the next ship to England.
Events in France were shaped as much by the memory of past revolutions as by anything else. Those who recalled how little had been achieved in 1830 were determined to establish a republic on a more authentically democratic basis; those still frightened by memories of the 1790s were determined not to let power into the hands of neo-Jacobins. The issue was undecided until, at the earliest, the end of June. Although the elections to the Constitutional Assembly revealed the limited support for radical republicanism outside Paris, the possibility of a “red” coup within Paris could not be ruled out. In May this was attempted unsuccessfully by the socialists Raspail, Blanqui and Barbès. In June the closure of the national work-shops led to clashes between disillusioned workers and National Guardsmen. As late as June 1849, the so-called Montagne party took to the streets in a last vain bid to rekindle the Jacobin spirit.
The pattern was roughly similar almost everywhere the revolution broke out. Although relatively few monarchs were definitively deposed by the revolution, a number were prompted to flee their capitals and most were forced to make constitutional concessions by the outbreak of violence in the streets, which exposed the inadequacy (or unreliability) of their civilian police forces. This collective scuttle meant that a variety of constitutional innovations were possible, ranging from French republicanism (also tried in Rome and Venice) to parliamentarism (in many German states). In the Netherlands, a centre of revolution in 1830, the Dutch and Belgian monarchs hastily gave ground to liberal pressure and allowed constitutional reforms to be implemented; the same was true in Denmark. In Germany, the revolution began in Baden, where the Grand Duke was forced to concede a liberal constitution almost immediately after the Paris events, an example followed in short order by Hesse-Kassel, Hesse-Darmstadt and Württemberg. In Bavaria, King Ludwig was forced to abdicate, his reputation irreparably damaged by his liaison with Lola Montez. Such changes within the monarchical system did not satisfy more radical republicans, who attempted a coup in Baden in April. The tremors were felt even in the Rothschilds’ home town: contrary to Anselm’s expectations, 1848 posed a threat to ancient republics like Frankfurt too if their definitions of citizenship were over-narrow and their governmental structures antiquated. The first violence in the town centre occurred in early March.
Everywhere there seemed to be two (possibly successive) revolutions: one of which aimed at constitutional reform, the other of which had fundamentally economic objectives. Though they overlapped in complex ways, there was a marked social difference between the two. While educated academics, lawyers and professionals made speeches and drafted constitutions, it was artisans, apprentices and workers who manned barricades and got themselves shot.
Perhaps the biggest difference between 1848 and 1830 was that now the revolutionary epidemic spread to Austria. Metternich received the news of the Paris revolution from a Rothschild courier. “Eh bien, mon cher, tout est fini,” he is said to have commented, though his subsequent remarks to Salomon were more bullish. It was indeed all finished. On March 13 crowds of demonstrators clashed with troops outside the hall where the Lower Austrian Estates were meeting. The next day Metternich resigned, fleeing by a circuitous route across Europe in disguise and with barely enough money—a credit-note from his faithful banker Salomon—to pay his family’s passage to England. The Emperor Ferdinand replaced him with his arch-rival Kolowrat and promised a constitution. As elsewhere, when the new government opted for an English-style bicameral parliament with a property franchise for the lower house, radical democrats—mainly students like Hermann Goldschmidt’s maverick cousin Bernhard Bauer—took to the streets (May 15), prompting the Emperor himself to flee to Innsbruck. When the Constituent Assembly proved quite conservative (the peasant deputies were satisfied with the abolition of serfdom) and the revolutionary government tried to reduce the money spent on public works, there was further unrest: workers went on strike in July, and students attempted a last-ditch coup in October.
The collapse of Habsburg authority at the centre set off a chain reaction throughout Central Europe. In Prussia, unrest had already begun in the Rhineland, but it was the news from Vienna which transformed the mood in Berlin. On March 17, after days of public demonstrations, Frederick William IV appeared to capitulate by agreeing to a constitution, but simultaneously deployed troops to restore order. As in Paris, it was shots fired by nervy soldiers at demonstrators in the city centre which turned reform into revolution. For more than twenty-four hours fighting raged; then the King gave in, issuing a series of proclamations to Berliners, Prussians and—significantly—“the German nation.” As in Baden, Württemberg and Hanover, liberals became ministers, though all those who accepted office soon came to realise the difficulty of reconciling their aspirations for economic and political liberty with the more radical aims of the artisans, students and workers. For a time, the best hope of unity appeared to be nationalism. Thus, from an early stage, the German revolution was more than merely a matter of constitutional reform within states: it promised a parallel transformation of the German Confederation itself.
The ramifications of the Habsburg collapse were not confined to Germany. In Prague, moderate liberals like Frantisek Palacky pressed for a modern parliament based on a property franchise in place of the antiquated Bohemian Diet. In Hungary, Croatia and Transylvania there were similar separatist tendencies with varying degrees of liberalism. It was the same in Italy, though the timing was slightly different. As we have seen, the revolution in the Two Sicilies had begun early: on March 6 Ferdinand II granted a separate parliament in Sicily and was shortly afterwards deposed there; two months later he allowed a parliament to assemble in Naples itself. In Piedmont and the Papal states, Charles Albert and Pius IX made similar concessions, both granting constitutions in March. In Venice and Milan, revolution took the form of revolt against Austrian rule. As in Germany (though on a smaller scale), some revolutionaries saw the opportunity to make Italy more than merely a geographical expression.
Why did 1848 seem “the worst revolution that ever happened” to the Rothschilds? It is important to notice that their reaction was not determined by a uniformly ideological aversion to liberal or republican forms of government. Attitudes towards the revolution varied widely from one member of the family to another. At one extreme, Salomon seemed almost incapable of comprehending the calamity which had befallen him other than in religious terms. When not trying to justify his own financial mistakes in rambling letters to his brothers and nephews, Salomon interpreted the revolution variously as an avoidable political mishap attributable to the incompetence of Louis-Philippe, the vanity of Princess Metternich and the irresponsibility of Palmerston, and a world-historical upheaval on a par not just with 1789 but with the Peasants’ Wars, the Crusades and a biblical plague of locusts. Whichever it was, he regarded it as a divine test of religious faith.
His nephew Nat lacked this consolation. Already more politically conservative and personally cautious than his brothers in London, he was deeply traumatised by the revolution—to the point of suffering something like a physical or nervous collapse. A worse “political cholera never yet infected the world,” he lamented, before repairing to take the waters at Ems, “& I am afraid the Doctor does not exist to cure it, a great deal of blood must be shed first.” Virtually every letter he wrote to his brothers during the revolutionary months concluded with a warning to sell all their stocks and shares.
No one else in the family took the revolution quite as badly. Neither Amschel nor Carl seems to have reflected deeply on the subject: for them, the revolution was like a natural disaster—inexplicable, but with God’s blessing survivable. The ideas of the revolution were beyond their ken—Carl dismissed talk of Italian nationality as “the stupid projects of a few deranged minds”—and as far as possible he and Amschel sought to keep their distance from political debate. Similarly, the pageantry of nationalism—the tricolours, the patriotic songs—left the older Rothschilds stone cold. A contemporary cartoon depicts a puzzled Amschel asking Arnold Duckwitz, the “Reich Trade Minister” appointed by the Frankfurt parliament in the summer of 1848 (on the optimistic assumption that a new Reich was in the making): “Nothing to trade yet, Mister Minister?” (see illustration 16.iii). It was probably right to imply that he was baffled by the protracted and inconclusive debates in the parliament. James, by contrast, had a good idea what the revolutionaries were after. Increasingly of the opinion that all regimes were at once unreliable and financially biddable, he was inclined to salute whichever flag was run up the mast after the storm. His refusal to let Alphonse serve in the National Guard, for example, was more an assertion of the primacy of family interests over all politics than an explicitly anti-republican gesture. James shed no tears for Louis Philippe.
This pragmatism was to some extent shared by the four eldest sons, Anselm, Lionel, Mayer Carl and Alphonse, who already tended to take a similar, sober view of political developments. Unlike James, however, they all occasionally expressed sympathy with liberal reforms, though they distinguished these from the ideas of radical democrats, socialists and communists. Anselm’s commentaries on German developments suggest little sympathy with the various kings, princes and archdukes obliged to bow to “the will of the people,” as well as considerable impatience with the “old wig-heads” of the Frankfurt Senate. He was interested enough to attend the first debates of the German “pre-parliament” in Frankfurt before leaving for Vienna, though it was a detached kind of interest: unlike their London cousin Lionel, neither he nor Mayer Carl thought for a moment of standing for election. And Anselm warmly welcomed the Austrian constitution issued in March 1849, the terms of which were in fact moderately liberal. By contrast, the various younger brothers had more idiosyncratic responses. Adolph in Naples was simply terrified. Anthony, on the other hand, regarded the German princes as “a set of donkeys” and had “a very good opinion” of the Frankfurt parliament’s project for a united Germany which he thought “Right and reasonable.” As for the nineteen-year-old Gustave, he itched to get back to Paris to see the action for himself—only to be disappointed by the “tristesse” he encountered there, the extent of working class unrest and the poor calibre of the republican politicians.
16.iii: “W.V.,” Baron: “Noch niks zu handele, Härr Minister? ” (1848).
