In this, Natty was at one with Bismarck; and in many ways the Rothschilds’ interest in the project of Anglo-German rapprochement has its origins in this period. Writing to Randolph Churchill in September 1886, he evidently relished relaying the German ambassador Hatzfeldt’s objections to British policy over Bulgaria:[H]e said here you are illogical and by your want of logic are running great risks. Your statesmen and yr press say you have no direct interest in the Danube or the Balkan Peninsula, you recognise Russia’s rights and you ask her not to interfere in Egypt and to remain within her sphere in Asia but today our agent in Sophia renews his telegrams that Sir [Frank] Lascelles [the consul-general in Bulgaria] is continually and continuously intriguing and manoeuvring against Russia, if this goes on you may be astonished at finding your hands forced in different parts of the world. Your conduct in Bulgaria is inexplicable[,] we shall not and cannot support such a policy and you must not be astonished if to bother you Russia listened to France.
Churchill, Natty evidently hoped, would take a more Bismarckian line than the Foreign Secretary Lord Iddesleigh (as Stafford Northcote had become). When the latter—variously dismissed by Natty as an “old goat” and a “cackling ... old hen”—sent Alexander Condie Stephen to New Court to request a £400,000 loan for the anti-Russian regime at Sofia, Natty was incredulous. “[N]aturally I refused,” he told Churchill; “was there ever such folly?” Churchill responded by blocking Stephen’s appointment as envoy to Sofia (even sending a telegraph to Salisbury in Foreign Office cipher signed “Iddesleigh”). To reinforce the argument for passivity, Natty went so far as to relay (via Balfour to Salisbury) Hatzfeldt’s warning of a possible German attack on France—the implication being that a simultaneous Anglo-Russian conflict would risk a general war. Natty’s letters to Reginald Brett and Rosebery after the Liberals came back in took the same line: Russian policy in Bulgaria should be tolerated—and increasingly Natty justified this argument with reference to the wishes of Germany. Bismarck, he told Rosebery in November, was “put out with the French for pushing themselves forward as the protectors of Russia in Bulgaria.” A month later, he reported that Bismarck had “isolated France and I should not be in the least astonished if he made England and Russia staunch friends.” “My own belief,” he concluded the following February, “is that there will be no war ... France has been flirting with Russia. The result as anyone could have foreseen is that Bismarck will let Russia do what she likes in the Balkans.”
Not for the last time, the Rothschild hope that Britain and Germany could co-operate was not fulfilled. This was partly because it suited Salisbury better to negotiate a new Triple Entente with Italy and Austria to preserve the status quo in the Mediterranean and the Black Sea. Though an unimpressive pair of allies for Britain, this sufficed to deter Russia from drastic action when a new Bulgarian king was elected who was also distantly related to English royalty (he was Ferdinand of Saxe-Coburg, the son of one of Prince Albert’s cousins) but, more important, had an Austro-Hungarian military background. At the same time, so Salisbury argued, the Triple Entente created an indirect link to Berlin through the German Triple Alliance, of which Italy and Austria were also members. It was an uneasy equilibrium, which logically implied (despite all Bismarck’s efforts to preserve some vestige of the Three Emperors’ League) a Russo-French rapprochement, though it remained to be seen how easy that would be to achieve and whether its existence would reinforce or weaken the case for Anglo-German co-operation.
Of all the other imperial powers, it was France which reacted most aggressively to the British takeover in Egypt: indeed, in many ways it was the Anglo-French antagonism which was the most important feature of the diplomatic scene in the 1880s and 1890s. As in the past, this was more awkward for the Rothschilds than any other international division for the obvious reason that the two Rothschild houses which still worked closely together were in London and Paris. But it was not easy to see what could be done. In 1886, at the time of the French expedition to Tonkin in Indo-China, the French Rothschilds uneasily predicted to Herbert von Bismarck “that the next European war will be between England and France.” They hoped briefly that the return of Rosebery as Foreign Secretary in 1892 might improve matters; but it rapidly became apparent that, despite his reluctance to confirm Britain’s anti-French Mediterranean agreements with Austria and Italy, Rosebery was inclined to continue the previous government’s Francophobe policy. He was dismayed by rumours (which were vehemently repudiated by the French Rothschilds) that France intended some kind of takeover of Siam following a naval confrontation on the River Mekong in July 1893. And the following January, Rosebery responded to Austrian worries about Russian designs on the Straits by assuring the Austrian ambassador that he “would not recoil from the danger of involving England in a war with Russia,” adding that, if France sided with Russia, “we should require the assistance of the Triple Alliance to hold France in check.”
