The House Of Rothschild Part 8

The second flashpoint came in August 1831 over Belgium. After months of uncertainty about the election of Leopold of Saxe-Coburg as King of the Belgians (exacerbated by continued fighting in Poland and news of Austrian reprisals against Italian liberals), the Dutch invasion of Belgium raised the possibility of a general war once more. But again the powers drew back. Neither Prussia nor Russia supported the Dutch move and the British government-after some tense negotiations-sanctioned the French decision to send an expeditionary force to Belgium, provided it withdrew once the Dutch had been driven out. It was only during October that the danger of war over Belgium gradually receded; though even the signing of the 24 Articles by Belgium on November 15 was far from the breakthrough it initially seemed, as Prussia, Austria and Russia took until May 1832 to ratify them, and the Dutch King continued to withhold his signature.

The third war scare came in February 1832 as a result of fresh unrest in the Papal states. Once again Austrian troops were called in, and once again the French sought to take a hand. Indeed, this time a French force was actually sent to occupy the port of Ancona-"a serious blunder" in James's view. However, this was far less serious than the earlier crises (as the muted reaction of the markets testified) and there was never any real prospect of a serious breach between Paris and Vienna. The final war scare of the post-revolutionary period came in the autumn of 1832, when France pressed once again for military intervention to force the Dutch to accept the 24 Articles. Even when Britain agreed to act jointly against Holland, this once again raised the spectre of a Prussian or Russian retaliation. The Convention of London of May 1832 was a stopgap, as it left the Belgians in Luxembourg (apart from its fortress) and Limburg (apart from Maastricht) in breach of the 24 Articles. But it sufficed to preserve the peace until the definitive international settlement of 1839.

Throughout these periods of crisis, the Rothschild letters were the channel through which the views of kings, ministers and diplomats could most rapidly be exchanged. But they also allowed the Rothschilds to make their own views known not only to one another but to the political figures to whom appropriately translated copies were circulated. A central leitmotif of the brothers' own commentary was their awareness of the potentially explosive interaction between international and domestic politics. This was especially p.r.o.nounced in Paris, where fear of war was inseparable from fear of a radicalisation of French domestic politics. "The Government here in France is all for peace," warned James on September 29, 1830, "but if they are threatened too much, then the king says that he would no longer be master of his house and the people don't want to be threatened like little children." James constantly fretted that, if the other powers were too aggressive in countering revolution in Belgium or elsewhere, more bellicose politicians would come to power in France. The difficulty was that even those ministers to whom he and Lionel gave their qualified backing were sometimes obliged to a.s.suage public feeling by speaking in a bellicose manner themselves; hence the repeated rea.s.surances from James that such utterances were only for domestic consumption and should not be taken literally abroad. When Sebastiani was appointed Foreign Minister in Laffitte's new government (November 1830), James immediately rushed to see him. In fact, the message he was able to relay to London and Vienna was much the same as the King's a few weeks before: "If they are looking for an excuse to wage war against us, then we are fit and ready for them but we will make every possible effort to prevent it from happening." However, James concluded optimistically that "there is every likelihood that peace will be maintained." Provided Russia did not think of intervening on behalf of Holland, France would tell the Belgians "that they shouldn't eliminate the House of Orange from their calculations and that they will not be able to count on our support if they behave stupidly." The difficulty was that, as James admitted, the government was simultaneously "asking for eighty thousand men [while] saying 'we are all for peace' . . . [T]here has been such a degree of fervour and activity at the War Department over here that it would seem that they already planned to make war in fourteen days' time. Our newspapers are now furiously screaming for war and yesterday the whole world thought that war was about to break out." Nevertheless, he still maintained that Laffitte was "for peace and he is only asking for the army so as to be able to defend peace." Talk of war was merely to "keep the public mind occupied." It was for this reason that James urged the Banque de France to avert Laffitte's bankruptcy in early 1831; a change of government in France, he was convinced, would increase the danger of war. Throughout January he a.s.sured his brothers of the government's peaceful intent, despite the increasingly febrile mood in Paris.

Yet James was soon forced to acknowledge a growing appet.i.te for war over Belgium even within the government, an appet.i.te which was only whetted when the news reached Paris of the revolutions in Modena and Parma. James reacted promptly. According to his own account, he told Louis Philippe: You are being pushed into a state of war, even though you have no interest in any Belgian [territory] . . . and is it wise for the French to take on such a proud stance? And now do you want us to go ahead and declare war on the foreigners? Your Majesty, you are being deceived. Your ministers have lost the confidence of the public. You should appoint Perier and then all the people, including the wealthy section of the population, will support him, and this will demonstrate that you mean business.

Laffitte, he told his brother, was bent on a course of "complete anarchy": This morning I was at Laffitte's and he said to me, "If France does not declare war on Austria, then, in a matter of three weeks, the king will no longer be king and will lose his head." I told him, how could he possibly give such bad advice to the king, to which he replied that the king no longer consults with him. In short, Laffitte views the situation as already lost . . . Tomorrow, I will ask the king and perhaps I might even go to see him today.

It would appear that James's "talking to the king had the desired effect": Laffitte resigned just over a week later.

James's support for Perier was thus inseparable from the idea that he would pursue a peaceful policy; by the same token, James knew that he would be able to survive in office only if the other powers made concessions too. This was the strategy on which he pinned his hopes of stabilisation in France. In a characteristic letter intended for Metternich's eyes, James urged Salomon that Austria should "support" Perier as the French politician least likely to go to war: Now, my dear Salomon, you must see that if my friend Perier takes office his ministry is supported, for thirty-two million people making a revolution are a danger to all countries. "And," Perier said to me, "if people want to do something for the king, they should try to give France a piece of Belgium; that would really strengthen the king's position, but he does not press for it." . . . Now I tell you that when Perier is in the saddle it depends on the [other] powers whether they have war or not . . . I tell the whole world that the powers only want peace . . . [W]e can't say yet what will happen, but I am confident because of Perier, as if we have war, he will suffer losses on his properties and factories; for that reason I believe in peace . . . When we are certain of peace abroad we shall have peace at home.

