The House of Rothschild (45 page)

The Rothschilds wanted the Russian government to confine itself to such bond issues and to end the practice of guaranteeing private railway company bonds, but this proved difficult to achieve as long as Bleichröder and others were willing to invest directly in Russian railways. “[I]t is a great pity,” complained Mayer Carl on more than one occasion, “that the Russian Government should allow all these Railways to issue their bonds which are all taken up by the public and spoil our market.” Moreover, as early as October 1870, with the Russian denunciation of the 1856 neutralisation of the Black Sea, Anglo-Russian relations began to deteriorate over the Eastern Question. The Balkan revolts of 1875 led to yet another breakdown in Rothschild—Russian relations, despite the hopes which Alphonse had expressed when he and Edmond visited St. Petersburg the year before. The crucial financial realignments which brought France and Russia and ultimately England together to check the new Germany lay more than a decade in the future.

II

MAYER CARL VON ROTHSCHILD, SEPTEMBER 1,1870

ALPHONSE DE ROTHSCHILD, AUGUST 22, 1870

 

 

T
he Franco-Prussian war of 1870-71 was, on the face of it, a disaster for the Rothschilds. For the first time, Rothschild houses found themselves on directly opposing sides in a major European war they could do nothing to prevent. In his memoirs, Moritz Goldschmidt’s son remembered Anselm in 1870 exclaiming petulantly: “I won’t stand for its coming to war! I won’t stand for it, even if it costs me thousands of gulden—I won’t tolerate it!” Still war came. The Paris partners elected to “remain at their posts” in the rue Laffitte, even as the Prussian army swept towards the French capital: despite an early awareness of French unpreparedness and the Bonapartist regime’s culpability in precipitating the war, Alphonse and Gustave nevertheless identified themselves with
la patrie.
They lent the French war effort their financial support and sought to use their influence in London to further the aims of French diplomacy. At least two of the younger French Rothschilds—their brother Edmond and Nat’s son James Edouard—served in the Garde Mobile. The great symbol of this identification was the occupation of Ferrières by the Prussian army. The arrival there of Bismarck and William I in September 1870 seemed to signify with stark force the advent of a new era in which Rothschild financial power must bow down before Prussian “blood and iron.”

In Frankfurt, meanwhile, Mayer Carl identified himself even more unequivocally with victorious Prussia, and not only with Prussia but with the new German Reich proclaimed in the aftermath of the French defeat. Here too there was a potent symbol, for Mayer Carl was chosen as one of the parliamentary delegates sent from the Reichstag of the North German Confederation to “pay homage” to the Prussian King on the eve of his proclamation as the “Emperor William” in the Galerie des Glaces at Versailles. Mayer Carl did not, however, stay for the ceremony itself; there is no Rothschild among the cheering soldiers and uniformed officials in Anton von Werner’s great depiction of the occasion, The
Proclamation
of the German Empire. Again, the Rothschilds seemed dwarfed by the new and ostentatiously military power of Germany.

Yet perhaps the most striking aspect of the French defeat—apart from the speed with which it was achieved—was the speed with which it was overcome. For a time in 1870 it seemed as if the collapse of the Bonapartist regime would plunge France—or rather Paris—into a revolutionary turmoil comparable with 1792 or 1848. The vain efforts of Republicans like Gambetta to prolong the war by means of a
levée
en masse seemed to jeopardise all the material achievements of “bourgeois society.” The peace terms, when they were finally accepted in January 1871, seemed crushing not only in territorial terms—the loss of Alsace and Lorraine—but in financial terms—an indemnity of 5 billion francs. All this could have turned the Third Republic into the Weimar Republic of the nineteenth century. Instead, a dramatic financial recovery enabled the French to pay their reparations bill ahead of schedule, thus ending the German occupation of northern French territory in 1873. In the same year, stock market crashes in Vienna and Berlin plunged all of Central Europe into economic depression, raising doubts about the internal stability of the Bismarckian system. The Rothschilds played a decisive role in this financial revanche. As a result, their power in Paris—and in Europe itself—seemed to emerge enhanced rather than diminished.

