Part 15 (1/2)

”[T]here is no error so vulgar,” wrote Benjamin Disraeli in 1844, ”as to believe that revolutions are occasioned by economical causes. They come in, doubtless, very often to precipitate a catastrophe; very rarely do they occasion one.” The succeeding four years were to prove him badly wrong.

Unheralded by economic crisis, the 1830 revolution had seemed to the Rothschilds like a bolt from the blue. By contrast, the 1848 revolution came after such a protracted period of economic depression that they almost grew weary of waiting for the storm to break-and perhaps even began to imagine that it never would. If they did ultimately fail to prepare themselves adequately for what was the greatest of all nineteenth-century Europe's political crises, the reason perhaps lies in the timing of the revolution. The economic nadir of the 1840s in fact came in 1847; by the spring of 1848 the worst was over. With hindsight, historians can infer that it was precisely at this point that political instability was most likely to occur, as popular expectations rose; but to contemporary bankers that was far from apparent.

Another difference between 1830 and 1848 was the Rothschilds' own position as targets of revolutionary action. In 1830 James had been sufficiently distanced from the regime of Charles X to allow a relatively easy switch to the Orleanist side. Eighteen years later he and his brothers had become much more closely identified with the established regimes not only in France, but throughout Europe. As bankers not only to the Austrian imperial government itself but also to numerous smaller states in Germany and Italy, they appeared-especially to the nationalist elements within the revolutionary movements-as the paymasters, if not the masters, of the Metternichian system. Eduard Kretschmer's 1848 cartoon, Apotheosis and Adoration of the Idol of our Time Apotheosis and Adoration of the Idol of our Time, portrays ”Rothschild” seated upon a throne of money, surrounded by kneeling potentates (see ill.u.s.tration 16.i)-a popular image of the period. At the same time, the Rothschilds' financial commitments to these various states made it difficult for them to welcome the radical redrawing of Europe's boundaries implied by the first principle of political nationalism-that political and ethnic or linguistic structures should be congruent. Writing in 1846, the poet Karl Beck lamented ”Rothschild's” refusal to use his financial power on the side of the ”peoples”-and particularly the German people-instead of their detested princes.

16.i: Eduard Kretschmer (after Andreas Achenbach), Apotheose und Anbetung des Gotzen unserer Zeit Apotheose und Anbetung des Gotzen unserer Zeit (1848). (1848).

Nor was it as easy for the Rothschilds to contemplate defecting to the side of the revolution when that now implied a republic rather than merely a dynastic change. And not only a republic: for the 1848 revolution was, unlike its predecessor, as much concerned with social as with const.i.tutional issues. For the first time, socialist (as well as ultra-conservative) arguments against economic liberalism were voiced alongside-and sometimes in contradiction to-the older arguments for political liberalism and democracy. Not only were the revolutionaries concerned with rights (to free speech, free a.s.sembly and a free press) and with representation in const.i.tutionally secured legislatures; some among them were also concerned to combat the widening material inequality of the early industrial era. In many ways the Rothschilds had come to personify that inequality. Nothing demonstrated that better than the explosion of anti-Rothschild sentiment in the wake of the accident on the Nord railway: while third-cla.s.s pa.s.sengers perished, the critics suggested, ”Rothschild I” callously counted his state-subsidised profits. Another cartoon of 1848 which depicted Rothschild as the object of royal (and papal) veneration also featured, kneeling in the foreground, a ragged, starving family; and in the background a group of students marching under the banner of liberty (see ill.u.s.tration 16.ii). When the Russian revolutionary Alexander Herzen wished to define the bourgeoisie in 1847, he called it ”a solid estate, the limits of which are the electoral property qualification below and Baron Rothschild above.” For Herzen liberalism was propagating a ”malicious irony” when it claimed that ”the dest.i.tute man enjoys the same civil rights as Rothschild,” or that ”the sated is . . . the comrade of the hungry.” (as well as ultra-conservative) arguments against economic liberalism were voiced alongside-and sometimes in contradiction to-the older arguments for political liberalism and democracy. Not only were the revolutionaries concerned with rights (to free speech, free a.s.sembly and a free press) and with representation in const.i.tutionally secured legislatures; some among them were also concerned to combat the widening material inequality of the early industrial era. In many ways the Rothschilds had come to personify that inequality. Nothing demonstrated that better than the explosion of anti-Rothschild sentiment in the wake of the accident on the Nord railway: while third-cla.s.s pa.s.sengers perished, the critics suggested, ”Rothschild I” callously counted his state-subsidised profits. Another cartoon of 1848 which depicted Rothschild as the object of royal (and papal) veneration also featured, kneeling in the foreground, a ragged, starving family; and in the background a group of students marching under the banner of liberty (see ill.u.s.tration 16.ii). When the Russian revolutionary Alexander Herzen wished to define the bourgeoisie in 1847, he called it ”a solid estate, the limits of which are the electoral property qualification below and Baron Rothschild above.” For Herzen liberalism was propagating a ”malicious irony” when it claimed that ”the dest.i.tute man enjoys the same civil rights as Rothschild,” or that ”the sated is . . . the comrade of the hungry.”

