CHAPTER II — THE ROTHSCHILDS AND NAPOLEON

(1806-15)

 

‘You will,’ Napoleon commanded Marshal Mortier, who was moving on Cassel, ‘seal up all treasures and stores and appoint General Lagrange as Governor of the country … My object is to remove the House of Hesse-Cassel from rulership and to strike it out of the list of powers.’[6]

For the preceding ten days Wilhelmshöhe had been plunged into feverish activity. Coaches carrying chests of gold and silver and guarded by a posse of soldiers left for Copenhagen and Prague. But there was no time to send away everything. Fifty trunks of jewellery, silver plate, antiques and the whole collection of coins and medals, to which Rothschild had contributed so many valuable specimens, were hidden under the stairs and in secret passages. More valuables, including mortgage documents and bonds, were concealed in Lewenburgh Castle, which stood in Wilhelmshöhe Park, while further treasures were sent to Sababurg Castle in the middle of a remote forest.

Soon French troops were encamped on the heights surrounding Cassel. The Elector could see their camp fires from the windows of his castle, and, alternating between tears of despair and rage, he despatched adjutant after adjutant to Mortier begging to be given a hearing. But Napoleon was implacable. When the marshal eventually sent an envoy to the Elector, the latter carried a personal ultimatum from the Emperor significantly addressed: ‘To the Elector of Hesse-Cassel, Field-Marshal in the service of Prussia.’

Although William returned a grovelling letter offering to throw in his lot with France and to join the Confederation of the Rhine, his pleas were in vain and he was given to understand that unless he left the country he would be made a prisoner of war. Indeed Napoleon was so determined to avoid a misunderstanding that he not only sent instructions to Mortier but to Lagrange himself. ‘Have all the artillery, ordinance stores, furniture, statues and other articles in the palace of the Court brought to Mainz … I shall not continue to suffer a hostile Prince on my boundaries, especially one who is practically a Prussian, not to say an Englishman, and who sells his subjects …’[7]

On the night before French troops swarmed into Cassel a member of the Elector’s staff aroused the Austrian ambassador, Baron von Wessenberg, from his slumbers, and handed him for safe keeping a casket of jewels and envelopes containing £100,000 in valid bills of exchange. An hour later Carl Buderus banged on the Baron’s door and delivered two chests crammed with securities which he begged the ambassador to look after. Meanwhile the Elector was fleeing the country in a coach and six. He reached one gate to find French soldiers on sentry duty but managed to escape by another. Late the next day he arrived at Gottorp, in Denmark, and moved into the palace of his younger brother, Carl. The latter had also married a Danish princess and was Resident Governor of the Duchies of Schleswig and Holstein, which he administered from Gottorp.

Buderus remained in Cassel and tried to soften the effect of the occupation. The new governor, General Lagrange, was a bluff and amiable soldier who liked the good things of life. He carried out the Emperor’s orders and was successful beyond expectation. Within two days he had discovered all fifty chests of Electoral treasures hidden in the walls of Wilhelmshöhe. The silver table-ware was sent to Mainz to be melted down, while the collection of rare coins and antiques was dispatched to Paris for auctioning.

At this point Carl Buderus intervened. He called on General Lagrange and after a conversation filled with very obvious innuendoes, left 260,000 francs (£10,800) on the table and departed. The following day the general returned to the Hessian officials forty-two trunks containing securities, title deeds and ledgers. He then reported to Napoleon that the Prince’s worth was about 10,000,000 thalers (£2,000,000), less than a quarter of the true value.

Nineteen of the chests were sent to the vaults of Preye and Jordis in Frankfurt, while another four, containing William’s Privy Council minutes, were despatched to the House of the Green Shield during the Spring Fair of 1807. The ledgers not only revealed the true extent of the Prince’s wealth but contained a list of his debtors and the interest received from them. As Napoleon had instructed his officials ‘to seize the Prince’s revenue’ it was essential to prevent the information from falling into the hands of the French. Mayer Amschel concealed the trunks in the secret cellar built to hide Jews from their persecutors.

Meanwhile Napoleon issued his famous decree establishing his continental blockade against England. He could not make himself master of Europe until he had brought the mistress of the seas to submission; and as invasion was impractical, he must conquer her by privation. If he could destroy the gold reserves of the Bank of England he believed that he would destroy the fabric of her industrial society. In his optimistic moods he envisaged an unemployed and starving population, and finally a revolution that would place in power a government amenable to Bonapartist ideas.

Napoleon overlooked the fact, however, that the continent needed British goods just as much as Britain needed continental markets. War-torn Europe was starved of everything from overcoats to shoes; from cottons and silks to sugar and coffee. Pressure from the public made the edict difficult to enforce and for the first few years the inconvenience lay mainly in higher prices.

*

Napoleon seemed bent on improving the Rothschilds’ lot in life, for his actions of November 1806 — the seizure of Hesse-Cassel and the imposition of the continental blockade — resulted in extreme good fortune for the family. The Elector, cowering in Denmark, had no option but to entrust Carl Buderus with his finances; and Buderus immediately appointed Mayer Amschel his chief banker. The blockade was advantageous in two ways, for it not only increased Mayer’s Frankfurt business but opened new fields for Nathan in London.

This red-headed youth with the sagging lower lip and the bulbous blue eyes had done brilliantly during the six years he had lived in Manchester. In his father’s shop he had known only one profession, that of distributor, but in England he began to buy semi-finished goods, had them dyed, parcelled them out for manufacture and finally sold the end product. ‘I soon found there were three profits’, he wrote years later. By 1804 he had increased his capital to £50,000, and decided to move to London where he could extend his activities to the stock market.

Here he met Levi Cohen, a linen merchant who had left his native Holland in 1770 and opened an accounting house in Angel’s Court, Throgmorton Street, and became the richest Jew in England. Apparently Cohen was greatly taken with the energetic Rothschild despite the fact that the young man spoke abominable English; almost as bad, Nathan admitted, as his German. But he excused himself by saying that there was no time for frills as there was too much to do. Levi had a surplus of beautiful daughters and was eager that all of them should marry well. He was therefore delighted when Nathan, who appeared to have an impressive bank account, asked permission to court Hannah Cohen.

