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