Although James and Lionel grew increasingly confident that the regime was secure after 1832—warmly welcoming every legal restriction imposed on republican activities—there were political crises of varying degrees of intensity throughout the 1830s. Quite apart from periodic ministerial crises, there were a number of attempts on the King’s life, working class unrest in Lyon in 1834, an abortive republican coup in 1839 and an equally abortive Bonapartist invasion in 1840. On closer inspection, relations between the Rothschilds and the July Monarchy were only superficially intimate; as James’s private correspondence makes clear, he regarded Louis Philippe and most of his ministers as incompetent. The King was “duplicitous”; the Finance Minister Humann “an ass”; Thiers “a little man,” and so on. “Well, my dear Amschel,” wrote James dismissively as yet another government fell in early 1839, “I can assure you that within two years these old Ministers will be back again in their old posts because our French Ministers are just like serviettes: after a period of time they require the attention of a washerwoman, and once they have had a rest they are as good [as new] again.”
8.i: H. Delaporte, James de Rothschild and Louis Philippe, La Caricature, No. 67 (June 23, 1831).
James’s contempt was rooted in his own traumatic economic experience during the revolution. Between May 1830 and April 1831 the price of 3 and 4 per cent rentes slid inexorably downwards to reach a nadir of 46 and 75 respectively, a fall of 30-40 per cent (see illustration 8.ii). This was despite the closing of the bourse during the July days and the injection of 50 million francs by the Banque de France in August. It was not until the end of 1831 that prices showed any sign of stabilising. Given that on the eve of the crisis James and Nathan had held a total of 6 million francs “nominal” of the two kinds of security, for which they had paid 5.36 million francs, their losses could have been as much as 2.1 million francs (£86,000) on the rente account alone. James sold at least some of these rentes before the nadir was reached, but as before he was reluctant to cut his losses. “We are sitting in a bowl of soup and we must now wait for it to be cooked,” he told Nathan in late August. “Every day there are so many rentes for sale but there are no buyers to be found . . . I hope that they will go up, God willing, and then one must get out of these. I no longer have the confidence which I had previously, and it will be a long time yet before the old feeling of trust returns once more.”
8.ii: The price of 3 per cent and 4 per cent rentes, May 1830-May 1831.
He, Lionel and even Hannah—who was in Paris for her daughter’s accouche ment—watched hypnotised by the hourly fluctuations of the market, waiting in vain for the crisis to “blow over.”6 Indeed, James began to buy new rentes in the hope of stabilising the market: by November 1830 his total holding may have amounted to as much as 30 million francs (nominal). But still the prices fell. “We have,” he lamented, “too many rentes hanging round our neck and are unable to compete with the speculators on the same level.” Five months later Lionel confessed to his father: “We have been all the time so misled by the abundancy of money and scarcity of stock, & by the peaceable assurances of the King, that we never could make up our minds to sell.” Writing from Berlin, Anselm urged a final liquidation before rentes sank any further. After much prevarication—“I cannot decide to accept a loss of 40 per cent”—James was ultimately forced to sell heavily at the bottom of the market in March 1831. “Unfortunately,” he told Nathan, echoing Apponyi, “my fortune has melted away because I have been realising [that is, selling].” He had “so depleted” his capital “that I do not wish to look at the balance.”
Moreover, the French crash affected other bonds. A German cartoon of 1830 or 1831 shows four of the Rothschilds (“the Krähwinkler,” after the imaginary German town of Krähwinkel) vainly struggling to keep some falling bonds in the air with the aid of bellows (see illustration 8.iii). It is impossible to quantify exactly the extent of the losses suffered by the Paris house at this time, as the relevant accounts have not survived; but for the London house total losses in 1830 were more than £56,000, 5 per cent of the house’s capital, and it seems safe to assume that the damage was worse across the Channel. Comparable losses bankrupted Laffitte, whose firm collapsed even as he reached the zenith of his political influence.
8.iii: Anon., Die Krähwinkler suchen die Papiere in die Höhe zu treiben (1830-31).
As it was, James had to endure a measure of embarrassment. In November 1830 he was forced to suspend payments due to the government for the pre-Revolution loan. Nor could he deny that “that damned Ouvrard” had supplanted him as the dominant figure on the bourse: “For the past six months, the man has had a lot of good fortune and so the whole world follows whatever he does . . . Whatever move he makes the whole stock exchange will follow suit.” When James sought to participate in a new government loan in March 1831, another old rival was brutally frank. “For several months now,” Hottinguer told him, “your establishment no longer makes the same positive impression [as in the past] on public opinion.”7 James felt obliged to speak to the other bankers “in a stiff tone and to ‘show them my teeth’ as they must appreciate that we are not to be treated off-handedly.” But it was some time before he was able to restore his credibility in the French financial world. Indeed, Lionel began to detect in his uncle something close to a loss of nerve. “Uncle James is so much shaken by this revolution,” he confided in his father, “that I assure you he is no more what he was, if he sees things looking well, he says, we must go to the old prices, and if the contrary is the case and the r[ente]s fall, then he gets immediately frightened and sells at the lowest price.”
