the world of private banking

THE RISE OF tHE ROtHScHILDS
Any owner of government bonds . . . can collect the interest at his convenience
in several different places without any effort. As its customers wish, the House
of Rothschild in Frankfurt pays the interest of the Austrian metalliques, the
Neapolitan rentes [or] the interest of the Anglo-Neapolitan obligations in
London, Naples or Paris. 25
Even more novel was the formal justification for these conditions included in
the Prussian loan contract:
[T]o induce British Capitalists to invest their money in a loan to a foreign
government upon reasonable terms, it will be of the first importance that the
plan of such a loan should as much as possible be assimilated to the established
system of borrowing for the public service in England, and above all things that
some security, beyond the mere good faith of the government … should be held
out to the lenders …. Without some security of this description any attempt to
raise a considerable sum in England for a foreign Power would be hopeless[;]
the late investments by British subjects in the French Funds have proceeded
upon the general belief that in consequence of the representative system now
established in that Country, the sanction of the Chamber to the National debt
incurred by the Government affords a guarantee to the Public Creditor which
could not be found in a Contract with any Sovereign uncontrolled in the exercise
of the executive powers. 26
Clause 2 of the ‘Decree for the Future Management of the State Debt’ of 17
January 1819 duly specified that ‘If the state should in future for its maintenance
or for the advancement of the common good require to issue a new loan, this
can only be done with in consultation with and with the guarantee of the future
imperial estates assembly.’ 27 In other words, a constitutional monarchy, with some
kind of representative parliament, was seen in London as a better credit risk than
a neo-absolutist regime. Was this a subtle form of political pressure – a kind
of financial liberalism, lending its weight at a critical time to the efforts of the
Prussian reformers who had been pressing Frederick William III to accept some
kind of system of representation? 28 Perhaps, though, Nathan may merely have been
25
R.M. Heilbrunn, ‘Das Haus Rothschild: Wahrheit und Dichtung’, Vortrag gehalten
am 6. März 1963 im Frankfurter Verein für Geschichte und Landeskunde (1963), p. 24.
26
RAL, XI/109/10/2/4, undated documents relating to Prussian loan proposal, c.
Sept. 1817. See also RAL, XI/109/10/3, copy of letter probably from Nathan, London, to
‘Sir’ [Rother or Hardenberg], 30 Dec.
27
P.G. Thielen, Karl August von Hardenberg, 1750–1822 (Cologne/Berlin, 1967),
p. 358.
28
H. Obenaus, ‘Finanzkrise und Verfassungsgebung zu den sozialen Bedingungen
des frühen deutschen Konstitutionalismus’, in G.A. Ritter (ed.), Gesellschaft, Parlament
und Regierung (Düsseldorf, 1984).