The House of Rothschild (117 page)

3
It is nevertheless true that Barings continued to pay interest on the earlier Russian bonds; the idea of prohibiting this did not occur to the British Foreign Secretary, Clarendon, though he was aware that it was going on. Indeed, Russian bonds continued to be traded in London throughout the war.

4
The national debt at this time was around 5,012 million francs. The conversion affected around 3,740 million of this, and implied an annual saving of around 19 million francs.

5
Interestingly, the Paris house was being encouraged by the French government to establish the proposed bank rather than leave the field clear to “English capital,” whereas it was the London house which had the more sceptical view of Turkey’s economic prospects.

6
Thun was replaced soon after and the Frankfurt protest shelved. Bismarck attributed this Austrian volte-face to “the efforts of the Rothschilds”: “That there are occasions when other but purely business considerations are a determining factor on the attitude of the House of Rothschild in financial operations seems to me to be indicated by the success with which Austria has secured the financial services of the House, since I am convinced that, apart from the financial profit to be gained by such transactions, the influence which the Imperial Government was able to bring to bear upon the Jewish problem at Frankfurt profoundly affected the House of Rothschild.”

7
Mayer Carl, he reported, “does not go to big functions, and when he does wear orders, prefers to wear the Greek Order of the Redeemer, or the Spanish Order of Isabella the Catholic. On the occasion of the official reception which I myself gave ... to celebrate the marriage of H.R.H. Prince Frederick William, which he would have had to attend in uniform, he excused himself on the grounds of ill-health, it being painful to him to wear the Red Eagle decoration for non-Christians, as he would have had to do on that occasion. I draw a similar inference from the fact that whenever he comes to dine with me, he merely wears the Ribbon of the Order of the Red Eagle in his buttonhole.” James urged Bleichröder to keep the award out of the Berlin press, for fear of arousing hostile comment.

8
The principal operations of the period were the somewhat unsuccessful 1853 conversion; the 30 million franc loan of 1854, which was shared between the Banque Nationale, the Rothschilds and the Société Générale; and the 15 million franc loan of 1862, handled by the same trio.

9
Loans to the Duchy totalled 19.4 million gulden between 1849 and 1861.

10
Carl had demanded that Jews be allowed to live where they please in the Papal states and that all special taxes and separate forms of procedure in the courts be abolished. In January, Pius IX gave James a written assurance through the Papal nuncio in Paris that these things would be done. However, when Carl visited Rome four months later, he found little sign of improvement; and the Roman Jews formally complained to James the following year. Another appeal on behalf of the Roman Jews was made by Anselm in 1857. Rather as with the Jews of Damascus and later the Christians of Jerusalem, the Jews of Rome became a political “football” between the great powers, in this case Austria and France. The Rothschilds seem to have played one off against the other rather successfully, though without achieving much for their co-religionists.

11
James proposed to establish a new “Comptoir impérial des travaux publics,” but he was at pains to stress that, unlike the Credit Mobilier, it would not “interfere directly in any operation or enterpise on its own account.” In other words, what he had in mind was more like a deposit bank, lending to companies against all kinds of securities in the way that the Banque de France did not.

12
The authorised capital of the Pereire bank was 60 million francs, that of the Rothschild bank 80; but in the latter case no more than 24 million francs was actually paid in, and this was later reduced. The Pereires, by contrast, had paid in the maximum capital by 1862, and sought to invest not only in railways but also in the Madrid gasworks and various mines. Significantly, the Rothschild bank was wound up in 1868—after the Pereire threat had disappeared.

13
Between 1855 and 1859, the Austrian government raised 118 million gulden by selling off the state-owned sections of the Habsburg railway network, though that figure excludes subsequent payments by the companies which bought the lines. This should be compared with a total gross budget deficit in the same period of 576 million gulden.

14
The company also acquired a line on the left bank of the Danube to Szeged, via Budapest, as well as various mining and metallurgical interests.