Soon, however, the young man was gambling in gold bullion, leaping in and out of the market with exhausting enthusiasm. Now Levi began to wonder. Nathan’s large, bulging eyes seemed a little wild. Could he be taking such chances with his own money? Or was he an irresponsible gambler, acting as a broker for someone else? Politely and prudently Levi asked Nathan for proof of his wealth, but the hot-tempered suitor angrily refused, snapping that Levi could not do better than to give him all his daughters in marriage. Father Cohen was amused by the effrontery, and the wedding took place in October 1806, a month before the blockade was imposed. Hannah did not come empty-handed. She brought Nathan a dowry of £10,000.

Nathan wrote to his father that he was confident that he could increase any funds entrusted to him and urged him to send whatever capital he could lay his hands on. Mayer passed the message to Buderus, who was leaving for Gottorp to pay his first visit to his difficult master, all the more difficult now that he was in exile. On this occasion, however, the Elector was so overjoyed to learn that Buderus had managed to prevent large sums of money from falling into enemy hands that he raised him to the nobility with the title ‘von Carlhausen’. He also gave him the equivalent of ‘power of attorney’, which meant that in future the latter could handle William’s resources at his own discretion. However the Elector’s temperament was alarmingly mercurial. One moment he was overjoyed, the next plunged into the depths of despair, complaining of his bad luck. He particularly resented the fact that when the Danish Crown Prince visited Gottorp he, William, was obliged to move out of the palatial apartment lent to him by his brother and accommodate himself in a miserable suite of rooms in the opposite wing.

Buderus remained with his master a week, outlining strategic plans for the future; but the old man could talk of nothing but the Countess von Schlotheim whom he referred to as ‘my best friend for whom I wait yearningly’. At last the lady arrived with her children in tow — she eventually had nine — and set about making her lover more comfortable. She rented a house, first at Rendsburg, then at Itzehoe, both spacious and well-staffed with servants. ‘I feel almost at home again,’ William wrote, a momentary change from his endless complaints.

His chief worry, of course, was his money and when Buderus took his leave he begged him almost piteously to do his best for him. As soon as the latter reached Cassel he sent a message to Mayer Rothschild in Frankfurt asking if he personally would undertake the collection of interest on the money that the Elector had out on loan. Very large sums were in the hands of German and Austrian princes and aristocrats. Mayer was determined to exploit a position which he had struggled to achieve for nearly half a century and readily agreed.

Yet the assignment was fraught with danger. The French were swarming over most of Germany, and Napoleon had announced that since Hesse-Cassel no longer existed all money owing to the Elector was to be paid to the French Treasury. There was certain difficulty in enforcing this imperious edict as the French officials did not know the names of the debtors. They suspected, however, that Mayer Rothschild of Frankfurt might have valuable information on the subject and went so far as to offer him 25 per cent commission on whatever debts he collected.

The old man nodded but remained scrupulously loyal to the Elector. Soon he had pressed all the members of his family into his subversive activities. His two eldest sons, Amschel and Salomon, were left in charge of the Frankfurt business which meant receiving and distributing smuggled goods; while he himself and his two youngest boys, eighteen-year-old Carl and fourteen-year-old James, travelled about Germany in a coach with specially constructed compartments, scooping up the bullion belonging to His Serene Highness. They had their own secret language, the usual jumble of Yiddish and German, and a code of pseudonyms. Mayer Amschel was known romantically as ‘Arnoldi’ while the Prince was judaized into ‘Goldstein’. Occasionally Mayer made the seven-day journey to Schleswig to consult the Prince, but the constant jogging on the rough roads made him so ill that Carl Rothschild gradually took over as the principal family courier. Although at first some of the debtors protested against repaying William for fear of offending the invader, the majority responded, for they knew that if they needed money in the future the Elector would be a better bet than the French Government. 

Mayer Rothschild tried to lessen the dangers he was incurring by winning the friendship of powerful protectors. In 1807 Hesse-Cassel was incorporated into the kingdom of Westphalia, while Frankfurt became the capital of the Confederation of the Rhine, administered by a German primate, the Grand Duke Carl von Dalberg. Luckily for Mayer Amschel, the Grand Duke not only had liberal ideas but was a spendthrift. Mayer advanced him money on easy terms and pressed him to relax the restrictions on the Jews. Dalberg finally granted the community political equality with the Christians, and the right to have their own governing body, but made them pay a huge price for it, half a million gulden (£48,000). Mayer Amschel himself put up half the sum demanded, a large chunk of which went straight into von Dalberg’s pocket.

Despite the high cost, the Duke’s friendship stood Mayer in good stead, for during 1807 Napoleon’s police spies became suspicious that Rothschild was acting as a banker to the Elector and demanded to see his accounts. As he kept two sets of ledgers he gladly allowed them to peruse the ones that had been written up by his daughter-in-law for their special benefit. Not satisfied, the police called on the Duke von Dalberg, who assured them that Mayer was wholly law-abiding and most unlikely to be engaged in illegal pursuits.

In Cassel Mayer’s close friend, Carl Buderus, was using the same methods of bribery to ingratiate himself with Napoleon’s profligate brother, Jerome, the new King of Westphalia. Jerome had moved into the Elector’s palace, Wilhelmshöhe, and complained bitterly of the frugal meals and provincial outlook of the local gentry. The miserly Elector was furious to think of such an extravagant man living in his palace and cried poverty to all who would listen, despite the fact that he had thousands of pounds in cash and regularly received large sums from Buderus, as part of the debts collected by Mayer.

Buderus was conscious of the great risks that his friend Rothschild was undergoing, and as a reward gave him the less arduous and equally profitable assignment of discounting the English and Danish interest payments which now came as drafts directly to Rothschild. As the Elector had £600,000 invested in England, his income from this source alone lay in the region of £2,000 a month.

