A Calculated Risk

by Katherine Neville

  In the year 1810, as Meyer Amschel’s dream had predicted, his son Nathan was devising a plan so daring and fraught with risk that it might well cost the family not only its fortune, but its freedom, too.

  Nathan had been in England for over twelve years, and he’d done well there. Starting in Manchester in the year 1798, he’d exported English cottons to the continent, where his father and brothers sold the goods. By 1809, Nathan had become a naturalized Englishman, and in the following year he had opened his own bank. He was the middle son of the Rothschilds’ five, but by far the most aggressive.

  Early in March of 1810, Nathan wrote to his father in Frankfurt that he wished the youngest brother, James, to be sent to Paris with the freedom to move about elsewhere in France—as well as in Spain, Italy, and Germany. Meyer Amschel was perplexed. How might a Jew be granted such a privilege? It was particularly difficult to secure the ability to live in Paris—for the Rothschilds were not only Jewish but Prussian, too.

  But believing that the premonition of his dream was about to flower, Meyer Amschel put on his silk hat, his lace jabot, and his finest black suit, and went to pay a call upon his friend the Prince of Thurn und Taxis, to whose family the Rothschilds had lent large sums of money in the past. Perhaps it was time to call in the debt—in another fashion.

  “Ah, Rothschild, you are looking very dapper today,” said the prince. “I can see in your countenance you’ve come for more than a social call. God willing, I shall find it within my power to grant whatever you wish.”

  “Your Highness is very astute, as always,” said Meyer Amschel. “It’s rather difficult; I wish my son James to be granted permission to establish residence in Paris.”

  “Ah, that indeed does pose a problem,” agreed the prince. “Even I cannot gain this permission, being a Prussian.”

  “I know my request is difficult,” said Meyer Amschel. “But it is necessary that I accomplish it, for personal family reasons.”

  “Since your ‘personal family reasons’ often have to do with the acquisition of more wealth, I suppose it’s in my own best interest to help you as much as possible. Have you any ideas on the subject? You rarely seem short of those!” The prince laughed.

  “In fact, I’ve thought of a possible solution,” Rothschild modestly admitted. “If my son could travel in the equipage of a member of the nobility—someone whom Your Highness might be aware was planning a trip to France for some purpose—then the individual in question might be persuaded—”

  “In fact, there’s such an event about to transpire in Paris, to which all of Europe may be traveling quite soon, as I’m sure you are aware,” said the prince, frowning slightly.

  “You refer, perhaps, to the royal wedding?” suggested Meyer Amschel.

  “If you can grace the marriage of that heathen Corsican upstart with such a kind description,” growled the prince. “Good Lord, he puts his wife away in the eyes of God and espouses another before the first is forgotten. It chills the blood, I say! Even the cardinals are not attending, but the European nobility scramble to such an event as if it were a cockfight. Well, Rothschild, if it would make you glad to have your son in such company … but I confess, I cannot think of any among my acquaintance—if you’ll excuse my saying so—who’d welcome the son of a mercantile Jew in his retinue on this sort of occasion. We’ll have to think hard to solve that one, for I myself will not attend the debacle.”

  “Yes, Your Highness. We should have to find someone who wishes very badly to attend the wedding of Napoleon and the Archduchess Marie-Louise, but for some reason finds—perhaps through lack of funds …”

  “Aha! Rothschild, I knew you’d not come to me without a plan! So it is my teakettle you want, and not my advice—is that it?” He chuckled.

  This was a candid thing for the Prince of Thurn und Taxis to say—for in his role as chief postmaster of Central Europe, he’d often in the past been in a position to steam open official-looking letters and share their contents with Rothschild, to the benefit of both.

  The prince clapped his hands twice, and an aide rushed to his side. The prince scribbled several names on a piece of paper and handed them to the aide.

  “Go to the post and collect whatever you see pertaining to these,” he said. “And Rothschild, perhaps we’ll have your solution before the sun sets on another day.”