Nowhere is the ambivalence of the Rothschilds towards the revolution more apparent than in letters and diaries of female members of the family. James’s wife Betty was vehemently hostile to the revolution, applauding her four-year-old grandson James Edouar when he declared: “If I had money, I would buy a gun to shoot the republic and republicans.” She expected the French republican constitution “soon to go to join its sisters whom oblivion has long since buried in the mists of time” and dismissed the deputies in the National Assembly as “the wild beasts of our great Parisian menagerie.” She was equally contemptuous of the German revolution. The Frankfurt parliament was, she told her eldest son, “an agent of false doctrines and anarchy.” When Robert Blum was shot in Vienna, she was delighted that “his factious voice has been extinguished” and regretted only that the same had not been done in Paris. Bizarrely for one whose parents had been born in the Frankfurt ghetto, Betty even expressed nostalgia for the ancien régime of the eighteenth century, “that century when minds were so fertile, and when anyone knew how to bring honour to his rank with dignity without departing from it, and did not consider himself lowered by obedience to a higher authority.” The nineteenth century she thought “an evil age.”
Her cousin, Lionel’s wife Charlotte, took a very different view, however. She feared for the family’s financial future, of course; yet at the same time she derived a certain moralistic satisfaction from the crisis, seeing it as an opportunity for self-denial and self-improvement. Following political events on the continent in her relatives’ letters and in the newspapers gave her a sense of exhilaration, of historical acceleration. It was, she wrote in her diary, “in truth . . . the age of the railways, for the last six weeks have been almost as eventful as the six years which saw Louis XVI’s death, the great Terror, the Convention and Napoleon.” Above all, she was captivated by the possibilities of German unification raised at Frankfurt:
As for Germany, there are hopes that she will soon become prosperous, powerful, united and free. In Prussia also the people have won a victory over the army and the king is forced to grant his subjects all the reforms and concessions they demand. The ministry has changed; the prince of Prussia has fled; the press is free; the proceedings of the law courts are public . . . and all confessions and religions have equal rights. Once more as a great and united empire, strong and happy, elevated and proud, Germany will trounce the Russian storms, the Cossack invasions and the warmongering of the French.
To be sure, her ideal of a united Germany was strictly monarchical: like Anselm, she repudiated republicanism. But in the French context Charlotte could find positive things to say even about republicans. Her view was that
those at the helm of state wish to lay a foundation of prosperity and happiness for their country, even if they are mistaken in the means they adopt to achieve this . . . Ledru Rollin . . . has honest intentions for France and at this time of general turmoil, he alone, apparently, of all the members of the administration is capable of taking action as a leader.
Charlotte’s sister-in-law Louisa also saw positive aspects to “this wonderful Revolution.” Provided “our house can only weather the storm,” she felt able to bear “any losses, however severe.” “I cannot say,” she confessed, “that the effect it may have upon our fortunes disturbs me at all. This is not philosophy, but simple indifference, or, rather, dislike to grandeur and display . . .”
In short, there was scarcely a united family front against the revolution. This can also be seen in the way individual Rothschilds treated the toppled kings and ministers who found their way into exile in England. Betty was shocked to hear that Louis Philippe and his family were living on 100 francs a day in Richmond. But the most he seems to have got from the English Rothschilds was a case of good bordeaux. The revolution had also left Metternich powerless and poor, as Charlotte remarked:
His castle at Johannisberg has been appropriated because he has not paid his taxes for the past nine years . . . The Prince has never owned a large fortune. In his past youth he lived extravagantly and later had to settle the debts of his son. Now he has a large family to provide for and educate. His financial affairs have only recently been put in order by Uncle Salomon.
She had little sympathy for his plight and shared the Frankfurt partners’ disinclination to give him further financial assistance. But Lionel felt a sense of familial obligation to “Uncle.” In June Metternich was given a 323,000 gulden advance, secured against his (heavily depreciated) railway shares. A further loan of 5,500 gulden to Princess Melanie appears in the Vienna house’s books for November 1848, and by the following year the combined debts of the Metternichs stood at 216,500 gulden. In addition, the repayments on the second half of the 1827 loan—which were supposed to be completed by 1859—were rescheduled, so that a substantial sum was still outstanding at the end of the 1870s.
In two lengthy letters to Salomon—one written as he passed incognito through Arnhem, the other from the safety of England—Metternich repaid his faithful bankers with a rambling apologia which shed intriguing light on their relationship:
What disorder the world has fallen into! You always used to ask me whether war was in sight. You always heard me reassure you that this was not the case and as long as I had the reins in my hands I would be able to vouch for political peace. The danger of the day was not on the field of political war, but of social war. On this field too I have held the reins in my hands as long as was humanly possible. On the day when that possibility ceased, I stepped down from the driver’s seat, for being overthrown is against my nature. If I am asked whether that could have been avoided by what naive utopians call Reform, I reply with a categorical No—for the logical reason that the measures which today are called Reforms and which might, under some conditions, have had the merit of bringing improvements, could have had no more value, given the situation of society as it was, than a dance with torches on powder kegs . . . You, dear Salomon, have understood me for years. Many others have not.
Things in France are only just beginning. Never before has there been a greater, more deep-seated confusion.
Perhaps this was just a way of currying favour with those he hoped would finance his new “bourgeois life.” But this avowal of mutual understanding was a fitting epitaph for a partnership which, since they had first met at Aix thirty years before, had exercised a remarkable influence over Europe. It was left to the sceptical Anselm to note that these were “theories which can’t be of great help to the world now.”
The Threat to Property
It was not the danger the revolution posed to their own lives which most alarmed the Rothschilds. Although quick to pack their wives and younger children off to safety at moments of crisis, the male Rothschilds—most of whom ran at least some personal risk during the period—were singularly cool as the bullets and bricks began to fly. On February 24 James was seen by the young Feydeau (then serving in the National Guard) emerging arm in arm with an unidentified male companion from the rue de la Paix and walking towards the ransacked Tuileries, even as gunshots continued to emanate from its grounds.
“Monsieur le Baron,” I said to him, “today does not seem to me a very fortunate choice of day for a walk. In my opinion, you would do better to return home, rather than expose yourself to the bullets which are whistling throughout this part of town.”
“My young friend,” he replied, “I tank you for your adfice. But tell me, vy are you here? To do your duty, isn’t it? Vell then, I too, Paron de Rothschild, haf come for the same ting. Your duty is to stand armed vatch, and assure the safety of goot citizens; mine is to go to the Minister off Finance, to see vether they may not need my experience and my counsel.”
And with that he left me.
As early as March 4 James was ready to let his wife and sons return to Paris—though in agreeing to Betty’s request he added some caveats:
All I ask is that you obtain a passport under a different name for a round trip. If you bring Alphonse, he too should have a supplementary passport with another name, because I don’t want the newspapers to print a headline saying, “Madame de Rothschild has returned to London,” if you decide to go back there. That would give rise to idle gossip . . . Come and bring Alphonse, although I wonder whether we shouldn’t keep him out of politics. If they see him, he’ll be required to enlist in the National Guard. He may come if he lies low.
In May, at the time of the abortive coup by Barbès and his associates, amid talk of guillotines in the place de la Concorde, James was once again ready to send his sons abroad for safety, and indeed briefly visited London himself. Yet he himself contemplated fleeing Paris only for a brief moment at the beginning of the June days. The contrast with his anxiety-ridden nephew could not have been greater. Nat was even alarmed by the men sent to protect the rue Laffitte by the new prefect of police Marc Caussidière: “a most ferocious looking set of gents with red sashes and anything but agreeable to meet in a dark night alone & unarmed—They would eat you up alive.” Though he stayed in Paris during the revolution’s most turbulent months, he retreated to England with relief at the end of November. James was contemptuous of such pusillanimity. As Betty proudly told Alphonse, her husband was one of the few who had “valiantly resisted the terrible storms which have struck down the courage and mental strength of so many.”
Salomon too stood his ground in Vienna though he rarely went out of doors. Despite regularly hearing the sound of “drumming in the streets” in the weeks after March 13, he did not quit the city until June, and then elected to settle with Amschel in less than tranquil Frankfurt. Anselm hung on until October 6-7, when armed revolutionaries took up positions on the roof of the Rothschild offices following the lynching of Count Latour outside the War Ministry and the storming of the Arsenal, “situated only one house from our own.” So dangerous had the city become by this stage that when Moritz Goldschmidt returned to rescue the bank’s papers, he had to disguise himself as a milkman; and Anselm felt obliged to remain in the country for a month.
Amschel never left Frankfurt, despite a number of alarming popular demonstrations. When a crowd gathered outside his house one night in March 1848, he “had gone to sleep a long time before and only learned about it the next day”; finally he hung nationalist flags out the window in the hope of being left in peace. Business continued in the Frankfurt office even when it was surrounded by barricades and hit by four bullets in September. A contemporary woodcut captured Amschel’s sang-froid when it depicted him remonstrating with two rifle-carrying revolutionaries. “What’s going on in my house?” demands “Baron von Rotschirm,” referring to the sign being nailed to his front door. The “barricade maker” replies: “Now it’s begun, Herr Baron, now things will be divided up equally, but private property is sacred.” At this, Amschel explodes: “What’s begun? Begone yourselves! Property sacred? Divided up? What d’you say? My property has always been sacred to me, I don’t need you to write that on my door. Divided up? When the Prussians come, you’ll all be divided up” (see illustration 16.iv).