As in the 1820s and 1830s, those who inveighed against the Rothschilds as capitalists could rarely resist making a connection with their Judaism. Typically, Karl Beck too could not resist alluding to ”Rothschild's . . . interest-calculating brethren,” ”filling the insatiable money-bag for themselves and their kin alone!” Nor is it surprising that minor figures like Beck were doing this when the man who would ulti-mately prove the most influential of all the period's revolutionaries had done exactly the same in February 1844 in an essay ”On the Jewish Question” (though at the time, of course, there was little to distinguish Karl Marx from the numerous other radical hacks churning out anti-Rothschild abuse): What is the secular basis of Judaism? Practical Practical need, need, self-interest self-interest. What is the worldly religion of the Jew? Huckstering Huckstering. What is his worldly G.o.d? Money Money . . . We recognise in Judaism, therefore, a general . . . We recognise in Judaism, therefore, a general anti-social anti-social element of the element of the present time present time . . . In the final a.n.a.lysis, the . . . In the final a.n.a.lysis, the emanc.i.p.ation of the Jews emanc.i.p.ation of the Jews is the emanc.i.p.ation of mankind from is the emanc.i.p.ation of mankind from Judaism Judaism.

16.ii: Anon., Anbetung der Konige Anbetung der Konige (1848). (1848).

Marx was not one to name names, of course, when he could couch his argument in Hegelian abstractions. But that he had the Rothschilds in mind is evident from the pa.s.sage he quoted from the pamphlet by Bruno Bauer he was (ostensibly) reviewing: ”The Jew, who in Vienna, for example, is only tolerated, determines the fate of the whole Empire by his financial power. The Jew, who may have no rights in the smallest German states, decides the fate of Europe.” This is no isolated fact [continued Marx]. The Jew has emanc.i.p.ated himself in a Jewish manner, not only because he has acquired financial power, but also because . . . money money has become a world power and the practical Jewish spirit has become the practical spirit of the Christian nations. The Jews have emanc.i.p.ated themselves insofar as the Christians have become Jews. has become a world power and the practical Jewish spirit has become the practical spirit of the Christian nations. The Jews have emanc.i.p.ated themselves insofar as the Christians have become Jews.

Only when society had ”succeeded in abolis.h.i.+ng the empirical empirical essence of Judaism-huckstering and its preconditions” would ”the Jew . . . become essence of Judaism-huckstering and its preconditions” would ”the Jew . . . become impossible impossible.” In fact, the socialist argument could stand unsupported by racial prejudice, as Marx came to appreciate (after all, he himself had been born a Jew, as had Karl Beck); it would be other revolutionaries of 1848 like Richard Wagner who would later develop and refine this line of argument. Either way, the Rothschilds were extremely vulnerable to radical calls for redistribution of wealth and greater regulation of the capitalists/Jews who possessed it. This made the 1848 revolution much more dangerous to them than that of 1830.

