The House of Rothschild (4 page)

In one respect, however, Nat’s fears were justified. Unlike the management of government debts, the management of railways directly and tangibly affected the lives of ordinary people. The Rothschilds’ involvement in railways therefore exposed them to unprecedented public criticism. Radical and (for the first time) socialist writers began to portray them in a new and lurid light: as exploiters of “the people,” pursuing capital gains and profits at the expense of taxpayers and ordinary travelers. There had been press attacks on the Rothschilds before; but in the 1820s and 1830s they had mainly stood accused of financing political reaction, or (by business rivals) of sharp commercial practice. In the 1840s, hostility to wealth fused with hostility to Jews: anticapitalism and anti-Semitism complemented one another. The Rothschilds provided the perfect target.

Along with inflammatory polemics, the depressed economic conditions of the mid-1840s were intimations of political instability. Unlike 1830, the revolution of 1848 could be seen coming from afar. The Rothschilds were not blind to its approach, yet underestimated the magnitude of the crisis. The problem was that economic stagnation increased government deficits by reducing tax revenues; in the short term, that meant new business for the Rothschilds, which they could not resist. Both Salomon and James undertook major loans on the very eve of the insurrections. With the spread of revolution eastward from Paris, Salomon’s industrial and railway bonds and shares simply became impossible to sell, and his contractual obligations to the Austrian state equally impossible to fulfill. James was only able to ride out the storm by negotiating major changes to his most recent loan contract with the new and financially naive government.

By dint of their multinational structure, immense resources and superb political contacts, the Rothschilds were able to survive the upheaval of 1848-49. In conditions of near-universal loss, their relative position may even have been slightly enhanced. However, the recovery of the European economies and the (not-coincidental) return of political stability brought new challenges.

First, one of the unspectacular achievements of the revolution was to weaken the resistance of state bureaucracies to the ideas of joint-stock company formation and limited liability. Once company formation became easier, the number of new entrants into finance began to rise. The Pereire brothers had started life as railway enthusiasts, with technical visions but without much money to realize them—hence their subordinate relationship with the Rothschilds in the 1830s. In the 1850s they were able to break free, mobilizing the resources of numerous smaller investors in raising the capital of the Credit Mobilier.

Related to the challenge symbolized by the Pereires was a change in the relationship between state finance and the bond market. The 1850s saw the first serious attempts by states to sell bonds by public subscription, without the mediation of bankers, or with bankers acting as underwriters rather than buying new bonds outright. If nothing else, states began to exploit the growing competition between private and joint-stock banks in order to whittle down commissions. Though still dominant in the bond market, the Rothschilds’ position became less monopolistic. The spread of the telegraph further weakened their grip, bringing to an end the period when their couriers had been able to deliver market-sensitive news ahead of the competition.

But perhaps the most important threat to the Rothschilds’ financial hegemony was political. The triumph of Louis Napoleon Bonaparte in France introduced a new uncertainty into European diplomacy. The possibility that he might seek to emulate his uncle never wholly disappeared until 1870. At the same time, the rules of the international game were subtly altered by the tendency of politicians elsewhere—notably Palmerston, Cavour and Bismarck—to elevate national self-interest above international “balance,” and to place as much trust in cannons as in conferences. Compared with the relatively peaceful thirty-three years from 1815 until 1848, the next thirty-three years would be marked by a succession of wars in Europe (not to mention America): wars that the Rothschilds found themselves unable, despite their best efforts, to prevent.

In May 1848 Charlotte de Rothschild affirmed her belief “in a bright, European and Rothschildian future.” Her confidence in the waning of the French revolutionary era was well founded. In the second half of the nineteenth century, the threats to monarchical politics and bourgeois economics did indeed recede. But the brightness of the Rothschildian future would depend on the family’s ability to meet new challenges. Of these, nationalism and then socialism would prove the greatest—especially when combined.

CHARLOTTE DE ROTHSCHILD, MAY 1849

 

 

Though they had managed to weather its storms financially, 1848 might still have proved a fatal turning point for the Rothschilds—but for reasons unrelated to economics and politics. For in the years immediately after the revolution the very structure of the family and the firm was called into question. It is easy to forget as one reads their letters that the four remaining sons of Mayer Amschel were by now old men. Amschel was seventy-seven in 1850, Salomon seventy-six and Carl an ailing sixty-two. Only James was still indefatigable at fifty-six.

Longevity, on the other hand, was a family trait: though their father had died aged sixty-eight, their mother, born in 1753, lasted long enough to see the crown of a united Germany offered to a Prussian king by a national assembly gathered in her own home town. Indeed, Gutle Rothschild had become something of a by-word by the 1840s, as
The Times
reported:

Cartoons were published on the subject: one, entitled
Grandmother’s
99th Birth
day,
depicted James, with Gutle in the background, telling a group of well-wishers: “When she reaches par, gentlemen, I will donate to the state a little capital of 100,000 gulden“ (see illustration 1.i). A different version of the same joke has a doctor assuring her she will ”live to be a hundred.“ ”What are you talking about?“ snaps Gutle. ”If God can get me for 81, He won’t take me at a hundred!“

Her dogged refusal to quit the old house “zum grünen Schild” in the former Judengasse appealed to contemporaries, suggesting as it did that the ‘Rothschilds’ phenomenal economic success was rooted in a kind of Jewish asceticism. Ludwig Borne had sung her praises on this score as early as 1827: “Look, there she lives, in that little house ... and has no wish, despite the world-wide sovereignty exercised by her royal sons, to leave her hereditary little castle in the Jewish quarter.” When he visited Frankfurt sixteen years later, Charles Greville was amazed to behold “the old mother of the Rothschilds” emerging from her “same dark and decayed mansion ... not a bit better than any of the others” in the “Jews’ street”:

But on May 7, 1849, in her ninety-sixth year and with her surviving sons at her bedside, Gutle finally died.