Apparently this arrangement was deeply resented by Ruppell and Harnier, the rival bankers, who had formerly handled the bulk of the Elector’s business. Bethmann Brothers, the other firm in a similar position, had bowed out gracefully but in June 1807 Herr Ruppell himself went to Rendsburg to lay his case before the Prince. He argued that although he had never failed His Serene Highness, he had been victimized by Rothschild who seemed to have some sinister hold over Buderus, perhaps blackmail. The Elector was always a prey to suspicion and became greatly agitated by the suggestion, particularly as he had just received a letter from his Hessian business manager in London, Lorentz, informing him that Nathan Rothschild had approached him for a loan. Upon being refused, Nathan had intimated that he would get the money anyway by writing to his father.

The jealous Lorentz intended this story to anger the Elector and was more successful than he could have hoped, as the Elector not only punished Buderus by entrusting Herr Ruppell with an important financial transaction, but informed his Privy Councillor that the English and Danish cheques being cashed by Rothschild should be sent to him at his new residence in Itzehoe, untouched. ‘I shall expect from you,’ he thundered, ‘an immediate acknowledgement of this decision and your compliance therewith.’[8] At the same time he wrote to Lorentz in London, and told him to give Nathan Rothschild no reply whatsoever if he should again venture to inquire into the Elector’s financial affairs.

The Elector’s actions came as a bombshell, particularly as Rothschild and Buderus were desperately anxious to transmit money to Nathan in London who assured them that he could guarantee the Elector the three or four per cent he desired, but in fact make ten or twelve per cent, entitling them to pocket the difference. Now not only were their immediate plans upset, but Buderus felt that his whole future lay in the balance. Nevertheless he did not hurry to re-establish himself with his master, for he had a shrewd understanding of the latter’s character. He sent the cheques to Itzehoe as requested and delayed the trip to Denmark until September. When he finally confronted His Serene Highness he was a perfect picture of injured dignity.

The first evening the Elector did most of the talking. He told Buderus that he could not understand why he wanted to give all his business to a Jew of obscure antecedents, and that he was greatly concerned that Rothschild was employed to the exclusion of such respectable firms as Ruppell and Harnier and even more particularly of the Bethmann Brothers, whose prestige stood so high. Buderus did not reply until the next day when he had had time to assemble his arguments. He reminded the Elector of the risks that Mayer Rothschild had run for him, travelling around Germany collecting the Elector’s interest payments. The very fact that his origins were obscure was in his favour; he had more to gain than the well-established Bethmanns and far surpassed them in energy and determination. Furthermore, the Bethmanns’ financial resources had given out in 1806 when Prussia was overrun. The Rothschilds, he continued, were punctual with their payments; always quoted the exact rate of exchange prevailing on the day of a sale; and knew how to hold their tongues. ‘And,’ added Buderus, ‘since I am unable to discover the smallest difference between a florin of Rothschild and a florin of Bethmann I thought that I was doing everything for the best. It hurts me, however, to observe that your Prince-Electoral Serenity, to judge by yesterday’s verbal utterance, does not seem graciously to approve. I should therefore like to ask for definite instructions as to how the English cheques are to be disposed of in future.’

But before His Serene Highness could reply, Buderus added that he was in duty bound to say: ‘Had your Prince-Electoral Serenity been most graciously content not to interfere in my business I could have sold £20,000 sterling at 141½. Today they are worth at least 6,000 florins less, and no human ingenuity on earth can now prevent that loss.’[9]

This last broadside demolished the Elector’s defences. That money should be lost through his interventions was an anxiety he could not bear. He reaffirmed his faith in his adviser and once again empowered him to handle all his finances in whatever way he saw fit. He excused his behaviour by grief that his beloved Hesse-Cassel had been incorporated into Westphalia, and was being ruled by a parvenu and a wastrel.

A few months later Napoleon’s army moved into the Duchies of Schleswig and Holstein and Prince William was once more forced to flee. Disguised as a woman, he travelled in a carriage piled high with bales made to look like cotton, but filled with treasures and money. The vehicle lost a wheel in a town swarming with the French and the passengers had to transfer themselves and their belongings to another carriage; but neither the Elector nor his companion, the Countess von Schlotheim, was noticed or molested.

William settled near Prague, in Bohemia, which was part of the Austrian Empire. He bought a Palace on the Kleinseite, where he maintained a household of thirty-six people, and a castle at Bubenetsch where he held courts. Nevertheless he pretended to be living on the bread-line and gave his guests disgusting food. ‘Personal association with him is indescribably unpleasant/ wrote an official of the Prussian Government. ‘The greatest patience is required to put up with his endless complaints and sudden outbursts.’[10]

*

Once again the Rothschild-Buderus axis swung into action but this time in a daring and unorthodox way. The partners began the operation that was to lay the foundation of the Rothschild fortune and to make Buderus a rich man. In his difficult interview with the Elector Buderus not only had restrained himself but had emerged with more authority than ever before. The Elector had to rely on someone, and Buderus had impressed him by his quiet dignity; so once again the latter filled the role of chief financial adviser.

But Buderus was not content to serve the Elector for ever without a suitable reward. He had his own family to think of, and was greatly taken by Mayer Rothschild’s enthusiastic insistence that if he could divert sufficient sums to Nathan in London, the boy could double and treble the money very rapidly to the benefit of all of them. Nathan lived in a sellers’ market. Not only was the continent increasingly starved of merchandise, but the London stock market was rising steadily. Furthermore, silver coin and gold bullion were in such short supply that anyone with enough money to buy specie, and hold it, could not fail to make enormous gains. What the Rothschilds would have liked was to borrow money directly from the Elector at the current rate of interest, but Buderus understood his master well enough to know that he would never lend money to upstarts like the Rothschilds. The Elector was a snob and only liked to do business with kings or princes or aristocrats. Besides, what security could the Rothschilds offer him?