Though politically close to Marx at the time of the 1848 revolution, Heine subsequently made fun of the early socialists' motivations. In his last jottings, he wrote: The main army of Rothschild's enemies is made up of have-nots; they all think: ”What we don't have, Rothschild has.” They are joined by the main force of those who have lost their fortune; instead of ascribing their loss to their own stupidity, they blame the wiles of those who managed to hold on to what they had. As soon as a man runs out of money, he becomes Rothschild's enemy.

And he adapted a traditional Jewish story in order to provide James with a possible reply to the socialist threat: ”The communist . . . wants Rothschild to share out his fortune of 300 million francs. Rothschild sends him his share, which comes to exactly 9 sous: 'Now leave me alone!' ” In practice, however, it did not prove quite so easy to see off the threat of expropriation. In his first surviving letter (dated 1843), a young radical named Wilhelm Marr had made exactly the argument satirised by Heine. ”The time is ripe,” he told his father, ”to share Rothschild's property among 3,333,333.3 [sic] poor weavers, which will feed them during a whole year.” The roots of Marr's later Anti-Semitic League lie in the 1840s.

A few voices, as we have seen, were raised to defend the Rothschilds. One ingenious writer in the Paris Globe Globe pointed out in 1846 that ”no one today better represents the triumph of equality and work in the nineteenth century than M. le Baron de Rothschild”: pointed out in 1846 that ”no one today better represents the triumph of equality and work in the nineteenth century than M. le Baron de Rothschild”: What is he, in fact? Was he born a Baron? No, he wasn't even born a citizen; he was born a pariah. At the time of his birth, civil liberty, and even less political liberty, did not exist for Jews. To be a Jew was to be less than a lackey; it was to be less than a man; it was to be a dog that children chased in the street, hurling insults and stones. Thanks to the holy principle of equality, the Jew has become a man, the Jew has become a citizen; and once his intelligence [and] his activity . . . allowed, he could rise within the social hierarchy. What better or more incontrovertible evidence could there be that the principle of equality has prevailed? Yet it is democrats who close their minds and eyes to this spectacle! Nominal democrats, no doubt. Sincere democrats would have applauded this Jew who, beginning at the bottom of the social ladder, has arrived by virtue of equality at the highest rung. Was this Jew born a millionaire? No, he was born poor, and if only you knew what genius, patience, and hard work were required to construct that European edifice called the House of Rothschild, you would admire rather than insult it . . . You tactlessly cite Figaro, without understanding that Figaro was one of the privileged by comparison with M. de Rothschild, since Figaro had only to be born in order to see before him the vast and open battlefield of labour. At his birth, M. de Rothschild found this battlefield closed to him and yet he has, aided by freedom, climbed higher than you. To abuse M. de Rothschild is to blaspheme against equality.

Yet such reminders of the Rothschilds' origins in the Judenga.s.se were rare in the 1840s. Only in England, where the issue of the parliamentary representation of the Jews was to play such an important role throughout the revolutionary period, did it really seem relevant. The continental revolutionaries did not think of the Rothschilds languis.h.i.+ng in the Judenga.s.se, but imagined them luxuriating in chateaus like Suresnes and Gruneburg. In Joseph Eichendorff 's allegorical comedy Liberty and her Liberators Liberty and her Liberators, for example, Amschel is once again satirised in the character of Pinkus, a self-made ”cosmopolitan” (misheard by a page as Grohofpolyp Grohofpolyp) who acquires the t.i.tle of baron and with it a castle and garden. Pinkus cannot abide Nature, preferring to impose strict uniformity (complete with steam engine) on the garden; whereas Libertas wishes to set the plants, birds and animals free. When she tries to do so, Pinkus has her arrested by his ”armed forces”; but the spirits of the primeval forest come to her rescue, throwing Pinkus's repressively ordered garden into chaos.