15
The merger was a relatively profitable one for the Pereires, who were able to exchange the half-finished Franz Joseph line for shares in the new Rothschild company worth 96 million francs.

1
Between 1860 and 1866, the Credit Mobilier accounted for around 28 per cent of the total deposits of the six biggest deposit institutions.

2
The Frankfurt house took £1 million of the loan and the Austrian National Bank £1.5 million. The 5 per cent bonds were issued at 80 in London—a disastrous investment for those who bought them.

3
The total loan announced by the government was for 700 million francs, of which 500 million were to be issued immediately. The Paris and London houses contracted to buy 285,720,000 francs of 5 per cents at a price of 71 with a 1 per cent commission, and to underwrite a further 214,300,000 francs. The London house issued just 75 million francs, as the market for Italian bonds was less firm than in Paris.

4
Charlotte to Leo, Cambridge, April 28, 1864: “B. D. says that the Baron is a great man, and the great Baroness a greatly prejudiced lady—immensely conservative, viz. illiberal in her prejudices... Mr. Pereire, the Emperor and the English are her favorite aversions. She calls us maniacs, and heaps all the coals of her eloquence upon our press because it declares that the French are not fit for liberty.”

5
It was a sound enough judgement; the issuing houses were able to keep the bonds above par only by massive intervention in the market.

6
Disagreements over American politics may account for the friction between Belmont and members of the London family when he visited them in 1865.

7
There was another abortive attempt to bring Belmont to heel in 1866, but, as James and Alphonse fatal istically pointed out, he had become irreplaceable.

1
Almost certainly an allusion to Bismarck’s celebrated comment on Austria’s role in the Schleswig-Holstein crisis of 1864: “Il travaille pour le roi de Prusse.”

2
Mayer Carl had his eye on a Grand Cross with a broad ribbon, but the Prussian King William I continued to regard this as too high an honour for a Jew: “Baron von Rothschild,” he minuted, “has developed a bad attack of tape-worm at the approach of the investiture ceremony. I can’t provide a remedy for this, but I could cure
Kreuzschmerzen
[literally ”cross-ache,“ a pun on the German expression for lumbago].”

3
So damaging was the Alvensleben convention to Bismarck that Bleichröder arranged a special code with which he would notify the Paris Rothschilds of his resignation.

4
The crisis in Poland had sparked a major debate within the British Jewish community, in which Lionel emerged as a leading opponent of intervention on the Poles’ behalf.

5
Characteristically, James also asked Bleichröder “to keep an eye out for old paintings or other antiques because the war against the poor Danes probably has brought many beautiful and interesting pieces on the market.”

6
The government also recovered control of a guarantee fund which had been set up for certain minor lines associated with the Cologne—Minden. Payment was to be partly in cash (3 million thalers on October 1, 2.7 million by January 2, 1866) and the rest in new Cologne-Minden shares.

7
The terms of the Lombard deal were complex: the government guaranteed a 6.5 per cent return on the bonds of the Italian part of the line, extended the concession to ninety-nine years, and freed it from the levy on foreign bonds until 1880. In return the company agreed to construct new lines worth 9 million francs, to reduce its fares and to undertake the expansion of the port facilities at Trieste and Venice at a cost of 15 million gulden, to be repaid over twelve years. Alphonse described the costs of this deal to the company as “almost illusory.”

8
According to
The Times,
the Austrian Minister of State Count Richard Belcredi “put forth the notion of requiring the Jewish congregations to organise several battalions of volunteers at their own expense. Now as the Jews necessarily undertook the obligations of military service in common with other citizens Count Belcredi’s plan was neither more nor less than an extraordinary tax levied on the Jews, a disguised renewal of the special Jews’ tax.” Anselm wrote to him “that he would close his offices, break off all financial negotiations with the Government and leave Austria if the Minister persisted in carrying out a project which would be so injurious to the Jews. His letter had the desired effect.” When Betty suggested that money be raised for Austrian soldiers who were Jews, Anselm (according to his son Ferdinand) “answered that the money was [to be] equally divided between all soldiers, quite regardless‘of creed, and that a distinction would create a bad effect.”