"Perier," he a.s.sured Nathan, "is a stroke of luck from G.o.d, as he will maintain peace, or at least I hope he will." He and Lionel were even led to believe that "if Perier comes in, it is to be one of his conditions, that Austria should be allowed to interfere in the Italian affairs without any notice being taken of it." As soon as Perier's appointment was confirmed, James repeated his appeal for Austrian backing: [W]e have a ministry which wants peace, and they want to do all that is in their power for peace to be maintained. [But] if the powers want peace to be maintained, then they will have to strengthen the "Peace ministry" and enable it to demonstrate [to the public] that the powers have no intention of attacking France. It would now be very helpful if both Russia and Austria were to issue a declaration that they will remain on the sidelines, and that they will not attack France, and such a move would calm the populace, for over here they firmly believe that as soon as Russia has resolved its problems in Poland, they will then turn their attention to France . . . I went to the king and pointed out to him that my whole fortune and family were in France and, consequently, I would not dream of misleading him and lulling him into believing that the foreign powers wanted peace when, in truth, they were planning to make war and, anyway, for whose benefit would such a ploy be? . . . If they should opt for Perier, then their credit will rise and everything will improve . . . Well, all now depends on the foreign powers and you will have to make every effort towards that end, for, should we be unsuccessful in maintaining peace, then no power will be able to preserve its credit.

Five days later he "urgently begged" Salomon to continue "pestering" Metternich "as to the importance of strengthening the ministry here and . . . maintain[ing] peace, which is so necessary to Europe, the Prince alone having the power to maintain it." "The whole depends upon the question of war or peace," wrote Lionel on March 31. "This govt. is for peace, but must be supported by the other powers and must not go against the public opinion, or it would give too much strength to the opposition, which would then bring us war immediately."

Yet even the appointment of Perier did not wholly allay James's fears of French aggression, especially when it became known that Austria intended to intervene in the Papal states regardless of the change of ministry in Paris. Events in Italy, Belgium and Poland periodically threatened to stir up liberal sentiment in Paris, leaving the government with little choice but to fight or resign. In the summer of 1831 there was even an economic argument for a more aggressive policy, as Lionel remarked: "There is [sic] in France too many young men, without employment and money and to get rid of them war is requisite, party spirit is also strong, and without a war, we should see the present king driven away." Louis Philippe appeared to share this view, and James watched with apprehension as Perier's position seemed to crumble. When Perier resigned at the beginning of August, James predicted "war within four days" if an "ultra-liberal" ministry took his place. Not for the last time, Perier survived politically by taking limited military action against Holland with the tacit approval of the other powers.

The same scenario was more or less replayed in January and February 1832. First James warned that Perier would resign if the final terms of the Belgian settlement were unsatisfactory to France. Then Perier sent a military force to Ancona in reply to the return of Austrian troops to the Papal states. Even after Perier's death, the pattern repeated itself. With Soult eager to despatch the army against the Dutch once again in October 1832, James sought to secure British support for intervention by warning Nathan: "If the government here, G.o.d forbid, does not survive, we will then get a republican administration, and then I expect things to be very black indeed. That is why everything now depends on the Belgian problem. Should England decide not to stand by France, we will then become very sick here, for the world is opposed to the doctrinaires doctrinaires."

There was a very similar link between domestic and foreign policy in Britain. The possibility, though remote, never entirely disappeared that a Tory government might revert to Pitt.i.te tradition and intervene against a revolutionary France. On the other hand, when the Whigs came to power in 1830, James at once visualised an equally alarming scenario: if the new government turned out to be "radicals" then "our ministry will have to be more liberal and consequently, the Belgian problem will be that much more difficult to resolve, and England may possibly enter into a treaty with France so that we could find ourselves at war with the rest of Europe." "All now depends on England," wrote James to Nathan in January 1831, during the search for a suitable Belgian king. "The foreign powers would never declare war without England as an ally . . . You see, dear Nathan, how important it is for you to be constantly vigilant, because whether or not we will have war depends on whether or not England will yield on the question of Belgium." But Nathan's Tory friends were unconvinced by James's arguments, least of all when he threw his weight behind Perier. As Nathan wrote to James shortly after the start of the Reform Bill debates, Herries says that Peel will certainly be asked to join the ministry, that Wellington will become Foreign Minister and that, unless France gives way, he is convinced that the British Army will go to Germany . . . It would be well for you to tell the king that he must hold himself aloof, and not trifle with England, for she is not to be trifled with . . . England has no faith in your ministers who want nothing but revolutions, in which old Lafayette and I know not who else a.s.sists. Your king and his ministers have only to show that they don't want war: they must not change their tone from day to day. Go to the king and tell him that Peel, Palmerston and Wellington are coming to power.

This shot across the bows does much to illuminate the Rothschilds' subsequent transition from Toryism to Whiggery. The Whig position, as relayed by Nathan on March 18, was far more congenial to James: "If France does not remain quiet, but takes action against the other three powers, we shall join the three powers, but if the other three powers take action against France, we shall join France but if the other three powers take action against France, we shall join France." James's fear that the Reform Bill would be defeated and the Tories returned to power was therefore more to do with the international situation than with his support for the bill itself, for "a Wellington ministry would declare war on France without hesitation." As Lionel observed in June 1831, confusion about British politics tended to reduce the chances of a Belgian settlement, because "all the time the King of Holland reckons upon a change in the ministry." James made the same point four months later: "The pa.s.sage of your bill is being closely watched, as people believe that, should the ministry resign, we will then have war." When Russia was hesitating about ratifying the 24 Articles on Holland, Lionel posed the question: "What can Russia do alone[?], everything depends upon the Reform Bill, if that pa.s.ses and the present ministry remain[s] in, England & France are quite strong enough to make all the other powers tremble."

