Part 15 (2/2)

While Nat savoured his own vindication, James's response to the crisis was to concentrate Rothschild attention on the Nord and extricate himself from the other lines in which he had a smaller interest. ”If,” he told his nephews, ”we can't a.s.sume that when the railways draw monies from us we will then be able to get it back again, then I view the situation as being potentially very dangerous.” Accordingly, when ”that blackguard fellow Talabot” requested additional funds for work on the Avi gnon-Ma.r.s.eille line, he was roundly rebuffed. Shares in other companies were also sold off. Nor did James commit more money of his own to the Nord: when the company required new funds for construction, he appealed directly to shareholders. Like so many malcontents in 1847, the Rothschilds themselves blamed the government for their problems. ”The gov. must change their manners of doing business,” complained Anthony, ”they have completely ruined their credit by the manner that they have behaved to the Railroad Companies. You can have no idea how every person cries out about losing their money & they all attribute it to the gov. & certainly they are very much to blame.” Of such grievances, multiplied a thousand-fold, are revolutions made.

The paradox was that even as they grew more and more disgruntled with the European governments' economic policies, the Rothschilds continued-as if reflexively-to act as their lender of first resort. The transmission mechanism which linked the economic crisis of 1847 to the political crisis the following year was fiscal. All over Europe, the combination of rising expenditures (first on railways, then on social palliatives, finally on counter-revolutionary measures) and falling revenues (as earnings and consumption slumped) led inevitably to government deficits. Between 1842 and 1847, for example, the Austrian budget rose by 30 per cent. So deeply ingrained was his habit of lending to the government that, when he was approached for a new loan of 80 million gulden in February 1847, Salomon ”thanked G.o.d” for ”an extremely good business.” It was to prove anything but that. Along with Sina and the ailing Eskeles, he had taken on 2.5 and 5 per cent bonds worth 80 million gulden (nominal), in return for which the bankers had to pay the government 84 million in cash in instalments spread over five years. This would have been a good business only if five years of peace and prosperity had been at least probable.

Ostensibly, this loan was needed to finance new railways: that was what Salomon told Ga.s.ser when he tried to sell ”a considerable sum” of the new bonds to the cash-rich Tsar. By November 1847, however, Austria was arming in preparation for intervention in Lombardy and Venetia, where insurrection seemed imminent. Salomon knew this because Metternich had told him, yet instead of being alarmed, he went so far as to offer more financial a.s.sistance. Incredibly, he agreed to lend a further 3.7 million gulden in return for 4 per cent bonds, which he furthermore pledged not to sell on the already stretched market: they would, he promised Kubeck, remain ”in his own safe,” in return for interest of 4.6 per cent. With short-term rates in London at this time standing at 5.85 per cent and the price of 5 per cent metalliques already ten points lower than they had been three years before, this was an extraordinary (not to say suicidal) decision. Even as Salomon's proposal was being discussed, Kubeck was warning that intervention in Italy would lead to ”the complete breakdown of our finances.” ”We are on the verge of an abyss,” he told Metternich presciently, ”and the increasing demands on the Treasury arising out of the measures necessary to combat foreign revolutionary elements have led to increased disturbances within the country, as is indicated by the att.i.tude of the provincial Estates, and by the literary outbursts in the Press of our neighbours.” Metternich was undaunted. When Salomon began to get cold feet in January, he angrily told him: ”Politically, things are all right; the exchange is not. I do my duty but you do not do yours.”

