The House of Rothschild (85 page)

Nor did victory in the Boer War represent an unqualified assertion of metropolitan authority in South Africa. Although the Boers were ultimately forced to make peace, it was Cape Town (and Kimberley) rather than London which benefited from the British victory. The final conflicts within the De Beers company between the London board and Rhodes were a microcosm of this. Even as the war in the Transvaal got under way, Rhodes was being exhorted telegraphically by Natty “to extinguish floating debt and free mortgaged consols no dividend even if earned could be paid before this done ... we therefore suggest take advantage of favourable opportunity to create fifty thousand more shares which would be readily absorbed by existing shareholders.” Natty followed this up eight months later with a detailed critique of Rhodes’s accounting methods—and in particular his habit of accumulating large surpluses which he and the other life governors “used for every kind of purpose, some connected with the mines and some with outside investments and ventures.” And Natty continued to oppose Rhodes’s ambition to break the power of the diamond-marketing syndicate in London.

Nevertheless, Rhodes left his successors at De Beers in an almost unassailable position. Annual dividends rose from around £1.6 million (40 per cent a share) in the period 1896 to 1901 to £2 million from 1902 to 1904. Even Natty had to admit that these were “brilliant results.” Moreover, political attacks on the use of Chinese labour in the South African ‘mines—which the Liberals turned into a major campaigning issue in the 1906 election—served to widen the gap. between London and Cape Town. Finally, the Rothschilds’ control over De Beers was dealt a damaging blow when the Inland Revenue sought to extend the tax liability of the company from the dividends of the British shareholders to the net profits of the company as a whole, a move which necessitated the formal dissolution of the London board and confirmed the supremacy of Kimberley over the European shareholders. As an alarmed Natty put it, “if the London Office is closed pure and simple, the De Beers Co. would be a Wernher Beit Co. and ultimately he would acquire the control and you would know absolutely nothing now [about] whatever takes place.”

It was nevertheless the Rothschilds’ reduced role in the financing of the Boer War which was the most ominous development. Just over a decade before, at the time of the Goschen conversion and the Barings crisis, N. M. Rothschild had seemed as financially dominant as ever. Now the dawn of a new century had brought the first unambiguous indication that the Rothschilds’ dominance was coming to an end. Did the Rothschilds themselves sense this? There is one telling piece of evidence to suggest that perhaps they did. On New Year’s eve at the end of December 1900, there was, as Edward Hamilton recorded in his diary,

SCHOMBERG MCDONNELL TO LORD SALISBURY, JANUARY 1899

LORD ROTHSCHILD

 

 

T
he history of Europe between 1870 and 1914 has often been written as a history of imperial rivalry, leading to the formation of a polarised alliance system and ultimately a calamitous war. Yet there are reasons to be sceptical about this narrative. For if there was a war which imperialism should have caused it was the war between Britain and Russia which failed to break out in the 1870s and 1880s; or the war between Britain and France which failed to break out in the 1880s or 1890s. These three powers were, after all, the real imperial rivals, coming into repeated con-Hict with one another from Constantinople to Kabul (in the case of Britain and Russia), from the Sudan to Siam (in the case of Britain and France). Few contemporaries would have predicted they would end up fighting a war on the same side.

