The House of Rothschild (46 page)

British pressure had some effect in Paris: when Lyons delivered his message, General Leboeuf’s demand that reservists be called up was rejected by the council of ministers, and it was decided not to regard Gramont’s demand for a guarantee of non-renewal as an ultimatum. At this point the Rothschilds’ informal mediation appeared to have contributed once again to the maintenance of peace. “Half an hour later,” wrote Gustave on hearing of William’s unqualified endorsement of Leopold’s withdrawal on July 12, “and war would have been declared, although it may not be in accordance with the ideas of the Emperor, who wanted war, but he is obliged to be satisfied with that response. Thus peace is made, or rather the war is adjourned, for I do not believe that relations between the two countries will remain good.” Mayer Carl’s relief was less qualified: “[E]verything is settled in a satisfactory manner and the dreadful calamity of a European war is spared. Thank God for that ...” Disillusionment the following day was profound; and they had no doubt where the blame lay. On the very day war broke out, Gustave raised the possibility that France might revive her earlier designs on Belgium. Nothing did more to discredit the French case in London.

The financial consequences of the crisis have been neglected by historians but deserve attention; for they too help to explain British non-intervention. In the first months of the war, German and French financial markets were more or less equally affected. Things were bad in Paris: the price of rentes had begun to slide as soon as the news broke of the Hohenzollern candidature, from 74.83 on June 4 to 71.25 on July 9; the outbreak of war saw a sharp fall to 67.05. But these figures were little different from those in Frankfurt and Berlin, where the recently issued Prussian 4.5 per cent bonds slumped from 93.5 to 77.3—if anything, the German crisis at the outbreak of the war was worse. Though the flight for liquidity was enough to plunge a number of banks on both sides into difficulties, the Rothschilds were more or less untroubled. Apart from a substantial sum (35 million francs) owing to Russia, the French house seems to have had relatively few problematic liabilities, and the Frankfurt house almost none. Even if he had missed a Bismarckian hint, Mayer Carl had “taken [his] precautions in time.” As accurate news of the first French reverses at Spicheren and Froeschwiller filtered back, of course, it was the French market which collapsed, while the German markets rallied. The British market, by contrast, was barely affected throughout: the biggest fall was 3.6 per cent between May and August 1870. The contrast with 1866, when the war between Austria and Prussia coincided with an acute financial crisis in London, is marked. (What seems to have happened in 1870 is that French capital began to flow to London from a fairly early stage in the conflict—one of the best indicators that, for all the government’s rhetoric, there was a vein of pessimism in Paris.) It is not without significance that Gladstone himself bought consols worth £2,500 at a price of 90 on 18 July: a private and well-founded vote of confidence in British non-intervention.
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The English Rothschilds therefore viewed events on the continent with something more like neutrality than had been the case in 1866, when Prussia had seemed the villain of the piece. True, there was a flicker of Francophile sentiment on the news of the French defeat at Sedan, prompted by the presence in London of Alphonse’s wife Leonora; hence, perhaps, Lionel’s request for details of Prussian atrocities and his later role in transferring money raised abroad for French war-wounded and prisoners-of-war. And before Sedan the London house did more for the French war effort than for the Prussian: French purchases of biscuits and salt pork in England were financed by the London house, though the government’s bills were discounted on less than generous terms. In addition, New Court initially offered to subscribe to any French war loan and to send gold if it were required by the Banque de France, though these offers were not taken up as the French government financed the first phase of the war by selling treasury bills on the domestic market. By the time the government brought out a proper war loan in late August, however, the London house was less keen. When the Government of National Defence sought to raise a £10 million loan in London in the autumn of 1870, it was to the minor American firm of J. S. Morgan & Co. that it had to turn.

By contrast, offers from Mayer Carl of Prussian war bonds, which were ignored at the outset of the war, led to talk of a subscription of 1 million thalers by the London house in October. The following month, Hansemann was sent to London to arrange an issue of five-year treasury bonds worth 51 million thalers; the short duration of the bonds was a signal of the intention to impose reparations on France, though not necessarily the extent of any indemnity. Mayer Carl made a persuasive case for Rothschild participation in this operation:

The London house hesitated to be publicly identified with the new loan, but evidently put Hansemann in touch with the Bank of London; Mayer Carl likewise used the Seehandlung as a kind of front for his participation. New Court also helped to replenish the Seehandlung’s silver reserve—one of the main objectives of the loan.