The Rothschilds were far from oblivious to the animosity they were incurring. Indeed, it might be said that they took positive steps to counteract it by making generous-and ostentatious-charitable gestures. In the very dry summer of 1835, Salomon offered 25,000 gulden towards the construction of an aqueduct from the Danube to the Vienna suburbs. When Pesth and Ofen were badly flooded three years later, he hastened to offer financial a.s.sistance for the victims. He donated 40,000 gulden to found an inst.i.tute for scientific research in Brunn. And when Hamburg was ravaged by fire in 1842 he and James made substantial donations to the fund which was set up to a.s.sist the victims. Before the 1830s the Rothschild brothers' charity had been largely confined within the Jewish communities of Frankfurt, London and Paris. Now Salomon made a point of contributing to causes which were regarded as good by the Habsburg elite. Baron Kubeck recorded in his diary how the elite responded. At a dinner for Count Kolowrat in 1838, Salomon declared expansively that his guest's presence had: ”given me as much pleasure today as if I had been given a thousand gulden, or had given them to a poor man.” Thereupon Count Kolowrat replied, ”Very well, give me the thousand gulden for a poor man who needs help, and has applied to me.” Rothschild promised to do so and after dinner Count Kolowrat was given the thousand gulden.

So frequently did Salomon act in this way that it was possible for a sentimental novella of the 1850s to portray him as a kind of Viennese Santa Claus, benignly siding with a carpenter's daughter who wants to marry her rich father's gifted but poor apprentice. The high point of this mawkish work is a description of the throng of Schnorrer Schnorrer in the antechamber of Salomon's Rennga.s.se residence: the man who claims to be G.o.d's brother-in-law (he is sent packing); the man who wants Salomon to be the G.o.dfather to his child (he gets 50 gulden); and the woman whose five-year-old daughter can recite seventy-two poems from memory (whose reward is not recorded). That they are all drawn to the house of Rothschild is explained not just by his wealth, but by his universally acknowledged wisdom and generosity. At one point, genial old Rothschild even delivers a homily to a young Frankfurt banker on the need for those who are rich to be generous. in the antechamber of Salomon's Rennga.s.se residence: the man who claims to be G.o.d's brother-in-law (he is sent packing); the man who wants Salomon to be the G.o.dfather to his child (he gets 50 gulden); and the woman whose five-year-old daughter can recite seventy-two poems from memory (whose reward is not recorded). That they are all drawn to the house of Rothschild is explained not just by his wealth, but by his universally acknowledged wisdom and generosity. At one point, genial old Rothschild even delivers a homily to a young Frankfurt banker on the need for those who are rich to be generous.

It may well be that this was the way Salomon wished to be regarded. But not everyone who came into contact with him would have endorsed this characterisation. Moritz Goldschmidt's son Hermann-a boy in the 1840s-remembered him as an impetuous, impatient, despot: ”a brutal egoist, a man without wisdom or education, who despised those around him and took the opportunity to treat them ruthlessly [just] because he was rich.” He ate and drank to excess. He was habitually rude to everyone from his barber to the Russian amba.s.sador and surrounded himself with sycophants. He had a lecherous pa.s.sion for ”very young girls,” his ”adventures” with whom had to be hushed up by the police. Above all, Salomon was extravagant. He habitually dressed in a blue suit with gold b.u.t.tons and nankeen or white stockings and, when he needed a new suit or hat, bought twelve at a time for good measure. He drove around Vienna in a luxurious carriage with a liveried servant. In 1847-in the depths of the economic slump-he spent immense sums building a new residence and office in the Rennga.s.se. To be sure, Goldschmidt was looking back in anger when he wrote; but his hostility towards Salomon was probably not so different from that felt by many of his more politically radical contemporaries.