The “nervousness” of Nat and of Carl and Adolph in Naples was the exception, and struck other family members as such.2 Although they often commented on the anti-Semitism which accompanied the revolution in parts of Central Europe, the other male Rothschilds never seem to have felt themselves threatened by it. Indeed, James was more worried that he might be arrested as a German spy in the event of a war breaking out, while his wife seems to have been as concerned for James’s dignity as for his life. Haughtily, she told Charlotte how the new French Minister of the Interior Louis Antoine Garnier-Pagès “always addresses our Uncle simply as ‘Rothschild’ without a prefix” (that is, the title “Baron” or “de”)—a mark of disrespect he was spared from older revolutionaries like Lamartine. Other members of the family found the revolution’s self-conscious (and often backward-looking) symbolism faintly comical. Marx was not the only one to suspect that history was repeating itself, but as farce rather than tragedy. The endless illuminations of Paris, the ritualised tree-planting, and above all the elaborate neo-classical rituals involving white-clad virgins seemed absurd, especially to the English Rothschilds.
16.iv: Anon., Barrikaten-Scene am 18. September: “Was geht vor in mein Haus? ” (September 18, 1848).
It was in fact the threat to their property which worried the Rothschilds more than any threat to their persons. The marking of selected town houses and the ransacking of Salomon’s villa at Suresnes—along with Louis Philippe’s at Neuilly—were only the first visible expressions of this threat.3There were also arson attacks on some railway stations and bridges belonging to the Nord company. The Easter elections to the Constituent Assembly reassured Nat that there was no longer any danger of “a sanguinary revolution,” but he still expected “our purses” to “bleed.” Rumours that the rue Laffitte would be plundered persisted into April; and the following month, on the eve of the decisive “June days,” Gustave described the appearance on walls in the city of “lists where to plunder and we are mentioned as having 600,000,000 francs.” In Frankfurt too—despite assurances from more moderate revolutionaries to the contrary—Rothschild properties were singled out for attacks. On three separate occasions, Amschel’s windows were smashed, and he took the precaution of sending “the greater part of our disposable effects” to Brussels and Amsterdam until he was more confident that “private property will be respected.” In Vienna, the Goldschmidts’ house was ransacked by workers building barricades outside it in May. Small wonder Anselm and Nat took the precaution of sending silverware and porcelain to London for safekeeping.
A second threat to Rothschild property was that of formal confiscation by revolutionary regimes, whether in the form of expropriation or heavy direct taxation. Reassurances of the sort relayed by their associate Bleichröder from Berlin on March 18—“there is absolutely no cause to fear for private property”—could hardly be taken seriously given the obvious danger that moderates like Camphausen and Hansemann might be displaced by more radical politicians. As James put it in April, “They won’t touch a hair on your head, but they’ll pose progressively until you have nothing left to eat.” In Vienna, attacks on the Rothschilds in the press seemed to imply confiscation of their factories if wages and conditions were not improved. In Venice, Salomon’s salt factory looked vulnerable to Manin’s republican regime.
The most serious proposals for formal expropriation, however, came in Paris, where plans for the nationalisation of the railway network—a radical demand which predated the revolution—began to be discussed as early as March. The railway companies, it was argued, had failed to honour their commitments under the plan of 1842: having underestimated the costs of railway construction and devoted their attention to crooked share speculations, they could not even make the payments due to the government for their concessions. Without a doubt, the financial position of the railway companies in the spring of 1848 was precarious. The Nord, for example, owed the government between 72 and 87 million francs which it was quite unable to pay; and these debts could easily have justified a government takeover. It must be said that nationalisation would not have been unwelcome to Nat, who had never been much enamoured of the railways. With the price of the company’s shares as low as 212 and the railway workers repeatedly defying the authority of their foremen and masters—even insisting on the planting of “trees of liberty” in front of main stations—he was eager to be rid of them. But James was altogether less ready to surrender the backbone of his nascent industrial empire. Unlike those companies whose lines were not yet completed, the Nord was already earning money from freight and passengers and the revolution did not much affect this.
The most serious threat of all was posed to that part of the Rothschilds’ wealth held in the form of government securities, the price of which fell dramatically in the first weeks of the new republic. Table 16a shows the devastating effect of the revolution on some of the principal securities held by the five Rothschild houses. Although prices had been falling generally since the onset of the economic crisis in 1846, if not before, the period February to April 1848 saw a catastrophic collapse.
Table 16a: The financial crisis of 1846-1848.
Sources: Spectator; Heyn, “Private banking”; Felisini, Finanze pontificie.
As we have seen, James had held on to around 170 million francs of the new 3 per cent rentes issued the previous year. By April, the market value of these was less than half what he had paid for them. Yet he remained formally obliged to resume paying the cash instalments due to the French Treasury (which amounted to roughly 10 million francs a month over two years) in November. In addition to these heavy losses, there was also likely to be red ink on the bills account: as Nat put it, “We have 16 million francs [of] bills, but God knows how many will be paid.” With bankers as substantial as d’Eichthal in difficulties, the outlook was grim. At the same time, the Paris house owed around 10 million francs to railway companies, including the Nord, the Strasbourg line and the Grand-Combe. Too many of its assets were depreciating stocks, shares and bills; too many of its liabilities were now due in cash. One 1848 cartoon showed a hobgoblin-like Rothschild tilting the scales of the bourse to his own advantage while above him the students demonstrate with a banner calling for the abolition of everything “except students” (see illustration 16.v). In fact the Rothschilds lost heavily in the crash.
Under these circumstances, many observers expected James to declare himself insolvent and probably also to flee Paris along with his family. The Austrian ambassador Apponyi watched him closely throughout March and April, expecting the bank to close its doors at any moment. On February 27, for example, he found James and other bankers “in a deplorable state” because their rentes had been reduced to “slips of paper, representing nothing.” Caussidière certainly suspected James of planning to leave Paris: rumours circulated that he was smuggling gold out of Paris hidden in manure carts and (as much to keep an eye on him as to protect his house from looters) James was placed under police surveillance. Throughout March and into April, rumours that de Rothschild Frères would be the next bank to fail abounded. Apponyi felt James was hanging “by a thread”; his friend Léon Faucher described him as being “bled white.” It was not far from the truth: at one point in April James’s cash reserve was reduced to little more than a million francs. When a clerical error made it seem even less, he admitted to a moment of panic, and joked of “giving up business, going to the country and living off potatoes.”
16.v: “Alexander,” Eine Sturmpetition: Das Steigen und Fallen auf der Börse (1848).
If anything, the position of the Vienna house was even worse. Not only was Salomon saddled with substantial amounts of metalliques; as we have seen, he had also assumed onerous commitments as a result of his rescue of Eskeles. Altogether, he estimated his payments due in the near future to third parties at around 3 million gulden. In fact, the position was much worse than this, as Anselm soon discovered; for the money to save Eskeles had been raised by depositing three-month finance bills worth 2.75 million gulden at the National Bank, the renewal of which had never been formally agreed before the revolution. This was in addition to bills worth a further 2 million gulden, most of which Salomon had issued to finance an advance to the Nordbahn. In all, his pending obligations were therefore closer to 8 million gulden. Salomon was in no position to pay such sums when they fell due as the greater part of his assets were industrial shares which the revolution had rendered unsaleable. The full extent of Salomon’s insolvency can be seen in the balance sheets which were subsequently drawn up by Anselm. Fully 27 per cent of his assets were accounted for by his stakes in the Witkowitz ironworks, the Nordbahn and the Austrian Lloyd, to say nothing of various smaller industrial properties he had acquired as securities for loans. None of this could easily be realised. Small wonder he “envied his blessed brother Nathan”; he was, as he told his brothers, “in the most painful situation that ever existed.” This was precisely the situation his English nephews had feared when they advised James against tying up money in railways.
The plight of the Vienna house in turn jeopardised the position of the Frankfurt house: new calculations in March suggested that Salomon owed the other Rothschild houses—principally Frankfurt—some £1.7 million (half his total liabilities). Salomon subsequently tried to justify this by arguing that the Frankfurt house had been milking the Vienna branch for years, but the most that can be said is that Amschel was as much to blame for allowing him to accumulate such an enormous debt. For the Frankfurt house had problems enough on its own account, notably the payments still owing to the state of Württemberg for its loan, money due to Hesse-Kassel, and the substantial sum deposited with it by the German Confederation (the so-called “fortress money”) which it was now feared would be withdrawn. Altogether, Anselm put its short-term liabilities at 8 million gulden, and felt sufficiently pressed to terminate support for the Beyfuses, writing off 1.3 million gulden already advanced to keep them afloat. Another source of anxiety was a substantial sum (1.2 million gulden) owed to the Frankfurt house by Prussia, the payment of which could no longer be relied upon. Ironically, it was Amschel who turned to Salomon for assistance in the first weeks of March—at the very time that James was desperately seeking assistance from Frankfurt, urging Anselm to sell securities “at any price!” Each house thought the other owed it money; none was in a position to pay. Salomon pledged all his houses and estates as securities for the money he owed the Frankfurt house; but, as none of these were realisable, the valuation he gave them (5 million gulden) was purely notional.
