Bismarck: A Life

by Jonathan Steinberg

  Your father got a hug from him on the stairs, and then he came into the blue room where we were with the Bowditchs’ and gave me three hearty shakes of the hand. I felt in three minutes as I had known him all my life and formed a deep attachment for him on the spot which has not diminished on further acquaintance. He looks like the photograph your father has of him and like some of the caricatures, is very tall and stoutish but not the least heavy, a well made man with very handsome hands. He is possessed of a wonderful physical and mental organization, eats and drinks and works without feeling it, like a young man of five-and-twenty instead of one of fifty or nearly so. He said, of course, he should come to see us whenever he had time to do so and begged your father to let him come to dinner entirely en famille so that they might be able to talk over old times together at their ease. Accordingly the following Tuesday, the next day but one, at 5 o’clock was appointed. … It would have done your heart good as it did mine, to witness Bismarck’s affectionate demonstration to your father.141

  I quote the letter at length because it testifies to the extraordinary magnetism Bismarck exercised on his contemporaries. They, in effect, fell in love with him, dazzled by his charm, brilliance, and, yes, warmth. In spite of Holstein’s portrait of the cold, joyless Bismarck, the warm, funny, affectionate side existed too and his career cannot be comprehended without getting us close to the mystery of his remarkable personality as this ecstatic letter has done.

  At the same time Bismarck was negotiating with Rechberg in Vienna, Disraeli took a long walk with his friend, the Russian ambassador Brunnow, and they talked of Bismarck’s successes.

  Brunnow thought there was no person whom circumstances had ever so favoured. France, holding back because she was offended with England, English government in a state of impuissance; Russia distracted with conflicting interests; Austria for the first time sincere in wanting to act with Prussia; then, the weak chivalric character of the king, the enthusiasm of Germany.

  ‘Bismarck has a made a good book,’ I said. ‘He has made a good book but, what is most strange, he backed the worst horse of the lot. For Prussia is a country without any bottom and in my opinion could not maintain a real war for six months.’142

  The negotiations in Schönbrunn Palace at the end of August 1864 have left conflicting trails of evidence and they remind me a little of those family games of Monopoly when players confront each other with deals. What will you give me to get Trafalgar Square? Rechberg knew perfectly well that Bismarck wanted both Duchies and Bismarck let him think that Milan might be the property to be swapped. On the morning of 24 August Rechberg presented the assembled monarchs and retinues with the draft of just such a swap filled out, as Pflanze puts it, ‘with uncomfortable exactness’. Franz Joseph thereupon asked William bluntly if he intended to annex the Duchies and after some hesitation William, embarrassed by the direct question, replied that ‘he had no right to the Duchies and hence could lay no claim to them,’143 exactly the same response he had given to Bismarck’s annoyance at the Crown Council earlier in the year.

  On 7 September 1864 Gerson Bleichröder wrote to Baron James de Rothschild to report what Bismarck had told him about Austro-Prussian relations. It seems to have been understood between Bismarck and Bleichröder that the Rothschilds would inform the French accordingly:

  The great intimacy with Austria has reached its term and a chill will follow. Schleswig’s future is still deeply veiled. My good source still thinks that we must reach an understanding with the French and keep Schleswig-Holstein for Prussia. Russia would not object, and Austria and England would remain silent, however, unhappy they might be. For the time being this ideal is frustrated by the will of the Monarch, who, because of the Crown Princess, is inclined towards the Duke of Augustenburg.144

  In the summer of 1864 France opened negotiations to create a free trade zone between the Empire and the Prussian-dominated German customs union, the Zollverein. At this point, Rechberg suggested again that a central European customs union would be a natural extension of the existing Prussian-dominated common market. The Prussian Landtag, the Prussian State Ministry, and the smaller German states opted for the French treaty which undermined Rechberg’s entire policy of cooperation with Prussia.

