"Money is the god of our time", the Jewish-born German pamphleteer
and poet, Heinrich Heine, wrote in 1841, "and Rothschild is his
prophet." For the Rothschilds, this gibe, and all it implied, was the
underside of their success. They were cosmopolitans--there were
Rothschilds in London, Paris, Frankfurt, Vienna and Naples--and they
had the world at their disposal. They prospered in international
bonds, and made a good deal of their money on exchange rate
differentials among the various European markets. They were the
creditors of rulers. Governments had begun to run large deficits,
railroads were criss-crossing the Continent, and the Rothschilds sat
astride the world of finance and diplomacy. In an age of secrecy and
tightly held information, too, the Rothschild family network
delivered handsome dividends. Theirs was a formidable, perhaps
impossible combination: they were simultaneously the friends of
rulers and the agents of a revolution in finance and production. They
could never do right by their detractors; to the progressives they
were friends of reaction, to the believers in blood and soil and
nationalism they were the harbingers of a cosmopolitan culture,
merciless capital and an economy severed from national roots.

It was the perceptive Heine, deeply ambivalent about the House of
Rothschild, who best caught this strange duality at the heart of the
family enterprise. He saw that the family dubbed the bankers of
reaction and the financiers of the Holy Alliance were the bearers of
a deep, revolutionary undertaking:

"No one does more to further the revolution than the Rothschilds
themselves . . . and, though it may even sound more strange, these
Rothschilds, the bankers of kings, these particular purse
string-holders, whose existence might be placed in the gravest danger
by the collapse of the European state system, nevertheless carry in
their minds a consciousness of their revolutionary mission."

There was indeed a great irony surrounding the rise of the
Rothschilds, one of no small measure of interest to readers today who
are tempted to think that a new age of finance has come--and has to
come--at the expense of the state. The House of Rothschild prospered
as bankers to states and princes. Carl, the third- youngest of the
sons of Mayer Amschel, who had also come to England to practice the
"rag trade" (textiles), attained wealth and power by solving the
riddle of supplying Wellington's armies with the gold bullion they
needed to prosecute the war against Napoleon. War financing was the
first big break for the Rothschilds. As Ferguson puts it, it was the
Rothschild gift to make cash available at reasonable rates to an army
on the march.

The next big break came their way from Prussia. In 1818 the
Rothschilds underwrote a loan to the Prussian state that proved a
watershed in European finance. The loan was made in sterling, not in
thaler, and the interest was to be paid in London, not Berlin. In yet
another innovation, the loan was issued not just in London, but in
Frankfurt, Berlin, Hamburg, Amsterdam and Vienna. With that Prussian
loan, the creation of an international bond market was well under way.

Modus Operandi

The claim that the Rothschilds were bankers of reaction was off the
mark. They were conditional supporters of the states of the Holy
Alliance, more active in the affairs and finances of Austria than
they were in Prussian or Russian affairs. On the whole, however,
their preference was for constitutional monarchies that could be
counted on more reliably to honor loans and securities. Deep down
they were skeptical about all states, but their heavier presence in
London and Paris should convey something of the way they judged their
customers. The attitude of the brother who oversaw the Paris
operation, "the Baron" James, is a fair reflection of the way this
banking dynasty viewed the uncertainties of politics. He was
inclined, Ferguson writes, to "salute whichever flag was run up the
mast after the storm."

In a perfect world, the bankers backed the winning coalition of
states, and all the family branches were on the same side of the
divide. Such perfection was at hand during the Crimean War, which
must mark the zenith of Rothschild influence. But this good alignment
of the stars would not materialize again in the decades and conflicts
to come. The wars of unification and of nationalism that would follow
tested the Rothschilds and their family unity in unexpected ways. The
Franco-Prussian War of 1870-71--to cite but one, singular, important
case--pitted Rothschilds on opposing sides of the war. In Frankfurt,
Mayer Carl von Rothschild was swept up in the cause of the rising
German empire, whereas the Paris Rothschilds were French patriots,
with two of their younger members serving in the Garde Mobile. It was
not easy to maintain a multinational financial dynasty in the age of
nationalism. An Anglo-French axis came to predominate in the
Rothschild empire, and the houses in Vienna, Frankfurt and Naples
became increasingly marginalized. (The one in Naples was shut down in
1863; the Frankfurt operation was wound up in 1901.)