With three out of the five Rothschild houses on the verge of insolvency, the future of the family as a whole evidently began to look doubtful. In London, Charlotte encountered a new, disrespectful tone from diplomats like the Austrian ambassador Count Dietrichstein, who, as she recorded in her diary,
paid me some compliments in poor taste, saying, “Looking at you it is obvious that you no longer enjoy such a high position in the world. Now you are grateful if someone calls you beautiful whereas in the past you would have laughed your head off at such irony.” I replied, “And why is it that I no longer enjoy such a high position? Is it because I no longer have a money-sack for my throne or my footstool? Or is it perhaps because I no longer am a money-sack?” “The money-sack is still there, but the revolution has half emptied it.” “The world will not trouble itself about that, your Excellency, provided we do not delay our payments and make no claims upon it.”
She suspected that even the Disraelis “believe in the destruction of our power,” though this too she defiantly rejected: “It does not lie in our wealth alone, and God the Almighty will not withdraw his protecting hand from us. Amen!” Privately, as she admitted, “the Rothschilds, whose wealth only two months ago exceeded the reserve of the Bank of England, have lost the greatest part of that wealth.”
Survival
How then did they survive? The obvious answer is that the revolutions themselves did not. The degree of popular support for liberal and republican constitutional innovations outside the major cities turned out to be limited, while within the cities there were deep divisions between different occupational groups over economic issues: liberalising bankers had little in common with disgruntled artisans who yearned to revitalise the guild system. Such divisions did much to dish the republicans in France and the liberals in Germany. Secondly, there was much less danger than there had been in 1830 of a war between the great powers—which in many ways remained the Rothschilds’ greatest nightmare, not least because of the remembered tendency of war to radicalise revolution. James said on more than one occasion that he would leave Paris in the event of a major war; but Lamartine’s France declined (once again) to play its historic role as the exporter of revolution, while Palmerston’s Britain could not decide whether to back the revolution or not, when aspects of it appeared contrary to British interests (notably the German claim to the duchies of Schleswig and Holstein).4 Prussia and Piedmont went to war, to be sure, but with strictly limited aims and even less resolve. Thirdly, the revolutionaries dissipated a good deal of their energies on national questions which implied a redrawing of state borders as well as constitutions; and here the contradictory rather than complementary nature of “the springtime of the peoples” became manifest.
As in 1830, the Poles fell victim to Russian intransigent opposition to their aspirations, despite a half-hearted Prussian flicker of support (it was all over in Posen as early as May). The minor Slav nationalities within the Habsburg Empire had everything to fear from successful Magyar secession, nothing to gain from the creation of a greater Germany and little in common among themselves, least of all language. The German project hatched in Frankfurt foundered ostensibly because the out-sized and loquacious parliament could not agree on a royal figurehead for their new liberally constituted federation; in reality because there was no way of reconciling Austrian and Prussian notions of how the German Confederation should be reformed. Beyond the “Kingdom of Upper Italy” formed by Piedmont, Milan and Lombardy in May 1848, the notion of Italian unity was really an afterthought to a multiplicity of quite diverse revolts up and down the peninsula. Thus competing nationalisms tended to cancel one another out. Finally, once the Habsburg armies had regrouped under the leadership of Windischgrätz, Jelacic and Radetzky, they made short work of the revolutionaries. Prague fell in June 1848. Charles Albert’s Piedmontese armies were defeated at Custozza the following month (July 25). Vienna itself capitulated in November.
Yet none of this could have been predicted with any degree of certainty. In many ways the revolution was at its most radical in the period after October 1848, and its defeat in Italy, South Germany and Hungary was not conclusive until the summer of 1849. Under the circumstances of March 1848, James and Salomon could have been forgiven for following Louis Philippe, Guizot and Metternich into exile, so closely identified were they with the ousted kings and ministers. Instead, they stayed; and their survival is one of the most remarkable aspects of 1848—from a Marxist perspective, one of the classic symptoms of the revolution’s foredoomed failure.
The sine qua non of the Rothschilds’ survival was their own “concordia.” Mayer Amschel’s hallowed injunction to his male progeny to maintain familial unity never counted for more, for it was the ability of the London house (and to a lesser extent the Naples and Frankfurt houses) to bail out the stricken Paris and Vienna houses which proved decisive. It helped that the revolution which had been so successful in Sicily failed so comprehensively in Naples. The accounts of the Rothschild house there reveal 1848 as a poor but not a disastrous year: profits slumped to just 2,709 ducats in the first half of 1848, but bounced back to 58,229 ducats in the second half; for the year as a whole they were down just over 40 per cent on 1847. The balance sheets show the Naples house treading water, with no major changes in the composition of its assets between 1845 and 1850. It was therefore possible for Carl to send money to Frankfurt in early April.
It helped even more that (as Charlotte put it) “the stirring wind of revolution which destroys the old injustices [did] not blow in England”—thanks in no small measure to the repeal of the Corn Laws and the suspension of the Bank Charter Act in 1847. The Chartist demonstration on Kennington Common on April 10 made the family nervous, but proved a damp squib; and Nat’s warning to Lionel that “you will find yourselves in the same position with regard to P.A. [Prince Albert] as we are with L.P. [Louis Philippe]” proved excessively pessimistic.5 In Ireland too the harvest proved less disastrous than had been feared. This meant that, having suffered its worst-ever year in the year of monetary crisis, 1847—with losses amounting to a staggering £660,702, or 30 per cent of capital—the London house was able to rebuild its position with some measure of success in 1848 and 1849, pushing its profits back up to £132,058 and £334,524. It was true then, as Charlotte had to admit to Dietrichstein, that the Rothschilds as a family were less rich than they had been; but their “money-sack” was far from half-empty, to judge by the limited domestic economies she had to make. “We had three nursemaids and sent away two of them,” she declared, “keeping one to do the dirtier and heavier chores. We shall dress the children ourselves. Our hands shall certainly lose some of their whiteness and beauty in the process, but they will still be of use to us, we hope.” Piano tutors for her daughter Leonora had to be content with 10 shillings an hour; when Chopin told her grandmother that he “cost” 20 guineas per performance, she “replied that of course I could play very beautifully, but that she advised me to take less, as one had to show greater ‘moderayshon’ this season. I gather from this that they are not so open-handed and that money is tight everywhere.”
Yet there was a vast difference between these expenditures and the immense sums required by the Paris, Frankfurt and Vienna houses. Lionel’s hasty visit to Paris in late February seems to have convinced him that James’s position could be salvaged, but he was a good deal more hesitant about Salomon and Amschel. For all their sentimental appeals to their father’s memory, they were made to sweat—and pay—for their salvation. Indeed, Lionel’s first reaction to Salomon’s pleas for support (in the form of accepting some bills of Sina’s) was to refuse; and when he did respond to the appeals of the Frankfurt house to send silver (the first of which arrived on April 14), he made sure the London house turned a profit on the shipments. His uncles reproached him, but they were at his mercy and were made to feel it. Lionel’s tough line was reinforced by Anselm, who arrived in Vienna on April 10 to clear out his father’s Augean stables, a task which he performed with a marked lack of filial compassion. Faced with a request to render yet more assistance to Arnstein & Eskeles (as well as another Vienna house, Heinrich & Wertheimer), Anselm
immediately informed my father in the clearest possible terms, that on the basis of all my powers as representative of the [five] houses I forbade any further financial sacrifice . . . no matter what the consequences might be for the commerce and the situation of this place, and added that I would leave immediately in protest if any attempt was made here to insist on this . . . It is, believe me dear Uncle, a fatal role which I am taking on here . . . they will curse me as my father’s evil angel . . . He is unfortunately in such a state of moral collapse and so bowed down by the situation, that for him to remain here any longer could only have a negative effect on his health . . . It would have been much better if he had left Vienna three months ago.
The recriminations between father and son over the financial morass into which the Vienna house had sunk in many ways marked the end of the dominance of the second generation. In a sense, this was the 1848 revolution within the house of Rothschild.
The reality was, however, that the London house was not the lender of last resort at all. For the ability of New Court to assist Paris and Vienna depended heavily on the ability of the Rothschilds’ agents in America to remit funds to New Court. The year 1848 was in many ways the decisive test of Belmont’s agency: had the system failed, the Rothschilds would have been seriously at risk. Beginning in the summer of 1847, they had nervously followed Belmont as he committed substantial resources to speculating in tobacco and to financing the American war against Mexico which had broken out in May the previous year. As late as February 1848 James sanctioned his decision to advance the US government a substantial sum against treasury bills to help pay the $15 million indemnity accorded to Mexico for the territory ceded by the US under the Treaty of Guadalupe Hidalgo. Typically, the Rothschilds had a man in Mexico at the same time—Lionel Davidson—who for several years had been importing Rothschild mercury from Spain to sell to Mexican silver mines; he too took a hand in the indemnity payment. Scharfenberg in Cuba and Hanau in New Orleans had also made large advances on tobacco and cotton respectively on the eve of the European crisis. These were big commitments: as James himself commented uncomfortably, “We are too much in the hands of these people.” Indeed, there is no better testimony to Belmont’s importance at this time than the frantic letters he was sent from London and Paris, berating him for his involvement with the Mexican indemnity and accusing him of having exceeded his powers. Finally, at the end of 1848, a Rothschild—Alphonse—was sent to New York in person, as if to bring the errant agent to heel.