  “Your Highness is most gracious and, if I may say so, a clever solver of problems,” said Meyer Amschel with a twinkle in his eye.

  The Grand Duke von Dalberg had not wished to include young James Rothschild in his equipage to the royal wedding. Aware of the grand duke’s financial situation, the prince had proposed other terms to him. Rothschild would compeletely finance all the carriages, elaborate clothing, and travel expenses for the duke’s entourage to pass a lavish and lengthy stay in Paris—should the duke favor him by securing not one, but three open passports for Rothschild sons’ prolonged stay in France. With this, the duke enthusiastically complied.

  By March of 1811, Carl and Solomon Rothschild were firmly planted in France, and James—the youngest of the brothers—was having pastries with Monsieur Mollien, the French minister of finance, in the minister’s study; it was filled with sunlight and with hyacinths gathered from the snowy gardens of the Tuileries.

  “M. Rothschild,” said M. Mollien, wiping at the bit of thick pastry cream that clung to his upper lip, “I have just written to the emperor, advising him of what you’ve told me. But even now I can scarcely believe that such good fortune could be true.”

  “Now you are making a jest with me,” said James. “Surely the French minister of finance does not expect me to believe that he considers the British to be cleverer at financial matters than the French.”

  “Oh no! Surely not! They are fools, the British! All the world regards them so. I only mean to say it’s hard for anyone to imagine that the ministers in London—unless they are the basest of traitors—would seriously devalue the pound by ten percent and the guinea by more than thirty! How can they reduce their own paper in wartime?”

  “But you yourself, Monsieur Mollien, have seen the letters,” James said calmly.

  “Yes, yes, of course. And even if it were not so, it is the emperor’s policy to drain England of her gold and silver reserves, a policy only aided by this measure. We know that an army cannot fight on an empty stomach, or without shoes. And we know how hard-pressed is their General Wellesley in the peninsula. The war will soon be over, I assure you—we’ve intercepted letters from Wellesley to his ministers in London, asking that his troops be recalled since their own government cannot provide these things. The English may control the seas, as they are so fond of saying, but we French control the land! So long as we keep them short of gold, they’ll be unable to send large shipments to Wellesley—they cannot risk that we may cut their supply lines.”

  The French minister finished this lecture on warfare and economics with a flourish, and stuffed another pastry into his mouth.

  “It’s fortunate that the emperor has taken this position, M. Mollien,” said James politely, “for I’d be most uncomfortably strained to slip this British gold into Germany. To do so, I’d have to pass through the lowlands, and so many bribes would be required it would hardly be worth the effort. Since you permit me to move it through Dunkerque, the French government will be the one to profit. I compliment you on your foresight.”

  “I pride myself,” said Mollien, his mouth full of pastry, “on being an excellent judge of character. It’s well understood here in France that you Jews are more interested in turning a profit for yourselves than in any national affiliations—in some way, you are men without a country. It may be costly to extract this gold from the crumbling British Empire, but any loss from your pocket will be France’s gain, and when the Napoleonic Code is in effect in Germany, the Jews of Frankfurt will conduct business freely and own property for the first time in perhaps a thousand years.”

  “It’s indeed fortunate for us that Monsieur Mo
llien perceives matters in his own light,” said James. “And history will remember you for that.”

  For two years, Nathan had been in London, buying gold bullion from the East India Company. He was able to acquire a large quantity, for while the British government was waiting for the price to drop, Nathan was willing to pay the full price.

  But the price did not drop, and by the spring of 1811, when the British treasury was desperate for enough gold to finance its armies, Nathan was able to sell it to them below the market price, though still at a profit to himself. Nathan believed in performance—not in promises—and England was the only European country in which all citizens, regardless of their religion, had property rights. He intended to see that it continued that way.

  “Mr. Herries,” said Nathan to the commissary-in-chief, “now that we have concluded our transaction to your satisfaction, may I make so bold as to ask what you intend to do with all this gold?”