As with his advance to Eskeles, Salomon's undertakings to the government were made without reference to the other Rothschild houses. ”We have very curious letters from Vienna,” Nat wrote to New Court at around the same time. ”Our good Uncle is full of Austrian Metallics 2[.5]% & 5% & how he will get out on such markets the Lord knows-Prince Metternich takes our good Uncle in so that he may continue his financial operations, I fancy the F'furt house will find a little difference in their balance the next time they make it up.” This was to prove a serious understatement. When the first efforts were made to compute Salomon's commitments in February 1848, the total approached 4.35 million gulden (around 610,000). That was more than double the capital of the Vienna house in 1844. Notionally, as Nat suggested, the Frankfurt house remained responsible for its Vienna branch; but it too had been acc.u.mulating the bonds of other German governments in the course of the 1840s, notably those of Wurttemberg and Hanover, and there was talk of a new loan to Prussia as late as March 1848! When Anselm finally arrived from Frankfurt to set the Vienna house in order, he was in no mood for filial generosity. His relations.h.i.+p with his father was to be one of the first Rothschild casualties of 1848.

French spending had also been rising steadily. By 1847 the budget was 55 per cent higher than it had been twelve years before, not least because of the various state subsidies to the railway companies. As early as the autumn of 1846 there was talk of a loan to fund the government's deficit; by the summer of the following year the difficulty of placing treasury bills on the struggling money market made such a new issue of rentes imperative. Needless to say, the Rothschilds had no intention of leaving the business to others, despite the periodic anxieties of James's nephews about French financial stability. As in Vienna, so in Paris: government loans had become a matter of course, regardless of economic conditions. True, James drove what seemed to be a hard bargain. The terms he secured looked generous: of the 350 million francs nominal to be raised, the Rothschilds took 250 million in the form of 3 per cent rentes priced at just 75.25, some two points below the market price. Indeed, his rivals could with justice have complained of double-dealing. It seems likely that the auction of the new rentes was rigged by the Finance Minister so that James's bid was exactly equal to the Minister's supposedly secret minimum. As Nat candidly told his brothers beforehand, Dumon had ”let the cat out of the bag”: ”[He] said he could not commmunicate his minimum as it was necessary for him to be able to state in the Chamber that his sealed letter had remained a secret for every body, but on pourrait se mettre a peu pres d'accord on pourrait se mettre a peu pres d'accord.”

Yet Nat was fundamentally right to regard the loan as ”a most dangerous & disagreeable concern.” James was less rash than Salomon, but he did not follow his bearish nephews' chorus of advice to ”get out of our loan famously.” Some of it was sold to investors ranging from the Tsar to Heinrich Heine. But not all of it. According to a number of accounts, he decided to sell only a third at once to the market, holding on to the remaining 170 million francs in the expectation that the price of 3 per cents would rise above 77. Meanwhile, of course, James had bound himself to pay the Treasury 250 million francs in instalments spread over two years. It was to prove another expensive miscalculation.

In England too there was an ill-judged loan on the eve of the storm. The 8 million so-called Irish Famine Loan of March 1847 was raised ostensibly to finance the cost of aid to Ireland, though it may reasonably be a.s.sumed that there were other reasons for the government's deficit in this period. The combination of Britain's unique credit-rating and the good cause supposedly being funded boded well, and Rothschilds and Barings-who shared the underwriting equally-had no difficulty in finding buyers. Indeed, James himself complained about being given only 250,000. Yet the price quickly fell from the issue price of 89.5 to 85, much to the consternation of the investing public and the embarra.s.sment of the underwriters.

Even in Italy, where the revolution may be said to have begun, the Rothschilds toyed with the possibility of state loans in 1846-7. In Naples, Carl appears to have been keen to agree a loan to the government, and was saved from doing so only by the Bourbon regime's own chronic indecisiveness. In Rome too there was talk of a loan. After the advances which had been made on the basis of Rothschild loans in the 1830s, the finances of the Papacy were once again in disarray: the deficit for 1847 was double that of the previous year and Roman 5 per cents dropped below par for the first time since 1834. Yet James had been intrigued by the election of Pius IX in 1846-”supposedly a liberal,” as he rather acutely put it-and he ordered a halt to sales of Roman bonds in the expectation of ”some really positive changes.” This probably referred to the position of the Jewish community in Rome, whose case for better treatment Salomon once again took up. Only a stark warning from their new Italian agent Hecht ”who represents the state of the Papal domains in the blackest colours & thinks that a revolution is at the eve to break out [sic]” deterred the Rothschilds from taking up Torlonia's proposal of a new loan. When Adolph visited the Holy City in January 1848, he was unnerved by the combination of political debate and military preparation he encountered. For the same reason, the London house's amazingly ill-timed suggestion of a loan to Piedmont-in January 1848!-was thrown out by Alphonse, who pointed out gently that this was ”a country which can be considered as . . . already in full revolution.” The only other country whose request for a loan was turned down at this time was Belgium-ironically, one of the countries least affected by the revolutionary upheavals which were about to begin.