The Frankfurt Rothschilds too sought to allay popular hostility by acts of public benevolence. In May 1847 Amschel distributed bread ration cards to the poor of Frankfurt at a time of acute food shortages in the town. But, although he received ”a unanimous vote of thanks” from the Frankfurt Senate, this does not seem to have done much to enhance his popularity. As his nephew Anselm observed when his uncle raised the possibility of buying British grain for the German market, ”We must be very careful in Germany about corn; there were a great many riots all & everywhere against corn dealers, & if the public would know that we are indirectly interested in corn transactions there might be a burst out [sic] against us.”

Perhaps the most successful gesture of public-spiritedness at this time was made by the English Rothschilds in response to the catastrophic potato blight and famine in Ireland-the worst of all the calamities of the 1840s, which cost the lives of around 775,000 people and drove a further two million to emigrate. Ireland was not a land with which the Rothschilds had many dealings; yet as early as 1821, hearing rumours of an impending famine there, Nathan had alerted Lord Liverpool to the possibility of buying ”American and East India Rice before speculators come into the market, the price of which is at present low and the Stock large and which in case of a deficiency of the Potato Crop would supply the numerous Poor of that Country with a wholesome food during the Winter.” When Peel used the Irish famine twenty-five years later to justify repealing the Corn Laws (thus freeing the import of grain into the British Isles, but also bringing down his own government) the Rothschilds were ambivalent. While Alphonse viewed Peel's conversion to free trade ”without admiration” as an ”utter revolution,” his father ”very much regretted” Peel's fall-though probably more for the diplomatic implications of Palmerston's return to office.

Lionel, by contrast, was a thorough-going Free Trader; but he understood that free trade alone would not alleviate the famine in Ireland, because of the general European cereal deficit. In the absence of a more than half-hearted official relief effort, he therefore took the lead in setting up at New Court the British a.s.sociation for the Relief of the Extreme Distress in the Remote Parishes of Ireland and Scotland, which raised some 470,000 in the course of its existence-even soliciting a contribution from that ardent Hibernophobe and Protectionist Disraeli! The Rothschilds themselves contributed 1,000 to the fund, the second biggest donation after the Queen's 2,000 and on a par with the Duke of Devons.h.i.+re's. In this instance, contemporaries were sincerely impressed by the Rothschild effort. As he declared to a friend, it did the heart of the future Liberal Irish Secretary W. E. Forster ”good” to see ”Rothschild, Kinnaird, and some dozen other millionaire city princes meeting every day, and working hard. A far greater sacrifice to them than mere gifts of money.” Lionel personally involved himself in ”regulat[ing] the purchase and s.h.i.+pment of provisions to Ireland and the formation of depots around the coast and in the interior of the country.” Though it is possible that this activity was partly designed to win Catholic votes at the 1847 election (in which he was a Liberal candidate), his mother's letters on the subject testify to the sincerity of the family's response to the Irish disaster.

The contrast with the Paris house's role is striking. The French food crisis was, of course, far from being as disastrous as the Irish: as Nat wrote in 1847, ”They talk terribly of the misery of the poor devils in the provinces but I don't believe it approaches that of Ireland-it cannot be compared to it.” Nevertheless, the 1846 wheat harvest was an exceptionally bad one: 15 per cent lower than the average of the previous ten years, it was the worst since 1831. James first began purchasing grain as early as January 1846 in antic.i.p.ation of a bad harvest throughout Europe. A year later he was urging the French government to make purchases of Russian grain, and in the spring of 1847 he offered ”to buy abroad 5 millions of francs worth of corn and flour for the consumption of Paris at our risks & peril and in the event of any loss accruing we s[houl]d bear it & the profit to be distributed in bread tickets to the poor.” Besides being philanthropic, James genuinely feared the social and political consequences of food shortages: as he told his nephews in November 1846, ”[T]he situation with our grain, which really isn't good, does scare me a lot.” For this reason, there is no doubt that he wished to be seen to be alleviating distress-Salomon wrote explicitly of ”making our name popular” with ”the ma.s.ses” by providing cheap bread and salt.