Nevertheless, Buderus was able to raise some cash without referring the matter to the Elector. He allowed Mayer Rothschild to retain at three per cent interest the debts he collected for the Elector; and Mayer of course forwarded the money to Nathan. Next, Buderus authorized Mayer to instruct the Elector’s Dutch brokers in London, the van Trottens, that the interest payments on the Elector’s £600,000, invested in British securities, was no longer to be sent to Frankfurt but to be paid directly to Nathan. Although Nathan would pay three per cent interest for the use of the money, the arrangement was to be kept secret from the Elector’s London agent, Lorentz, and of course from the Elector himself. This was not easy, for Prince William was demanding to see Buderus’ accounts. ‘It is surely most graciously known,’ Buderus wrote firmly to William, ‘that my papers are hidden away, so that I could not (even if I had the time) possibly work at my accounts.’[11]

Buderus’ excuses were valid as both he and the Rothschilds lived in constant danger as the Elector’s employees. Prince William had donated money to the Baron von Stein’s League of Virtue, a Prussian organization formed to deliver the German states from the Napoleonic yoke. Letters were intercepted, and the Rothschilds and Buderus were denounced as accomplices. All of them were cross-examined by the police, but finally released through lack of evidence.

Meanwhile Buderus, at the instigation of the Rothschilds, was urging the Elector to double his investments in British gilt-edged securities. The consols not only paid a steady rate of interest but were bound to soar if Napoleon were defeated. This was sound advice: but there was more behind it than at first met the eye. No one knows who thought of the idea first, Buderus or Mayer or Nathan. If the Elector could be induced to divert large sums of money to London, the Rothschild-Buderus axis might ‘borrow’ the money for a few months before investing it, and the few months might be sufficient to accumulate a fortune. It took Buderus nearly a year to persuade the Elector to follow his advice. In the early months of 1809, however, the Prince sent £150,000 to Buderus with instructions that it be used to buy British consols quoted at 72. The money was despatched to Nathan who reasoned that as he had been asked to buy at 72 and consols had fallen to 60 he was within his rights to postpone the investment until the specified figure was reached.

In any age, this was sharp practice, but as the months passed no one could deny that Nathan Rothschild made brilliant use of the money. Altogether, between 1809 and the end of 1811, he received £550,000 from the Elector, via Buderus, via his father. And not a penny was invested in consols. The most difficult aspects of the operation was how to fob off the Elector without producing certificates from the Bank of England proving that the purchases had been made. Prince William was a cynical man and however much he tried to place faith in his servitors he never wholly succeeded. Therefore he began badgering Buderus for the certificates and Buderus countered with a flood of excuses: the difficulties of travel; the danger of being caught with treasonable documents; the fear of being under surveillance from Napoleon’s police.

This last contingency was more than likely, for Napoleon’s blockage had set in motion a chain of action and reaction. The Papal States flatly refused to impose it, whereupon the French Emperor invaded Rome and took the Pope prisoner; Russia fumed because she could not send and sell her timber and hemp to England; and the Portuguese tried to think of some clever way that they could maintain their wine trade with London, whereupon Napoleon deposed the House of Braganza. Britain retaliated by sending troops to Portugal and Spain under the command of Sir Arthur Wellesley, later the Duke of Wellington.

In 1809, the Austrians, encouraged by huge subsidies from Britain, were ready once again to take up arms against the French. The Elector of Hesse offered the Emperor Francis four thousand troops, but at the last minute only supplied two thousand. He gave Mayer Rothschild the dangerous task of distributing £30,000 necessary to keep his tiny army in the field; then he called upon his Hessian subjects to revolt against King Jerome. ‘I come,’ he wrote in a proclamation of April 1809, ‘to loosen your bonds; Austria’s exalted monarch protects me and protects you …’

Unfortunately Austria’s exertions proved unsuccessful, and the Hessians failed to respond to their master’s call. At this point, one of Mayer Rothschild’s jealous rivals, a banker named Simon, is believed to have supplied the Westphalian police with the information that Mayer Amschel had served as Paymaster to the Prince of Hesse’s army. M. Savagner, the Police Chief in Cassel, succeeded in obtaining a warrant for Rothschild’s arrest and travelled to Frankfurt to conduct an investigation.

The Grand Duke von Dalberg was furious at what he considered an infringement of his sovereign rights. That the police from another province should poke their noses into Frankfurt’s business was more than he could bear. Consequently, he warned Mayer Amschel to prepare himself for the visit. When Savagner arrived he found the old man ill in bed. He placed him under arrest in his own room and confined James and Salomon to the office below. Gutle, with her uncomprehending eyes and her rough hands, wept and wailed and drove everyone mad by asking repeatedly what it was all about. Mayer Amschel found an opportunity to slip Savagner a wad of bank notes and although the French report described the family as ‘exceedingly wise and cunning’, the only positive information gleaned was the fact that Amschel was in Prague advising the Elector on his investments.

The Elector was busy bemoaning his own misfortunes so that he scarcely noticed the danger to which his servitors were subjected. The unsuccessful campaign of 1809 had resulted in the retirement of the Austrian Foreign Minister, Count Stadion, and the promotion of Count Clemens Metternich, destined to play a major role in the fortunes of Europe in the next forty years. The Elector immediately wrote to Metternich requesting him ‘to restore to his orphaned subjects their native Prince, whose presence they so ardently desire’. At the same time he wrote furiously to the out-going Stadion: So many worthless people relying on French protection are enabled to sin against me with impunity, and nobody now feels that he has any duties toward me; everybody does as he pleases and is actuated by base and selfish motives. I have thus lost more than two-thirds of a fortune that was never very considerable. That is hard, but harder than everything else is my present condition.[12]

All of this was completely untrue. By the end of 1810 the Elector had sent £450,000 to England for investment. Although he had badgered Buderus relentlessly for certificates the latter still prevaricated. The Elector now lost his temper and threatened to turn really nasty but, fortunately for Buderus and the Rothschilds, Napoleon chose this moment to try to put an end to black market activity and enforce his blockade. He strode to a map and placed his fingers squarely on Frankfurt as a hot-bed of subversion. The French army was ordered to search the warehouses for illegal goods.