This illuminates Nathan's decision not to support Wellington when he was unexpectedly returned to office in May 1832. It was not just that Nathan feared internal "commotions" if an anti-Reform government stayed in office; it was also that "the foreign ministers"-he instanced Talleyrand, Weissenburg and Bulow-were "in great anxiety lest the King of Holland should be led to expect such support from the new government as would lead to war." This a.n.a.lysis was echoed six months later, when news of the Whig election victory was generally welcomed by James, Lionel and Anthony as "the best guarantee of peace in Europe" and the stability of the French government. In the dying moments of the Belgian crisis, when the possibility of Russian intervention surfaced for the last time, Nathan indicated the extent and nature of his conversion in a letter to James: You must write to our brother Salomon, to tell Metternich not to let himself be bamboozled into war by Russia, for Pozzo [the Russian amba.s.sador in Paris] is with the king and was not well received, and he and Lieven [the Russian amba.s.sador in London] are intriguing to make Austria and Prussia declare war. I have, however, been informed in a reliable quarter [presumably Bulow] that Prussia will not go to war, and that they are making a great mistake, because England and France jointly can do a great deal. We shall keep peace, there won't be war . . . Write and tell Salomon that Neumann [the Austrian amba.s.sador] is always spending a great deal of time with Pozzo and believes our government to be weak. The man is seven-eighths mistaken and now Pozzo has not been well received. The king invited him to Brighton and he sat six places from the king. The king asked him how long he would stay here. He replied, "Six weeks"; and now we know that Russia wants war, and Metternich is being bamboozled by those people. Pozzo and those folk are making themselves ridiculous and do not understand England, so ask our good brother Salomon to tell Prince Metternich not to let himself be bamboozled by Russia. Pozzo is here simply to spy and You must write to our brother Salomon, to tell Metternich not to let himself be bamboozled into war by Russia, for Pozzo [the Russian amba.s.sador in Paris] is with the king and was not well received, and he and Lieven [the Russian amba.s.sador in London] are intriguing to make Austria and Prussia declare war. I have, however, been informed in a reliable quarter [presumably Bulow] that Prussia will not go to war, and that they are making a great mistake, because England and France jointly can do a great deal. We shall keep peace, there won't be war . . . Write and tell Salomon that Neumann [the Austrian amba.s.sador] is always spending a great deal of time with Pozzo and believes our government to be weak. The man is seven-eighths mistaken and now Pozzo has not been well received. The king invited him to Brighton and he sat six places from the king. The king asked him how long he would stay here. He replied, "Six weeks"; and now we know that Russia wants war, and Metternich is being bamboozled by those people. Pozzo and those folk are making themselves ridiculous and do not understand England, so ask our good brother Salomon to tell Prince Metternich not to let himself be bamboozled by Russia. Pozzo is here simply to spy and I am convinced that England is stronger than she was in the time of Wellington I am convinced that England is stronger than she was in the time of Wellington. Now, my dear brother, don't let yourself be bamboozled by anyone. If England and France hold together, it will be difficult to touch them. Write this to brother Salomon.

In Vienna too, despite the absence of a revolutionary threat, there was a domestic political struggle with important international implications: between proponents and opponents of foreign intervention. When Salomon returned to Vienna in early October 1830, it was in order "to impress upon Prince Metternich how important it now is to maintain peace," as "the issue of peace or war depend[ed] entirely upon" him. This was a slight exaggeration, as Austrian influence over the Belgian question was limited; on the other hand, Russia (and possibly also Prussia) would be more likely to go on the offensive if a lead came from Vienna-that was the implication of the Carlsbad agreement of August 1830, which had reaffirmed the counter-revolutionary intent of the Holy Alliance. Over Italy, Metternich was unequivocal. He told Salomon in November 1830 that he was prepared "to send troops . . . to keep the country quiet," and he duly did so in both Modena and Bologna, as we have seen. Until April 1831 Salomon could do little more than relay Austrian intentions to Paris (in itself an important service as his letters to James arrived as much as three days before Apponyi's official instructions). When the Tsar appealed for help in Poland, however, Salomon was able to exert real influence, forewarning Metternich's rival Count Kolowrat, who intervened "with uncharacteristic decisiveness" against such a.s.sistance. By July he was able confidently to a.s.sure his brothers: "Strictly between ourselves, Austria will not make war, does not want war and is doing everything possible to avoid having a war . . . I am convinced that even if England and France declared war on . . . Russia Russia, it would make no difference to Austria, we would stay . . . neutral."

Even when he was away from Vienna, Salomon kept up the pressure on Metternich to avoid war. In March 1832 he wrote long and effusive letters to Metternich from Paris, urging him not to overreact to Perier's decision to send troops to Ancona. In November, when French troops were descending on Antwerp, Kubeck complained that "Prince Metternich is a veritable pendulum, swinging back and forth between Tatichev [the Russian amba.s.sador in Vienna] and war, and Salomon Rothschild and peace."

Golden Chains.

Yet it is hard to a.s.sess how much the brothers' constant lobbying for peaceful policies would have achieved if it had not been linked to their financial power. As suggested above, the Rothschilds had two potential forms of leverage: not only the influence they derived from their role as a channel of informal diplomatic communication, but also actual financial pressure-if a regime bent on war asked them to lend money, they could refuse, and conversely they could give financial support to one that was peacefully inclined. Here once again it is necessary to stress the limits of Rothschild power, especially in those countries (Britain and Prussia) which did not make large increases in military expenditure during the 1830-33 crisis, but also even in those (France, Russia and Austria) where spending did create a need for new loans.

Rothschild financial leverage was most limited in the capitals where no partner was resident. In Berlin, the brothers were caught by the outbreak of revolution in 1830 halfway through a delicate conversion operation designed to reduce the interest on their earlier sterling loan to Prussia from 5 to 4 per cent. From the outset this was not a promising transaction. After much hard bargaining between Salomon, Anselm and the Rothschilds' "old friend" Christian Rother, it was agreed in February 1830 that the Rothschilds would issue a new sterling 4 per cent loan at 98, the proceeds of which would be used to redeem the old 5 per cent bonds. The total amount of the loan was 3.8 million. In addition, the possibility was raised of a similar operation for the bonds issued in 1822.4 However, by the time the French revolution broke out in July, roughly half of the new 4 per cent bonds were still unsold. With financial markets across Europe nose-diving, there was no possibility of disposing of these other than at a steep discount: by February the new bonds were being traded at 79.5, and renewed sales would doubtless have driven the price lower. Yet the brothers were contractually bound to continue making cash payments to Prussia on the basis of the underwriting price of 98. Could the Rothschilds have stood the losses-estimated by Rother at more than 367,000-which would have ensued had the contract been honoured? Probably; but it is easy to see why, having lost so much on the earlier French 4 per cent loan, they were so determined to extricate themselves from this second costly debacle. However, by the time the French revolution broke out in July, roughly half of the new 4 per cent bonds were still unsold. With financial markets across Europe nose-diving, there was no possibility of disposing of these other than at a steep discount: by February the new bonds were being traded at 79.5, and renewed sales would doubtless have driven the price lower. Yet the brothers were contractually bound to continue making cash payments to Prussia on the basis of the underwriting price of 98. Could the Rothschilds have stood the losses-estimated by Rother at more than 367,000-which would have ensued had the contract been honoured? Probably; but it is easy to see why, having lost so much on the earlier French 4 per cent loan, they were so determined to extricate themselves from this second costly debacle.

Anselm was duly sent back to Berlin for a protracted and exceptionally difficult bout of wrangling, made the harder by the machinations of the various officials and ministers he had to deal with, who were united only by their opposition to an outright cancellation of the conversion agreement. Finally, after Carl had been sent to join him, it proved possible to reach a compromise. In effect, by paying an indemnity of around 140,000 (which in practice dwindled to around 50,000 after various deductions), the Rothschilds secured a postponement of the operation until European financial conditions had stabilised.