Yet James had meant the grain purchases only to be non-profit-making; he had not intended to lose money outright. His a.s.sumption in early 1847, for example, was that prices would remain high; and when the improved harvest that year partly confounded that expectation he and Nat could not conceal their annoyance. ”There never was anything so stupidly managed as this corn operation,” grumbled Nat: ”to buy up all the corn in the world & to get it just as the harvest is coming on, we shall lose a great deal of money & in future we shall be more careful.” This may partly explain why James received little if any credit from ordinary consumers in Paris. As Nat had predicted, ”I fancy the philanthropic feelings of our good Uncle will cost a little money. If people don't attribute a wrong motive it will be all very well & charitable, but in Paris where n.o.body can imagine anything done disinterestedly I should not be surprised if it were said we do it for the sake of getting rid of what we have got at very high prices.” Violence of the sort which broke out in the faubourg Saint-Antoine in May 1847 was partly directed against grain merchants; James was widely perceived to have acted as little more. Indeed, it was rumoured that Rothschild bread was laced with ground gla.s.s and a.r.s.enic. Here perhaps was the origin of Heine's imagined Rothschild nightmare: ”He dreams he gives 100,000 francs to the poor and becomes ill as a result.”

What made the agrarian crisis doubly worrying for the Rothschilds was its impact on the European banking system. All countries which found themselves obliged to import grain from relatively remote markets like Russia and America experienced a drain of gold and silver which had a direct impact on their monetary systems. The most dramatic case was that of Britain. The effect of the s.h.i.+ft to free trade was to increase immensely the import of corn to Britain, from 251,000 tonnes in 1843 to 1,749,000 tonnes in 1847. The success of Peel's policy was thus not in reducing the price of bread, but in averting what would have been a very substantial price increase if the Corn Laws had remained in force. But the policy had an unexpected side-effect on one of Peel's other great legislative achievements, for it forced the suspension of the Bank Charter Act of 1844. It did this because the act had reinforced the link between the Bank of England's gold reserve and the British money supply. As corn imports flooded in and gold flooded out, so the reserve dwindled: from 15.8 million in 1844 to 9.8 million four years later. The Bank was obliged to increase its interest rates in steps from 2.5 per cent (March 1845) to a peak of 10 per cent (October 1847), thus causing a drastic monetary squeeze and finally forcing suspension. No other European economy permitted such a large outflow of specie; but Britain's financial dominance of the continent at this period ensured that the contraction was felt everywhere. Only the grain exporters were spared, which partly accounts for the very different Russian experience in this period.

First to suffer was Frankfurt. As early as April 1846 Anselm reported: ”The volume of business in Frankfurt is more and more shrinking, without a downpour of gold from heaven, I do not know how this place can recover”-a verdict echoed by James when he visited in July. Soon came the inevitable casualties, this time uncomfortably close to home. In 1847 the house of Haber collapsed, threatening to take with it the Beyfus brothers' bank. As two of Mayer Amschel's daughters (Babette and Julie) had been married to the Beyfuses, it was felt necessary to bail them out-to the tune of 1.5 million gulden-though this was done with extremely bad grace. The younger generation in London and Paris had little time for ”old Mad Beyfus.” ”If we are to pay because they chose to swindle,” complained Nat, ”the Lord knows to what interest they may draw upon our cash box . . . the only regret I experience is that our worthy relatives have thought it fit to come to their a.s.sistance.” In fact, it seems to have been James who insisted on rescuing ”so near a relation,” despite the grumblings of Amschel, Salomon and Carl-a good ill.u.s.tration of his ultimate leaders.h.i.+p on familial matters at this time. Yet the fall of the Habers-to whom the Beyfuses were also related by marriage-attracted much more attention than the survival of the Beyfuses. Once again, there were articles in the press ”attributing to us the ruin of . . . German industry.” ”These attacks were so violent,” wrote Anselm, ”that we found ourselves compelled to answer these libels by a declaration signed by us and inserted in the princ.i.p.al papers of Germany.” In the Bade nese parliament, a liberal deputy denounced the Rothschilds in terms which, Anselm reported, ”aimed at nothing less than mobilising the ma.s.ses in a religious crusade against our House, representing it as a vile monetary power . . . sitting [on] . . . all the kings, all the peoples.” It was even alleged that Lionel had agreed to bankrupt South German industry in return for a promise from Palmerston of a seat in the House of Commons.