Once again Dalberg tipped off Mayer Rothschild, enabling him to empty his storerooms before the inspectors arrived: ‘… several French regiments with artillery have come into the town as well as a host of Customs officials,’ Buderus wrote from Frankfurt to the Elector in Prague. ‘All the gates have been occupied, and nobody is allowed to pass out without being closely inspected; all warehouses have been sealed and an intensive search for English and colonial goods have been instituted, severe penalties being inflicted when such goods have been discovered.’[13] Thousands of pounds’ worth of goods were publicly burned, and over two hundred tradesmen fined. Although some were made to pay nearly a million francs, the Rothschilds, sixty-eight on the list, were fined only 19,000 francs.

This was a pittance to Mayer Amschel who by now was one of the richest men in Frankfurt. He revealed his prosperity in expensive black suits, lace jabots, and wigs made of the best-quality human hair. In the summer of 1810 his mounting fortune prompted him to prepare a new deed of settlement. The firm was renamed M. A. Rothschild und Söhne and the partnership drawn up between the four sons in Frankfurt. Nathan was still excluded as he was residing in enemy territory, but Mayer, now 67 years old, made it clear that his own share was earmarked for him. The deed recited that: … with the help of the Almighty, Mayer Rothschild had, through the industry which he had shown from his youth upwards, through his discernment and through a tireless activity continued to an advanced age, alone laid the foundation of the present flourishing state of the concern, and thereby provided for the worldly happiness of his children.

But Mayer was thinking of something more than fleeting wealth. He dreamed of founding a dynasty and pondered the rules as carefully as though he were the head of a royal clan. Rothschild solidarity must not be diluted by outsiders brought into the family by marriage.

The deed emphasized that female Rothschilds who married non-Rothschilds were to be excluded from the business along with their spouses. Thus when Mayer’s eldest daughter, Schonche, wed, neither she nor her husband were employed by the firm, but when his eldest son, Amschel, married, his wife, Eva Hanau, was promptly given a job. The name was what mattered.

*

By 1811 the Elector had become almost impossible to handle. Although in the early months of the year he agreed to invest a final £100,000 in British consols, making the sum total £550,000, he suddenly became hysterical at the thought that he did not have a single piece of paper to prove that his money had been handled as he had instructed. For three and a half years he had been demanding certificates, a perfectly normal request, yet he was always fobbed off with excuses.

Buderus tried to divert his attention with a barrage of letters, some alarming, some reassuring, but the Elector refused to be placated. As a result Nathan Rothschild decided that at long last the moment had come to indulge his patron. A receipt for £189,500 was sent out of England to James Rothschild in Holland, who forwarded it to the Elector. It was, in fact, the first purchase of British securities that had been made.

*

The Elector’s money had been engaged in high adventure. Nathan had spotted a great opportunity in 1810, the year that George III was put in a straitjacket. Times were hard, for although the population numbered less than twenty million, the British Treasury had been obliged ever since 1805 to raise annual taxes to the staggering sum of £100,000,000. In 1815 the amount exceeded £176,000,000.

Although the Government increased its army and navy, poured out subsidies to foreign powers who would resist Napoleon, sent its merchant ships scouring the world for new markets, during the winter of 1810-11 the blockade began to bite, bringing about the worst economic crisis in British history. With the Baltic closed, with North America hostile and glutted, with only licensed goods reaching the European continent, the outlook was misty with peril.

Nathan Rothschild had become a naturalized Englishman in 1809, and the following year had established his own bank, N. M. Rothschild & Sons. His keen eyes saw that Napoleon was trying to destroy British credit by lowering the exchange rate. And this meant that gold bullion would continue to rise in value. For months he scoured the market and in the middle of 1810 learned that the East India Company had £800,000 worth of gold to sell. ‘I went to the sale and bought it all,’ he recounted years later. ‘I knew the Duke of Wellington must have it. The Government sent for me and said it must have the gold. I sold the gold to them, but they did not know how to get it to the Duke in Portugal. I understood all that and sent it through France.’[14]

This sums up laconically one of the most brilliant and cunning financial operations ever conceived. Nathan knew that Britain was so short of hard currency that for the past two years she had not been able to scrape up enough to even satisfy the needs of Wellington’s army in Portugal and Spain. Indeed, she was obliged to instruct the Duke to issue drafts on British Treasury bills. As no one wanted paper money the buyers — a mob of Maltese and Sicilian financiers — insisted on massive discounts which cut the Duke’s resources by a quarter and frequently made it impossible for him to pay the troops. ‘If you cannot supply us with money,’ Wellington wrote angrily to Liverpool in 1810, ‘you ought to withdraw us. We are reduced to the greatest distress.’[15]

As the drafts were sent back to London, passing through the hands of a long chain of speculators, Nathan Rothschild frequently bought them up very cheaply. He therefore was acutely aware of Wellington’s distress; and when he heard that the East India Company had gold to sell he bought it up, using the Elector’s half-a-million pounds, and borrowing the rest himself. But why, if the British Government needed the bullion so badly, was Rothschild allowed to have it? ‘How can you expect us to buy specie here with the exchange thirty per cent against us, and guineas selling for twenty-four shillings?’ a Treasury official, William Huskisson, had asked querulously in 1809;[16] and no doubt asked again in 1810. While British civil servants waited for the price to drop Nathan Rothschild paid what was asked; and when the civil servants realized that the price was not going to drop, he sold it to them for a very large profit.

This was not all. Once the gold belonged to His Majesty’s Government, Nathan offered to take charge himself of its delivery to the Duke of Wellington in Spain. Mr John Herries, a Treasury official who had been appointed Commissary-in-Chief in 1811, was only too pleased to relegate responsibility to someone else. Recently more than one vessel carrying specie had been sunk en route.