  Bismarck was furious. He wrote a letter to Roon on 22 September 1864 from Reinfeld, his wife’s family estate:

  A privy councillorish rheumatism has afflicted the Ministry of Trade and the Ministry of Finance for which the correct mustard plaster has yet to be found. The gentlemen understand perfectly that they make difficulties for the present government when they worsen our relations with Austria and Bavaria through unnecessary discourtesies, from which we gain not the least advantage.145

  In spite of Bismarck’s anxiety, shortly thereafter the Peace of Vienna was signed, the main clause of which, Article 3, stated that

  His Majesty the King of Denmark renounces His rights over the Duchies of Schleswig, Holstein and Lauenberg to their Majesties the Emperor of Austria and King of Prussia.146

  The situation played again into Bismarck’s hands. Prussia had in effect now annexed Schleswig and Austria had an army of occupation in Holstein hundreds of kilometres from her borders in a territory utterly useless to her. In the meantime Rechberg had fallen from power in Vienna, and the Emperor appointed Count Alexander von Mensdorff-Pouilly (1813–71), a dashing and much decorated cavalry general, to succeed him. Rechberg, who for all his faults had been apprenticed to Metternich, knew the diplomatic trade. Mensdorff, a very wealthy man, had the highest connections to the English royal family through his mother, Sophie Duchess of Saxe-Coburg, but had absolutely no qualifications for the post of Foreign Minister. In addition, on taking office, he seemed to lose all his dash, and became ‘the picture of a man who wavered with every tendency in court circles’.147 And this incompetent, charming but supine figure had to play on centre court against the greatest gamester in the history of diplomacy. The record of Austrian incompetence in the nineteenth century hardly has a dimmer chapter than this appointment.

  Bismarck took advantage of Mensdorff’s inexperience to stir up trouble in the Duchies. There were still the Saxon and Hanoverian army units, which the Bund had sent north to fight Denmark; Bismarck decided to expel them and demanded that they exit Schleswig at very short notice. This humiliation of the German Confederation put Austria into difficulty. They needed to strengthen the Bund, not weaken it. Bismarck managed to enlist Mensdorff in the enterprise and the two powers issued a joint note on 14 November 1864 which demanded that the allied troops withdraw, which in due course they did.148 On 7 December Prussian troops, who had fought in the Danish War, enjoyed a triumphal march into Berlin, the first public celebration of success that Bismarck could claim.149

  The early weeks of 1865 brought tension between Austria and Prussia closer to the breaking point. Mensdorff kept pressing Bismarck to state Prussia’s intentions and in February Bismarck issued the so-called ‘February Conditions’: the army and navy of the Duchies were to be absorbed by Prussia; servicemen were to swear an oath to the King of Prussia; Prussia was to be granted coastal forts and the right to construct a canal across the territories; Prussian garrisons were to remain; and the Duchies were to join the Zollverein, which still excluded the Habsburg Empire. The Austrians were appalled. The Emperor called them ‘quite unacceptable’.150

  Between February and the summer, the two powers made moves and counter-moves. The Prussian commissioner began to turn Schleswig into a Prussian province, to which the Austrian responded by getting Bavaria to introduce a motion in the Bund that Holstein be turned over to the Duke of Augustenburg which passed by 9 votes to 6.151 In secret during early March 1865, Bleichröder opened negotiations with the Austrian Jewish banker Moritz Ritter von Goldschmidt (1803–88) on a scheme for Prussia to buy out Austria in Schleswig and Holstein. On 8 March Goldschmidt wrote to Bleichröder: ‘it would have to be a fat sum to overcome the immense reluctance against a cash settlement, which would not be very hono
urable.’152

  This particular period between the February Conditions and the signing of a new Austro-Prussian convention in August at Bad Gastein has been the subject of more historical debate than any other in Bismarck’s long career. How are we to account for the apparent vacillations in Bismarck’s policy between the ‘Schönbrunn System’ (solidarity between Austria and Prussia in joint control of Germany) and the declaration made by Bismarck to Disraeli, Brunnow, and Vitzthum and repeated over and over in many venues that Prussia could only flourish if it destroyed Austrian hegemony by an inevitable Austro-Prussian war. The most famous German historians could not agree. For some the peerless Bismarck always knew—as a genius—what the next step had to be and he only appeared to waver. He changed tactics but not strategy. Others argued that Bismarck really wanted peace but it eluded him. The international conjuncture favoured aggressive moves against Austria. Great Britain had shown itself unwilling or unable under the Liberals to intervene in defence of Denmark. Napoleon III had got involved in an absurd attempt to found an empire in Mexico, and Tsarist Russia had to cope with the social upheaval caused by the emancipation of the serfs in 1861. The engagement of these powers in a German civil war must have been improbable. And yet Bismarck seemed to hesitate.