This had its effect. Rightly fearing that Alphonse had been sent out to replace him, Belmont hastily despatched large consignments of silver to London. These were to prove one of the most important stabilising influences on the European financial situation in 1848, and without them Lionel would have been hard-pressed to assist his relatives on the continent. But Belmont wished it to be understood that he was bestowing favours, not following orders. As Alphonse reported, after a frosty reception in New York, Belmont’s role was a “singular” one: “It is a position which is at once semi-dependent and semi-independent, simultaneously that of an agent and a correspondent.” The long-discussed plan to replace him with a family member foundered once again in the face of Belmont’s doggedness and the reluctance of any of the younger Rothschilds to settle permanently in the US. In the short term, Belmont packed Alphonse off to New Orleans and carried on as before, resuming the payment of the Mexican indemnity.
The second factor in the Rothschilds’ survival was the relaxation of monetary policy by the European central banks, which undoubtedly helped to end the collapse of security prices. The Bank of England had set the precedent by suspending its gold reserve rule in October 1847; however, it proved less than easy to persuade its counterparts on the continent to do likewise. In Frankfurt, of course, there was no central bank, and it took time to persuade the town Senate to create some emergency credit facilities. In Paris, the situation was better, once the fear had receded that the republic would use the Banque de France as a milch cow for forced loans. In addition to suspending convertibility, the government set up a nationwide complex of comptoirs d’escompte and magasins générauxto supply firms with new sources of liquidity, although these proved ephemeral and the enduring effect of the revolution was to increase the power of the Banque de France by obliterating the provincial banks of issue. In Vienna, the National Bank imposed a ban on exports of silver and gold and, in May, suspended convertibility. In each case, of course, the danger existed that issues of paper money might be excessive, and Anselm was not alone in fearing a slide into inflation in Central Europe (no one had forgotten the assignats). Here again the Rothschilds’ access to supplies of silver from America and England proved crucial, for it enabled them to replenish the reserves of the continental central banks. As early as April the Banque de France was placing orders for large silver purchases through New Court. The prospect of a similar deal gave Anselm an important source of leverage in the discussions over his father’s huge accumulation of due bills at the Bank, which he succeeded in prolonging for two years. Even so, it was necessary for him to issue a bald threat to clinch the deal: “Either the prolongation of the bills or the fall of the houses of Eskeles and Wertheimer, which would not only have as a consequence the fall of many other houses here and in the provinces, but would also seriously compromise the portfolio of the National Bank itself.”
This was one of the critical moments in the rescue of the Vienna house. For the Paris house, however, of greater importance were the deals struck over government finance. Government loans contracted in 1847 were among the Rothschilds’ most burdensome obligations. The only way to reduce these was by hard bargaining. Thus, in parallel with his negotiations with the National Bank, Anselm sought to arrange a modest rescheduling of his father’s obligations to the Austrian Treasury. In Frankfurt too Mayer Carl sought to strike deals with Kassel and the Confederation. Even in Naples an agreement had to be reached with the government regarding payment of the interest due on Neapolitan rentes. The Rothschilds were most vulnerable in Paris, however, where James had been left holding around 170 million francs of 3 per cent rentes, now valued at roughly half what he had agreed to pay the government for them. Rather than swallow this heavy loss by selling (as it has sometimes been claimed he did), James sought to extricate himself from the 1847 commitments; and the way he did so is a case study in negotiation from a position of weakness.
It was far from easy. On February 24, as we have seen, James paid a visit to the Ministry of Finance, possibly to get the new regime to pay the interest falling due on the Greek bonds guaranteed by the previous regime (which normally he himself would have paid). There was a quid pro quo: the next day, it was announced that he was to make an ostentatiously large donation of 50,000 francs to the fund for those injured in the street fighting and that he intended to “offer his co-operation to such a good and honest Revolution.” He then presented himself at the prefecture of police on February 26. When Caussidière detailed the allegations that he was smuggling money out of Paris in preparation for his own flight abroad, James categorically denied them, steering a clever course between admitting to bankruptcy and implying that he had millions at his disposal:
People think I am made of money, but I only have paper. My fortune and my cash are converted into securities, which at the moment have no value. I am far from wishing to declare bankruptcy, and if I must die, then I am resolved to do so; but I would regard flight as cowardice. I have even written to my family, to ask them to send me funds so that I can meet my engagements; and if you like, he added, I will introduce you to my nephew tomorrow.
Once again money changed hands: Caussidière requested that James open a credit for a print works to keep its 150 workers in employment, a request granted when James returned the next day with Lionel (Caussidière was handed 2,000 francs “to be distributed as [he] intended”). This was small beer to James, but the stakes were raised higher in early April when the government unexpectedly demanded 500,000 francs, the balance of a mortgage loan arranged before the revolution with Louis Philippe. At the same time, he was reminded of the large sum owed by his railway company to the government.
James responded to these demands with a mixture of threats and blandishments, as Charlotte recorded in her diary:
The failure of the House of Rothschild would be a terrible disaster for France. It would be to kill the goose that lays the golden egg with a single blow and to abandon forever the chance of [its performing] any public or private services. The government could not auction off the family’s golden houses: Ferrières could not be sold; the hôtel Florentin stands empty and could not be let under the present circumstances. If, however, they spare our uncle’s life—by which I mean only his financial life—then he could be of service not only to the state, but to individual members of the government . . . In England, they say, no one is grateful for favours received. We certainly do not expect that, but I think one can count on recognition for favours still to be granted. Our uncle has just granted favours to M. de Lamartine, M. Caussidière and Crémieux.
At the same time, if the immediate repayment of the money owed by the Nord was demanded, “thirty or forty thousand workers would be deprived of the employment the government had guaranteed them and the expenditures of the national Treasury on unemployment would increase considerably.”
Not everyone was convinced by James’s protestations that his “financial life” was at stake. In a good illustration of the way “socialism” made itself felt even in the financial sector, the clerks at de Rothschild Frères protested when James justified cutting their salaries on the grounds that “my business has been reduced.” “Yes, you have lost nothing,” declared one of them. “You are richer than anyone and we won’t [accept a pay cut].” But, if nothing else, James had bought himself valuable time. By the time the government’s commission had decided in favour of the state’s repurchasing the concessions from the companies, it was the third week of May. Just over a month later, the political position in Paris was transformed by the brutal suppression of the “June days” (22-28 June)—an apparently spontaneous eruption of working class rioting—by troops under the command of General Eugène Cavaignac.
Marx’s bitter diagnosis of the “June days” and their aftermath was that the “bourgeoisie” as a whole had thrown in its lot with authoritarianism and militarism in order to crush the proletarian revolution. In contrast with the revolution of 1830, however, the Rothschilds did little, if anything, to promote the restoration of “order” (just as they did little to promote resolutions of the various diplomatic conflicts of the revolution). They did no more than welcome—cautiously—the arrival of Cavaignac. Indeed, they positively avoided making a direct contribution to his efforts: James packed Alphonse off to Frankfurt to ensure that he did not take part in the fighting, which he would have done had he stayed. The military restoration of “order” thus had the aspect of a deus ex machina. It was the same story in Naples, where Ferdinand dispensed with parliament and successfully reclaimed Sicily in August; and in Vienna, where Windischgrätz bombarded the revolutionaries into surrender in early November.
Still, the Rothschilds knew how to swim with the turning political tide. For the reconstruction of the republican regime under Cavaignac provided the perfect opportunity not only to bury the railway nationalisation project but to reschedule the Nord’s debts to the state and to resolve the question of the 1847 loan. It was later alleged that the Paris house had been “refloated” by the government at this juncture—to the great ire of James’s grandchildren, who took pains to deny that their bank had ever relied on state intervention. The word “refloated” is misleading but—like the related accusations levelled at the government of excessive generosity—not without an element of truth. In essence, James had adopted the stance which Balzac had years before anticipated: that of the indispensable debtor who owes his creditors so much that they dare not let him fail. Fearing that he might otherwise be unable to resume his payments to the Treasury, the government felt obliged to renegotiate the terms of the 1847 loan. The decision was understandable: in threatening them with the death of the “golden goose,” James was implicitly threatening the collapse of the French financial system. As Mérimée suggested at the time, the government’s financial position was “diabolical”; the collapse of de Rothschild Frères would have made matters worse still.
The easier alternative was to work in partnership with “the Baron.” Thus, when Lionel visited Paris in July, he found James closeted—as of old—with the Finance Minister. He was “now a great favourite and as there is no other Banker or person with money or disposition to come forward, he is naturally very much looked up to.” Yet the expedient adopted by the new Finance Minister Goudchaux—to convert the 3 per cent bonds of 1847 into 5 per cents—was probably over-generous, in that it effectively turned a loss of 25 million francs into a profit of 11 million. The fact that Goudchaux was a Jew (like another moderate republican linked to James, Crémieux) merely added to the radical suspicion of a conspiracy to prop up Rothschild. In truth, James had probably exaggerated the danger of his own financial collapse in order to minimise his losses on the 1847 loan. Far from being in cahoots with Goudchaux, the Rothschilds regarded him as “not a practical man by any means” who knew “no more about the bourse than the man of [sic] the moon.”