Banking crises have a domino effect: the problems of Haber served to exacerbate the difficulties of one of the major Vienna banks, Arnstein & Eskeles. Trouble had been brewing in the Vienna market since early 1847, prompting Metternich to request Salomon to return urgently from Paris ”to contrive some plan which would ward off the crisis of the market.” By the end of September it seemed that he had succeeded in ”averting” an ”immeasurable calamity.” However, the failure of Haber proved to have potentially disastrous implications for Eskeles, whom he owed 1 million gulden. It may be that Salomon was already heavily committed to Eskeles, with whom he had acted in close partners.h.i.+p for many years in issuing Austrian government bonds. Alternatively, he felt morally bound to intercede on his behalf. At any event, he informed the Frankfurt house on December 23 that Eskeles had visited me a few hours ago and most frankly informed me that at present he does not need anything, however as soon as he does, he is in a position to transmit mortgages as a security to the full amount. I have in my portfolio 1,520,000 gulden drafts upon Eskeles of which 1,185,000 gulden are of Haber, the remaining with good endors.e.m.e.nts.

In effect, he and Sina had agreed to bail Eskeles out, just as Salomon had wanted to rescue Geymuller six years previously. This time, however, Salomon had acted without consulting his brothers (remembering perhaps their refusal to agree to the Geymuller rescue). Naturally, he hastened to rea.s.sure them that there was no risk involved and that Sina was ”caution itself.” He urged Anselm to remain ”calm”: ”With G.o.d's help we shall remain the Rothschilds.” If his brothers-and son-suspected that a grave mistake had been made, Salomon had no inkling. The full gravity of his error would become apparent within the month.

In Paris, the Banque de France faced a ”crisis in the supply of money” (James) from as early as October 1846. On previous occasions (in 1825 and 1836-9), it had been the Banque which had come to the a.s.sistance of the Bank of England; now the Bank repaid the debt by selling its counterpart silver worth 25 million francs. As in the 1830s, Rothschild attempts to play a part in this transaction were abortive: although James made a personal visit to London in December, the business was finally arranged by Hottinguer, and James's subsequent offer of an additional 5 million francs was rejected by the Banque Governor d'Argout. The bad blood between New Court and Threadneedle Street since Nathan's death had yet to be purged.

Nor was Lionel successful in his attempts to mediate between St Petersburg-rich in bullion from Russian grain exports-and the Banque de France. Benjamin Davidson was packed off via Riga to the Russian capital with several carriages filled with gold, apparently with the intention of establis.h.i.+ng a new agency. But his expedition was a failure. Having endured a gruelling journey on snow-covered Russian roads, Davidson found himself effectively unable to do business as a foreign Jew. When the Russian government came to the Banque de France's rescue by buying 50 million francs of rentes from its securities reserve, the Rothschilds were mere onlookers. In fact, the 1846-8 crisis proved a remarkably good opportunity for the Banque to enhance its power over the French monetary system: it was not sorry to see the collapse of Laffitte's ambitious Caisse Generale, nor that of the various regional banks of issue Laffitte had encouraged in his time as Banque Governor. Nat summed up Rothschild feelings towards the Banque at this time succinctly: ”They are a set of s.h.i.+ts & behave to us as badly as possible, but it is not [in] our interest to quarrel with them.”