  The King had begun to resent the behaviour of the Austrians. On 25 April he wrote to Roon that Bismarck had shown him the Austrian note about a compromise over Kiel which would involve a reduction of the Prussian garrison. ‘I cannot bring myself to do that, since every concession to Austria is met by a new ingratitude and pretensions.’153 Manteuffel had also been alarmed by the ministerial activities and in early May wrote to the King:

  Who rules and decides in Prussia, the King or the ministers? … Your Majesty’s ministers are loyal and devoted but they live now only in the atmosphere of the Chamber. If I may express an opinion, it is this, your Majesty should hold no council but should write to Minister Bismarck and say, ‘Now that I have read the proposal, I have decided that the government will not agree to it’.154

  The King rejected this advice and held a Crown Council on 29 May 1865 at which he declared for the first time that annexation of the Duchies was ‘almost unanimously’ demanded by the ‘nation’. ‘Only the Democracy which does not want Prussia to become great under the present government stands against this demand.’155 After the King had declared his determination to annex the territories, Bismarck outlined his expectations about relations with Austria. Sooner or later a war would come; at the moment the international situation was favourable. Nevertheless, the wisest course was to eliminate from the February conditions the two points which had met the greatest objection: the oath of allegiance and the ‘amalgamation’ of the Prussian and Ducal forces.156 After the meeting Manteuffel, genuinely alarmed by what he had heard, wrote to Roon:

  I beg your Excellency most earnestly to keep your eye on Bismarck and stay in touch with him. I fear this hot-headed approach. That must not be. I beg your Excellency again to follow things closely. This is a game for high stakes and the state is the main thing.157

  It must have been a stimulating session if the proverbial ‘hothead’ himself had been alarmed by Bismarck. But what had Bismarck actually said that was rash? He had modified the February Conditions to make them more palatable. He offered various courses of action and seemed not to opt for any.

  The trouble was money. The Landtag session had begun in January and, while the obvious and unexpected success in the Danish War had softened the hostility of the liberals towards Bismarck, the lower house still had not yet surrendered its demand to approve state expenditure. On 19 June another Crown Council discussed what strategy to adopt in the deadlock. The minutes reveal that Bismarck said:

  for a long time it had been his conviction that with the existing constitution Prussia could not be governed for any length of time … [he referred] to the opportunities which a complication of the foreign situation could yield and noted that it might be advisable by proper financial operations to weaken the present inclination of the money market toward an Austrian loan.158

  There were several possible sources of funds. The government could issue a public loan without authorization by the Landtag. Bismarck wrote to Fritz Eulenburg, the Minister of the Interior on 5 July 1865 to say that the King had become as convinced of ‘the necessity of a money operation as I am. He feels himself free of constitutional reservations. He said to me today his duty to preserve the Monarchy is more binding than his duty to the constitution.’159 On the same day the State Ministry published its budget in the official state newsletter which contained an item for the fleet approved by the King but not the legislature, which came close to royal rule by decree.160 A loan by decree could follow that example but might not recommend itself to the bond market. As a result the rate of interest could be punitively high or the sale fall short.

  Exasperated by the ‘quibbles’ and lack of initiative of his Finance Minister von Bodelschwingh, Bismarck turned informally and quite irregularly to August von der Heydt (1801–74) to explore other ways to raise money. Von der Heydt had exactly the qualities that Bodelschwingh lacked: real experience in private banking as a partner in Heydt, Kersten und Söhne, the family firm; long tenure as Trade Minister under Count Brandenburg and then in the Manteuffel cabinet; though a liberal, he had excellent relations with the royal family; and ‘as a result of his personal initiative he had insured the development of state-owned railways. By 1860 half of all Prussian railways belonged to the state.’161 On 22 June von der Heydt wrote to Bismarck to explain his scheme to raise money.