”The Worst Revolution That Ever Happened”

To say that the 1848 revolutions began in Italy is perhaps not strictly true: civil wars in Galicia and in Switzerland were harbingers of the cataclysm, as were the abortive United Diet (Landtag) summoned-in conformity with the 1819 State Debt Decree-by Frederick William IV in Berlin in 1847, and the stirrings of liberal enthusiasm in South Germany. But, though they followed these events carefully, the Rothschilds were not worried by them. Indeed, the annexation of Cracow by Austria looked like just another Polish part.i.tion: as on previous occasions, ”the poor Poles” were ”very much to be pitied.” ”I suppose lots of them will be shot,” remarked Nat dispa.s.sionately; his uncle Salomon's sole concern was that foreign governments should not challenge the Austrian move. It was the outbreak of an artisans' revolt in Sicily in January 1848 and the granting of a liberal const.i.tution by Ferdinand II which made the Rothschilds for the first time afraid. It was, commented Nat, ”stinking news” (which the Rothschilds were, as usual, the first to hear).

Yet he and the rest of the family continued to think primarily in diplomatic terms, wondering whether the Neapolitan crisis would harden the Austrian resolve to intervene (something Salomon anxiously denied). In his letters to Lionel and Alphonse, Anselm joked about Adolph's hand shaking as he wrote his letters, suggesting that he shared his father's nervous, not to say pusillanimous temper. But this was just banter. Carl's initial reaction in fact suggests sang-froid: as early as February 19 he was once again discussing the possibility of a loan to the Bourbon regime. When Anselm commented on liberal attacks on Ludwig I's government in Munich, he little realised how soon his diagnosis would apply to all Europe: ”That is the way it is, alas: in the highest politics just as in the most lowly social relations, the people imposes its will and dictates the law to the higher power.” He could still hope that ”the unrest there” would ”soon pa.s.s”-and with it the slump in the price of the Rothschilds' ”low loans.”

As in 1830, it was the outbreak of revolution in France which turned disquiet into panic. Of course, the Rothschilds had never had unqualified confidence in the July Monarchy. The death of Louis Philippe's eldest son in 1842 had reinforced their pessimism about the future: the King himself confided ”that after his death . . . the Revolution of 1830 would begin again.” ”I a.s.sure you it has given me the stomach ache,” commented Anthony uneasily. ”I do not think that there is any danger as long as the present King lives-but what will take place after his death G.o.d knows & I hope to G.o.d that the good old gentleman will live for a mighty time and that everything will go on well-nevertheless we must be prudent.” This explains the Rothschilds' fear of a successful a.s.sa.s.sination attempt against the King. When James himself received a death threat in 1846, he pa.s.sed the letter on to the government, remarking: ”The man who wants to shoot at me could just as well shoot at the King, or vice versa.” When Louis Philippe survived yet another attempt on his life the following April, Nat p.r.o.nounced him ”one of the most admirable men that ever existed.”

The growing extra-parliamentary pressure for electoral reform in the course of 1847, however, raised the possibility that 1830 might repeat itself even with Louis Philippe still living. Nat's reports from Paris in January and February 1848 show that he saw the crisis coming: ”[G]ood folks speak exactly as they did just before the revolution of 1830,” he remarked on February 20, two days before the fateful Reform banquet was scheduled to take place, in defiance of a government ban.