From the Rothschild standpoint, this was a successful exercise in damage-limitation; but why did the Prussian authorities agree to it? Rother's argument to the Prussian King, Frederick William III, was based on self-interest. "If Nathan Mayer von Rothschild's firm were to be compelled strictly to observe the dates laid down in the contract," he pointed out, "in spite of the unfavourable conditions now obtaining, it would necessarily endeavour to sell the new 4 per cent bonds at any price in all markets, and thereby deal a severe blow to our public credit. Our experience has taught us that financial transactions in which the von Rothschild firm do not act as intermediaries, but as opponents, are apt to fall through . . ." Rothschild weakness, in other words, could have negative repercussions for Prussia too, despite the short-term benefits of insisting on the fulfilment of the contract: Through the recent French loan of January 1830 and the conversion . . . of the Prussian debt contracted in 1818, in which latter transaction they a.s.sociated a number of other banking firms with themselves, involving them in enormous losses, the Rothschild banks have entirely lost their credit in transactions of this kind . . . Although their wealth . . . is still very considerable, they lack the cash necessary for transactions of this kind, since their property, which consists of bonds of all the European states, cannot at present be turned into money on any bourse. The Rothschild banks are therefore now refusing to take over any large loans direct, seeking as in the case of Austria, to deal with them on a commission basis, and while they will make advances on account, they proceed to sell the newly created bonds at exceedingly low prices, thus damaging the States concerned.

But this argument would not have cut any ice if Prussia too had not been in need of new funds to pay for the rising costs of her military preparations. For although Prussia was, in James's words, "of all Powers, least in a position to demand war, and most [keen] to avoid it," she could not ignore the threat of a major war (whether over Belgium or Poland) which recurred throughout 1831 and 1832. Rother's letter to the King suggests that he had been dissuaded, probably by Amschel, from attempting to float a new issue of bonds. Instead, the Rothschilds offered to make substantial short term cash-advances of up to 5 million thaler against treasury bills and to lend their support to a lottery loan. It was this offer which was decisive in securing the postponement of the conversion, discussion of which resumed only in 1833, by which time Prussian 4 per cents had recovered to 92 and "the present political situation gives no more cause for serious concern."5 In other words, the Rothschilds still had some financial leverage in Berlin; but it was only sufficient to secure concessions over the conversion. There is no evidence of any attempt during this period to influence Prussian foreign policy: all the Rothschilds got out of Frederick William was some porcelain and (for Nat) the t.i.tle of Privy Commercial Councillor, by way of grudging thanks. In other words, the Rothschilds still had some financial leverage in Berlin; but it was only sufficient to secure concessions over the conversion. There is no evidence of any attempt during this period to influence Prussian foreign policy: all the Rothschilds got out of Frederick William was some porcelain and (for Nat) the t.i.tle of Privy Commercial Councillor, by way of grudging thanks.

If their power was limited in Berlin, the Rothschilds' influence in St Petersburg was almost non-existent. True, Russia needed money more than any of the great powers to fight her war against the Poles. But relations between the Rothschilds and the the Russian Finance Minister Kankrin had never been good, so even when the Russians directly approached their agent Ga.s.ser for a loan in early 1831, James was wary. "The Minister must be terribly short of money," he reflected. "That means he will not be able to fulfil his commitments, and, should it occur to the good man not to pay his interest, we will then be left floundering." He argued for taking any loan only on commission and issuing it in small tranches, opposing Nathan's decision to offer an immediate advance of 400,000. "In the event of war breaking out," he warned, "neither France, nor Russia nor Prussia will meet their interest payments, and, by G.o.d, they will all use the excuse of war to justify the non-payment of the interest due." On the other hand, as Anselm argued, if the danger of war disappeared-especially if Russia won a decisive victory in Poland-the government would have no need of their services. Only as long as the crisis lasted would the government need money badly enough to "submit to any conditions." In fact, James's real anxiety was political: he had no objection to lending the Russian government as much as 5 million provided the fact could be kept secret in Paris, where sympathy for the Poles was fervent. "It is a foregone conclusion," he pointed out, that we will be severely criticised in the newspapers, otherwise, I have no objections to proceeding on this basis . . . [S]hould the Poles indeed have achieved a victory, this will ease matters considerably, as we must make every effort to co-operate with the liberal[s]. Would it perhaps be possible to claim that the minister will be arranging the loan in conjunction with Ga.s.ser and in his name? . . . Well, I suggest we consider . . . very carefully how we can possibly prevent our involvement in this matter becoming public knowledge.

He repeated his misgivings a week later: "I can a.s.sure you that if we support Russia against Poland I am not at all certain that I won't be clubbed to death, because public opinion here is pa.s.sionately behind Poland." Nevertheless, he was obviously prepared to risk public hostility if the terms of the loan were sufficiently attractive. It is noteworthy that these discussions took place on the eve of the Poles' decisive defeat at Ostrolenka. Indeed, Nathan managed to sell some guns to the Russian government just a few days after the battle. James was "extremely happy" at the profit thereby realised; once again, his only concern was to avoid bad publicity: I beg you, in G.o.d's name, not to provide your name unless it is absolutely essential, that is, to register that "Rothschild" has sold "guns" and please keep this information under wraps, as otherwise I am liable to be shot, for it will be said that I am selling guns to facilitate the shooting of the Poles. Yesterday a friend of mine who is a newspaper correspondent came to see me and showed me a newspaper article which claimed that we were providing funds to Luxembourg so that they could suppress the Belgians. He had not written the article but believe me, dear Nathan, now that the general feeling amongst the public has veered to liberalism one must be that much more careful. That is why you should make every effort to prevent the information reaching the newspapers.