Predictably, it was Egypt and her southern neighbour the Sudan which proved the main cause of Anglo-French antagonism—so much so that a war between England and France seemed a real possibility in 1895. As we have seen, Rosebery tipped off the Rothschilds about the government’s intention to reinforce the Egyptian garrison in January 1893. In January and February 1894, Alfred reciprocated by passing on to Rosebery alarming reports they had received about the growing mood of hostility to British rule in Cairo. It was now increasingly apparent that the French government intended to make some kind of bid for control of Fashoda on the Upper Nile. Fearful that French control of Fashoda would compromise the British position in Egypt, Rosebery—who became Prime Minister in March—hastily concluded an agreement with the King of the Belgians to lease the area south of Fashoda to the Belgian Congo in return for a strip of the Western Congo, with the obvious intention of blocking French access to Fashoda. In the difficult negotiations which ensued, the French Rothschilds sought to mediate, assuring their English cousins that the French government was not “full of Anglophobes,” but warning them that British policy in Africa seemed intolerably “aggressive” in Paris. It was no use: attempts by the French Foreign Minister Gabriel Hanotaux to reach some kind of compromise over Fashoda failed and when an expedition led by the French explorer Marchand set off for the Upper Nile, Rosebery’s Under-Secretary at the Foreign Office, Sir Edward Grey, denounced it as “an unfriendly act.” It was at this critical moment (June 1895) that Rosebery resigned, leaving Britain in a position of unprecedented diplomatic isolation.
Fortunately for the incoming Salisbury government, the contemporaneous defeat of Italy by the Abyssinian forces at Adowa took the wind out of French sails, for reasons which Natty spelt out to McDonnell for Salisbury’s consideration. “The French are in desperate alarm lest the defeat of Italy should lead to a revival of the Three Emperors’ Alliance,” he argued, “the French Government [is therefore] too weak to give us any real trouble.” But he warned Salisbury that “if the powers combined to reopen the question of evacuation [of Egypt], it would be impossible for the Government to resist.” This was an encouragement to act swiftly. Exactly a week later, the order was given to reconquer the Sudan.2 When Hanotaux’s successor Théophile Delcassé reacted to Kitchener’s victory over the Sudanese dervishes at Omdurman by occupying Fashoda, the Rothschilds egged Salisbury on to call the French bluff. Kitchener should be ordered to “to take Marchand prisoner,” Natty told McDonnell in September. At the height of the crisis two months later, Alfred assured him “that the French will yield and that there will be no war. He thinks,” added McDonnell, “the French army [is] in a very rotten state; but has a great opinion of the French navy ... (this is a pious opinion which Lord R[othschild] thinks is nonsense). M. de Staal [the Russian ambassador] also told Lord R. this morning that he thought there would be no war.”
Did Natty consciously put British strategic interests in Egypt ahead of his Paris cousins’ sensibilities? Possibly; but a more plausible explanation is that the French Rothschilds were, as in 1882, co
ntent to see British dominance in Egypt asserted, even at the expense of French pride. There is no evidence that Alphonse favoured Delcassé’s confrontational strategy. In any case, the Rothschilds knew enough to recognise the weakness of the French position. As the Russian ambassador indicated to Natty during the Fashoda crisis, St Petersburg would never support Paris on African issues—any more than Paris would support St Petersburg over the Black Sea Straits.
Fashoda is of interest because it reminds us of a war between the great powers which did not happen, but might have. Similarly, it is important to remember that in 1895 and 1896 both Britain and Russia toyed with the idea of using their navies to force the Straits and assert their direct control over Constantinople. In the event, neither side was sufficiently sure of its naval power to risk such a step; but had it been attempted, a diplomatic crisis as serious as that of 1878 would have been almost unavoidable. Here too there was an unrealised war, this time between Britain and Russia. If nothing else, all this goes to show that, if we are to explain why a war eventually broke out in which Britain, France and Russia fought on the same side, imperialism is unlikely to provide an answer.