There is no question that the Rothschild intelligence system failed badly over the question of the Spanish throne. They knew well enough that one of the candidates being considered by the Cortes in Madrid was Leopold of Hohenzollern-Sigmaringen. But they failed to grasp the significance of Bismarck’s support for his candidacy, which he decided upon as early as February. We know that Bismarck concealed this decision from Bleichröder, allowing his personal banker to continue to believe that “the political realm offers no cause for disquiet” until perhaps as late as July 5. Interestingly, he seems nevertheless to have dropped a hint to the Rothschilds. According to a letter to New Court dated April 5, “Old B” told Mayer Carl, “that the news from Spain are [sic] so bad and that the financial state of that country looks particularly queer.” But if this was a coded warning of an imminent Spanish crisis, Mayer Carl failed to decipher it.

Equally, Alphonse failed to appreciate the significance of the due de Gramont’s appointment as French Foreign Minister in May. Gramont’s belief in the existence of a
de facto
Franco-Austrian alliance made him willing to take far greater diplomatic risks than his predecessor, who had considered English support the essential precondition for any reckoning with Prussia; but when Alphonse heard of Gramont’s appointment, he commented: “We will be delighted by it from every point of view, because it is necessary to have at the head of this ministry a man of experience who is wise enough not to want to try to win fame for himself by some brilliant stroke.” A more erroneous character assessment would be difficult to imagine; though the fact that the Duke’s son later married a Rothschild (Mayer Carl’s daughter Margaretha) raises the possibility that he was already a family friend. On July 2 Mayer Carl saw Benedetti, the French ambassador in Berlin, who was leaving (along with the usual throng of grandees, politicians and bankers) to take the waters at Wildbad. He was, Mayer Carl reported to New Court, “very glad to be able to rest a little after all the fatigue of the great Capital. He seems in very good spirits and says that everything is in perfect order and that peace is assured.”

The Rothschilds were not alone in their complacency: the under-secretary at the British Foreign Office greeted the new Foreign Secretary Lord Granville on July 12 with the unfortunate observation that “he had never during his long experience known so great a lull in foreign affairs.” But Mayer Carl’s letter of July 2 gives us a valuable clue to why bankers in particular were taken unawares by the Spanish crisis. Not only was it the holiday season; as he reported routinely, the Frankfurt bourse, like its Paris counterpart, was “in very good spirits.” It was the eve of the Prussian Credit Foncier flotation—that symbol of Franco-Prussian economic co-operation—and Mayer Carl’s main concern was that “everything [should] go well.” He became concerned about “this Spanish fuss” only on July 7, and even then was confident that it would not “not come to a serious disturbance of peace.” An early City of London pessimist like Henry Raphael seemed to be making an uncharacteristic mistake by selling at such a time. Yet, unbeknown to the Rothschilds, both the Prussian and the French governments were already bent on a major diplomatic confrontation, if not outright war.

There is no question that Bismarck set out to back the Hohenzollern candidacy with the intention of provoking France. As early as July 8, he spoke of “mobilising the whole army and attacking the French.” This was at least partly because he saw a foreign policy crisis as a way out of the internal deadlock over the financial question and the South German opposition to unification on Prussian terms. On July 10, for example, he confessed that “politically a French attack would be very beneficial to our situation.” Bismarck’s difficulty was in overcoming the reluctance of Leopold’s father Karl Anton and, more important, the unwillingness of William I to quarrel with France over the issue. In fact, Leopold had declined the candidacy on April 22, and it was only after much persuasion that Bismarck overturned this. A further difficulty arose when a cipher clerk in Madrid incorrectly decoded the Spanish envoy’s message conveying Leopold’s acceptance; this meant that instead of remaining in session to elect Leopold, the Cortes was dissolved, creating an unforeseen delay.

It was a war of crossed wires: when they met at Bad Ems on July 9, William intimated to Benedetti that he would not be opposed if Leopold once again withdrew, but the more conciliatory part of the latter’s telegram to Paris was rendered indecipherable by climatic interference during transmission. Still, when Benedetti returned to pester William the next day, he was granted an audience. Although William refused to ask Leopold to withdraw, on the ground that it was purely a matter for the Hohenzollern-Sigmaringens, he instructed Werther, his ambassador in London, to assure Gramont of Prussia’s peaceful intentions. On July 12 Karl Anton declared that his son would not, after all, be a candidate. At their meeting outside the Kurgarten the next morning, William famously declared to Benedetti: “Eh bien, voilà donc une bonne nouvelle qui nous sauve de toutes difficultés.” That afternoon he went further, telling the ambassador that he approved Leopold’s withdrawal “in the same sense and in the same degree in which he had given his approval to the acceptance,” that is, “entirely and without reservation.”