The idea of a loan (now for 1 million) resurfaced again at the end of 1832. Again, James felt nervous, this time imagining the English press "tearing us apart, claiming that we are providing the Russian Tsar with loans which will enable him to wage war." But once again he was prepared to run this risk. After all, "it is not as if one can conquer the world with 1 million." And to be on the safe side Lionel argued that "in case of war the . . . clause ought to exist . . . that we are not bound to continue our payments" (a device used for other Rothschild loans in this and later periods, as we shall see). However, as James predicted, Kankrin once again "bamboozled" Nathan by using the Rothschild offer merely to secure improved terms from Hope, the Russian government's traditional banker. The idea that the Rothschilds had been competing to make this loan would have come as a surprise to those French emigres-supporters of Charles X, who banked on a Russian-led counter-revolution-who were convinced that the Rothschilds had "fallen to a prodigious extent under revolutionary influence" and now served "the revolutionary movement . . . under the leadership of the London [Rothschild], and of Talleyrand." After all, this was the last opportunity when a Russian intervention might have averted the imposition of the 24 Articles on Holland. It is possible that Nathan and James genuinely believed that if they handled the loan instead of Hope-especially as they envisaged lending a much smaller sum than the Dutch bank-they would be able to exert pressure on Russia not to intervene. Alternatively, Nathan's warning after the Hope coup that Russia was bent on war was disingenuous. It is tempting to conclude that he was prepared to shut his eyes to the possibility of Russian aggression if he could only win back his influence at St Petersburg.

James came to feel that his brother was trying too hard to secure Russian business. "As far as I am concerned, Russia can go to the Devil, and we can quite happily do without them," he wrote when yet another loan was bruited in 1834. "Under no circ.u.mstances should you personally write to Petersburg for you have been refused enough times. Don't give them another opportunity to embarra.s.s you." "Do you think that we will ever be on friendly terms with Russia?" he asked two years later. He evidently thought not. It is hard to find a better ill.u.s.tration of the limits of Rothschild financial power.

Even where a partner was resident there were difficulties. In London, the disintegration of Tory power which began with Catholic emanc.i.p.ation and was completed by the failure of Peel's 1834-5 ministry unquestionably led to a decline of Rothschild influence over financial policy. Althorp, Grey's Chancellor, was decidedly unimpressed by Nathan when the latter sought to ingratiate himself in December 1830. "The result of a good long conversation," noted Althorp, "was that I was satisfied he must think me the greatest fool that ever existed or he never would have supposed that he could so grossly deceive me as he appeared to wish to do." And whatever sympathy Nathan may have come to feel towards Grey's government, he was never given much inside political information; indeed Grey's resignation in 1834 took him wholly by surprise. However, the decline of Nathan's political influence had less to do with the door being "shut in his face" by the Whigs than with the fact that British financial policy largely rendered him superfluous during the 1830s. With only one exception-the 15 million loan to compensate the slave owners in 1835-there were no major borrowings by British governments in this period. Expenditure was tending to fall and revenue, despite continuing piecemeal reductions in indirect tax, was stable. For this reason, Nathan's leverage in London was much less than James's in Paris. Although Nathan was ready and willing to act as a channel for inter-governmental messages, he was not really in a position to influence their content. It was a matter of luck rather than Rothschild design that the Whig government was keen to avert war over Belgium.

By contrast, there is evidence that James succeeded in using financial leverage to discourage an aggressive policy in France, though the strength of his position should not be exaggerated. The revolution had left the Paris house in an extremely vulnerable state, saddled with large amounts of depreciating 3 and 5 per cent rentes and with payments totalling 10 million francs still outstanding to the Treasury for the 4 per cent Polignac loan. On the other hand, the new French government was forced to begin borrowing almost immediately, issuing substantial quant.i.ties of treasury bills. James's immediate reaction to this was characteristic: there were, he told Nathan as early as December 1830, "big deals to be made here," and it was his intention not to be excluded from them. Despite his heavy criticism of Laffitte's foreign policy, at no point did he withdraw from the discussions about financing the government's deficit. His reasons were straightforward. As he explained to his brothers in March 1831, "doing business with the current Government will, I think, bring in its wake a rise in the rentes." In any case, "the businessmen are all in agreement about the loan here, and I shall go with them, because I don't want to be out of it."

The problem was that some of the money being raised was obviously wanted for military purposes (this was confirmed by "a colonel in the War Ministry who is on my payroll"). Indeed, James and Nathan themselves sold around 28,000 British guns and offered to sell other military supplies to the French government at around this time-a remarkable kind of "hedging," given their vocal pacifism. There was no real guarantee that French armaments were for purely defensive purposes, except that the higher costs of war would be unfinanceable. James pinned much hope on this idea that "an outbreak of war would be very dangerous [to the French government]," adding: "I a.s.sure you that they will have to raise loan after loan to be able to pay the interest." When Sebastiani talked of France's refusing to be "bossed about" in February 1831, James was sceptical: "Basically they have no funds in reserve. With what will they wage war? Consequently, I am convinced we will have no war, no matter what others might say."

This helps explain James's support for Perier, for the latter seemed to recognise the fiscal constraint on French policy: Perier told me, ". . . If we choose war, we will be unable to meet our debts, and I am therefore not prepared to join the ministry only to see the Treasury slide into bankruptcy the following day . . ." In short, he will not join without first being rea.s.sured that we can maintain peace . . . Should Perier not join the government, then I fear that the Treasury here faces bankruptcy for they will have to issue a loan at 5 per cent.

It therefore made sense to give Perier financial as well as moral support, not least because the combination of peace and a properly funded loan would lead to a rise in the price of rentes: I will speak to Perier and may sell a loan on commission. The Treasury is in need of funds . . . We must a.s.sist the government by providing funds, and ensure that the bankers partic.i.p.ate, as it is in my interest to provide these people with funds, so that . . . I can make my exit from all this . . . I think that Perier will boost the value of your stocks . . . I want to tell you that we can perhaps do business with Perier.

But the fact remained that James had no way of preventing the money thus raised from being used to fight a war. He simply lacked the bargaining power to insist on the clause suggested by Nathan "that in case of war those payments that have not been made . . . are not to be enforced." The most he could do was to hope that Perier would not be "too belligerent [over Austrian intervention in Bologna], as we must of course remember that the people wish to raise a loan." There is some circ.u.mstantial evidence that such financial considerations inclined the French government to avoid war with Austria over the Papal states. Market expectations that the loan would stabilise the fiscal position ran counter to pessimism about the dangers of war. Indeed, the fact that the French Finance Minister Louis exploited a slight rally in April to demand better terms for the loan was regarded by James as a sign of the government's peaceful intentions. That the amba.s.sadors of potentially hostile powers like Werther (Prussia) and Pozzo (Russia) were personally interested in taking a share of the loan also suggested to Lionel that peace would be preserved. Nevertheless, James's overwhelming sense in the spring of 1831 was one of impotence. "I am master of nothing," he confessed to Nathan. "Times are no longer what they were. Previously, we would have taken on [such] a loan . . . by ourselves."