The Rothschilds’ position had in fact been stabilising for at least a month before the “June days.” As early as the last week of May, it was possible for Charlotte to affirm her belief in “in a bright, European and Rothschildian future.” When Nat went to Frankfurt in June, he found Amschel still furious with Lionel, but financially quite secure, with a balance of at least 26 million gulden and a bullion reserve of £400,000. Indeed, the English Rothschilds were surprised to find Amschel selling on to the Vienna house silver he had received from the London house only weeks before. Another sign of normalisation was the resumption in earnest of negotiations for a new mercury contract in Spain (where Baring was mounting a serious challenge). This coincided with excited reports from Davidson about new discoveries of silver in Chile and Peru which were likely to boost the mercury market. By August matters were sufficiently far advanced for James, Lionel and Anselm—now the family’s dominant triumvirate—to meet at Dunkirk to take stock of the combined accounts. It was not until some time later, however, that it was apparent to those outside the family that the Rothschilds had survived. When the radical Tocsin des Travailleurs devoted a leader to the subject in August, its tone was ironical; yet a genuine undertone of admiration is unmistakable in its appeal to James to lend his miraculous financial powers to the cause of the republic.
You are a wonder sir. In spite of his legal majority, Louis-Philippe has fallen, Guizot has disappeared, the constitutional monarchy and parliamentary methods have gone by the board; you, however, are unmoved! . . . Where are Arago and Lamartine? They are finished, but you have survived. The banking princes are going into liquidation and their offices are closed. The great captains of industry and the railway companies totter. Shareholders, merchants, manufacturers, and bankers are ruined en masse; big men and little men are alike overwhelmed; you alone among all these ruins remain unaffected. Although your House felt the first violence of the shock in Paris, although the effects of revolution pursue you from Naples to Vienna and Berlin, you remain unmoved in the face of a movement that has affected the whole of Europe. Wealth fades away, glory is humbled, and dominion is broken, but the Jew, the monarch of our time, has held his throne[.] [B]ut that is not all. You might have fled from this country where, in the language of the Bible, the mountains skip about like rams. You remain, announcing that your power is independent of the ancient dynasties, and you courageously extend your hand to the young republics. Undismayed you adhere to France . . . You are more than a statesman, you are the symbol of credit. Is it not time that the bank, that powerful instrument of the middle classes, should assist in the fulfilment of the people’s destinies? Without becoming a Minister, you remain simply the great[est] man of business of our time. Your work might be more extensive, your fame—and you are not indifferent to fame—might be even more glorious. After gaining the crown of money you would achieve [your] apotheosis. Does that not appeal to you? Confess that it would be a worthy occasion if one day the French Republic should offer you a place in the Pantheon!
Even this struck some as premature: as late as November rumours were still circulating that James intended to go into liquidation. But the Rothschilds had indeed survived. We now know how they did it. We can also see why, at the time, their escape seemed well-nigh miraculous.
Tranquillity and Order
Another important difference between 1830 and 1848 was the Rothschilds’ lack of diplomatic influence. Though they fretted constantly about the danger of a European war, for most of 1848 they were far too preoccupied with their own financial problems to play their familiar part in great power politics. When the Austrian government asked Salomon to help “end the Italian difficulties” by sending “a member of his House in order to start negotiations in this sense in the name of the Austrian Government,” the younger Rothschilds were reluctant to become involved. As Mayer Carl put it:
[I]n my opinion we should not mix in politics, because, however things turn [out], it is harlequin who gets the kicks and harlequin, that is us. Also I don’t believe that Lombardy is going to pay anything to Austria. The Italian cause has aroused too much sympathy for any solution not to be inimical to Austria’s interests. Also everybody [would] say that we make God knows how much out of this. People are used to assuming that Rothschild does nothing without getting something.
When Radetzky “gave a good licking” to the Piedmontese armies at Custozza, Anselm and his cousins were delighted, but poorly informed about Austrian diplomatic intentions, assuming that Austria would still relinquish most of her Italian territory. Although James came to realise that Bastide, the new French Foreign Minister, was unenthusiastic about Northern Italian unification, and that therefore Palmerston’s efforts in that direction were unlikely to succeed, his nephews remained convinced for some time that Lombardy and Venetia would be able to buy their independence: it was, wrote Anthony, “only an affair of money.” Their sources of information in Germany were not much better. Mayer Carl, for example, seems to have expected Frederick William IV to accept the German crown when it was offered by the Frankfurt parliament in March, and—even more improbably—that this would help Austria and Prussia “pull together.” (In fact, he contemptuously spurned what he called a “diadem moulded out of the dirt and dregs of revolution, disloyalty and treason.”) It was not until late February 1849 that Anselm began to receive the kind of inside information about Austrian diplomacy which his father had for so long taken for granted. He was soon following in Salomon’s footsteps by siding enthusiastically with Schwarzenberg in the second war with Piedmont—a tendency which his father’s return in April may have reinforced.
In practice, of course, the Rothschilds could not hope to exercise political influence as long as they themselves were financially weak. The traditional leverage exerted by the Rothschilds had, after all, been based primarily on the granting of loans. But throughout 1848 the British Rothschilds used their new predominance over the continental houses to veto numerous suggestions of loans to the post-revolutionary regimes in Austria, Hungary, Rome, Lombardy, Prussia, Baden and elsewhere. (Incredibly, Salomon seems to have suggested lending money to allow the Hungarians to buy guns in England—this even as he was lamenting the collapse of the Habsburg Empire!) It was not until late September that anything resembling “business as usual” was contemplated, though talk of a loan to Austria proved premature. The trouble was that the revolution refused to lie down and die. No sooner had “red republicanism” been defeated in Paris, Vienna and Berlin than it burst forth again in Italy. No sooner had it been defeated in Italy than it had a last lease of life in South Germany.
As long as political uncertainty remained, the Rothschilds held back. When the Austrian government approached Anselm with a 60 million gulden loan proposal in March, he was cautious, dismissing it as “a great nonsense” and “a stupid project.” The following month, when James was asked by the city of Paris to make a 25 million franc loan, he “refused it & said it three times, he did not wish to do any business.” This hesitation reflected above all the difficulty of deciding what was to be done with the Vienna house which, even after Anselm’s skilful salvage operation, still owed the Frankfurt house the immense sum of £1.7 million, as well as a smaller sum to the Paris house. It was not until the summer, after a succession of meetings between the principal partners (including a full “congress” at Frankfurt in the spring), that the decision was taken to preserve the Vienna house by writing most of this money off. The extent to which the London partners wished to restrain their uncles is obvious from Alphonse’s comment that the “true goal” of the “congress” would be:
to modify the bases of our house, and, with respect to the London house, to free them reciprocally from a solidarity incompatible with the political activities and the ardent business spirit of the first generation. Our good uncle [Amschel] cannot bear the reduction of our fortune, and, in his desire to re-establish it on its old basis, would not hesitate to plunge us into hazardous enterprises.
It was symptomatic of the mistrust engendered by the crisis of 1848 that the London partners began to distinguish between letters they would allow their uncles to see and those they kept to themselves. Considering that the circulated private letters had up until this point been the very life blood of the partnership this was a revolutionary suggestion—though it is impossible to be sure how far the London partners went in this direction since so much of their correspondence has been lost or destroyed.
Two additional factors tended to diminish Rothschild political influence. Firstly, their relations with Palmerston remained as tenuous as ever. Charlotte denounced Palmerston’s policy in 1848 as “laughable,” and it seems reasonable to assume that Lionel shared his wife’s view; there was evidently little communication between the Rothschilds and Palmerston at this time. In Nat’s view, “any change in the Foreign Affairs will be an improvement on Ld. P[almerston],” a view “heartily” endorsed by his uncle James. To Betty, Palmerston was “the bad genie, breathing fire everywhere and sheltering behind political puppets whom he knows how to station at the front door.” Indeed, the Rothschilds seem to have based their assessments of British policy more on defence estimates than on first-hand ministerial intelligence—a reflection perhaps of Lionel’s preoccupation at this time with the question of Jewish representation in Parliament. Secondly, they miscalculated the political future in France. James overestimated the durability of “respectable, moderate” republicanism. Assuming that Cavaignac and his fellow general Nicolas Changarnier (who combined command of the National Guard with the military governorship of Paris) would remain the key figures of the new regime, he set to work to ingratiate himself with them. Meetings with Cavaignac and other ministers to discuss French foreign policy became frequent. “Our little friend” Changarnier was invited to hunt at Ferrières and was a frequent Rothschild dinner guest. So close did relations become that the Austrian ambassador in Paris was able to report gossip about Changarnier’s “sentiment de coeur” for Betty. As it turned out, James was backing a loser, though his reason for doing so is understandable. For the alternative to the generals was Louis Napoleon Bonaparte, the nephew of the former Emperor.
Throughout the nineteenth century, no figure of political importance was viewed by the Rothschilds with more suspicion, not to say contempt, than Louis Napoleon. This was partly because of his disreputable past—the escapades at Boulogne in 1836 and Strasbourg in 1840, the idiosyncratic books, the English mistress—and the louche lifestyle which he never wholly abandoned. In April 1849, for example, Anthony reported that his aunt and uncle were “disgusted with L. N. They say he gets drunk every night & God knows what else he does.” His relationship with Mrs Howard was also a subject for sardonic comment: in Anthony’s words, all Louis Napoleon wanted was “plenty [of money] so that he can roger comfortably & get drunk when he likes.” James regarded him as “a stupid ass” but, pragmatic as ever, was prepared to put his personal aversion to one side and sup with him as early as January 16—just eighteen days after he had been sworn in as President of the Republic. “I could not refuse his invitation,” he explained to his nephews apologetically. Indeed, he seems to have taken the precaution of lending Louis Napoleon 20,000 francs shortly before his election. Nevertheless, this was to be no repeat of the regime change of 1830, when James and Louis Philippe had translated a private, financial relationship into a public, political one almost overnight. As soon as Louis Napoleon had access to public funds, James cut off his credit, ordering Anthony “to give Napoleon no more money, he has no credit with us . . . I promised him 20,000 francs before his budget was passed but now he is getting money from the government, so I don’t want to throw away our money and so I won’t give him a penny more.”