Nor should it be assumed that there were insuperable forces generating an ultimately lethal “Anglo-German antagonism.” Indeed, from the Rothschilds’ point of view, precisely the opposite outcome seemed not only desirable but possible: an Anglo-German understanding (if not an outright alliance) seemed a logical response to the imperial differences between Britain, France and Russia. There is always a strong temptation for the historian to be condescending to diplomatic intitiatives that fail, by assuming or seeking to prove that they were bound to do so. The efforts to secure some kind of understanding between Britain and Germany in the years before the outbreak of the First World War have very frequently been the object of such condescension. The fact that Alfred de Rothschild played such an important role in trying to broker an Anglo-German alliance has only encouraged the tendency to dismiss the enterprise as futile. As we have seen, Alfred was not greatly admired by his contemporaries, and his reputation as a dilettante has inclined later writers to assume that everything he did lacked seriousness—as if he genuinely imagined that an alliance could be achieved “by the simple expedient of inviting Chamberlain and Hatzfeldt (or Eckardstein) to dinner.” The role of Baron Hermann von Eckardstein, the first secretary at the German embassy, has also tended to be discounted by historians, following the disparaging remarks of contemporaries like Edward Hamilton, who dismissed him as “a sort of unofficial go-between on Anglo-German affairs at the beck and call of the firm of Rothschild.” At best, the idea of an Anglo-German alliance has been seen as appealing too narrowly to the bankers of the City of London, particularly those of German and Jewish origin—a view which, of course, Germanophobe contemporaries did not hesitate to express.

Yet the ultimate descent of the relationship between Britain and Germany into the disastrous war of 1914-18 should not be retrospectively “over-determined.” In many ways, the arguments for some kind of understanding, if not a full alliance, were founded on common international interests. This is not to resuscitate the old argument about “missed opportunities” in Anglo-German relations which could have averted the carnage of the trenches, a line which has all too often rested on the wisdom of hindsight and unreliable memoirs; it is merely to suggest that the failure of the Anglo-German entente to develop was a more contingent than predetermined outcome—something which cannot be said of all the diplomatic combinations of the pre-1914 period.

From the moment Egypt was occupied, Britain found herself at a diplomatic disadvantage when trying to check analogous expansion by her imperial rivals. In one case, that of Germany, there was no real attempt to do so; but in the case of Russia and France British diplomacy was less pliant.

The German Chancellor’s map of Africa was, as he said, subordinate to his map of Europe; nevertheless, he enjoyed pretending (as his son told Gladstone) that “there is and can be no quarrel about Egypt if colonial matters are amicably settled.” Natty relayed a similar message from the German ambassador Count Paul von Hatzfeldt to Randolph Churchill in September 1886. The obvious place to look for colonial compensations was in sub-Saharan Africa, where the Belgian King Leopold II had established a vast private empire through his International Association of the Congo. British interests lay further south, but it seemed prudent to establish some kind of indirect strategic foothold by encouraging the reliably Anglophile Portuguese to claim some territory in the Lower Congo: it was the Rothschilds’ tacit approval of this strategy which disinclined them to assist Leopold in his activities. Beginning in 1884, Bismarck used Egypt as the pretext for a series of audacious German interventions in the region, menacing Britain with a Franco-German “League of Neutrals” in Africa, asserting German control over Angra Pequena in South-West Africa and claiming all the territory between Cape Colony and Portuguese West Africa. The British response was to appease Germany by accepting the South-West African colony and conceding further territorial acquisitions in the Cameroons and East Africa. The issue of Zanzibar raised by Hatzfeldt in 1886 was typical: Germany had no economic interest worth talking about in Zanzibar (and indeed exchanged it for Heligoland in the North Sea in 1890); but it was worth asking for such territory so long as Britain was embarrassed by her position in Egypt.

There were at least two regions where Russia could legitimately stake comparable claims: in Central Asia and the Balkans. In neither case was it entirely credible for Britain to resist. For this reason, the Rothschilds were inclined to press for a British policy of conciliation and concession—despite their own growing hostility towards the anti-Semitic Tsarist regime.