In fact, the 1831 loan was not large enough to solve the government's financial problems, as James realised from the outset. Moreover, the Treasury's parallel attempt to raise a "National Loan" by public subscription was a failure: only 25 million of a possible 80 million francs were sold, and the rest then had to be sold to the consortium of banks. A more radical government than Perier's might of course have followed the example of the 1790s, pursuing an aggressive foreign policy by printing money. But, as long as Perier was in office, financial realism prevailed. In August, as the Belgian crisis abated, James was encouraged to hear talk of a new loan of 100 million francs to consolidate the floating debt. Two months later he and Lionel were rea.s.sured to hear Perier say that he "would do what Villele could not, he would make 5 per cents par and then reduce them"-an unambiguous signal of impending retrenchment. The decision to maintain the sinking fund also pleased them. The year 1832 saw James rea.s.serting himself on the French financial market. In May a Rothschild-led consortium successfully bid to underwrite a 40 million franc loan by the city of Paris. This paved the way for another government loan of 150 million francs, again handled by a consortium. Significantly, James insisted on delaying this until after the Dutch had relinquished their claims on Belgium. By this time the idea that France might herself take unilateral military action without the express consent of England was being discounted. When James was approached to consider yet another loan in early 1833, fears of French aggression had faded, as evinced when 3 per cent rentes briefly touched 80 in February. In fact, the government chose to reduce the size of the army and hence the defence budget in preference to borrowing more, and there was soon talk of another conversion project to reduce the cost of servicing the existing debt. The same issue was still being debated four years later.

In short, the French government was was financially constrained, but it was a constraint imposed not by the Rothschilds alone but by all the major banks in Paris. The critical point is that there was no Rothschild monopoly over French public finance in the 1830s, as the loans of the period were undertaken by groups of banks, while sales of treasury bills were even more widely distributed. Many of the visits paid by James to Perier and other ministers were therefore less about exerting financial leverage than about obtaining financially sensitive news. Typically, James spoke in January 1832 of "going with Salomon to see Perier to hear whether he has any news, and to formulate my future actions on the basis of any information he might provide me with, as we are currently holding a large parcel of rentes and we must therefore deal with great caution." financially constrained, but it was a constraint imposed not by the Rothschilds alone but by all the major banks in Paris. The critical point is that there was no Rothschild monopoly over French public finance in the 1830s, as the loans of the period were undertaken by groups of banks, while sales of treasury bills were even more widely distributed. Many of the visits paid by James to Perier and other ministers were therefore less about exerting financial leverage than about obtaining financially sensitive news. Typically, James spoke in January 1832 of "going with Salomon to see Perier to hear whether he has any news, and to formulate my future actions on the basis of any information he might provide me with, as we are currently holding a large parcel of rentes and we must therefore deal with great caution."

It might therefore be suggested that, if Prussia, Russia and France had had resolved to go to war in the 1830s over Belgium or Poland, the Rothschilds would have been powerless to avert it. Yet this is to overlook the leading role played in Central and Eastern Europe at this time by Metternich's Austria: without Austrian partic.i.p.ation and, indeed, direction, a conservative crusade against the spread of revolution is hard to imagine. And this brings us to the role played by Salomon in Vienna, which has sometimes been portrayed as decisive in averting war after July 1830. resolved to go to war in the 1830s over Belgium or Poland, the Rothschilds would have been powerless to avert it. Yet this is to overlook the leading role played in Central and Eastern Europe at this time by Metternich's Austria: without Austrian partic.i.p.ation and, indeed, direction, a conservative crusade against the spread of revolution is hard to imagine. And this brings us to the role played by Salomon in Vienna, which has sometimes been portrayed as decisive in averting war after July 1830.

As early as November 1830 Salomon intimated to Gentz that, after the heavy losses suffered by himself and his brothers, financing a war was out of the question. In the same way, when Metternich sent Austrian troops into Bologna, James backed up Perier's threat to intervene with an explicitly financial argument, evidently intended for official consumption. In the event of war, he asked, "how would Austria be able to pay the interest [on her debt]? . . . Better not to risk one's entire capital." Yet, like James, Salomon did not occupy a monopolistic position. In the spring of 1830, when the Austrian government had issued a loan of 30 million gulden of 4 per cent metalliques, he had merely been one of a consortium of four issuing houses, along with Arnstein & Eskeles, Sina and Geymuller; and he had failed to wrest control of a planned conversion operation for the old 5 per cent bonds from the Frankfurt house of Bethmann. In the wake of the revolution, he was as little able as his brother to contemplate the idea of a government loan being handled by his rivals. When Metternich requested an issue of 36 million gulden of 5 per cent metalliques to finance intervention in Italy in March 1831, Salomon took a share along with the other three Vienna houses. Admittedly, a clause was inserted stating that the loan would have to be repaid within three months in the event of a war. But Salomon did nothing to oppose Metternich's covert borrowing of the 20 million francs which had been deposited with the Frankfurt house since the 1815 Treaty of Paris in the name of the German Confederation.6 Nor did he achieve much by a thinly veiled threat to withdraw financial support if Metternich did not ratify the 24 Articles relating to Belgium in early 1832: Nor did he achieve much by a thinly veiled threat to withdraw financial support if Metternich did not ratify the 24 Articles relating to Belgium in early 1832: Your Highness is aware that we have subscribed a quarter of the last loan of 50 million and have also purchased securities on the Bourse in order to maintain the price of metalliques, that we are carrying through other important financial operations, and that we are also negotiating new ones. As these are closely affected by the course of political events, and as I would like to see my brother happy and free from worry, I would humbly beg Your Highness to be pleased to let my manager . . . know of your opinion as to the present situation and whether the Austrian Government will recognise Belgium and allow the statement to be ratified.

Metternich hastened to rea.s.sure him "that, as the fundamental att.i.tude and will of the Russian Tsar were very well known to him, he vouched for the fact that these, without a single exception, were as peaceful as those of the Austrian Emperor." But this was flannel; Austria did not ratify the articles for another three months.

Salomon's most explicit use of the financial lever came in June 1832, while he was in Paris. "I do not," he wrote with uncharacteristic bluntness in a letter he ordered to be pa.s.sed on to Metternich and Kolowrat, "regard [it] with indifference . . . that Austria should issue a further metalliques loan during the year 1832, which G.o.d forbid."