His wife felt an even deeper dislike, partly based on a lingering loyalty to the deposed Orléanist royal family. Disraeli recalled Betty inveighing against Napoleon “whom she hated” to Macaulay, who sought vainly to persuade her that he might be Augustus to his uncle’s Julius Caesar. She was unimpressed: France was “floundering between a nobody and a head garotted by a subversive, useless minority.” If Cavaignac won it would be “a disaster” as he had shown “neither candour nor capacity in power.” But if Louis Napoleon won it would be “a humiliation” as he was “that ridiculous flag from a wonderful past existence, a political nothing who has no other value than as a negative power, a polished socialist hiding roughness beneath the pretence of pleasant politesse.” France’s “love affair” with him, she predicted, “could be just like a happy love affair at the beginning of a novel; lovers in this case always end up hating each other, or by being violently separated.” His victory was a “distress signal around which diverse and opposing opinions rally to protest against the country’s upper crust.” From the outset she assumed that “a parody of the Empire” would be restored. Until April 1849 she stayed away from the President’s receptions.
What concerned the Rothschilds much more, however, was the possibility that, like his uncle before him, Louis Napoleon would pursue an expansionist foreign policy which might plunge Europe once again into a general war. From the moment that Bonaparte’s star began to wax in mid-1848, when he was elected to the Chamber of Deputies, it was this which coloured the Rothschilds’ judgement. Identifying him as the ally of the “friends of disorder and unrest,” they assumed that his popularity presaged war. As James put it, Louis Napoleon would
spend a nice bit of money to ensure that they have him as President and in my opinion—I who have never believed in war—the situation looks blacker now, because the people now have to . . . make war. At the bourse everyone was horribly black, because they say that the working class will supposedly back him, because he is a socialist and draws his support from the most common people . . . I am trying to liquidate.
Although they came to revise this assessment in the succeeding months, as the likelihood of his victory in the presidential election grew, they were far from delighted at this prospect, regarding Cavaignac as “decidedly better.” Both camps directly approached James to ask for support, but he told them that “not being French he was withholding all influence in this serious matter and would not support either of the two candidates, that he was waiting for the country to make its decision and would not oppose to whichever president was preferred by the majority.” Privately, he expected Louis Napoleon to defeat Cavaignac. But he found the new President “dull and with no charisma whatever,” despite his flattering request that James should “visit him often and eat with him in the morning.” In the immediate aftermath of Bonaparte’s victory in December, he and Betty nervously anticipated a return to the “June days,” and even the outbreak of war between France and Prussia.
Such fears were only increased by the assumption—which can be detected as early as January 1849—that Louis Napoleon would “not rest till he has made himself Emperor, & that the votes of the Army and Peasantry combined will be enough to secure his success.” James had no doubt that this would be “a great mistake.” Throughout the first months of 1849 he watched with anxiety for signs of a “forward” French foreign policy which might reinforce such pretensions. In particular, the continuing instability of the situation in Italy seemed to invite some kind of French intervention. In James’s words, “This question is the one which interests us the most: whether [or not] we will have peace.” Every flicker of unrest in Paris seemed to increase the likelihood of a gamble on war by the new government. “It will end with war,” predicted James on June 9. “We are in the hands of God. We have [not only] Asiatic cholera [but also] political and financial cholera . . . I do not believe rentes will go up.”
The realisation that Napoleon intended to intervene in Italian affairs on the side of the Pope—who had been forced to flee Rome in November—rather than the Roman republic therefore came as a welcome relief, even if Anthony could not at first see “how they can enter & put the Pope on the throne if they have a Republic here.” In fact, prolonged debates on the subject meant that this ended up being the last of the foreign interventions against republicanism which finally brought the revolutionary period to an end. The first blow was dealt in March by the second, decisive Austrian victory over Piedmont, which was followed by the occupation of republican Tuscany in May. In April it was the turn once again of the Frankfurt Rothschilds to pack up their valuables as a last wave of popular unrest swept through South Germany, only to be crushed by joint action between Prussia, Saxony and Hanover. As before, the Rothschilds could do little more than stand on the sidelines cheering. Anselm enthusiastically welcomed the Russian intervention in Hungary, conscious that Windischgrätz alone could not win.
Only when the military defeat of the various enclaves of revolution was sure did the Rothschilds seriously think about resuming their traditional loans business. On July 4, Anselm began to talk more positively about the Austrian loan, as well as urging the Paris house to provide the Russian army in Hungary with financial assistance via the Paris house. He also began to involve himself in the efforts to stabilise the Austrian exchange rate, which war and the suspension of silver convertibility had seriously weakened. By mid September, a small Austrian loan had been arranged in the form of a 71 million gulden issue of treasury bills; although most of these were absorbed by the Vienna market, around 22 million were taken up and sold by Amschel in Frankfurt.
Naturally, these transactions implied an explicit commitment to the forces of monarchical reaction, something which caused a degree of disquiet to members of the family in France and London, where support for Hungary was widespread. Betty can hardly have been indifferent to the bitter sentiments expressed in Heine’s pro-Magyar poem, “Germany in October 1849,” a copy of which he sent her. But Anselm had no time whatever for his English cousins’ “uneasy” expressions of pro-Hungarian feeling, advising “your good English folks [to] stick to Ireland & its Potato crop, & keep their arguments for their objects.” Carl’s suggestion of a loan to the Pope could also be seen as lending sustenance to the counter-revolution. To the disappointed revolutionaries of 1848—not least Marx—the moral was plain: “Thus we find that every tyrant is backed by a Jew, as is every Pope by a Jesuit. In truth, the cravings of the oppressors would be hopeless and the practicability of war out of the question, if there were not an army of Jesuits to smother thought and a handful of Jews to ransack pockets.”
It was misleading, however, to portray the Rothschilds as the financiers of reaction, as they had so often been portrayed in the past. For one thing, as Lionel reported from Wildbad in August, the revolution had made erstwhile liberals more conservative: “The Liberal party in Germany is very different from the liberals in England. All persons of property or who are in business are for the old state of things.” James’s paramount concern was to resume normal business activity—as he reminded his nephews in London, he was “a friend of business” and wanted to “keep the wheels turning.” Provided international stability could be relied upon, he was relatively uninterested in the political complexion of the regimes he lent to. Before it was confirmed that the Pope would be restored with French support, for example, James was perfectly willing to do business with the Roman Republic. Indeed, when the Republic’s representative approached him with a small deposit in March 1849 to ask whether he “would do their business,” he accepted it “as I am [now] a Republican”—an ironic aside from a man who at other times referred to it as the “accursed republic.” And when the position of the Papacy was restored at the end of June, James informed Carl that he had no desire to “run after” the Vatican for business. Adolph too showed little respect for the Pope—“His old Pious-ness with all his nonsense.” Any loan, insisted his French cousins, was to be conditional on the granting of civil rights to the Roman Jews. For, as Anselm said,
the Pope who was once so liberal and who brought Italy such misfortune through his overhasty reforms, is now not just wholly reactionary but, following the example of the Popes of the dark Middle Ages, intolerant in the highest degree, I am tempted even to say inhuman. If the Pope could do business with any other house, he would certainly break with us, and so compliments to the holy gentlemen are not in order.
Nor were James and Lionel willing to allow the Vienna house to resume its traditional role as a more or less unquestioning supporter of the Habsburg regime. In December, both expressed strong objections to Salomon’s efforts to support the Austrian currency when their rivals were profiting from speculating against it.
This political neutrality was most obvious in the case of Piedmont, which had been among the principal troublemakers of 1848. As Anselm pointed out, the Piedmontese indemnity to Austria promised to generate “a beautiful and safe piece of business” in the form of a loan to Piedmont as well as the transfer of part of its proceeds to Vienna. Nat was initially sceptical—as Charlotte observed, the “more sensible” members of the family had not forgotten the “fearful period” of the previous year—but even he could see the appeal of such a transaction. As for James, his interest in Piedmont was so great that Anselm feared he might give the Turin government the impression of “excessive keenness.” This underestimated James’s skill as a negotiator. He had begun by sounding out the government in advance of the peace agreement with Austria, though without committing himself. Then he hinted at a deal with the Italian bankers who hoped to float the bonds themselves in order to shut out rivals from Paris and Vienna. In September he went in person to Vienna and Milan to offer an advance of 15 million francs on the Piedmontese indemnity due to the Austrian government. Finally, in Turin, he succeeded in securing control of more than half the 76 million franc Piedmontese loan, leaving just 8 million to the Italian bankers and the rest to public subscription.
This was not just because he wished to see Austria get her indemnity. As he assured a young and ambitious financier named Camillo di Cavour, he was “very anxious to have dealings with this country; he has repeatedly told me that he regards Piedmont as established on a much sounder basis than Austria.” For his part, Cavour was shocked by the way James had “bamboozled” the Piedmontese Finance Minister Nigra. Convinced that Piedmont should not allow herself to become dependent on “this cunning old rascal Rothschild,” Cavour would prove a formidable obstacle to Rothschild ambitions in Italy in the future.6 But, for the time being, James appeared to have established an important foothold, with the possibility—as he put it—that this would lead to a financial “marriage” with Italy as a whole. In a similar way, the Frankfurt house made approaches at around the same time to German states like Württemberg and Hanover (where a liberal ministry under Johann Stüve remained in power until November 1850), though these were rebuffed.