  “That’s a very forward question, Mr. Rothschild,” said Herries, “but as anyone must have concluded by now, we are in dire straits because of that damned Corsican who’s running all over Europe, marrying our allies and putting his relatives on the throne of every country in sight.”

  “And so you plan to use the money to expand your naval prowess, in order to further protect England’s coastline from her neighbors?” asked Nathan.

  “Rothschild, you’re not a fool,” said Herries abruptly. “You’re the cleverest man I know—and surely the one with the greatest foresight. You know that Lord Wellington is in distress at this very moment. His army in the Iberian peninsula has received no gold in months, for we’ve had none to send him. Our economies are of the very worst sort just now, the American colonies are acting up again, and I openly admit there may be war with them soon, now that they feel bold enough to challenge our supremacy at sea. The king—let us be frank—is too ill to be of any use. The prime minister makes a different decision every day, and has angered the people thereby. I shall tell you confidentially that the state of our nation is one of utter confusion, that if Wellington fails to win this peninsular war, quickly and cleanly, he will be recalled from Spain.”

  “Indeed,” said Nathan, who knew the state of the British treasury better than Herries himself.

  Only last winter, Nathan had bought up the drastically discounted drafts that Herries’s predecessor in office had advised Lord Wellington to draw on British treasury bills to help finance the war. Those drafts had passed into Nathan’s hands through the ruthless and treacherous Sicilian financial bloc—whose ill-gotten wealth was earned solely through speculation on countries whose stars were waning. The Sicilians were the vultures of the European financial community, never buying anything at more than a quarter of face value. If England’s paper were in their hands, they must have been the only ones Wellington could sell it to, in order to raise the essential funds. This alone revealed the position to Nathan, more starkly than a detailed financial statement from the treasury.

  “So you plan to send this gold to Lord Wellington, to keep him alive in the peninsula?” said Nathan.

  “That’s what the gold’s intended for—but I fear there’s no way to do it,” Herries admitted sadly. “Sending it by ship is out of the question; three ships have been sunk off the coast in as many months. And to send it through allied territory would take too long and pose too great a danger. The entire war may be concluded, in fact, before we can find a way to deliver this gold to Wellington.”

  “Perhaps I may make a suggestion, then,” said Nathan.

  “Any suggestion is welcome at this point,” said Herries, “though I fear we’ve exhausted all solutions.”

  “Not quite,” said Nathan. “There is one you haven’t mentioned. If you choose, I’d be willing to convey the gold to Wellington myself—naturally, for a fee. I am prepared to guarantee its safe delivery.”

  “Yourself?” said Herries, a smile hovering about his lips. “My dear Rothschild, you’re a brilliant financier, but I scarcely believe you can walk on water—the sort of miracle called for just now. And what would be our guarantee?”

  “That any gold I cannot deliver will be replaced from my own pocket,” said Nathan calmly.

  “But how do you plan to get it there?”

  “Let that be my concern,” he said.

  While Mollien congratulated himself in letters to his emperor upon the great success he was having in looting British coffers of their gold, James Rothschild was at the money markets in Paris, trading the steady flow of gold he received from Nathan into bills of exchange drawn on Spanish banks.

  His brothers Carl and Solomon moved back and forth in relays across the Pyrenees from Paris into Spain, disappearing into the mountains with their bills of exchange, then returning with receipts from the Duke of Wellington. And the French never realized that the gold they’d permitted the Rothschild brothers to smuggle from England into France was being fed through legitimate channels into Spain and used by Wellington to feed his armies.

  With his coffers replenished, Wellington soon achieved victory against the French in the peninsular war—and entered Madrid.

  Nathan’s father, Meyer Amschel, remained in Frankfurt with his eldest son, Amschel, carefully monitoring news of the war through the central post office, and feeding that news to the others. Now that he was an old man, he had little else to occupy himself—except for the daily care and feeding of the new dovecote, full of doves, that Nathan had sent him from London as a gift.

  In September of 1812, when Napoleon was fighting at Borodino, en route to Moscow, Meyer Amschel passed away into his last dream. Three days later, the Russian general Count Rostopchin put the torch to Moscow, leaving Napoleon’s armies to march back through Russia in winter, in final defeat. It was the end of an era.

