The House of Rothschild, Volume 1

by Niall Ferguson

  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.3 There 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 l
iving 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.