  If it is a question of making liquid considerable sums of money without actual state loans as a floating debt or through their sale, there will be no lack of immediately realizable assets. I draw your attention to the substantial holdings of railroad shares, namely the state participation in the Cologne-Minden, the Bavarian-Märkish, the Upper Silesian, the Stargard-Posen railroads, and then there are the holdings in the Guaranty Fund of the Cologne-Minden line, which in a case of need could be used for sale or for mortgage, then there are the tax credits, perhaps, those of the Saarbrücken Mines or the Upper Silesian pits.162

  Von der Heydt reckoned that the use of these state assets would finance the government’s needs without recourse to unpopular increases in taxation. These were ideas that Bismarck wanted to hear, and it is hardly a surprise that after the victory over Austria in 1866, when he could rid himself of the ‘conflict ministry’ and the tedious Bodelschwingh, August von der Heydt became Finance Minister. Bismarck called him ‘the Gold Uncle’, in this case, a term of endearment.

  The Protestant banker had come up with a scheme that would work. Bismarck’s Jewish bankers, Bleichröder and his Rothschild and Sal. Oppenheim connections had ideas of their own. They too had hit upon a fire sale of Cologne-Minden shares but they had their eyes on the Preussische Seehandlung, which by an irony of history Bismarck, as reporteur of the Finance Committee of the Landtag in 1851, had helped to become ‘the bank house of the state’.163 The Preussische Seehandlung had been founded under Frederick the Great but in 1820 it became an independent institute directly under the Crown.164 In an era when the joint stock company still required an individual permit from the government, the state bank became a very important agent in financial transactions. The Bleichröder/Rothschild group constructed various schemes to exploit the Seehandlung: floating it on the market; taking out a loan against the reparations to be expected from the Danish government as a result of the Peace of Vienna; selling some of its assets, raising money by selling bank shares or arranging a bond issue.

  Bismarck set out the options in a letter to Roon from Carlsbad on 3 July 1865. The money operation had, it seemed, a peaceful side. ‘Our task remains by means of our own money operations to block those planned by Austria and thus to assure the maintenance of peace.’ He asks why the Seehandlung should not simply accept the demand of the state for credit with an agreement to pay it when and as needed, and if at the same time
they raised interest on deposits they would open the gate to a flow of liquid capital to cover the obligation. And there was still the option of the Cologne-Minden railway which Count Itzenplitz had been investigating. ‘If neither of the two operations goes forward, there remains only the direct loan available in spite of the constitution.’165

  Bismarck’s intentions cannot easily be deduced from the evidence above but thanks to a piece of luck, we can get a little further towards clarity. In the late 1960s Professor John Röhl, the biographer of Kaiser Wilhelm II, came upon three folders of letters to Fritz Eulenburg in Haus Hertefeld, a home belonging to an Eulenburg descendant. One of them contained 62 hitherto unknown handwritten letters from Bismarck, of which eleven belong to the period between 27 June and 18 August 1865, precisely the period in which Bismarck’s intentions have been most contested.166 The letters show that Bismarck had possibilities to raise the money to finance an Austria war from several sources, and a loan against assets in the Seehandlung had almost been agreed. They make his intentions no clearer but that may be because Bismarck always kept many options open.

  When Bismarck arrived in Carlsbad and met the Austrians, he found ‘the welcome as cool here as the weather’ and on 4 July he wrote to Eulenburg that ‘things with Austria stand badly. All the military reports from Holstein tell the King that the situation of troops has become impossible in the face of the press and social chicanery.’167 While tension mounted between Prussia and Austria, Bleichröder had arranged with the Paris Rothschilds a deal in which the Rothschilds would form a consortium to lend the Seehandlung the money needed to finance the war with security provided by Seehandlung bonds at 1 per cent under the interest payable on Prussian state obligations. As Bismarck wrote to Eulenburg,