I think a change of ministry wd. remedy the evil but in the mean time it is impossible to say what will occur-no one can tell how a french mob will behave & when the [president?] of the chamber of deputies a.s.sociates with the common people it is a hazardous thing to say how far they will go and when they will remain quiet-We must hope for the best, in the mean time my dear Brothers, I really recommend you most strongly to sell stocks & public securities of all sorts and descriptions.

Yet the very next day he was more optimistic: The nasty banquet continues exciting the public . . . It is really very much the same sort of thing as in 1830 & nevertheless I can not help thinking it will all blow over and leave us [far?] behind.-This country is so well off and in general people are so greatly interested in the maintenance of things that I believe a revolutionary movement [to be] out of the question . . . The end will be a change of ministry & Guizot will in all probability go out on the Parliamentary reform question.-I shall be very glad when that takes place, it wd. make our rentes get up and set matters right again.

”I have however no doubt that as soon as the affair of the banquet is over we shall see a great improvement,” he added in another letter. ”All our friends a.s.sure us there is no need of anxiety on acct. of any revolutionary demonstration on the part of the dep[utie]s of the Gauche-in my opinion their banquet will be a complete failure.” ”People have much too great an interest at stake in the maintenance of order to kick up rows,” he concluded in his final despatch before the date set for the banquet, ”& I don't think that emeutes will be again a l'ordre du jour at least p[ou]r le moment-” The temperamental pessimist had picked the worst possible moment to look on the bright side.

Even in his letter of February 23, with barricades in the street and signs of mutiny in the National Guard, Nat still underestimated the gravity of the situation, hoping nervously that a change of ministry would suffice to dampen unrest: The ministry has changed, Guizot has just declared in the chamber of Depts. that he had sent in his resignation to the king and his majesty was at the present moment closeted with Mole-We must hope that between them they will cook up a good government but it is a dangerous experiment to yield to the wishes of a factious minority and of a turbulent set of national guards-The great fault was in not sending off Guizot sooner, the people had got up the reform cry and it is impossible to resist public opinion any where nowadays.-The emeute in itself was not of a very serious nature, very little real fighting and few if any killed-but what really made the king anxious was the manifestation of the national guard in favour of reform and against Guizot . . . The emeute by all accounts is over, now they have got reform I do not see what they have got to fight for & I suppose we shall hear of illuminations and the Lord knows what else. I know one thing and that is your humble servant will not hold much French stock in future . . . [I]t's a dangerous job to give way to a mob incited by the National [Guard].

This must have been written just hours before the fateful confrontation in the rue des Capucins, in which fifty demonstrators were shot dead by soldiers guarding the Foreign Ministry. The next day, in the face of what he called ”a moral uprising,” Louis Philippe abdicated in favour of his grandson and fled to England, leaving the various opposition parties to form a provisional government, including the lawyer Alexandre Ledru-Rollin, the poet Alphonse de Lamartine, the socialist Louis Blanc and a token worker named Albert. The following day a commission was set up in response to unemployed building workers' a.s.sertion of their ”right to work.” Nat's next despatch was short and to the point: ”We are in the midst of the worst revolution that ever happened-You may perhaps see us shortly after this reaches [you].” Already he and James had sent their wives and children to Le Havre to take the next s.h.i.+p to England.

Events in France were shaped as much by the memory of past revolutions as by anything else. Those who recalled how little had been achieved in 1830 were determined to establish a republic on a more authentically democratic basis; those still frightened by memories of the 1790s were determined not to let power into the hands of neo-Jacobins. The issue was undecided until, at the earliest, the end of June. Although the elections to the Const.i.tutional a.s.sembly revealed the limited support for radical republicanism outside Paris, the possibility of a ”red” coup within Paris could not be ruled out. In May this was attempted unsuccessfully by the socialists Raspail, Blanqui and Barbes. In June the closure of the national work-shops led to clashes between disillusioned workers and National Guardsmen. As late as June 1849, the so-called Montagne party took to the streets in a last vain bid to rekindle the Jacobin spirit.

