the world of private banking

THE RISE OF tHE ROtHScHILDS 19
and not quarrel with each other’, he pleaded the following year. ‘If peace reigns
between us this will only bring us good fortune and blessings and both you and
we should not lack anything.’ 67 Perhaps not surprisingly, it was decided when the
partners met at Paris that same year to leave the 1836 agreement unaltered, as
– in the words of Nathan’s widow – ‘the Elder Brothers appear to be content with
things as they are and require no change’.
However, as Hannah herself noted, ‘The counting house of each having their
[i.e., its] own capital should be independent, and they must regulate the income
of each party to make all those concerned equally so, the Elder Members’ capital
being so much greater they have more to say’. 68 Two years later, Lionel was able to
modify the partnership agreement in precisely that way. By formally withdrawing
£340,250 from their personal share of the combined capital, he and his brothers
brought their proportion – and therefore the amount of annual interest they received
– into line with those of their uncles, ending the situation whereby Nathan (and
his heirs jointly) had been the biggest ‘shareholder’. 69 In doing so, it might be
thought, Lionel was surrendering an advantage. Indeed, he surrendered even more
by leaving the 1836 system intact for the distribution of the combined profits,
which had specified that just 10 per cent of the continental houses’ profits went to
the London house. However, Lionel’s objective was primarily to retain the relative
autonomy of the London house. His real victory was to defeat James’s proposal
– first put forward nearly thirty years before – that the partnership between the
five houses should be made public. 70 Thanks to Lionel, the precise nature of the
relationship between the five houses remained shrouded in mystery, a secret
between the partners and their lawyers. Such secrecy was a Rothschild tradition,
but it is tempting to conclude that Lionel already preferred not be bound too tightly
to the other four houses. On the other hand, when the supreme crisis of 1848
came – the moment when the Rothschilds came closest to ruin – it became clear
that complete autonomy was not really an option for the London house. It stood
to lose too much if the Paris and Vienna houses collapsed, as they would have
done without assistance from London. In fact, the 1850s saw a new tightening
of the links between the houses, especially between London and Paris; and the
Rothschild system was strong enough to survive the profoundly disruptive wars
of the period 1859–71, when the houses more than once found themselves on
opposing political sides.
If the secret contractual ties between the five houses were asymmetrical and
often strained, this was to a large extent counterbalanced by the marital ties which
acted as a secondary source of family unity. After 1824, to a quite remarkable
67
RAL, X1/109J/J42, James, Paris, to his nephews, 14 Nov. 1842.
68
RAL, RFamC/1/20, Hannah, Paris, to Mayer, London, 22 Aug. 1842.
69
CPHDCM, 637/1/7/88–92, Uebereinkunft, 30 Aug. 1844; also CPHDCM,
637/1/9/1–4.
70
RAL, XI/109/48/2/6, Lionel, Frankfurt, to Nat, Paris, 28 Aug. 1844; RAL,
XI/109/48/2/8, same to same, 29 Aug.