Governments were the Rothschilds' business partners, but governments
and princes made for risky, unpredictable business. The Rothschilds
had no taste for Louis Napoleon Bonaparte and his Second Empire, for
example. They suspected that his adventure would come to grief. But
they had to tread carefully in his world if their French base was to
survive. Conversely, they admired and had a healthy measure of fear
for Bismarck--the "terrible", "inexorable" Bismarck, the "great
highway robber", as one of the Rothschilds described that imposing
figure. But the Rothschilds had very little leverage over him, for
Prussia was less indebted, and hence less open, to their influence.
That great enterprise of states, war and warmaking, was hazardous to
the Rothschilds as a family, but was not unprofitable to business. It
gave the family's work its edge.

Though the radical pamphleteers and anti-Semites loved to write of
the Rothschilds "holding the world in the hollow of their hands",
there were things other than Bismarck beyond the power of
underwriting bonds and of finance. Now and then the Rothschilds
entertained ideas of using the carrot of finance to tame the fury of
anti-Semitism in Russia, or to secure greater sympathy for the Jews
from the papacy, but such hopes were in vain. In Russia, the winds of
anti-Semitism blew at will. St. Petersburg was not Rothschild turf;
they had no one on the ground there, and the Romanov court remained
inaccessible to them. Nor was the Vatican susceptible to the bankers'
entreaties. The papacy took Rothschild loans, but strenuously
resisted granting the limited measures of Jewish emancipation in Rome
for which the Rothschilds pleaded. The papacy presented the
Rothschilds with a cruel choice between loyalty to kin and faith on
the one hand and the hard-headed realities of finance and power on
the other. In Ferguson's words: "Given the choice between boycotting
the Vatican--thus losing their monopoly over the Pope's external
borrowing--and accepting defeat over the Jewish question, the
Rothschilds opted for the latter."

Outflanked by Change

It is said that the widow of Mayer Amschel once discounted the
possibility of a European war in no uncertain, prideful terms. "It
won't come to war; my sons won't provide money for it." Decades
later, the left-leaning writer J.A. Hobson, in his influential book,
Imperialism: A Study (1902), wrote in similar terms. A major war, he
observed, could not "be undertaken by any European State . . . if the
house of Rothschild and its connexions [sic] set their face against
it." This was the same Hobson who had described the Boer War as a
conflict engineered by international bankers "chiefly German in
origin and Jewish in race."

When the Great War threatened, the power of finance was unable to
avert it. This was a hurricane beyond the control of bankers. Natty
de Rothschild--grandson and namesake of Nathan--who had risen to the
peerage in 1885, foresaw a "horrid" war of unprecedented brutality
and duration. He died in 1915, before the consequences of his dark
vision were fully realized. He was the last of the Rothschild giants;
there would be impressive descendants, some of them men of character
and drive, but the obituary given him would be the last of its kind
for one of his family. "The death of Lord Rothschild is an event
which not even the war can overshadow", the editorialists of the
Western Morning News wrote. The luminaries of British life were there
to see him off: David Lloyd George, Arthur Balfour and Herbert Samuel
among them. The chief rabbi's sermon, a few weeks later, described
him quite simply as the "foremost Jew of the world."

This was the kind of eulogy Natty de Rothschild would have savored.
He shared with all the descendants of Mayer Amschel fidelity to the
faith. The Rothschilds were not particularly pious, but they remained
proud bearers of Judaism as a culture and a source of identity. One
stray case aside, conversion to Christianity was anathema to them.
They had retained Mayer Amschel's admonition that the desertion of
one's faith was nothing less than a crime. The Rothschilds went
through doors that had previously been bolted shut against Jews, and
they had done it as men and women of their faith.