The House of Rothschild (36 page)

As this indicated, Napoleon was still inclined to side with the Italians, insisting that they had yet to begin military preparations. It was his old game of backing the revolution wherever it might break out, and when he said as much, denouncing the treaties of 1815 in a speech at Auxerre on May 6, the Rothschilds were appalled. The effect of the speech on the Paris bourse was devastating. It marked, wrote Alphonse the next day, “a new era and one can no longer even conjecture what will happen now in the world, and what revolutions Europe will have to endure before returning to equilibrium.” At a ball given by the Empress at the Tuileries that night, Mérimée noticed that “the faces of the ambassadors were so long, that one would have taken them for people condemned to death. But the longest of all was that of Rothschild. They say that he lost ten millions the evening before.” It was in fact after the Auxerre speech—which caused renewed panic on the Paris bourse—that James coined his famous epigram: “L‘Empire, c’est la baisse.”

It is conceivable that, had Napoleon been consistent in backing Italy and (by implication) Prussia against Austria, the Austrians might still have backed down. Yet at the eleventh hour—perhaps partly because of James’s badgering—Napoleon seemed to come to Austria’s rescue. The diplomatic compromise was foreshadowed economically. First the Credit Foncier offered another cash advance, as requested by Metternich. Then the Lombard company’s annual general meeting in Paris on April 15 was a “brilliant success”—which also seemed to reaffirm the economic links between France and Austria. The crucial development came in the course of May, when Austria unexpectedly offered to cede Venetia to
France
(which might then hand it over to Italy) in return for support against Prussia. Although Napoleon dithered, reverting to his hobby-horse of a Congress, this remarkable and often misunderstood initiative bore fruit on June 12, when Austria and France signed a treaty guaranteeing French neutrality. Throughout the negotiations, James played an active role in promoting French “goodwill towards Austria,” regularly seeing Rouher, the British ambassador Cowley and Napoleon himself Typically, he had his own private anti-Italian agenda, enlisting the French government’s support in his private quarrel with Italy over the tax on rentes. He also held out as an incentive to the Austrians the prospect of renewing the existing Rothschild short-term credits in Vienna, though the Austrians retorted with quibbles about their contract with the Lombard line.

Bismarck had told Bleichröder on May 23: “The Emperor [Napoleon] can still make peace if he wants.” This was not quite true; for in bolstering the Austrian position Napoleon was in fact contributing decisively to the outbreak of war. The treaty of June 12 was predicated on the assumption that, with France neutral, Austria could not only defeat but dismantle Prussia and Italy: in return for relinquishing Venetia, Austria intended nothing less than the restoration of the Bourbons in the Two Sicilies, the Pope in central Italy and even the old duchies of Tuscany, Parma and Modena. Prussia would be reduced to the frontiers of 1807, losing Silesia to Austria, Lusatia to Saxony, and her Rhine provinces to Hanover, Hesse-Darmstadt, Bavaria and Württemberg. Although Bleichröder had been talking as if the war had already begun since May 4, it was only really after June 12 that Austria decided to fight rather than capitulate. Indeed, James himself regarded the war as not having begun until June 13. Thus it was French policy—at once encouraging Italy and Austria to fight—which turned what might have been a phoney war over Schleswig-Holstein into a full-scale war over the future of Germany and Italy. Without his intending it, James’s efforts to secure peace by shifting Napoleon from a pro-Italian to a pro-Austrian position had tempted the Habsburg regime to stand and fight on both fronts.

The Rothschilds had tried to stop the war of 1866; they had failed. The costs of this failure for Austria were high: contrary to the expectations of most contemporaries—the Rothschilds included—she and her German allies were decisively defeated by Prussia in the field, a defeat which counted for infinitely more than the Austrian victories over Italy. This time, the Rothschilds had backed the losing side. Moreover, the ramifications of the battle of Königgrätz seemed and were immense. “Casca il mondo,” said the Papal nuncio, and with reason. Bismarck’s alliance of Prussian conservatism with democracy,
kleindeutsch
Liberalism, Italian nationalism and even the Hungarian revolution truly turned the world upside down.

The dismay of the Austrian Rothschilds was understandable: “In consequence of the terrible news from the battlefield,” Anselm’s son Nathaniel wrote after Königgrätz, “I feel so deeply upset and depressed that I am hardly able to write.” Nor was this just pained patriotism—though Anselm affirmed the existence of this with his donation of 100,000 gulden for the care of the wounded. (He also firmly resisted efforts to distinguish between Jews and non-Jews in the Austrian army).
⁸
Until the preliminary peace had been signed at Nikolsburg on July 26, there seemed every chance that the Prussian army would continue southwards to Vienna itself. As it was, Rothschild properties in the vicinity of the battlefields came directly under Prussian control. Communications to the Rothschild-owned ironworks at Witkowitz were cut off, so that the workforce could not be paid. It was reported that Schillersdorf had been occupied—allegedly by members of the Prussian-backed Hungarian legion—and “a great part of the game” plundered. In fact, when Ferdinand arrived there in September, he found a handful of Prussian cavalry officers; on the day they left, he reported crossly, “they cantered their horses all over the gravel paths in the park. One of them had a hedge put up under
my
window, and kept jumping over it backwards and forwards. All the English servants were looking on and laughing at his want of skill.”