These financial factors partly explain why Britain declined to play the mediating role which the French Rothschilds hoped for. From the outset of the war, Alphonse and Gustave urged the British government to intervene to broker an early peace, hoping that they and their cousins once again could act as the channel for pacific communications. But the only thing which would have prompted such an intervention would have been a French victory, with its implicit threat to Belgium; and once that possibility evaporated Gladstone and his ministers were more or less content to let events take their course. The other potential danger—that Russia and Austria-Hungary would also become embroiled in a “general war”—was never real: Gorchakov and Beust stuck to their policy of non-intervention (agreed as early as September 1869), announcing their neutrality on July 13 and 20 respectively. Even Disraeli’s criticism of Gladstonian inaction was a mere reflex action: he saw no real reason to resist the “German revolution,” and as for saving Napoleon III, had he not just dedicated his novel
Lothair
to the Orléanist duc d‘Aumale? It was especially irksome for Alphonse that
The Times
—whose editor Delane’s friendship with Lionel was well known—came out strongly against France in its early coverage of the war. In particular, the paper’s publication of the draft treaty Benedetti had given Bismarck in 1866 seemed to confirm suspicions that France had designs on Belgium.
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In October 1870 Gladstone himself published an anonymous article in the
Edinburgh Review
in which he declared that the “new law of nations... censured the aggression of France.” There were those who believed that the Rothschilds were responsible when
The Times
changed its tune in the same month, arguing for intervention to prevent the annexation of Alsace and Lorraine. But in truth any Rothschild attempts to find a basis for English mediation were bound to come to nothing. The assumption that the war would be long and indecisive may also have encouraged a policy of wait-and-see in London.
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For the Rothschilds on the continent, neutrality was never an option. Mayer Carl had no hesitation in subscribing 1 million thalers to the initial Prussian war loan; when this public subscription raised only half the 120 million thalers sought by the government—another sign of German nervousness in the early stages of the war—he readily joined the Hansemann-led syndicate to underwrite a further 20.7 million thalers (of which the Frankfurt house took 3 million). Once news of Prussian successes began to reach Frankfurt, he could not resist basking in Bismarckian reflected glory. “I should think that the people at Paris will be rather astonished,” he wrote gleefully after Froeschwiller, “particularly as they most likely did not fancy that the Germans could lick them so easily. Here and all over the country there is a great enthusiasm and I need not tell you that everybody is quite delighted.” “I have not the least doubt,” he wrote a week later, “that the German troops will be victorious and that a durable peace will be made. Meanwhile there is a good deal of business and every one speculates thinking that we are likely to have a great life.”

As the military news got better, so his tone became more strident: “I think that the French have no chance of success,” he exclaimed on August 27, “and will learn to know what it is to compete with the German nation and with one Million of men.” Like so many Germans, he was exhilarated by the news of Sedan and eagerly increased his holdings of government bonds. ‘There is not the least doubt,“ he declared on November 23, ”that the [German] Government is called upon to be first fiddle in the future European concert“; ”Germany strong and united will be able to do more for the peace of the world than any other nation.“ To be sure, he and his family had no illusions about the human costs of the conflict: his English-born wife Louise and their children worked ”day and night“ in the hospital they established for wounded soldiers. But he had no doubt about the justice of the Prussian cause. Despite his grumblings about the discomfort of the journey, Mayer Carl was only too proud to be invited along with other parliamentarians to ”pay homage at Versailles to the German Emperor.“

Identification with one’s native land cut the other way in Paris. James’s sons, unlike their father, were French citizens and they were punctilious in their patriotism. On July 19, for example, Alphonse resigned his post as consul-general of the North German Confederation in France. They subscribed for at least 50 million francs of the August war loan. From the outset, he and Gustave expressed the hope that “the first clash would be favourable to French arms.” At first this was primarily because they believed it would precipitate English diplomatic mediation; but as the war proceeded, anti-Prussian feeling began to generate a less dispassionate patriotism. By the time Ferdinand arrived in Paris, he found his cousins “very excited and pour[ing] out volumes of wrath on the Prussians, Bismarck and Cie.” “They are all extremely French in their views and feelings,” he reported to London, “plus catholique que le pape.” Edmond and Nat’s son James Edouard, as noted above, served in the Garde Mobile; and Alphonse did his bit guarding the ramparts of Paris on the eve of the Prussian siege, as did Nathan James, who may have fought in Trochu’s abortive “sortie” to the south of Paris on November 30. On August 6 Mérimée heard of “a Rothschild” leaving Paris in August “with his bag and a baguette on his back, travelling in a third class compartment of the Nord railway, in which his house has twenty million shares.” Though it is undeniable that Anselm returned to Vienna before Sedan and James Edouard’s brother Arthur was in Brussels in late 1870, that story has the whiff of malicious gossip. In reality, the Rothschilds stood their ground and risked their lives in the crisis, unlike many wealthy Parisians.

The difficulty for those in France was that from a very early stage they were confronted with alarming intimations of defeat. Anselm happened to be in Paris when the war broke out, and he made no secret of his views: “The French are full of enthusiasm but the Prussians have a better military organisation and their army is much superior in number.” Alphonse too was pessimistic. “The wine is poured,” he declared on July 20, “and it is unfortunately necessary to drink it. It will be pretty bitter.” An early sign of French mismanagement in Rothschild eyes was the response of the government to the economic consequences of the war. Talk of the suspension of gold convertibility by the Banque de France and heavy-handed attempts to prevent specie from leaving Paris infuriated Alphonse, who favoured relying on increases in the discount rate. On August 4 some 2 million francs of silver which the Rothschilds were sending to Belgium in exchange for gold on behalf of the government were seized by the police in the belief that they were being smuggled out of the country. By the 12th, the Banque had effectively been forced by the government to suspend convertibility and this was followed by a moratorium on bills of exchange: the only reason Alphonse did not resign his post as regent over these measures was, as he put it, that it would be “to desert one’s post at the moment of combat.” More alarming still was the request of a “senior military personage” to send a small packet of his securities for safekeeping in London house. As Alphonse commented, “Such a recommendation on his part, as you may imagine, has awakened our suspicions, and we intend to follow his example ...” They began to do so three days later. On August 11 James Edouard sent over his collection of rare books and drawings. As the crisis deepened, securities were sent to Lambert, the Rothschild agent in Brussels. On the day of Sedan, at Bleichröder’s recommendation, the Paris house sold the shares it held in the Cologne—Minden railway—at a handsome profit.