In April 1885, in the dying days of Gladstone’s second ministry, an Anglo-Russian conflict threatened to break out following the Russian victory over Afghan forces at Penjdeh. Natty at once sought to avert war by sounding out (at Reginald Brett’s suggestion) the Russian ambassador Count de Staal. When Staal asked what Britain would be “satisfied” with as the basis for a diplomatic compromise, Natty suggested “the immediate recall of the Russian forces from the debated country,” but added: “Do this, and you will get a boundary line not unlike the one which you Russians have drawn for yourselves.” Staal duly responded with a proposal of this sort to Brett, who forwarded it to Gladstone. Usually sceptical about Natty’s initiatives, even Edward Hamilton had to admit that it was “something to have got anything out of the Russian Embassy, however unofficially it may be put forward.” In classic Rothschild fashion, Natty sought to accelerate the process of pacification by inviting Staal to dine with a group of Liberal and Tory politicians, among them Harcourt, now Home Secretary, Brett, Drummond Wolff and the rising Conservative star Arthur Balfour. When Churchill took over the India Office in the summer of 1885, he hastened to tell him the good news that the Russians wished to settle the Afghan frontier issue, and Churchill was able to announce an agreement in a typically flamboyant speech at Sheffield on September 3. This, however, was premature. No sooner had the Liberals returned to office in January 1886 than Alfred had to warn Rosebery that:

The crisis abated once again, but the Rothschilds continued to keep a close watch on the North-Western frontier. Indeed, in 1888 Edmond travelled under Russian escort to Samarkand, ostensibly to look into “commercial conditions” but more probably to assess the extent of the Russian military threat to Kabul.
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It was a similar story when a crisis blew up over Bulgaria in 1885. To the Rothschilds, there seemed no very good reason for Britain to get mixed up in the affairs of Bulgaria at this time of growing diplomatic isolation. If Britain had a right to run the affairs of Egypt, then Russia had every right to prevent the Bulgarian King Alexander from unifying Bulgaria and Eastern Rumelia on his own terms, as he sought to do in September 1885. The only reasons for opposing Russian intervention were dynastic (one of Queen Victoria’s daughters was married to Alexander’s brother Henry) and moralistic (the fate of the Bulgarians had been an emotive issue since Gladstone’s atrocitarian campaign, and the Russian kidnapping of Alexander aroused fresh indignation). Though Natty accepted the need to “keep the Prince of Bulgaria on the throne and keep the minor states like Serbia from helping themselves,” he immediately discerned that Russia meant “to meddle in the Balkans.” His attitude, in essence, was that Britain should tolerate this.

In this, Natty was at one with Bismarck; and in many ways the Rothschilds’ interest in the project of Anglo-German rapprochement has its origins in this period. Writing to Randolph Churchill in September 1886, he evidently relished relaying the German ambassador Hatzfeldt’s objections to British policy over Bulgaria:

Churchill, Natty evidently hoped, would take a more Bismarckian line than the Foreign Secretary Lord Iddesleigh (as Stafford Northcote had become). When the latter—variously dismissed by Natty as an “old goat” and a “cackling ... old hen”—sent Alexander Condie Stephen to New Court to request a £400,000 loan for the anti-Russian regime at Sofia, Natty was incredulous. “[N]aturally I refused,” he told Churchill; “was there ever such folly?” Churchill responded by blocking Stephen’s appointment as envoy to Sofia (even sending a telegraph to Salisbury in Foreign Office cipher signed “Iddesleigh”). To reinforce the argument for passivity, Natty went so far as to relay (via Balfour to Salisbury) Hatzfeldt’s warning of a possible German attack on France—the implication being that a simultaneous Anglo-Russian conflict would risk a general war. Natty’s letters to Reginald Brett and Rosebery after the Liberals came back in took the same line: Russian policy in Bulgaria should be tolerated—and increasingly Natty justified this argument with reference to the wishes of Germany. Bismarck, he told Rosebery in November, was “put out with the French for pushing themselves forward as the protectors of Russia in Bulgaria.” A month later, he reported that Bismarck had “isolated France and I should not be in the least astonished if he made England and Russia staunch friends.” “My own belief,” he concluded the following February, “is that there will be no war ... France has been flirting with Russia. The result as anyone could have foreseen is that Bismarck will let Russia do what she likes in the Balkans.”