  THE FED

  Under the Constitution, it is the right and duty of Congress to create money. It is left entirely to Congress. Congress has farmed out this power—has let it out to the banking system.

  Constitutionally, the Federal Reserve is a pretty queer duck.

  —Wright Patman

  When the dust had settled after the first of the year, Tavish took a look at the programs we’d installed at midnight Christmas Eve, and polished them up a bit.

  We were grabbing a big percent of the money transfers that came in each day, slicing them up like a salami and dropping them into the fake bank accounts we had set up under all those ritzy names on the Bobbsey Twins’ list. We hung on to each money wire like that for only about twenty-four hours so no one would get suspicious. We picked up the interest on it, then gave it back. But since our “borrowing” was now running in the hundreds of millions, the income from it was growing by leaps and bounds even though we rotated our pot each day.

  Tor and his team—now including Pearl—had headed off to Europe. It seemed things were running smoothly at both ends. At least, so I thought until Tavish came in one Friday morning just after New Year’s.

  “There’s good news and bad news,” he said.

  “Let’s hear the good first,” I told him.

  “I’ve been tracking Dr. Tor’s bonds from that list you gave me—following them in the newspapers. Nobody’s trying to pay them off or redeem them, at least not yet, so we needn’t be concerned about those loans in Europe you told me they’re securing. Furthermore, I’ve tuned up our systems so we can take bigger slices of the salami. That’s boosted our average pot to around three hundred million we can now invest.”

  “Terrific,” I congratulated him. “Now what’s the bad news?”

  “I’ve redone those figures you got from Charles Babbage, about how much money you need to steal and invest in order to earn that thirty million by April first—that’s forty-four banking days from now. Your numbers are wrong; you can’t do it. And that’s a really serious problem, not only because of winning your bet. If something did happen to those loans of Dr. Tor’s, and we had to cover for him, I doubt we could wring out enough just from our profits. A
nd you know we can never hold the actual wire transfers themselves for more than forty-eight hours at best.”

  How could it be that we wouldn’t be making enough in profits? I’d run those figures a dozen times and they always came up the same. Tavish interrupted my thoughts to explain.

  “You took into account all the wire transfers passing through the bank,” he said. “Your plan was to slice off as much as we could from whatever action might pass through the door—without drawing undue attention.”

  “Right,” I agreed. “So what’s the problem?”

  “One of the biggest volumes of wires is one we can’t get our hands on—Fedwire. It’s used to transfer, adjust, or fiddle with our reserve at the Fed. But the money’s in their pocket—not ours. You shouldn’t have counted the Fed activity in.”

  Blast. He was right, of course—but the problem this raised was even worse than the idea of knocking over a bank. Fedwire was a wire transfer network owned by the U.S. government; you could go to federal prison just for getting a parking ticket on U.S. government property—I didn’t like to think what they’d do if they caught you mucking about with their loot.

  “But here comes the worst part,” Tavish added. “I saw Lawrence in the elevator a moment ago. He’s sent you a memo. It seems he somehow learned that we’ve successfully broken through security. We couldn’t have hoped to keep it a secret forever, but now even the auditors know—and they’re all expecting some sort of statement from us. Lawrence says he’s off on a business trip tonight, and he wants our project wrapped up, our report submitted, our hands off, and an impeccably restored system by the time he gets back. If we need to increase any activity on that system, we’ve got less than two weeks in which to do so. What should we do?”

  I sighed and folded my hands on the desk. Then I gave Tavish a resigned smile.

  “Looks like we’re going to have to knock over the Fed,” I said.

  The Federal Reserve sits at the bottom of Market Street, a forest of pink granite pillars supporting the trellised granite arches that conceal its blocklong facade. The Fed hasn’t changed its architectural preferences, its operations, or its concept of technology in the more than seventy-five years since its inception. It still seems ossified in the traditions of the Parthenon.