Nathan had a far more ingenious plan than shipping gold by sea. First, he asked his father to send his young brother, nineteen-year-old James, to Paris, as he needed a reliable collaborator in enemy territory. Although it was not easy for a German to secure permission to reside in the French capital, in 1811 the Grand Duke von Dalberg pulled the right strings in return for Rothschild favours. The previous year Napoleon had married the eighteen-year-old Archduchess Marie Louise of Austria; the bride had produced the desired son and heir and the Grand Duke von Dalberg longed to attend the official celebrations in Paris. The cost of equipage and clothes, however, deemed necessary for the Prince-Primate of Frankfurt was so high that the Grand Duke could not manage it. That was where Mayer Amschel stepped in. He offered to advance the money, and in return von Dalberg not only supplied James with a passport, but arranged permission for Carl and Salomon to move about France as well.

Nathan’s scheme for despatching money to Wellington was comparable to burglary in broad daylight. The second of the Rothschild combined operations, it cleverly exploited the fact that Napoleon had slightly relaxed his blockade in order to alleviate the hardship of the French consumer. Certain British goods were allowed to enter the country under licence; consequently at Gravelines, near Dunkirk, a railed-off enclosure was set up where ‘legal smuggling’ was permitted. Although most of the wares were manufactured articles, English gold and silver were allowed entry as part of the Emperor’s policy to drain away Britain’s reserves. ‘A Frankfurter,’ wrote the French Minister of Finance, M. Molliens, to Napoleon in March 1811, ‘who … goes by the name of Rothschild is principally occupied in bringing British bullion from the coast to Paris.’

James Rothschild did not let the matter rest here. He talked a great deal, putting it about that Britain was planning drastic moves to stop the injurious loss of gold. ‘He states that he has just received letters from London dated the 20th of this month,’ Molliens continued, ‘according to which the English intend, in order to check the export of gold and silver coins, to raise the value of the crown from five to five and a half shillings, and the value of the guinea from twenty-one to thirty shillings … I sincerely hope that the Frankfurt Rothschild is well-informed on these matters, and that the Ministers in London will be sufficiently foolish to act in this way.’[17]

So the French Government allowed the Rothschilds to establish an artery of gold, running the length and breadth of France, to the heart of enemy resistance: Wellington’s headquarters in Spain. And all the while Molliens prided himself that England’s loss of the precious metal was helping the Bank of France consolidate its own position. In Paris James traded his mixture of British guineas, Portuguese gold ounces and French napoléons d’or, for bills of exchange on Spanish, Sicilian and Maltese banks. The notes were handed to Carl while Salomon flitted between Toulouse and Saint-Jean-de-Luz making sure that the transit points were diffuse enough not to arouse French suspicions nor to disturb the British exchange rate. Carl then disappeared into the Pyrenees, eventually emerging with the Duke of Wellington’s receipts in his hand.

Even old Mayer Amschel and his eldest son, Amschel, were fully employed. They remained in Frankfurt with their ears close to the ground, despatching couriers to London and Paris with the latest news. Mayer was in a unique position to unearth the most secret secrets, for he was on the closest terms with the princely family of Thurn and Taxis who ran the Central European postal service. The Rothschilds had lent considerable sums of money to the Prince, the hereditary postmaster, who lived at Frankfurt. Consequently the Prince was not at all averse to giving instructions that certain letters should be steamed open, and a précis of the contents sent to old Mayer, who passed on the intelligence to his sons.

A few months after this joint Rothschild venture which Nathan later described as ‘the best business I have ever done’, Mayer Amschel drew up a new will. Once again he emphasized that the Rothschild name was what mattered, and that the business was to be placed exclusively in the hands of his sons.

‘… my daughters, sons-in-law and their heirs having no part whatsoever in the existing firm M. A. Rothschild und Söhne … nor the right to examine the said business, its books, papers, inventory etc. … I shall never forgive my children if they should against my parental will take it upon themselves to disturb my sons in the peaceful possession of their business.’ He went on to state that anyone who upset the family harmony would be limited to the legal minimum of estate valued far below its real worth. With the will completed, on 19 September 1812 he died in the arms of Gutle, well satisfied that he had founded a dynasty.

The sons often lamented that their father had not lived another two years to witness Napoleon’s abdication. Yet the very month of Mayer Amschel’s death marked the beginning of the end for the Corsican adventurer. That summer Napoleon had begun his invasion of Russia to compel the Tsar Alexander I to respect the blockade against the British. Twelve days before Mayer Amschel drew his last breath the great battle of Borodino was fought with enormous casualties on both sides. The Russian army retreated, compelling the Grand Army to continue its march to Moscow.

The world soon heard that Moscow was burning; and that this was not the prelude to a Russian surrender but to French retreat. That October the Grand Army was struggling back to Western Europe in freezing temperatures and chaotic conditions. The wounded froze to death, the survivors starved to death. There was no question of buying food, as the gold wagons had been looted, captured or blown to bits. The French Paymaster General had set out on the campaign with seventy-eight clerks and fifty-five cartloads of cash drawn by four horses apiece. He had been able to rescue only one cart which contained two million of gold. ‘My staff’, he reported, ‘no longer exist; they have all perished from cold and hunger. Some of them, whose hands and feet have been frozen, have been left at Vilna. All the account books have been taken by the enemy. Nobody thinks of anything except saving his own skin, and it is quite impossible to stem the panic …’ ‘The baggage taken is enormous,’ wrote Sir Robert Wilson, the British general attached to Russian headquarters at the same time, ‘and its value immense. One wagon was full of gold and silver ingots. Another military chest had two hundred thousand pounds in specie. …’[18]

As armies did not know how to function without wagons of hard cash, a massive defeat was the quickest way to drain a state treasury. The Duke of Wellington exulted in the disintegration of the French army, and began preparations to lead his men through France to the Low Countries; but he informed London that he could not move until he had an adequate supply of gold.