In Frankfurt too there was horror; and again this reflected the direct threat posed to the town itself by Prussian arms. From an early stage, Mayer Carl had recognised the vulnerability of Frankfurt “in the centre of it all” and his hopes of remaining on “good terms with both parties” were soon shattered. He himself could not help siding with the majority of German states and the Confederation itself against Prussia. “Now that hostilities have begun,” he wrote on June 11, “we must hope that Prussia will get a famous licking and be well punished for her unaccountable conduct which is considered by everyone as quite unheard of in the annals of ancient & modern history.” By June 20 preparations were under way “to keep the Prussians at a distance” from Frankfurt; but it was obvious when they prepared to attack the city on July 8 that resistance would be futile, and Mayer Carl hurriedly sent his daughters off to France. On July 17, after another decisive Prussian victory over troops of the Confederation, the town was occupied. “In a great state of perturbation and anxiety,” Mayer Carl’s wife Louise described to her sister-in-law Charlotte:

If it were true that by now the Rothschilds were beginning to be assimilated into their respective national milieus, such feelings would presumably have been much less pronounced in neutral London and Paris. But they were not: the entire family seems to have identified itself with the Austrian-German side. When the Italians received what James called “a real hiding” from the Austrian army at Custozza, he was delighted: “It will do them good,” was his verdict, “and will make it easier to arrive at peace.” As for Prussia, Mayer Carl’s fears that the French house might belatedly succumb to Bleichröder’s appeals for assistance were surely unfounded: James exclaimed that he “heartily wished Austria to give the damned Prussians a good licking, as they have messed everything up.” The news of Austrian losses on the eve of Königgrätz therefore made him “half crazy.” “I declare,” he told his nephews, “I am wholly [pro-]Austrian this time, as the war is just too unjust.” Even his eight-year-old granddaughter Bettina was “very angry with Mr Bismarck for having taken Venice [sic].” “Will it depend upon Mr Bismarck,” she asked her English grandparents, “whether you go to Gunnersbury or some other place?”

But what could be done? Whereas a number of those close to the Emperor continued to urge an anri-Austrian policy on him, Alphonse had discerned as early as April the dangerous implications of a German war for France. Napoleon’s indecision—his encouragement of both Italy and Austria to fight—had left him not the arbitrator he had hoped to be, but a mere spectator. On July 1 Alphonse astutely summed up the contradictory nature of French policy:

Alphonse rightly discerned that if Napoleon could not make up his mind to join the war on the Austrian side—or lacked the military readiness to do so—he was in no position to demand “compensation” from a victorious Prussia. In the Rothschilds’ eyes, the various French bids for territory in Germany, Belgium or Luxembourg were bound to come to nothing; the most that France could do was to persuade the defeated Italians to accept Venetia without demanding anything else. Itching as he was for “Prussia the aggressive to receive a hard lesson at the hands of imperial France,” James’s verdict was damning: “If I were Emperor, I would be ashamed of myself.” For him and his sons, a French war against Prussia had merely been postponed: in the end, Napoleon would be “forced to go to war with Prussia, as these people think Europe belongs to them.” Any peace between France and Prussia would only be “bastard peace.”

The English Rothschilds too were dismayed by the Prussian victory. To Charlotte, the war of 1866 was not about the unification of Germany, but its division—indeed its defeat—by Prussia. On July 10 she even predicted that Prussian ambition would ultimately necessitate British intervention:

Of course, as Alphonse said, Napoleon might have acted more decisively if there had been such English support for a French intervention to check Prussia. But it was not to be. Bismarck’s terms—which gave Prussia military control of Germany north of the Main but guaranteed an “international independent existence” for the South German states—were seen as moderate enough in London to preclude a concerted intervention. As Charlotte remarked, in response to a plea from Louise “to ask Mr. Delane for a powerful article in the
Times
”: “[W]hat does Count Bismarck care for an article in our English papers[?]—He has vanquished the world, even now he would not have consented to peace, had he not obtained for himself an empire quite as large as he can possibly wish for and rule over without fear of revolution and aggression.” The most that Charlotte could do was to join “a committee of ladies, who are willing to collect subscriptions for the poor Austrian soldiers.”

Yet, for all this, the political significance of Königgrätz outweighed its financial significance; if anything, the swift end to the conflict permitted a general financial recovery, abruptly ending the tight monetary conditions of the preceding months. With this in mind, we should not exaggerate the financial costs of war to the Rothschilds. As we have seen, a sense of the impending storm had prompted James to cut his losses and minimise his exposure weeks before the fighting began. As early as April 9, he gave his London nephews some advice which deserves to be as famous as his more pacific axioms. He told them to sell whatever securities they could, even at a loss. “I am very much afraid of war,” he wrote, “and would rather make a sacrifice in order to keep and maintain my holdings of cash because
in a war there is money to be made from having money.
” A week before, James had already instructed Bleichröder to start selling Rothschild securities in Berlin as soon as he believed war was certain (though he was angry when Bleichröder started to do so prematurely). On April 10 he was able to report to London that he had “paid off all his Lombard bonds” and would “watch any war with equanimity.” “Now my good nephews,” he wrote, contemplating the “full-scale panic” on the Paris bourse, “the world will not come to an end, and if war does come one will find other ways of making money.” In the final analysis, that was James’s first principle: not peace at any price, but profits under any circumstances, peace or no peace.

James’s assessment as the war began was the product of a lifetime’s experience of financing war and peace: “In the long run, all securities must fall since everyone will need loans. Italy wants one and no power can sustain war for two months. Perhaps it will therefore be quite short.” His son Alphonse could also see the strictly economic benefits of war, even as he deplored its political implications. As he reminded his cousins in London, receipts on the Lombard line had never been better than during the war of 1859-60 and were likely to soar again as the Austrian government paid the company to transport its troops to Italy. This ability to distinguish between politics and private interest was a family characteristic. Chided before the war began for being “too devoted an Austrian,” Anselm retorted that he was “far more a devoted pro-Rothschild.”