The position was not very different in London. As James put it in April 1847, with Bank rate climbing inexorably upwards, ”Your Bank is the Master and driver of the situation. It is in a position to press its will on the world and so gold will have to be sent back.” Yet the Chancellor of the Exchequer, Sir Charles Wood, was less confident that the Bank would be able to master the crisis without breaching its legal gold reserve requirement. He and the Prime Minister were singularly unimpressed when they sought Lionel's views on the matter. As Wood told his confidant, Samuel Jones Lloyd, ”I saw at Lord John [Russell]'s, Lionel Rothschild & [Joshua] Bates [of Barings] this morning & (low be it spoken) I am utterly confounded at the ignorance they displayed, of facts & circ.u.mstances which I should have thought every merchant in the City must have known. They really had little or nothing to say for themselves, & admitted that things were proceeding rapidly.” If Nat's views give any indication of what Lionel said, the Rothschild position perhaps struck Wood as politically naive. The Bank's policy, he wrote, was ”illiberal-I must say I can not understand their policy, they do all in their power to stop trade & the country will pay very dear indeed for their gold.” Wood knew that; what he wanted to know was how to suspend the 1844 rules without acquiring the reputation of a Vansittart. When he turned for advice (and whitewash) to the architect of the Bank Charter Act himself, Peel agreed that Lionel was not among ”those who really understood the question of currency, whose prepossessions were in favour of the principles on which the Bank act was founded-and in favour of the Bank act itself.” It was, Peel told him, not ”Rothschild, Masterman, Glyn and the leading men of the City-but . . . those with whom he had conferred in private [who] were the very persons . . . deserving of his confidence in the matter, Jones Lloyd, W. Cotton, Norman and the Governor of the Bank.” This bipartisan depreciation of Lionel's expertise testifies to the Rothschilds' loss of influence over monetary policy since Nathan's death.

Deflationary monetary policies had direct effects on European industry. For the Rothschilds, it was their impact on the French railway companies which was most troublesome. It was not that railway investment and construction ceased: to the extent that these were pre-programmed by political and commercial decisions taken before the crisis, the problem was more that they were difficult to stop.1 The strain was therefore taken by the railway companies' bankers and investors: as work proceeded, the banks found themselves being asked for loans to finance the inevitable cost overruns, while investors could only watch gloomily as the monetary squeeze drove down railway share prices. In truth, James had been over-optimistic, just as his English nephews had feared. On the very eve of the crisis, he and his son had confidently a.s.sured their relatives that, in addition to their economic benefits, the railways tended to make people politically ”conservative and pro-government” too. ”Every thing is calm in France,” Alphonse told Mayer Carl in January 1846, ”there is a strong majority for the administration. Industrialism and the railroads absorb all thoughts and divert from politics. Please G.o.d that we may enjoy for many years to come the blissful peace.” Within a matter of months they were singing a different tune. ”Well,” James confided in Anselm that August, ”I must admit that when I think about the many commitments that the world has taken upon itself for the payments to be made everywhere for the railways, money which will not so quickly return into the hands of the business people, then I find myself trembling.” By October, he was having to reschedule payments due to the government for the Nord concession and to intervene to prop up the share price. The strain was therefore taken by the railway companies' bankers and investors: as work proceeded, the banks found themselves being asked for loans to finance the inevitable cost overruns, while investors could only watch gloomily as the monetary squeeze drove down railway share prices. In truth, James had been over-optimistic, just as his English nephews had feared. On the very eve of the crisis, he and his son had confidently a.s.sured their relatives that, in addition to their economic benefits, the railways tended to make people politically ”conservative and pro-government” too. ”Every thing is calm in France,” Alphonse told Mayer Carl in January 1846, ”there is a strong majority for the administration. Industrialism and the railroads absorb all thoughts and divert from politics. Please G.o.d that we may enjoy for many years to come the blissful peace.” Within a matter of months they were singing a different tune. ”Well,” James confided in Anselm that August, ”I must admit that when I think about the many commitments that the world has taken upon itself for the payments to be made everywhere for the railways, money which will not so quickly return into the hands of the business people, then I find myself trembling.” By October, he was having to reschedule payments due to the government for the Nord concession and to intervene to prop up the share price.