The House of Rothschild

by Ferguson, Niall

  It is usually assumed that Rhodes’s expansionist aspirations must have been shared by the Rothschilds: why else tell Natty so much about them? There is, however, a need for caution. To be sure, Natty and his brothers were not opposed to the idea of an enlarged British South Africa. When Rhodes joined forces with Gifford and Cawston of the Bechuanaland Company to create a new Central Search Association—to spearhead his plans for Mafabeleland—Natty was a major shareholder, and increased his involvement when this became the United Concessions Company in 1890. He was also a foundation shareholder when Rhodes established the British South Africa Company in 1889, and acted as the company’s investment adviser free of charge.12 More important, as a letter of January 1892 shows, Natty had no illusions about Rhodes’s ambitions. “[O]ur first and foremost wish in connection with South African matters,” he told Rhodes, “is that you should remain at the head of affairs in that Colony and that you should be able to carry out that great Imperial policy which has been the dream of your life.—I think you will do us the justice to admit that we have always loyally supported you in the carrying out of that policy, and you may rest assured that we shall continue to do so.”

  Indeed, Natty would no longer willingly listen to criticism of Rhodes. When the increasingly unstable Randolph Churchill returned from South Africa in 1891 denouncing the prospects of Mashonaland and declaring in the press that “no more unwise or unsafe speculation exists than the investment of money in [mining] exploration syndicates,” Natty was incensed—especially as he had financed Churchill’s trip. Sir William Harcourt’s son Lewis (“Loulou”) described in his diary an extraordinary confrontation between Natty and Churchill at Tring in early 1893, when the latter:attacked Rhodes & S Africa & Mashonaland most bitterly, said the country was bankrupt & [Cecil] Rhodes a sham and that Natty knew it and Rhodes could not raise £51,000 in the City to open a mine etc. All this was to Natty’s face and made him furious—so much so that he went out of the room for a few minutes to cool himself.

  Nor did the Rothschilds have any qualms about Rhodes’s use of force against the Matebele and other black African tribes who got in his way. Writing from Paris in October 1893, Arthur de Rothschild made the classic imperialist connection between “a little spurt in the shares of the Chartered Co.” and “a sharp engagement having taken place with the Matabeles, 100 of them having been killed, whilst there was, I am happy to say, hardly a single casualty on our side.” The senior partners in the Paris house were equally enthused, not least by Rhodes’s autocratic style of governing the Cape after he became its Prime Minister in 1890.

  Yet there was always a substantial gap between Rhodes and Rothschild with respect to the means of extending British influence from the Cape. Philosophically, Rhodes was always closer to Liberal imperialism than to the policy of the Salisbury governments, which tended to subordinate the ambitions of white colonists on the periphery to the diplomatic interests of the metropolitan government. He was in favour of Home Rule, for example, the litmus test of late-Victorian politics. Having expected so much from Natty, Rhodes was quickly disillusioned. He was frustrated by the Rothschilds’ inability to persuade the Portuguese government to cede Delagoa Bay, the principal sea port on the Mozambique coast and therefore the strategic key to the future of the Transvaal. Negotiations on this subject dragged on, but although Natty talked optimistically of buying the land from Portugal, diplomatic obstacles proved insuperable. Rhodes felt Salisbury had “treated [him] very badly over the Portuguese business,” a charge which Natty was at pains to dispute. “You must not forget,” he explained to the impetuous empire-builder,that at that time public opinion all over Europe was very much in favour of Portugal, and it would hardly have been wise for Lord Salisbury to incur the reproach, on the part of friendly Powers, that this country was going to crush weak little Portugal for the sake of a no doubt important but underdeveloped region in Central Africa. After all, could you have expected more, or as much from a Liberal Government?

  When Rhodes tried again with a direct approach to the Portuguese envoy Luiz de Soveral, he felt Natty’s support was lukewarm. “It appears that you take Soveral’s view that nothing can be done,” he complained in May 1893:I thought that you would do all you could as for several years you have felt and rightly so, that the Delagoa is the key of our position in S. Africa ... I am afraid that we are going to buy Delagoa Bay. We want it and are prepared to pay for it. With the growth of the Transvaal the longer we wait the more we shall have to pay and with the completion of the Delagoa line we shall probably never get it.