The pattern was roughly similar almost everywhere the revolution broke out. Although relatively few monarchs were definitively deposed by the revolution, a number were prompted to flee their capitals and most were forced to make const.i.tutional concessions by the outbreak of violence in the streets, which exposed the inadequacy (or unreliability) of their civilian police forces. This collective scuttle meant that a variety of const.i.tutional innovations were possible, ranging from French republicanism (also tried in Rome and Venice) to parliamentarism (in many German states). In the Netherlands, a centre of revolution in 1830, the Dutch and Belgian monarchs hastily gave ground to liberal pressure and allowed const.i.tutional reforms to be implemented; the same was true in Denmark. In Germany, the revolution began in Baden, where the Grand Duke was forced to concede a liberal const.i.tution almost immediately after the Paris events, an example followed in short order by Hesse-Ka.s.sel, Hesse-Darmstadt and Wurttemberg. In Bavaria, King Ludwig was forced to abdicate, his reputation irreparably damaged by his liaison with Lola Montez. Such changes within the monarchical system did not satisfy more radical republicans, who attempted a coup in Baden in April. The tremors were felt even in the Rothschilds' home town: contrary to Anselm's expectations, 1848 posed a threat to ancient republics like Frankfurt too if their definitions of citizens.h.i.+p were over-narrow and their governmental structures antiquated. The first violence in the town centre occurred in early March.

Everywhere there seemed to be two (possibly successive) revolutions: one of which aimed at const.i.tutional reform, the other of which had fundamentally economic objectives. Though they overlapped in complex ways, there was a marked social difference between the two. While educated academics, lawyers and professionals made speeches and drafted const.i.tutions, it was artisans, apprentices and workers who manned barricades and got themselves shot.

Perhaps the biggest difference between 1848 and 1830 was that now the revolutionary epidemic spread to Austria. Metternich received the news of the Paris revolution from a Rothschild courier. ”Eh bien, mon cher, tout est fini,” he is said to have commented, though his subsequent remarks to Salomon were more bullish. It was indeed all finished. On March 13 crowds of demonstrators clashed with troops outside the hall where the Lower Austrian Estates were meeting. The next day Metternich resigned, fleeing by a circuitous route across Europe in disguise and with barely enough money-a credit-note from his faithful banker Salomon-to pay his family's pa.s.sage to England. The Emperor Ferdinand replaced him with his arch-rival Kolowrat and promised a const.i.tution. As elsewhere, when the new government opted for an English-style bicameral parliament with a property franchise for the lower house, radical democrats-mainly students like Hermann Goldschmidt's maverick cousin Bernhard Bauer-took to the streets (May 15), prompting the Emperor himself to flee to Innsbruck. When the Const.i.tuent a.s.sembly proved quite conservative (the peasant deputies were satisfied with the abolition of serfdom) and the revolutionary government tried to reduce the money spent on public works, there was further unrest: workers went on strike in July, and students attempted a last-ditch coup in October.

The collapse of Habsburg authority at the centre set off a chain reaction throughout Central Europe. In Prussia, unrest had already begun in the Rhineland, but it was the news from Vienna which transformed the mood in Berlin. On March 17, after days of public demonstrations, Frederick William IV appeared to capitulate by agreeing to a const.i.tution, but simultaneously deployed troops to restore order. As in Paris, it was shots fired by nervy soldiers at demonstrators in the city centre which turned reform into revolution. For more than twenty-four hours fighting raged; then the King gave in, issuing a series of proclamations to Berliners, Prussians and-significantly-”the German nation.” As in Baden, Wurttemberg and Hanover, liberals became ministers, though all those who accepted office soon came to realise the difficulty of reconciling their aspirations for economic and political liberty with the more radical aims of the artisans, students and workers. For a time, the best hope of unity appeared to be nationalism. Thus, from an early stage, the German revolution was more than merely a matter of const.i.tutional reform within states: it promised a parallel transformation of the German Confederation itself.