The Franco-Russian Entente
Of all the diplomatic combinations which arose in this period, the Franco-Russian entente was the most logical both strategically and economically. France and Russia had common foes: Germany between them and Britain all around them. Moreover, France was a capital exporter, while industrialising Russia was hungry for foreign loans. Indeed, French diplomats and bankers began to discuss the possibility of a Franco-Russian entente based on French loans as early 1880.
Nevertheless, it is important to realise how many obstacles there were to such an alignment. There were, to begin with, financial difficulties. Recurrent instability on the Paris bourse—the Union Générate crisis of 1882 was followed by the failure of the Comptoir d‘Escompte in 1889 and the Panama Canal crisis in 1893—cast doubt on France’s basic capacity to cope with large scale Russian operations. On the Russian side too there were problems. It was only in 1894—7 that the rouble was finally put on the gold standard, so that exchange fluctuations further complicated negotiations up until that point.3 The bond markets also remained wary of Russian bonds. The price of Russian 5 per cents oscillated with unusual rapidity in the 1880s, dropping sharply at the end of 1886, recovering in the first half of 1887, then falling again to a nadir of 89.75 in early 1888, only to leap up to a peak of 104.25 in May 1889. There was another steep drop in 1891, however. Between March and November, the new 4 per cent Russians fell over 10 per cent from 100.25 to just 90. It was only after that crisis that a steady appreciation set in, culminating in August 1898 (105) (see illustration 12.i).
There were also serious diplomatic difficulties in the way of a Franco-Russian alliance. Firstly, Bismarck’s diplomacy appeared, at least outwardly, to hinge on maintaining the links between Germany, Austria and Russia which he had first forged in the Three Emperors’ Alliance. The rise of General Boulanger served to rekindle Franco-German animosity, but it did not lead Russia to side with France: the Russian ambassador in Berlin, Count Peter Shuvalov, merely spoke of Russian neutrality in the event of a war between Germany and France. The Russian objective in the early 1880s was to separate Germany and Austria-Hungary, not to risk alienating Bismarck for the sake of France. The secret Reinsurance Treaty signed between Germany and Russia in June 1887 may have been practically meaningless (it guaranteed Russian neutrality unless Germany attacked France and German neutrality unless Russia attacked Austria); but it at least indicated a desire in both Berlin and St Petersburg to maintain some sort of diplomatic connection. Moreover, as mentioned already, there were important limits to what France and Russia could offer one another. France was never willing to back Russian policy with respect to Turkey; Russia was never willing to back French policy in the Sudan.
Finally, there were political obstacles, and not just because of the obvious difference between Republican France and Tsarist Russia. The assassination of the “Tsar Liberator” Alexander II in March 1881 and the accession of his reactionary son Alexander III led to a marked deterioration in the treatment of the Empire’s four million Jews, most of whom continued to be confined to the so-called Pale of Permanent Settlement in Poland and western Russia. Under Alexander II there had been some relaxation in the restrictions on Jewish residence and occupation; but a wave of pogroms in 1881 and 1882 encouraged the Tsar and his new ministers in the belief that “the people” had to be protected from the “pernicious activity” of the “in many ways harmful” Jews. In the wake of the May Laws of 1882, which imposed new restrictions on where Jews could live and the business they could do, there was a sustained campaign against them. Educational opportunity, the right to own land, access to the professions, the right to reside in villages or outside the Pale—all were curtailed. Jews responded in various ways: around two million emigrated, as we have seen. Among those who remained, most struggled on as best they could, but some were attracted by the revolutionary politics of organisations like the Socialist Revolutionaries, the Social Democrats and the specifically Jewish Bund: enough to convince Tsarist ministers that they were right to regard the Jews as a menace. When new pogroms occurred at Kishinev in 1903 and more generally in 1905—accompanied by the kind of ritual-murder claims which had sparked off the Damascus affair more than sixty years before—there was enough evidence of official indifference, if not complicity, to confirm the impression abroad that the Tsarist regime was the most anti-Semitic in the world.
12.i: The weekly clsing price of Russian 5 per cents, 1860-1900. Notea From November 1889 based on prices of 4 per cents (as if they had a 5 per cent coupon).