  In this, as in much else, he was moving too rapidly for the Rothschilds, who grew weary of explaining that the Portuguese government had no intention of selling the territory in question. As early as February 1891, Rhodes confided in Reginald Brett that he regarded Natty as “honest but without sufficient brains.” It was not long before he revised his will once again, appointing a second trustee of his fortune alongside Natty. “The thought torments me sometimes,” he declared, “that if I die all my money will pass into the hands of a man who, however well-disposed, is absolutely incapable of understanding my ideas. I have endeavoured to explain them to him, but I could see from the look on his face that it made no impression ... and that I was simply wasting my time.”13

  For his part, Natty was perturbed by the cavalier way in which Rhodes set about using De Beers Consolidated to advance his designs in Matabeleland. The first bone of contention was Rhodes’s determination that De Beers should be a major shareholder in the British South Africa Company, usually referred to in correspondence as “the Charter.” Natty’s view was “that De Beers should not hold so speculative a security,” a view strongly supported by Carl Meyer, always “a great pessimist about the Charter.” In January 1892 Natty spelt his views out in “perfectly frank” terms:[Y]ou are the only judge as to whether the Cape Government ought to take over the Northern Territories; that is not our business and we do not wish to offer any opinion on the subject. You must know how far your Charter would meet with the approval of Her Majesry’s Government. But what we do say is, that if that is your policy, and you require money for the purpose, you will have to obtain it from other sources than the cash reserve of the Debeers [sic] Company. We have always held that the Debeers Company is simply and purely a diamond mining company ... and if it became known that the Debeers Company lent money to the Chartered Company, some Debeers shareholders might move for an injunction, and get up an agitation to turn out the Board and put in their own nominees, which would be most undesirable. Apart, therefore, from the question whether it is right or wrong to use the funds of the Debeers Company in this way it would be very injudicious, and might do a great deal of harm to the credit and reputation of the Company and its Directors.

  To Rhodes’s complaint that the Charter Company needed money, Natty replied:that sooner than let the Debeers Company subsidize the Chartered Company, we would prefer your getting a small export tax on diamonds; no doubt there would be some grumbling at first, but eventually the trade will get accustomed to it. And this raises the point if the time has come for you to consider whether the Cape Government should take over the Diamond Mines and buy out the shareholders; not, of course, at the high figures of a few years ago,.but at a fair and equitable price. Let that idea pass through your fertile brain and tell me what you think of it.

  It is not difficult to imagine what Rhodes thought of the idea of submitting De Beers and the Charter to such direct political control.

  In such negotiations, Natty was always careful to avoid antagonising the volatile Rhodes: “[Y]ou know I do not like to interfere in their [De Beers‘] internal administration,” he assured him in July 1892, “and only hope that the company will be able to pay good dividends in the future and gradually diminish their indebtedness.” There were in fact a number of occasions when Rhodes was able to disregard “orders” from London (for example when he insisted on buying the Premier or Wes selton mine). But Natty did not disguise from Rhode
s that the big De Beers shareholders on the London board held the purse strings. Such conflicts between the London board and the life governors flared up again in 1899, when Rhodes wished De Beers to invest money in Rand gold mines and railways at a time when it was having to borrow to pay its dividend. Natty’s opposition to this and his criticism of the system of life governorships prompted Rhodes to complain that “the whole of my policy in connection with De Beers has been opposed by the London board almost ever since it was created” and to subject Carl Meyer to “violent abuse.” Yet he could not get around the fact that Natty together with “the majority of the French shareholders ... represent[ed] the larger portion of the Company’s capital,” and in the end they were able to insist on the the abolition of life governorships. It is also worth noting that Rhodes himself owed the Rothschilds substantial sums on his own account: in mid-1895, when he was premier of Cape Colony, he owed them as much as £16,515, though he was by this time a millionaire in his own right, mainly thanks to his holdings of De Beers shares. This was far more than Randolph Churchill owed them when he was in office.