1
The lack of detailed accounts for the period 1852-79 makes it difficult to be sure when the Paris house made its dramatic leap forward ahead of the other houses in terms of capital. We do know that in the five years to 1868 the Paris house made profits in excess of £4 million, an annual average of £800,000. This was very nearly double the average figure for the entire period 1852-79, suggesting that much if not all the credit for the growth of de Rothschild Frères should go to James.

2
Altogether, James left Betty lump sums and annuities worth around 16 million francs, the house at 19 rue Laffitte and its contents, the house at 7 rue Rossini and its contents, as well as use of the houses at Boulogne and Ferrières. Ownership of Ferrières James wished to pass to his eldest son Alphonse and to carry on through the male line according to the rule of primogeniture. This was at odds with French law (which favoured partible inheritance), but James explicitly requested his descendants to put his wishes first! In addition, Alphonse was given 100,000 francs a year for the upkeep of the Ferrières. However, most of the other real estate (Boulogne, 21, 23 and 25 rue Laffitte, 2 rue Rossini, 2 and 4 rue St Florentin, 267 rue St Honoré, the three houses in the rue Mondovi and the Lafite estate) was divided equally between his three sons, with the remainder going to Charlotte and Hélène. On attaining his majority, Edmond was to receive various sums amounting to around 3 million francs. The rest of James’s fortune, including his share in the bank, was divided between Alphonse, Gustave and Edmond (c. 26 per cent each) and Charlotte and Hélène (11 per cent each). Various codicils distributed further sums to his children (400,000 francs), their spouses (300,000) and Salomon James’s widow Adèle (100,000).

3
It was a sign of the widening gulf between the government and the Rothschilds that the loan was underwritten by the Société Générale.

4
The London and Paris houses jointly advanced £1.7 million to the Spanish government, which was to be repaid over twenty years. This debt was then converted into 5 per cent bonds with a nominal value of £2,318,000. As Lionel was heard to observe in January 1870, “whatever might be the condition of the Spanish government as regards money matters it could always raise funds... in England. This is certainly not the result of the peculiar honesty of Spanish administration, but of a vague tradition of the ancient wealth of Spain ...”

5
The syndicate included Fould, Pillet-Will, Credit Lyonnais, the Banque Franco-égyptienne, Oppenheim, the Société Générale and the Banque Impériale Ottomane—one of the heterogeneous combinations so characteristic of the period after 1870.

6
Erroneously, Alphonse described Amadeo as “of all the candidates, the most dangerous.”

7
James’s death considerably enhanced Nat’s influence in Paris; he became the senior figure to whom Alphonse, unaccustomed to taking decisions for himself, turned for counsel.

8
An exemption from the new tax, which would have cost the company around 4 million lire a year, could be bought only by giving the government an advance payment of 22 million lire.

9
Whenever a government imposed a tax on securities—and it happened increasingly often after 1866—the Rothschilds were outraged, predicting collapsing bond prices if not national bankruptcy. Yet, as Alphonse himself on occasion admitted, the effect of such taxes, if they served to reduce a government’s budget deficit, could actually be to strengthen bond prices. This paradox perplexed “practical men” like Alphonse and Natty, so they generally ignored it and continued to denounce such taxes.

10
The Times,
Feb. 21, 1867, p. 7, quoting “a mercantile letter from Frankfort”: “This choice was not influenced by party feeling. Baron Rothschild can do a deal of good for our commercial interests, and particularly by insisting on the maintenance of the florin currency, which is essential to our commerce with the South ... There has rarely been such general enthusiasm for a candidate, and all was done without any previous understanding, and even without a regular committee.”

11
After lengthy negotiations, Mayer Carl had secured a 12 million thaler share of this operation. Undaunted, Hansemann revived the scheme by floating the bonds exclusively outside Germany, but the Paris Rothschilds declined to participate, to Mayer Carl’s annoyance.