James himself became increasingly fatalistic in 1831. “We can now expect many years of unrest here in France,” he told Nathan gloomily in July, “and regrettably, I fear we will lose our fortune here, and have no hope of preventing this from happening, because the people never know what they want.” “For some time now, I have been very sick,” he wrote a month later, requesting that Salomon’s son Anselm return to Paris to assist him:
Every day we have new scares, and every day new surprises hit us. Good news is followed by a fall, and bad news brings a rise in its wake. At night one goes to sleep, and is then awoken by a drum making a terrible din in the street. “Please hide all your securities without delay.” . . . I promise you, so help me God, my arms are trembling, as things have gone badly wrong for me. I did some buying, so prices fell. When I sell, prices go up. It is absolutely disgusting.
By October he was feeling “half frantic,” “nervous” and isolated: “The world is speculating against me, and I am speculating against the world.” It was not until early 1832 that James began to recover his confidence. Curiously, he seems to have rather relished riding out the cholera epidemic, and was pleasantly surprised when Périer’s death caused only a minor fall. Only when matters began to improve in the summer was he able to retreat to his house at Boulogne, where he took to bed in a state of complete exhaustion.
Consols and the Constitution
The principal reason for James’s financial survival was the role played by the other Rothschild houses in bailing him out. Here, not for the last time, the bank’s multinational character proved an invaluable source of strength. Nathan’s first reaction to the news of the events in Paris was to purchase and borrow large quantities of silver and gold from the Bank of England—he bought gold alone worth £779,000—and send it at once to his brother. This is what James meant when he repeatedly praised Nathan’s “decency,” for it allowed him to continue paying the money due to the French Treasury under the terms of the loan agreement concluded earlier in the year—a vital show of financial strength. As Hannah told her husband proudly, “Your exertion in sending so much money gives great pleasure . . . You have dear Rothschild behaved uncommonly well and every one is quite satisfied with you.” One reason Nathan was able to bail his brother out was that, as The Times later said, he had managed to sell a substantial proportion of his own 4 per cent rentes before the r
evolution broke out.8 The London house was again a source of support in March 1831, when James was seeking to participate in a new French loan: access to the London market remained James’s trump card in Paris. The Naples house also seems to have assisted by sending silver; its surviving accounts show that half-yearly profits were unaffected by the revolution. Indirectly, the fact that the Frankfurt and Vienna houses remained on a sound footing also helped.
Of course, this would not have been the case if the revolutionary wave of 1830-32 had affected the other Rothschild houses as directly as it affected the French house. It is important to note that it could have. There were widespread fears in 1830 that Naples would succumb once again to revolution as well as the Papal states, and the German reverberations might have been felt more strongly than they were in Vienna. As it was, Salomon confided in Gentz in November 1830 that he was “10 million [gulden] poorer than he had been six months before.” In Frankfurt too there were grounds for anxiety, not least because of events in neighbouring Hesse-Kassel. The Elector William II (who had succeeded his father in 1821) was one of those rulers who came unstuck in 1830, when citizens’ assemblies in Kassel, Hanau and Fulda demanded the summoning of a parliament (Landtag). Initially, the main bone of contention was William’s overt cohabitation with his mistress; but the looting of customs houses on the state border suggests that economic grievances also played a part. Since 1823 the Elector had not had recourse to the Rothschilds for financial assistance. But in the crisis of 1830 his officials appealed to Amschel for a small advance of 150,000 gulden. As his chief minister put it: “Your most humble servants are not in a position to propose a way of obtaining the advance which is most urgently needed other than through the house of Rothschild.” They were not the only ones: requests were also received from hard-pressed governments in Hanover, Württemberg and Oldenburg. Given the growing risk of German revolutions on the French model, however, Amschel was prepared to lend the Elector only 100,000 gulden.
Yet when the Elector’s son Frederick William was installed as co-regent and accepted a constitution which was the most liberal yet seen in Germany, Amschel’s attitude changed. In 1831 he arranged two loans to the new regime totalling 1.35 million gulden. In many ways, this was analogous to James’s defection from Charles X to Louis Philippe in Paris. And, as in France, it did not take long for the more advanced liberals to become dissillusioned with the new ruler. Amschel nevertheless stuck to the new ruler even as his popularity declined, just as James stuck to Louis Philippe. He continued to act as banker to Frederick William and his unpopular wife9 even after the Hessian government resumed a course (under the firmly anti-liberal Ludwig Hassenpflug) which led inevitably to a messy constitutional crisis. In short, Amschel blew with the wind. He and his brothers evidently had little respect for the various German princes endeavouring to retain their traditional authority. Salomon advised him “not to pay attention to the declamations and discussions” of the King of Württemberg “as I know this prince better than you: his views are always wrong and his opinions are always changing, and whether he is courageous or cowardly makes no odds, [as] I have more confidence in the opinion of a child than in that of this prince.” But once Metternich’s influence began to make itself felt in Germany after the revolutionary high-water mark of the Ham bach festival, the Frankfurt house wept no tears. Even this very modest German revolution had cost Amschel money, as Anthony found when he visited Frankfurt. The failure of the putsch in Frankfurt attempted by a small and incompetent group of radicals in April 1833 was a welcome sign that the political tide was ebbing.