You know that, taking the sum of our holdings of metalliques at Frankfurt, Paris, London and Vienna-that is, the holdings of the four banks which really const.i.tute one bank-the total amounts to several millions. Now, you cannot ride two horses at once; if our firm were forced to sell . . . what price could we expect to get? . . . We should be forced to realise our metalliques, whether we wished to or not. What would the capitalists and the commercial world say to the issue of two metalliques loans in one year, when the payments in respect of the first loan are not due to be completed until December? Such action might produce a sharp fall in metalliques. The government would not be able to get further loans at a low rate of interest, a blow would be dealt to the credit of Austria's finances and the government would fail to achieve its object . . . Moreover, what would the public say to a new loan? "There will be war-there must be a war, as Austria is issuing another loan." Even if we were not forced to sell, as we should be, prices would fall sharply and Austria's credit would be severely damaged . . . [This is] my conviction as to what would happen if there were to be even a whisper of a suggestion that another loan should be issued this year.

At first sight, this does indeed seem like the exertion of financial pressure with a view to limiting Metternich's room for aggressive manoeuvre. But it is important to realise that it came at a time of relatively low international tension: the Austrians had by now ratified the 24 Articles and the dispute over Ancona had been resolved. On closer inspection, it looks more like a primarily financial argument to avoid a slump in the price of Austrian bonds which would have been detrimental to the Vienna house's balance sheet. Salomon was not opposing a loan altogether: for purely technical reasons, he was arguing that "if it is essential to get money, it is much better to issue Treasury bills, and get in twelve millions of silver for the bank . . . a procedure which costs the government hardly anything and provides it with money for six to eight months." A year later he and the three other Vienna houses were perfectly happy to partic.i.p.ate in another issue of metalliques worth 40 million florins, and in 1834 to a lottery loan of 25 million gulden. If these were chains of peace, they did not bind tightly.

Underwriting Peace.

In fact, it was not so much by denying governments money as by making it available to them that the Rothschilds were able to give weight to their diplomatic efforts. The cla.s.sic ill.u.s.tration of this point is the way they responded to requests for credit from the areas where revolutions had broken out.

The Rothschilds had been doing business with the Belgian-based Societe Generale since 1827. Within days of the revolution in Brussels, James had re-established contact with it and over a period of months advanced over a million francs to help it weather the storm of revolution. At the same time, he and Nathan discussed a possible loan to Holland, presumably as a carrot to persuade the Dutch King to accept the secession of Belgium; Salomon saw such a loan as a way of helping "to control our war mongers." But Nathan could also wield a stick: when the Dutch invaded Belgium in August 1831 he at once offered to sell guns to the government in Brussels. Only when the Dutch had withdrawn and appeared to be about to accept the loss of Belgium, did he and James revive the possibility of a 6 per cent loan to the Dutch King, "for if he has the money, he will not consider any warlike actions"-and needless to say, "a lot of money could be earned from the Dutch government."

In the case of Belgium, although James was convinced there was "a fortune to be made there," the brothers waited until the supposedly definitive 24 Articles had been signed by Leopold before making their move. At the end of 1831, in partnership with the Belgian banker Osy, they floated a loan worth some 2.75 million-five times as much as the previous year's loan to Holland. This might be thought something of a gamble, considering that a diplomatic resolution of their differences was anything but sure. Interestingly, a contemporary British cartoon ent.i.tled The Protocol-Society in an Uproar The Protocol-Society in an Uproar shows the representatives of the powers gathered in Downing Street, with Nathan stage left complaining: "Your Potecols are no use; help mi Cot, Shentlemen, if you don't make everyting out for me, I will lend you no more monish-vat am I to do vit your Ponds" (see ill.u.s.tration 9.i). An etching from the same period by "J.W.W." depicts Nathan plucking the Belgian goose, and muttering: "cot tam you and your Pelgian Ponds! I could not find a shingle flat to puy them; upon my shoul, they are not worth as much as Spanish ponds" (see ill.u.s.tration 9.ii). shows the representatives of the powers gathered in Downing Street, with Nathan stage left complaining: "Your Potecols are no use; help mi Cot, Shentlemen, if you don't make everyting out for me, I will lend you no more monish-vat am I to do vit your Ponds" (see ill.u.s.tration 9.i). An etching from the same period by "J.W.W." depicts Nathan plucking the Belgian goose, and muttering: "cot tam you and your Pelgian Ponds! I could not find a shingle flat to puy them; upon my shoul, they are not worth as much as Spanish ponds" (see ill.u.s.tration 9.ii).

9.i: S.W. Fores, The Protocol-Society in an Uproar, or the Conferees The Protocol-Society in an Uproar, or the Conferees Confounded Confounded. A Sketch in Downing Street A Sketch in Downing Street (1831). (1831).

9.ii: "J.W.W.," PLUCKING THE GOOSE OR BELGIUM SUPPORTED BY HER FRIENDS AND ALLIES PLUCKING THE GOOSE OR BELGIUM SUPPORTED BY HER FRIENDS AND ALLIES (1831). (1831).

Anselm for one feared that it would "prove a bad concern, as I do not think that Belgium will be able to pay the Dividend for many years." On the other hand, he went on, "There is some money to be made . . . We must take things as they are and profit of the folly of the world." Provided the Dutch did not resume hostilities during the period when the loan was being sold to investors, the Rothschilds as underwriters could only profit; and if they did invade again there was "a clause which provides that, in the event of war, we need not take anything further." As James reported, brokers and bankers were "snapping [the loan] up like sugar pumpernickel" even before it had been issued, though by the time it was issued news of unrest in Rome and delays over the ratification of the Belgian agreement weakened demand, forcing James to support the market with repurchases.

By the spring of 1832, with Holland diplomatically isolated, the brothers were ready for more. The diplomatic settlement had created a Belgian debt to Holland by allocating a portion of the pre-1830 combined Dutch debt to the new government in Brussels, and this raised an obvious possibility. "There is money to be made there," wrote James. "If you promise Talleyrand a little something, my dear Nathan, he will then arrange that you be appointed the agent for the handling of the debt, just as Baring was between France and the Powers [in 1815]." There was "money to be made if we place ourselves between Belgium and Holland"-provided of course there was no further war between the two. In August 1832 proposals were drawn up for a second loan of 1.9 million, a third of which was to be issued by the Rothschilds in Paris-despite a warning from the French government that "it would be madness for us to give the Belgians money just at this moment & to give them every facility of making war." The dandy and diarist Thomas Raikes took a different view. "The Belgian question is just as near settlement as it was twelve months ago," he wrote on September 12: The mandates of the Conference are of no avail. Holland will not abate a particle of its demands. Leopold wishes to yield, but the Belgians will not hear of it. His treasury is empty, and Rothschild will not contract for the loan without binding the Belgians not to go to war. But there will be more temporising, as the stock-jobbing interest must prevail. All the nations of Europe want money, and dread a fall in the funds more than any other calamity.