The ramifications of the Habsburg collapse were not confined to Germany. In Prague, moderate liberals like Frantisek Palacky pressed for a modern parliament based on a property franchise in place of the antiquated Bohemian Diet. In Hungary, Croatia and Transylvania there were similar separatist tendencies with varying degrees of liberalism. It was the same in Italy, though the timing was slightly different. As we have seen, the revolution in the Two Sicilies had begun early: on March 6 Ferdinand II granted a separate parliament in Sicily and was shortly afterwards deposed there; two months later he allowed a parliament to a.s.semble in Naples itself. In Piedmont and the Papal states, Charles Albert and Pius IX made similar concessions, both granting const.i.tutions in March. In Venice and Milan, revolution took the form of revolt against Austrian rule. As in Germany (though on a smaller scale), some revolutionaries saw the opportunity to make Italy more than merely a geographical expression.

Why did 1848 seem ”the worst revolution that ever happened” to the Rothschilds? It is important to notice that their reaction was not determined by a uniformly ideological aversion to liberal or republican forms of government. Att.i.tudes towards the revolution varied widely from one member of the family to another. At one extreme, Salomon seemed almost incapable of comprehending the calamity which had befallen him other than in religious terms. When not trying to justify his own financial mistakes in rambling letters to his brothers and nephews, Salomon interpreted the revolution variously as an avoidable political mishap attributable to the incompetence of Louis-Philippe, the vanity of Princess Metternich and the irresponsibility of Palmerston, and a world-historical upheaval on a par not just with 1789 but with the Peasants' Wars, the Crusades and a biblical plague of locusts. Whichever it was, he regarded it as a divine test of religious faith.

His nephew Nat lacked this consolation. Already more politically conservative and personally cautious than his brothers in London, he was deeply traumatised by the revolution-to the point of suffering something like a physical or nervous collapse. A worse ”political cholera never yet infected the world,” he lamented, before repairing to take the waters at Ems, ”& I am afraid the Doctor does not exist to cure it, a great deal of blood must be shed first.” Virtually every letter he wrote to his brothers during the revolutionary months concluded with a warning to sell all their stocks and shares.

No one else in the family took the revolution quite as badly. Neither Amschel nor Carl seems to have reflected deeply on the subject: for them, the revolution was like a natural disaster-inexplicable, but with G.o.d's blessing survivable. The ideas of the revolution were beyond their ken-Carl dismissed talk of Italian nationality as ”the stupid projects of a few deranged minds”-and as far as possible he and Amschel sought to keep their distance from political debate. Similarly, the pageantry of nationalism-the tricolours, the patriotic songs-left the older Rothschilds stone cold. A contemporary cartoon depicts a puzzled Amschel asking Arnold Duckwitz, the ”Reich Trade Minister” appointed by the Frankfurt parliament in the summer of 1848 (on the optimistic a.s.sumption that a new Reich was in the making): ”Nothing to trade yet, Mister Minister?” (see ill.u.s.tration 16.iii). It was probably right to imply that he was baffled by the protracted and inconclusive debates in the parliament. James, by contrast, had a good idea what the revolutionaries were after. Increasingly of the opinion that all regimes were at once unreliable and financially biddable, he was inclined to salute whichever flag was run up the mast after the storm. His refusal to let Alphonse serve in the National Guard, for example, was more an a.s.sertion of the primacy of family interests over all politics than an explicitly anti-republican gesture. James shed no tears for Louis Philippe.

This pragmatism was to some extent shared by the four eldest sons, Anselm, Lionel, Mayer Carl and Alphonse, who already tended to take a similar, sober view of political developments. Unlike James, however, they all occasionally expressed sympathy with liberal reforms, though they distinguished these from the ideas of radical democrats, socialists and communists. Anselm's commentaries on German developments suggest little sympathy with the various kings, princes and archdukes obliged to bow to ”the will of the people,” as well as considerable impatience with the ”old wig-heads” of the Frankfurt Senate. He was interested enough to attend the first debates of the German ”pre-parliament” in Frankfurt before leavi

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