It was one of a spate of deaths in the family. The year before, Amschel’s wife Eva had died. In 1850, so did Nathan’s widow Hannah as well as—to the great distress of the Paris Rothschilds—her youngest grandson, Nat’s second son Mayer Albert. Carl’s wife Adelheid died in 1853, followed a year later by Salomon’s wife, Caroline. The effect of these events on the older members of the second generation may easily be imagined. Mayer Carl noticed how “deeply affected” Amschel had been by the death of his mother. “It is a great loss to [him] ... & I cannot tell you how many wretched hours we have spent lately ... Uncle A. is confined to his room but feels rather better after the first shock which was really fearful.” He was only slightly “calmer” when the family gathered in Frankfurt for Gutle’s funeral. Indeed, he and his brother Salomon cut rather forlorn figures in their twilight years, spending less and less time in the counting house and more and more time in Amschel’s garden.

To the new Prussian delegate to the Diet of the restored German Confederation—a mercurial and ultra-conservative Junker named Otto von Bismarck—Amschel seemed a pathetic old man. “[I]n monetary terms,” Rothschild was of course the “most distinguished” man in Frankfurt society, Bismarck reported to his wife shortly after arriving in the town. But “take their money and salaries away from the lot of them, and you would see how undistinguished” he and the other citizens of Frankfurt really were. The newcomer was characteristically rebarbative when Amschel invited him to dinner ten days in advance (to be sure of an acceptance), replying that he would come “if he was still alive.” This answer “alarmed him so much that he repeated it to everybody: ‘What, why shouldn’t he live, why should he die, the man is young and strong!’” With his limited private means and meagre stipend, the Junker diplomat was bound to be impressed as much as he was repelled by the “hundredweight of silverware, golden forks and spoons, fresh peaches and grapes, and excellent wines” which were laid before him on Amschel’s dinner table. But he could not conceal his disdain when the old man proudly showed off his beloved garden after their meal:

As Bismarck shrewdly divined, it was this last question—who should inherit their wealth—which most preoccupied the old Rothschilds, who accordingly spent long hours tinkering with their wills. Years before—in 1814—Amschel had joked that the difference between a rich German Jew and a rich Polish Jew was that the latter would “die just when he was losing, whilst the rich German Jew only dies when he has a great deal of money.” Forty years later, Amschel was living up to his own stereotype, with a share in the family firm worth nearly £2 million. But who should inherit this fortune? Denied the son he had so long prayed for, Amschel brooded on the merits of his twelve nephews, particularly those (principally Carl’s sons Mayer Carl and Wilhelm Carl) who had settled in Frankfurt. In the end, his share of the business was divided in such a way that James got a quarter, Anselm a quarter, Nathan’s four sons a quarter between them and Carl’s three sons the last quarter.

Salomon had an heir, of course, and a daughter well provided-for in Paris; but—perhaps because of the harsh words they had exchanged in Vienna at the height of the revolutionary crisis—he sought to avoid making Anselm his sole heir. Instead, he devised complicated provisions designed to transmit most of his personal wealth directly to his grandchildren. At first he seems to have considered leaving almost all of it (£1.75 million) to his daughter Betty’s children (£425,000 apiece for the boys and just £50,000 for Charlotte, whom he had already given £50,000 on the occasion of her marriage to Nat), leaving only his three houses to Anselm and his sons, and just £8,000 for their married sister Hannah Mathilde. Even his Paris hotel, he told Anselm, would go to “you and your sons ... I repeat it is for you
and your
sons. I have thought about it and put in a clause [to ensure it remains their property for] over a hundred years. No sons-in-law or daughters can have any claim on it.” This was partly a self-conscious strategy to exert the maximum posthumous influence, rather as Mayer Amschel had done in 1812; indeed, the exclusion of the female line was an idea he had inherited from his father. But, unlike his father, Salomon decided that only one of his grandsons would ultimately inherit his share of the family business from Anselm—a new development in a family which had hitherto treated all male heirs more or less equally. In a final codicil to his will dated 1853, he scrapped the clause which left the choice of successor to Anselm, specifying (unsuccessfully, as it turned out) his eldest grandson Nathaniel. Ultimately, all Salomon’s schemes came to naught; in practice, it was Anselm who inherited his fortune and who decided which of his sons should succeed him. Bismarck was right too that the younger Rothschilds ridiculed their old uncles. Visits to the invariably “sad and morose” Uncle Carl were especially dreaded. If there was great grief in 1855 when Salomon, Carl and Amschel one after another expired in the space of just nine months, no record of it has come to light.