While all this went on at Ems, Bismarck was to some extent “out of the loop,” though he was already preparing the German press for some sort of
démarche.
He regained control of events only on July 13, when he received the famous telegram from Ems relating the gist of William’s encounters with Benedetti. Bismarck’s rewriting of this telegram for publication in the press correctly stated the King’s view that he could not undertake “in perpetuity never again to give his consent” to a renewed Hohenzollern candidature, but made it seem that William had subsequently refused to see Benedetti because the French demand had been offensive to him. This was not at all the sense of the original, and was calculated to affront Gramont. Bismarck proceeded to use the doctored telegram as the basis for an anti-French propaganda campaign directed at both domestic and foreign opinion.

Thus Bismarck made Prussia’s policy more aggressive than his supposed master would have wished. Nevertheless, the blame for the war cannot be laid exclusively at Prussia’s door. The French had been signalling their opposition to a Hohenzollern candidacy from March 1869 onwards. When the news of it broke in Paris on 2—3 July, the immediate reaction was bellicose. Gustave summed up the French mood. The markets were “cool,” but:

Accordingly, on July 6, the French government approved a highly inflammatory declaration drafted by Gramont to be read in the Legislative Body. As Gustave discerned, Gramont’s “violent” language was a true reflection of the government’s position: nothing less than an “absolute veto by the king” of the Hohenzollern candidacy would satisfy them, and if Leopold were to accept the crown it would be regarded as “a declaration of war.” “Here,” he repeated, “one is all ready to make war, and one considers that one will never have a better and more popular occasion to do so.”
¹
When Gustave saw the French Prime Minister Ollivier, he was warned that France would use “every means” to stop the candidacy, “even war, and under such circumstances it will be a war of enthusiasm as in 89.” “The Emperor is going to get what he wants,” Gustave predicted, “war imposed by a parliamentary vote.”

The crucial French step in this direction was Gramont’s insistence on July 12—after Leopold had withdrawn—that Benedetti demand from William a gratuitous and uncalled-for “assurance that he shall not again authorise this candidacy.” It was never likely that William would give such an assurance and Gramont’s repeated insistence that Benedetti ask for it was obviously designed to provoke Berlin, as was the request for a letter of apology to Napoleon. In the same reckless way, instead of resting content with William’s last conciliatory words to Benedetti, Gramont seized on the Ems telegram as a
casus belli
and secured French mobilisation on the afternoon of July 14—though not before Napoleon had once again dusted off his dog eared solution to all diplomatic difficulties: a congress. It was too late. On July 15 Ollivier and Gramont presented the Chamber with a version of the events at Ems just as distorted as Bismarck‘s, and war was declared. It was not until after the news of this reached Berlin that William agreed to Prussian mobilisation. “France is determined to pick up [sic] a quarrel,” concluded Mayer Carl. It is hard not to agree, even if it was a quarrel which was welcome to Bismarck and fatal for France. According to Gustave, the French view was “that if we have to have war, if it is inevitable, it is better to have it now rather than in six months.”

It was the fact that France not only appeared to be more aggressive than Prussia but actually
was
the aggressor which determined British non-intervention. As in the Luxembourg crisis of 1867, the Rothschilds acted as a channel of communication between London and the potential belligerents. On July 5 Napoleon had asked Alphonse to relay a message to Gladstone asking for his support in securing the withdrawal of the Hohenzollern candidature. Natty delivered this to Gladstone at his home at 11 Carlton House Terrace early on the morning of July 6 and, finding him on the point of leaving to see the Queen at Windsor, drove with him to the railway station. According to Morley, “For a time Mr. Gladstone was silent. Then he said he did not approve of the candidature, but he was not disposed to interfere with the liberty of the Spanish people to choose their own sovereign.”
²
This has sometimes been interpreted as a blow to the French Rothschilds’ hopes; but it seems just as likely that this is what they wanted to hear. A lukewarm response was what was needed if the increasingly reckless Gramont was to be restrained. Gustave wanted England “to preserve the peace”: that meant putting pressure on France as much as on Prussia.
³
“We hear that your government has put a good deal of pressure on ours to accept [a compromise],” he wrote on July 11, “but in the meantime unfortunately the public mood and the Chamber are becoming aroused.” Thus, when the Hohenzollern candidature was withdrawn on July 12, the Paris house sent another telegram to London stating optimistically: “The French are satisfied.” Gladstone saw it late that night. This was the cue for Granville to telegram to Lyons, the ambassador in Paris, that France should indeed “accept as satisfactory and conclusive the withdrawal of the candidature of Prince Leopold.”