However, when French troops were marching into Belgium to impose terms on the Dutch the following November, it was James's turn to think twice when the Belgian minister approached him for a short-term loan of 10 million francs. "One must help these people," he wrote somewhat wearily, "for, otherwise, they will simply not know what to do, and will only resort to stupid actions . . . In a word, these people . . . have no money and . . . don't have the intelligence to make any money." Belgium, he grumbled, was "a lousy country." Only when it was apparent-and the a.s.surances came from both Louis Philippe and Metternich-that the Dutch were diplomatically isolated and would have to acquiesce in the continuing Belgian occupation of Luxembourg and Limburg did the Rothschilds consent to the Belgian request. In partnership with the Societe Generale, the Paris house now took more than half of a new issue of treasury bills. The decision to lend to the new state was, in many ways, a remarkable gamble, for the Rothschilds had no way of knowing that the diplomatic stand-off would end peacefully. But it was a gamble that paid off, not least because Belgium was to prove one of the dynamos of European industrialisation.

Poland was a different case, however. Although the Rothschilds had business links in Warsaw just as they had in Brussels, they were never seriously interested in the success of the Polish revolt. Expressions of sympathy aside-"poor Poles, I pity them," wrote Charlotte to her mother-they did nothing to a.s.sist the revolt; on the contrary, as we have seen, they sought to lend money to Russia which would have been used to crush the revolt, and actually sold guns to St Petersburg.

In Italy too there was no question of a.s.sisting the revolution. Here, even before the political situation had been brought under control, the brothers arranged a 400,000 loan to the Papacy in partnership with an Italian banker named Torlonia. Perhaps more than any other Rothschild transaction of the 1830s, this loan fascinated contemporaries, who were in varying measures amused or appalled by the notion of a Jewish bank lending to the Holy See. Carl's audience with the Pope in January 1832, for example, was widely commented upon. "Now things are getting at last into the order that G.o.d desired when He created the world," sneered Borne: A poor Christian kisses the Pope's feet; a wealthy Jew kisses his hand. If Rothschild had got his Roman loan at 60 per cent instead of 65 and so been able to give the cardinal-chamberlain another 10,000 ducats, he might have been permitted to fall on the Holy Father's neck. The Rothschilds are a.s.suredly n.o.bler than their ancestor Judas Iscariot. He sold Christ for 30 small pieces of silver; the Rothschilds would buy Him, if He were for sale.

"Like pagan Rome Christian Rome too was overcome and even obliged to pay tribute," gloated the more sympathetic Heine, conjuring up a vision of the portly Papal emissary arriving at the Rothschild office in the rue Laffitte to deliver "the tribute of Rome" to "a fair haired young man . . . who is somewhat older than he looks and whose aristocratic, grand-seigneurial nonchalance has something so solid, so positive about it that you might be inclined to think that he had in his pocket all the money of this world. And indeed-he does have all the money of this world in his pocket; his name is James de Rothschild . . . What further need, then, of the Talmud?" "The Jewish banker says: '[G.o.d] has given me the royalty of wealth and the understanding of opulence, which is the sceptre of society,' " wrote Alfred de Vigny in July 1837. "A Jew now reigns over the Pope and Christianity. He pays monarchs and buys nations."

In truth, the Rothschilds themselves had their doubts about the wisdom of it. At first, James was tempted to let two English banks, Wilson & Co. and Wright & Co., take the lead, for two reasons: First, we are Jews, and if we should have a different Pope who is an evil man, he will say to himself that he could earn a ticket to Paradise if he refuses to pay anything to Jews. Secondly, I think the Pope's financial situation is in a bad state, similar to that of Spain, and if they should decide not to pay their interest, we will then not be involved with them directly.

At the same time, he and Lionel feared that while the British banks would find it easy to sell their shares, because of "the certainty of [their] being able to place amongst their Catholic friends, all their shares," the Rothschilds, "having quite a different connexion & not having the confidence of the friends of His Holiness, should have no employment for this stock & should be obliged to lock up our own money in it." This partly explains the Rothschilds' uncharacteristic caution in proposing to take the loan in three separate tranches, retaining the option to withdraw after the first. On the other hand, the stabilisation of Papal finances promised at least short term and diplomatic benefits, because (as Perier, Pozzo and Apponyi all agreed) "the Pope, if he is in need of money, and he receives the same, will then ensure that peaceful conditions are maintained." Moreover, there was much more public demand for the loan than James had antic.i.p.ated, leading to a hasty last-minute renegotiation of the deal to the disadvantage of Wilson and Wright, who found themselves cut out. The loan, issued at 70 but soon rising above 79, turned out to be a "most excellent little business," Lionel reported with relief. Although the recurrence of unrest in February 1832 caused a temporary setback, the bonds surged to a peak of 83 that summer and rose with only minor checks to reach par in 1835.

At first sight, there was something contradictory about all this, an echo of Heine's point about the Rothschilds' ambivalence towards revolution: they lent at one and the same time to revolutionary states like Belgium and conservative states like the Papacy. On closer inspection, the rationale was consistent: the Rothschilds made money available to new states if they had the backing of the five great powers. Formal or informal guarantees made loans attractive whether they were to an independent Belgium or a superficially reforming Papacy. In that sense, they were merely carrying on the policy which they had begun in the 1820s and which contemporaries had misrepresented when they called them bankers to the Holy Alliance. The obvious precursor to their support for Belgium was their loan to Greece. As early as February 1830, when Leopold of Saxe-Coburg was being touted as a possible monarch for the new kingdom, James urged Nathan: to pay a visit to your Coburg for there is business to be made from Greece. England has already agreed that if Coburg is prepared to accept, then they will guarantee to pay the country the same every month as France and Russia and he is negotiating with them that England should join in granting the guarantee together with France and Russia.

This was premature. It was not until May 1832 that a treaty was signed by the powers guaranteeing a loan to the new King, and he was a Bavarian rather than a Coburg prince (much less the Dutch prince predicted by Ludwig Borne). But the Rothschilds were still determined to handle the loan, and fought a hard battle for control against the Bavarian banker d'Eichthal and the Spaniard Aguado. Greece herself might be "worthless," but a 60 million franc loan guaranteed by France, England and Russia looked a sure thing. The feeling was mutual. Apponyi spoke for all the diplomats when he said: "Mr. Rothschild, it must not happen that such a large deal, in which all the Powers are interested, should be complete