The British Treasury called a conference and John Herries asked the brilliant Nathan Rothschild to put up a scheme. Once again this astonishing man, whose name was still being misspelled by the British Treasury, stepped into the breach. He travelled to Holland, and in collaboration with his four brothers, whom he summoned to meet him, bought up at an extremely advantageous rate of exchange millions of French gold pieces which Napoleon had coined for continental use. He then shipped the bullion from the Dutch port, Helvoetsluys, to Wellington’s headquarters in Spain, enabling the Duke to move through France using the local coinage which, eliminating the need for exchange bureaux, gave him vastly increased purchasing power.

Everything entrusted to Nathan had been brilliantly executed. Now not only John Herries but Vansittart, the chancellor of the Exchequer, reposed complete confidence in him. The two men asked him to handle the huge subsidy payments to Britain’s continental allies. Between 1812 and 1814 the British Treasury paid out the staggering sum of £30,000,000 to the continent; over half this amount was handled by Nathan, and handled so deftly, swiftly, noiselessly, that the exchange rate did not suffer the slightest dent. ‘The only perceptible commotion’, commented one historian, ‘was the abacuses clicking in the counting houses.’ It was far from a single operation; Nathan’s conception of the first great clearing house in history was original, and the means of achieving it both subtle and complicated. John Herries, who could claim Nathan as his own prodigy, basked in the sunshine of the Rothschild success. In 1822 he wrote to a friend.

It was entrusted to me by their Lordships [the Treasury] to affect the application of this very large sum in the discharge of foreign subsidies … by an arrangement entirely new which consisted principally in providing the Specie required for these services thro’ a single and confidential agency … The details of the arrangement embraced every mode by which foreign currencies could be obtained for British money or Credit; such as the purchase of Specie in all the markets of the world; the conversion of Bullion into coin at our own and at foreign mints; the coining of foreign money in England and the purchase of bills of remittance in such manner as to conceal that they were for a Public Account; the negotiation of British paper on the continent at a long date to avoid pressure upon the exchange etc. etc. …[19]

Nathan’s commission may have reached £1,000,000, yet he was thought to have earned it. The fact that he managed to transfer the English subsidies without depressing the exchange rate was regarded as straight wizardry. Up till now any government advancing money faced the prospect of losing as much as a third of it. But Nathan had brothers. James in Paris and Amschel, Salomon and Carl in Frankfurt, worked so quickly and harmoniously that the transfers were carried out with no unfavourable effects, saving the Prince Regent’s Government hundreds of thousands of pounds.

*

Nathan and James also joined forces to finance the return of a Bourbon prince to the throne of France. Ever since 1807 the future Louis XVIII had been living in Hartwell in Buckinghamshire. The Prince appealed to the English King, the English King appealed to the Treasury; and the Treasury as usual consulted Nathan Rothschild. Together Nathan and James raised £200,000; the future Louis XVIII entered Paris on 3 May 1814. 

Ten months later a spectacular array of princes and diplomats assembled in Vienna to settle the peace of Europe. The music and politesse came to an abrupt halt, however, when the incredible news burst on the world — in England Nathan was the first to hear of it — that Napoleon Bonaparte had escaped from Elba and landed on French soil. Louis XVIII and his court fled from Paris to Ghent in Belgium, and in March 1815 Bonaparte again took up his abode in the Tuileries. The British Treasury, of course, was plunged into feverish activity, pledging huge subsidy payments to the Continental powers for the overthrow of the resilient adventurer.

*

Nathan Rothschild had always understood the value of news and for some years had operated a private courier system. As his agents in Dover, he employed Messrs Nathan, Rice and Co., a firm well equipped with light vessels ready to sail at a moment’s notice with Rothschild despatches. At Calais, another agent, James Levereau (the courier who brought to New Court, Nathan’s house in London, the first news of Napoleon’s escape from Elba) was similarly provided. On both sides special ‘post boys’ were employed to carry letters to their destination. In addition, Nathan offered rewards on a fixed tariff basis to the captains of ordinary packets and the guards of the stagecoaches if they specially exerted themselves on his behalf.

Soon not only Dover and Calais, but Ostend, Ghent, Brussels and Amsterdam swarmed with Rothschild agents judged necessary by Nathan to assist him in the task of implementing the British Government’s vast banking commitments. Nathan’s job, assigned to him by John Herries, was to supply cash to Louis XVIII and his exiled court, which he did through Ostend and Ghent; to transmit subsidy payments to Russia and Prussia, which he did through Ostend and Amsterdam; to supply coin to Wellington’s army, now in Belgium, which he did through Ostend and Brussels.

The Battle of Waterloo was fought on Sunday, 18 June 1815. A dozen different accounts have been given as to how Nathan Rothschild received the news, and what he did with it, and not one is accurate. Many writers talk about carrier pigeons, and some even claim that Nathan followed Wellington on to the battlefield and stayed there until he was satisfied which way the struggle was going. Almost all biographers accept the fact that instead of imparting the news of the Waterloo victory, he pretended that all was lost in order to depress the market and make a fortune for himself. Even the version given by Leopold de Rothschild at a public dinner in 1903 was incorrect. He spoke of the ‘Dutch’ Gazette being brought to England by a trusted Rothschild captain who stumbled upon it accidentally; and told how Nathan hurried to inform Lord Liverpool, who refused to believe the news.

