The House of Rothschild Read Online Free

banks not only in other European markets but also all over the world, from Weisweiller in Madrid to Gasser in St. Petersburg to Belmont in New York. Their power fascinated contemporaries, not least because of their so recent lowly origins. An American observer portrayed the five brothers “peering above kings, rising higher than emperors, and holding a whole continent in the hollow of their hands”: “the Rothschilds govern a Christian world ... Not a cabinet moves without their advice ... Baron Rothschild ... holds the keys of peace or war.” This was exaggeration, but not fantasy. Yet this huge and powerful organization remained at its core a family firm. It was run as a private—indeed, strictly secret—partnership, with its main business the management of the family’s own capital.
    There was no loss of entrepreneurial momentum as the third generation joined the partnership, though the relations between the five houses did become slightly more confederal. To some degree, James carried on where Nathan left off, as primus inter pares. He too was a masterful man, indefatigably devoted to business, as addicted to the bread and butter of bill broking and arbitrage as to the big bond issues that delivered the fattest profits. His longevity kept the ethos of the Frankfurt ghetto alive in the firm well into the 1860s. Yet James was never able to dominate the other houses as Nathan had done. Though one of Nathan’s own sons—Nat—became his chafing adlatus in Paris, the others were never under his thumb. Lionel in particular proved as successful a businessman as his father, though his manner was sotto voce where Nathan had been explosive. Salomon’s son Anselm also proved a man of strong will. Nor could James really control his older brothers: Salomon in particular tended to pay more heed to the interests of the Austrian government and the other Vienna banks than his partners liked.
    In some ways, this shift from monarchy to oligarchy within the family was advantageous : it allowed the Rothschilds to respond to the new financial opportunities of the mid-century more flexibly than Nathan might have allowed. For example, Salomon, James and Amschel were able to play leading roles in railway finance in Austria, France and Germany, which their brother had conspicuously omitted to do in England.
    Nathan had been inclined to extend the practices of the 1820s into the 1830s. As the finances of the major European states stabilized, he looked for new clients farther afield: in Spain, Portugal and the United States. But to become “master of the finances” of Belgium was one thing; to repeat the process in Iberia or America quite another. Political instability in both Spain and Portugal led to embarrassing defaults on Rothschild-issued bonds. In the United States the problem was the decentralization of fiscal and monetary institutions. The Rothschilds hoped the federal government would prove a good source of business, but it tended to leave the business of foreign borrowing to the states. Likewise, they expected the Bank of the United States to evolve into an American Bank of England. Instead, politically undermined and financially mismanaged, it went bust in 1839. The Rothschilds’ failure to establish a strong foothold in the United States—they had little confidence in their self-appointed agent on Wall Street—proved to be the single biggest strategic mistake in their history.
    Such reverses in the familiar field of government finance made diversification logical. Thus the decision to acquire control over the European mercury market was partly a response to the risks of governmental default. By controlling a tangible asset like the Almadén mines, then the world’s biggest, the Rothschilds could finance the Spanish government with minimal risk, advancing money against consignments of mercury. The involvement in mercury mining made sense doubly because of the use of mercury in silver refining. Already experienced bullion