the world of private banking

12
THE WORLD OF PRIVAtE BANKING
are so diametrically opposed to the truth. In fact, Nathan’s relations with the Bank
of England were close and mutually beneficial. In December 1825, for example,
the Rothschilds supplied the Bank with enough specie from the Continent to avert
a suspension of cash payments. Looking back in 1839, the Duke of Wellington
had no doubt who had averted disaster: ‘Had it not been for the most extraordinary
exertions – above all on the part of old Rothschild – the Bank must have stopped
payment’. 40
Interest in money led naturally to an interest in the extraction and refining of
precious metals. The Rothschilds’ first step in this direction was their involvement
in the mining of Spanish mercury (primarily for use in the refining of silver).
For over three centuries the mines of Almadén had played a pivotal role in the
international monetary system because of the use of mercury in the refining of
silver. Traditionally, the Spanish government leased the Almadén mines to private
companies, most famously to the great banking dynasty of the sixteenth century,
the Fuggers. 41 It was a precedent the Rothschilds followed when Nathan’s son
Lionel went to Madrid to try to retrieve 15 million francs his father had advanced
to the Spanish government. 42 Although he failed to recover the money, he outbid
four other companies to secure the new contract to control the mines. 43 This was
the beginning of a long and lucrative involvement. Henceforth, when the Spanish
government asked for money, the Rothschilds could simply make advances of
the sums they had contracted to pay on account of Almadén. Their experience
with mercury mining proved useful in the second half of the century when the
Rothschilds followed the international shift from silver to gold, acquiring their own
gold refinery in London in 1852, establishing agents in California and Australia,
and later playing a leading role in South African gold mining.
The final area of business which the Rothschilds entered in this period was
insurance. Nathan’s involvement in the founding of the Alliance Assurance
Company in 1824 has been variously explained. According to the company’s
official history, it was the result of a casual meeting with his brother-in-law Moses
Montefiore; others have suggested that the aim was partly to provide employment as
an actuary for their relative Benjamin Gompertz, an accomplished mathematician.
A third hypothesis advanced is that the existing insurance companies had been
40
R. Davis, The English Rothschilds (London, 1983), p. 45.
41
C.P. Kindleberger, A Financial History of Western Europe (London, 1984), p. 26;
Corti, reign, pp. 120f.
42
RAL, XI/109/31a/1/31, Lionel, Paris, to his parents, 11 March 1834.
43
RAL, XI/109/32/4/50, Lionel, Madrid, to his uncles and parents, 13 Dec. 1834;
RAL, T22/678, XI/109/33/1/2, Lionel, Madrid, to Anthony, Paris, 15 Feb. 1835; RAL,
T22/678, XI/109/33/1/2, Lionel to his uncles and parents, 25 May; RAL, XI/109J/J/35,
James to Nathan and Nat, 28 Feb.; same to same, 9 March; RAL, XI/109/33/1/9, Lionel
to his uncles and parents, 25 March; RAL, XI/109/33/1/20, same to same, 6 June. Cf. J.
Fontana, La revolucion liberal (Madrid, 1977), pp. 59f. See in general V.M. Martin, Los
Rothschild y las Minas de Almadén (Madrid, 1980).