This was nearer the truth but still inaccurate. First of all, the Gazette was published in Brussels not Amsterdam; secondly the captain did not bring the news sheet to England by ‘chance’; thirdly Nathan did not call on Lord Liverpool. Throughout Sunday, 18 June, the day of the battle, a number of Gazettes were issued, some regular editions, some ‘Gazettes Extraordinary’, all of them carrying bulletins on the fighting signed by the Secretary of State, Baron de Capellen. Altogether four editions were issued on Sunday; and at 3 a.m. on Monday a fifth edition came out, announcing that the wounded Prince of Orange had been brought in, and referring to the ‘victory of yesterday’ as having been ‘bloody but brilliant’. In reply to Leo de Rothschild’s inaccuracies, a scholar wrote in the London Graphic of 15 April 1903, that an extra Gazette Extraordinary had been issued briefly announcing the great victory. This ‘special extra’ was out before 3 a.m. No doubt while still wet from the printing press — say at 2 a.m. — a copy was carried post haste by one of the Rothschild couriers, or relays of couriers, to Ostend. There it would have arrived about 10 o’clock in the morning. The local agent would have at once shipped himself on board one of the Rothschild boats, and by evening he would have been on British soil travelling fleetly to London on post horses supplied by the Dover agency. Hence the Gazette might well have been in Nathan’s hands before breakfast in the morning of Tuesday the 20th; or some forty hours before Wellington’s official despatches reached Downing Street.

This is precisely what happened, according to a Rothschild relation, Lady Colyer Fergusson, who wrote a letter to the Daily Telegraph on 9 November 1962.

My grandfather, Benjamin Cohen, went with Nathan Rothschild to see Lord Castlereagh … to tell him that the Battle of Waterloo had been won. When they arrived the butler refused to admit them and all remonstrances were met with the same answer. ‘His Lordship is sleeping and is not to be disturbed.’

Eventually, Lord Castlereagh woke up, but when he relayed the news to his Foreign Office officials the latter viewed it with scepticism as they had just learned of the English defeat at Quatre Bras on the previous day. Nathan Rothschild took his leave with no further ado and went straight to the Stock Exchange where he bought large quantities of British bonds. This fact is recorded in the London Courier of 20 June with the laconic statement: ‘Rothschild has made great purchases of stock.’

Now what about Lord Liverpool? Apparently on Tuesday, 21 June, the day after Rothschild had seen Castlereagh, an independent Belgian agent, in quest of glory and a suitable reward, had called at 10 Downing Street. Here is the account given by the London Courier, which came out in the evening of the twenty-first.

The following is said to have been brought by a gentleman who states that a great battle was fought on the day before: that he was on Monday at Ghent opposite the hotel of Louis XVIII when, at 1 p.m., an officer arrived covered with dust: and as the King receives every despatch, he instantly entered the hotel with the officer who forthwith congratulated His Majesty on the great victory just gained. ‘We have taken all the heavy artillery,’ he explained, ‘and a great decisive victory is ours.’ There was immediately the greatest joy among the officers assembled. The King embraced the officer with transport. The officer then said that the battle of Sunday had been general along the whole line and had continued for nine hours — that a great number of prisoners had been taken, the French retreating with the greatest confusion, leaving all their heavy artillery behind. The gentleman instantly left Ghent, and reached Ostend in the evening of Monday. The Nymph packet was then underway; without waiting a moment he embarked to be the first bearer of the good news …

He was not the first, but the second; and apparently Lord Liverpool could not understand the man’s bad English and sent for his secretary, Mr Croker, to disentangle the story. Croker, who was a regular contributor to the Courier, passed the information on to the editor. And when Mr Jennings, many years later, came to edit the Croker papers, he took it upon himself to describe the informant erroneously as ‘a Rothschild agent’. Hence the confusion as to whether Nathan went to Castlereagh or to Liverpool, and on what day, and with what information.

The Courier was not on the streets until late in the evening on the twenty-first. Meanwhile Lord and Lady Willoughby de Eresby were dining with their friend, Thomas Raikes, who wrote in his Journal that he found the company ‘breathless, impatient for news of the battle’. ‘I felt little alarm,’ he adds, ‘as I had heard that Rothschild was purchasing stocks largely and that the funds had risen two per cent.’[20]

Raikes was anticipating events. On Friday, 16 June consols were quoted at 69¹/16 where they remained until the twentieth when Nathan Rothschild began to buy. Wednesday, 21 June they had moved up to 70; three days later they were traded at 71½.

So much for the stories of Nathan depressing the market and making a fortune. The truth was that he already had his fortune. But who promoted the fantastic tale of his attending the Waterloo battle? Apparently this story was invented many years later, after Nathan’s death, by a scurrilous French journalist, Georges Mathieu-Dairnvaell, who deliberately compiled it to show the lengths to which Nathan’s money greed would drive him. Dairnvaell submitted the unpublished version to James Rothschild in Paris, demanding a large sum of money for its suppression. James refused, and the report appeared in a pamphlet entitled Histoire edifiante et curieuse de Rothschild I. James issued a public statement, denying that Nathan had been anywhere near Waterloo and revealing the author’s attempts to blackmail him.

Sometime before Waterloo the Elector of Hesse-Cassel had moved back into Wilhelmshöhe Castle, and was now busy reviving the institutions and re-imposing the customs of pre-war days. He even insisted that his soldiers re-grow their pigtails. Every penny that he had entrusted to the Rothschilds was returned with interest reckoned at the rate paid by British consols, the safe stock in which his fortune had not been invested. As he had often despaired of ever seeing his money again he was overjoyed to receive such a large sum and he rewarded Buderus, who now was a very rich man, by showering him with honours. He had raised him to the nobility by giving him the title, Baron Buderus von Carlhausen; he now made him a Privy Councillor and appointed him his representative to the Frankfurt Diet, an assembly which had been created by the Vienna Congress and to which all the German states adhered.

The relations between the Elector and the Rothschilds were equally cordial, although now their positions were reversed, and it was William who took the trouble to keep in touch. Although the Elector remained the most affluent prince in Europe he no longer was a power, for the Rothschilds had created new standards of wealth. Years later Nathan said that, during the period between his arrival in England and the end of the Napoleonic wars, he increased his original stake 2,500 times. This was not literally true for he made the bulk of the fortune by speculating with the Elector’s half-a-million pounds. But, speaking mathematically, if his original stake was £20,000 this gave the Rothschilds, who operated as one family and one partnership, £50,000,000. Not only were they the richest bankers in Europe, but they had invented haute finance, a new force destined to mould the capitalism of the nineteenth century.[21]