The Rothschilds were dismayed by all this. As early as May 1881, the Austrian, French and British partners began to discuss what practical steps could be taken “on behalf of our unfortunate co-religionists.” The marriage of Alphonse’s daughter to the Russian Jewish banker Maurice Ephrussi may have served to increase their interest in this question. Thus it was rumoured in diplomatic circles that the Rothschilds had secured the dismissal of the French ambassador in St Petersburg, Appert, when he informed the new Madame Ephrussi that she would not be considered presentable at court by the Tsar. What made Rothschild Russophobia matter was that de Rothschild Frères were still regarded by other French banks (and indeed by the Russian Finance Minister) as the Russian government’s preferred agent in Paris, without whom no major operation could be assured of success. When Shuvalov informally approached the Paris house in 1882 on behalf of the Finance Minister Bunge, Gustave did not beat about the bush: “[W]e can but reply that we wish for nothing more than to conclude a financial operation with the Russian Government, however we are unable to do so in view of the persecution of our Russian co-religionists.” That was to be a more or less constant refrain from the London partners too in the coming years.
This explains the limited success of Elie de Cyon (alias Ilya Fadeyevich Tsion), a Russian Jew of strongly Germanophobe views who sought to act as a go-between between the French and Russian governments at a time when rumours of a German attack on Boulangist France were at their height. His aim, as he later described it, was to achieve Russia’s “economic emancipation from Germany and the transfer of the market in Russian bonds to Paris.” Although he found the Tsar’s adviser Michael Katkov sceptical about the danger of war when he visited him in February 1887 (on the ground that Bismarck’s sabre-rattling was merely an electoral ploy), Cyon aroused his interest by communicating “the result of my discussions with several representatives of the Parisian haute banque, who were all very well disposed [towards Russia].” His trump card, as he thought, was that:one of the Rothschilds brothers, with whom I had long conversation on the subject towards the end of January, [had] once again assured me that their house was always at the service of our [Russia‘s] ministry of finance, [and was ready] to resume the relations which had been forcibly interrupted twelve years before, at the moment when France was obliged t
o devote all her capital to her own internal needs.
Cyon then made a similar claim to the new Russian Finance Minister I. A. Vyshnegradsky, who expressed doubts about the likelihood of “obtaining the cooperation of the house of Rothschild, without which the Paris market did not have much value.” Vyshnegradsky intimated that until he had convincing evidence of Rothschild goodwill—he suggested the Paris house might offer to convert the mortgage bonds issued by the Russian Credit Foncier—he was unwilling to make a direct governmental approach to the rue Laffitte. According to Cyon’s account, he then returned to Paris and began negotiating along these lines with the Rothschilds, talks which were ultimately crowned with success. Although in April—at the peak of the Boulanger crisis—Katkov informed him that the terms being discussed were unacceptable, Cyon rushed back to St Petersburg and secured the government’s approval. On May 5 Vyshnegradsky and an unnamed Rothschild representative signed an agreement reducing the interest on mortgage bonds totalling around 108 million marks. Cyon later published a letter from the Paris house congratulating him on his achievement, and expressing “satisfaction that we have felt at being able to profit from this occasion to renew direct relations with the Russian Imperial Minister of Finance.”
The significance of Cyon’s activities should not be exaggerated, however. While he protested his altruistic motives, the Rothschilds themselves regarded him as “a man of dubious honorability” and commented shrewdly: “Nothing proves that he did not begin by presenting himself there in our name just as he presents himself here in the name of the minister, by virtue of a dual mandate which he has voluntarily taken upon himself.” More to the point, Cyon very probably misrepresented in his memoir the nature of the mortgage bond operation. It must be remembered that the months of April and May 1887 witnessed the culmination of the Boulanger crisis. It is apparent even from Cyon’s own account that Bismarck, recognising what was afoot, sought to interfere in his negotiations. Nor was Cyon able to conclude the deal without securing the consent of Bleichröder in Berlin: after all, the original mortgage bonds had been floated by Bleichröder, not by the Rothschilds, though the Paris house had taken a share in the issue. Given that more of the mortgage bonds were in German hands than in French, Cyon had really done nothing more than secure Rothschild approval of a transaction which was between Berlin and St Petersburg. This was easily given as it meant nothing; it did not represent the decisive shift of Russian finance to Paris. What is more, when that shift began to happen in September 1887, the Rothschilds were not involved.
The House of Rothschild Page 66