Nathan in London also experienced his share of political turbulence. Of course, events in Britain were less violent than those on the continent. It would nevertheless be a mistake to overlook the close parallels between British reform on the one hand and French revolution on the other, not least because contemporaries were so conscious of these, and had no way of being sure that the former would avert the latter. The issues at stake were not so different: the freedom of the press; the reduction of religious disabilities in political life (which had already caused a serious political crisis in 1829); the extension of the electoral franchise; the constitutional position of the crown relative to ministers and that of the upper house of parliament relative to the lower. The cholera came to London too.10 More importantly, the financial consequences of political crisis were very similar, if less dramatic in London. Had the Reform crisis in Britain been even slightly more serious, then James might have found his brother much less free to lend assistance.
From the vantage point of Paris, it seemed at first unlikely that the Whig ministry of Earl Grey would survive. Indeed, as late as March 5, 1831—four days after Lord John Russell introduced the Reform Bill—James wrote to Salomon assuring him that “Peel, Palmerston and Wellington are coming to power.” But this was wishful thinking on the part of his old Tory friends (Herries was his source for this tip). For his part, James was more inclined to think that an English revolution was in preparation, similar to the one he himself had experienced the year before, “because should the Bill be passed, then this will be seen as a fatal blow to England, and if on the other hand the Bill is not passed then one can expect a great deal of unrest.” When Parliament was dissolved in April, James had a sense of déjà vu. As he put it to Lionel: “If the Reform Bill passes, it will bring the same results as the revolution did here, the King wanted to take away from the people all their rights, which brought the revolution. In England the King gives the people more than their rights, which will have consequences as bad as the contrary has had.” He made the same point directly to Nathan:
I might be mistaken, but the initial impression that the dissolution of Parliament in England has made on me is the same as . . . our dissolution made when, to start with, no one viewed the matter as giving cause for concern but then we fell some 30 per cent and I hope to God this will not be repeated this time in England. But I am very anxious . . . Let us get down to the nitty gritty. I am not at all pleased with the situation in England.
As James saw it, “a lot of antagonism has been generated against the wealthier classes, and England has only been strong until now precisely because they [the government] had the support of the wealthy class.” The Reform Bill might seem moderate, but “the supporters of . . . Reform will almost certainly make further demands later on.” He fervently wished England to “put a stop to the progress of the infamous liberal spirit.” “The plebeians believe that a Parliamentary reform will provide them with [free] bread and cake,” he warned Nathan, “and just like here, they are revolutionaries at heart. Once the Reform Bill has been passed, they will come up with new demands.” The riots in Bristol and elsewhere in October 1831 seemed to confirm this diagnosis.
Lionel acknowledged that there was a parallel between France and England. “We have had a revolution and are now quiet; in England you are in the middle of your revolution, & you must wait ’til it is over.” However, he was far less worried by this than his uncle. This was partly a reflection of his liberal outlook. “I am very pleased to see that this Reform Bill has had a little effect upon some of the aristocracy,” he commented in a revealing letter to his parents. “It is a very good thing, some of those great persons were really insupportable, the great difference that they always made between the different classes will soon be done away with, & the society in England will be more like that here, which is by far more agreeable.” There is more than a hint of Disraeli’s fictional Adrian Neuchatel here (“Well; we City men must see what we can do against the dukes”).
But Lionel’s attitude was rooted in pragmatic considerations: it had more to do with the connection between the prospects of the Reform Bill and the price of government bonds. Between January 1830 (when they stood at 95.6) and March 1831 (75.4), consol prices fell by 20 per cent—a less dramatic fall than in Paris, but nevertheless a substantial decline. The sharpest fall came between October 1830 and January the following year (see illustration 8.iv), but prices
remained below their average level in 1829 (91) until 1834.
Although international concerns were paramount in the City (as they were on the Paris bourse), domestic factors also played a part in this crisis. Notoriously, the Duke of Wellington’s intransigent speech against reform on November 11 provoked a fall of more than six points, though the slide had actually begun two months before. At the same time—and this was more of a problem than in France—there was a sharp monetary tightening in 1830-31 as the Bank of England’s reserve fell, providing the inspiration for the Radical Francis Place’s famous slogan of the following year: “To stop the Duke, go for [meaning withdraw] gold!” In short, it began to seem as if the financial markets wanted the Reform Bill to pass. In Paris, James made this connection as early as March 1831, just after the bill had passed its second reading by a single vote. “That the Reformers are winning,” he argued in early May, “can at the present moment only have a positive effect and cause a rise in the stocks.” Lionel agreed, expecting the passage of the bill to produce “a very great effect,” and strongly favouring the creation of new peers to force the bill through the Lords. Both were prepared for the Lords’ rejection of the bill to cause a further fall in prices.
The House of Rothschild, Volume 1 Page 39