  Quite apart from the specific role of De Beers, Natty’s vision of South Africa’s future differed in many essentials from that of Rhodes. It is hard to believe, for example, that Rhodes welcomed his offer in 1891 to subsidise the passage and settlement of hundreds of families of Russian Jews fleeing Tsarist persecution. A more serious source of friction was Natty’s refusal to recognise that Rhodes’s plans ruled out peaceful coexistence with the Boer republics. In May 1892 Rhodes was curtly informed that the London house was contemplating floating a £2.5 million loan for the Transvaal government to enable it to expand its own railway network, a possibility which had been raised earlier that year by President Paul Kruger during a visit by Carl Meyer to Johannesburg. Kruger, Meyer had reported to New Court, was “a queer old Boer, ugly, badly dressed and ill-mannered, but a splendid type all the same and a very impressive speaker.” And he added a political observation: “The relations between the old Boer party and the new mining industry population are getting much better than they have been hitherto.” It was not by chance that these talks had taken place while Rhodes was himself in London.

  It is, of course, arguable that the aim of the 1892 loan was to establish an informal imperial control over the Transvaal—something Rhodes might have been expected to welcome. When Natty raised the issue with Lord Salisbury he pointedly stressed that he had been able to whittle down Kruger’s original plan for a larger loan to acquire the Portuguese Delagoa Bay line. And when he wrote to Rhodes on the subject he emphasised that “in drawing up the contract we were careful to reserve to ourselves a voice in future borrowings, as you suggested,” and that he intended pointing out “the necessity for coming to an arrangement with the Cape Railway when the time comes”: “We also told them that we cannot agree to their borrowing more money for the Natal extension, and as you will see from the prospectus, we insisted upon the money being spent exclusively within the limits of the Republic. Naturally we shall never let them think that we are acting at your suggestion.”

  As this indicates, Rhodes’s first thought had been that by building their own railway links southwards, the Boers would be in a position to dictate terms to the gold mines. Natty evidently wished to reassure him, but as he himself admitted, “we could not very well dictate to the Government what tariff they were to charge when the line will be completed.” As Chapman has shown, the Boers had no intention of being intimidated by their new bankers. When New Court wrote its customary admonition that the money raised “be used with the very greatest prudence and economy” and “that every expenditure ... be subjected to a strict and efficient control,” Pretoria replied fiercely that no “control can be allowed, that the Government prior to the several drawings being made cannot state for which purpose the money will be used, and further that the Government cannot consent to the money remaining deposited with you until it is required.” The success of the Transvaal bonds on the London market was therefore a blow to Rhodes. The issue was predicated on peace between the Cape and the Boers, whereas by late 1895 plans were already afoot in Cape Town to overthrow the Kruger government in the name of the non-Boer “Uitlanders” in the Transvaal. 14

  The Jameson Raid—an abortive invasion by what was, in effect, Rhodes’s private army in Bechuanaland—appalled the Rothschilds, who had no inkling of the plans for a coup. Although Rhodes had discussed the idea of fomenting Uitlander revolt with Joseph Chamberlain—who had joined Salisbury’s government as Colonial Secretary in the summer of 1895—he apparently had said nothing of the kind to Natty; and he in turn was not sufficiently close to Chamberlain to be tipped off (as was The Times’s Africa correspondent). In the wake of the débâcle, Natty sought to patch up relations between London and Pretoria, urging Kruger to come to London in terms which could hardly have disavowed Jameson more explicitly. “By accepting invitation without conditions,” he assured Kruger, “you will obtain the independence of the Republic. We hope nothing will be done to strengthen hands of opponents of Transvaal Government here and it is also absolutely necessary to prevent the growth of hostile feeling to Boer Government, for up till now public opinion has been in your favour and everything will be done to make your task easy.” Hobson was in the wrong when he claimed the “financiers” had profited from Jameson’s escapade: the opposite was true.