James’s success in Turin brought to an end over a year of immobility induced by the revolution. Even Lionel and his brothers were now ready to contemplate new business, although they were still more interested in revolutionless Spain and America than in Central Europe. Mercury, cotton, gold, tobacco—even Nicaraguan canals and African groundnuts—seemed safer fare than loans to politically volatile states.
In Paris itself there was also a slight relaxation in Rothschild attitudes. The main barometer of financial opinion—the price of rentes—points to a growing (though not unqualified) confidence in the presidential regime in the course of 1849: in the year after December 1848, 5 per cents rose from 74 to 93, and with them Nat’s spirits. This was in part a reflection of Napoleon’s restrained foreign policy. As Nat remarked when the expedition to Rome was first bruited, “In general when troops begin to move bondholders are frightened; in this case as it is for the re-establishment of order, perhaps & I trust it will produce a good effect.” The return of financial confidence also reflected a growing awareness that Louis Napoleon was far from being the ally of the radical left. Although he still thought the President “a little ugly fellow,” Nat was favourably impressed by the evidence of social restoration he witnessed one evening at the President’s palace: “The ladies were beautifully draped in jewellery and when the carriages were called the titles were not omitted.” “If we remain quiet,” he added hopefully, “there will be no difference between the republic and the monarchy.” This was over-optimistic: in strictly financial terms, rentes never recovered to pre-war revolutionary levels under the Republic, suggesting continued doubt about the stability of the regime—witness Anthony’s alternate warnings that Louis Napoleon would go the way of Louis Philippe or that the republicans would succumb to a Bonapartist coup. Yet there was confidence enough for the Rothschilds to raise the inevitable subject of a new loan to France herself.
There were also the first signs of a revival of the railway mania of the 1840s (Léon Faucher’s appointment as Minister for Public Works was especially encouraging). In February 1849 the Pereires revealed their most ambitious scheme to date: a railway to link Paris, Lyon and Avignon, which would then fuse with the line from Avignon to Marseille (the forerunner of the Paris-Lyon-Marseille line). The aim was to revive the system on which the Nord had been based, with the state investing 147 million francs in the initial construction of line between Paris and Lyon and guaranteeing the company a 5 per cent return, while the company put up 240 million francs to operate the concession for ninety-nine years. In fact, it would seem that the Pereires were now seeking to emancipate themselves from the Rothschilds. To raise the money for the new company, they had initially approached Delessert and through him Barings—a first hint of the breach which lay ahead. James was well aware of what was going on and in May fired his first shot back by forcing Isaac Pereire off the board of the Nord. No one should think “that the Pereires are [the same as] Rothschild,” he told Anthony. “You have no idea what scoundrels these little fellows are. They are always trying to exploit our name.” But “when these people don’t need you, they give you a kick in the arse.”
In a symbolic reassertion of his position as railway king, James had made a point of appearing alongside Napoleon and Changarnier when a new stretch of the Nord line was opened in July. In November he sought to force his way into the Paris-Lyon-Avignon concession negotiations, buttonholing Louis Napoleon on the subject over dinner and haggling tenaciously with the new Finance Minister Achille Fould thereafter. From the Pereires’ point of view, however, this may have been an unwelcome reminder of their association with “Rothschild Ier.” There was fierce opposition to their plan, which one critic warned would lead to “a vast consortium Pereire-Rothschild dominating the country from Marseille to Dunkirk and from Paris to Nantes, controlling the coasts of the Mediterranean, those of the Channel and almost all those of the Atlantic, master of the French isthmus.” By comparison, the more modest rival proposal put forward by Talabot and Bartholony to link Paris and Lyon seemed less monopolistic. There was similar opposition to the Pereire plan for a line linking Paris and Rennes in the west, which they hoped to link to their Rive Droite terminus. Still, the very notion that he was striving for such a “railway hegemony” testified to the extent of Rothschild recovery. As James put it in a letter to Anthony: “Above all, it is good that people realise that nothing gets off the ground without us and when we demand something, then it is a case of giving Rothschild all he wants.”
Nothing could better express how far things had come full circle than this renewed self-confidence—except perhaps the deeply paradoxical friendship which James formed in 1849 with Alexander Herzen. As one of the founding fathers of Russian socialism—the man who coined the phrase “Land and Freedom”—Herzen had left Russia for Paris in January 1847 and, after a brief trip to Italy, returned there at the height of the revolution in May 1848. He had already suffered internal exile as a young man for his liberal inclinations, but by the time he reached Paris his views had moved closer to those of revolutionary socialists like Michael Bakunin and Pierre-Joseph Proudhon (author of another famous aphorism of the period, la propriété, c’est la vol ). Indeed, Herzen personally financed Proudhon’s short-lived journal the Voix du Peuple to the tune of 24,000 francs while the latter was in prison. A less likely person to become a favoured Rothschild client would be hard to imagine. The fact that he did sheds light on James’s political outlook, and perhaps substantiates Heine’s earlier assertion that he was at heart more a revolutionary than a reactionary.
Though born illegitimate, Herzen had inherited a substantial fortune from his aristocratic father, so it is not wholly strange that the Rothschilds obliged him with minor banking services while he was in Italy and helped him invest some 10,000 roubles when he began to sell off his Russian property. Herzen later recalled how he
made the acquaintance of Rothschild, and proposed that he should change for me two Moscow Savings Bank bonds. Business then was not flourishing, of course, and the exchange was very bad; his terms were not good, but I accepted them at once, and had the satisfaction of seeing a faint smile of compassion on Rothschild’s lips—he took me for one of the innumerable princes russes who had run into debt in Paris and so fell to calling me Monsieur le Comte . . . By Rothschild’s advice I bought myself some American shares, a few French ones and a small house in the rue Amsterdam which was let to the Havre Hotel.
However, when the Russian government sought to prevent Herzen raising more cash by mortgaging his mother’s estate at Komostra, less orthodox financial assistance was called for. According to Herzen’s own account, James agreed to accept a bill drawn to the value of the anticipated mortgage and, when the Russian authorities refused to authorise the mortgage, “grew angry, and walked about the room saying: ‘No, I shan’t allow myself to be trifled with; I shall bring an action against the bank; I shall demand a categorical reply from the Minister of Finance!’ ” Despite receiving warnings about his new client from the Russian ambassador Count Kiselev, James now took up the cudgels on Herzen’s behalf, drafting a stiff letter to Gasser in St Petersburg which threatened the Russian government with legal action and exposure in the press.
Why did he do this? He can have had no illusions about Herzen’s politics because he had been given “a very unfavourable opinion” of him by Kiselev. As Herzen put it, he now “surmise[d] that I was not a prince russe.” The answer seems to be that this was James’s idea of a joke. Herzen was bemused by the fact that James “now took to addressing me as Baron,” and even more bemused when he refused to send his letter to Gasser until Herzen increased his commission on the transaction from half a per cent to 5. This “Mephistophelean irony” was intended to test Herzen, who refused to concede more than another half per cent:
When half an hour later I was mounting the staircase of the Winter Palace of Finance in the Rue Laffitte, the rival of [Tsar] Nicholas was coming down it.
. . . His Majesty, smiling graciously, and majestically holding out his own august hand [said,] “the letter has been signed and sent off. You’ll see how they will come round. I’ll teach them to trifle with me.”
“Only not for half of one per cent,” I thought, and I felt inclined to drop on my knees, and to offer an oath of allegiance together with my gratitude, but I confined myself to saying: “If you feel perfectly certain of it, allow me to open an account, if only for half of the whole sum.”
“With pleasure,” answered His Majesty the Emperor, and went his way into the Rue Laffitte.
I made my obeisance . . .
Six weeks later the money was paid. “From that time forth,” Herzen recalled, “I was on the best of terms with Rothschild. He liked in me the field of battle on which he had beaten Nicholas; I was for him something like Marengo or Austerlitz, and he several times recited the details of the action in my presence, smiling faintly, but magnanimously sparing his vanquished opponent.” After Herzen’s expulsion from Paris by the Bonapartist regime, James continued to look after his investments in American and other bonds (he appears in the 1851 balance sheet owing the Paris house 50,000 francs) and secured him permits on the occasions when he wished to visit Paris. He also recommended him to the London house, which took over his account during his long English exile.
Herzen’s transformation from insurgent into investor, from Rothschild critic into Rothschild client, was in many ways emblematic of a Europeanwide change of mood—as was James’s willingness to play this game with a notorious revolutionary. Did he know that the money he was putting in Herzen’s hands was being used to finance the Voix du Peuple ? If he did, it did not worry him. By the end of 1849 the revolution was over and the more rapid and sustained pace of economic development henceforth would make another 1848 much less likely. For his part, Herzen saw the Rothschilds as personifying this shift away from revolutionary politics:
A Rothschild . . . must be in his office in the morning, to begin the cap italisation of his hundredth million; in Brazil there is plague, and war in Italy, America is falling to pieces—everything is going splendidly: and, if someone talks to him then of man’s exemption from responsibility and of a different distribution of wealth, of course he does not listen.
Of course, for a new era lay ahead: of conflicts within capitalism rather than against it, and between states rather than classes.