  The Pitfalls of Formal Empire: The Boer War

  The failure of the Jameson Raid merely postponed the conflict with the Boer republics, however. Within a year of arriving in South Africa as high commissioner in 1897, Alfred Milner became convinced that the only way to establish British control over the republics’ external policy was by war. He readily took up the cause of Uitlanders’ franchise, and Chamberlain felt bound by party political considerations to back him up. These two had sufficient leverage to dissuade Natty from issuing a second Transvaal loan in November 1898;15 but it was awkward from Milner’s point of view that the informal diplomacy of the Rothschilds nevertheless aimed at defusing the quarrel with Pretoria. In June 1899 Alfred telegraphed directly to Kruger in terms which cannot have been dictated by the Colonial Office, though Chamberlain had been consulted beforehand:[N]either the Country nor the Government wants war, but one can never foretell what may happen and what public opinion might force the Government to do ... The crux of the situation is that the Uitlanders should have some direct and immediate representation in the Volksraad parliament whereas the defect of Your Excellency’s proposition is that every change is postponed for so long a time that it does not in any way affect the present situation.

  Kruger was not deaf to such appeals. On July 6 Chamberlain heard from New Court advance news of a concession from Kruger: the Uitlanders were to be offered a “seven years’ retrospective and retroactive franchise” which “would be accepted with acclamation by the non-British Uitlanders who it is feared expect Lord Salisbury to go to war.” Natty was able to confirm this to McDonnell twelve days later, prompting Chamberlain to describe the crisis as “ended.” As late as August 25, Carl Meyer still “persist[ed] in believing that a modus vivendi [would] be found for this time—though I admit Kruger is trying the Govt’s patience and ... there is a smell of gunpowder in the air which is dangerous.” This was also the view taken by Cecil Rhodes, who remained confident until the eleventh hour that “the Boers [would] give in at last.” As it became apparent that this time Kruger did not intend to back down, the Rothschilds made one last effort to achieve a peaceful solution. At the suggestion of Hartington (now the Duke of Devonshire), a telegram was sent to Samuel Marks, a business associate in Pretoria, which—without the authorisation of either Chamberlain or Salisbury—effectively reformulated British policy:Government of Great Britain are anxious Peace. If agree to 5 Years Franchise without conditions Government of Transvaal have no reason to fear friendly discussion subsequently arranging details. Positive no further demands shall ... be sprung. War occur now it is his [Kruger‘s] fault not Govern
ment of Great Britain ... We are assured byNM Rothschild & Sons Government of Great Britain and England or the British do not wish interfere integrity Transvaal ... Most strongly urge you to do utmost secure franchise without conditions. In our opinion only way war can be prevented.

  It was a proposal which was not only rejected by the Boers but which would in any case probably have been repudiated by Salisbury. He feared that such “subterranean negotiations” might lead to “serious entanglement” and asked Natty “very earnestly” to desist from “any further communication of this kind with Pretoria.”

  The Rothschild view was not based on any deep sympathy for Boer self-government: as Natty told McDonnell, Samuel Marks was confident that, if peace were preserved, “In 15 years the Transvaal will be British.” “Kruger is the last of the old Boer Toryism,” argued Marks’s partner Lewis, and “he is also the last President of the kind that the Transvaal will ever have.” Moreover, once war had broken out, Natty unhesitatingly involved himself in the war effort, suggesting that Boer supplies through Delagoa Bay be immediately cut off. The obligatory patriotic rhetoric came readily when local soldiers returned to Buckinghamshire from the war, while Alfred contributed in his own way by organising a spectacular gala evening at Covent Garden. Natty also remained on good terms with Milner and wrote warmly to congratulate him—albeit “in my wife’s name”—“on having firmly established His Majesty’s Dominions in South Africa.” Yet privately he deplored the “wretched guerrilla warfare” the British army found itself having to wage. Within two months of peace being concluded, Alfred was promoting reconciliation between British and Boer generals around his dinner table.