Bethmanns and Rothschilds

The two great banking dynasties of Frankfurt am Main were the House of Bethmann and the House of Rothschild. For several decades their affairs were closely intertwined while they carried on a vigorous rivalry. On occasion they would cooperate – as business partners but also, not least thanks to the enlightened outlook of Simon Moritz von Bethmann, with the shared goal of enfranchising the Jews of Frankfurt.

Historical background

Ever since the discriminatory Decretals of Pope Gregory IX in the High Middle Ages, Jews in the Holy Roman Empire had led a precarious existence, condemned to a status of perpetual servitude by Church doctrine and imperial decree, confined to narrow, unhealthy ghettos, and threatened by outbreaks of mob violence when the Jews came in handy as scapegoats. At long last this began to change towards the end of the 18th century. Besides the French revolution and its call for equality and freedom, liberalizing influences came from the changes agreed by the Vienna Congress, from the 1820 constitution for the Grand Duchy of Hesse, and from the specific provisions concerning Jews in the supplement to the Frankfurt constution and the Frankfurt council decree of 1824. [Preissler, pp.30-31.]

As seen by writers

Egon Caesar Conte Corti

Like snapshots, two quotes from Egon Caesar Conte Corti highlight the great strides made by the Rothschilds in a very short timespan. The first is a glimpse at the beginnings of the Rothschilds' rise. The year is 1794, but as yet "Gebrüder Bethmann" are too powerful for the upstart to break into the game.

The second, from 1820, shows what a difference a few decades make.

The shock of the bigoted burgomaster is palpable: what is the world coming to, he is thinking, when minorities no longer know their place?

Johann Philipp Freiherr von Bethmann

Following in the footsteps of his famous ancestor, Johann Philipp Freiherr von Bethmann in 1994 praised Mayer Amschel Rothschild and his sons for their achievements. The occasion was Hans Sarkowicz' book "Die großen Frankfurter", in which well-known Frankfurt personages were invited to describe notable citizens of Frankfurt and their achievements.

Bethmann notes the initial rivalry between the two Houses as bankers to the Landgrave and Elector of Hesse, which however soon gave way to preferment of Rothschild. [A major part of the Elector's fortune that he had his bankers invest derived from the impressment and sale of Hessians to rulers who used them in military conflicts abroad.] Simon Moritz at first found this setback hard to take and complained about the aggressive style of doing business exhibited by the Rothschilds.J.P. v. Bethmann in Sarkowicz, p.59.]

Eventually, however, he came to express respect for Mayer Amschel's five sons: cquote|The five brothers Rothschild are indeed a peculiar phenomenon of our time. Where they are lacking in ingenuity, they make up for it by tireless industry and exemplary unity while looking out for each other.J.P. v. Bethmann quoting Simon Moritz von Bethmann in Sarkowicz, p.60.]

in 1836.

At the time of Mayer Amschel's birth, Frankfurt's Jews were still "serfs" in "slavery", as Ludwig Börne said, not mincing his words. As "footmen of the Imperial chamber", Jews were subjects of His Majesty the Holy Roman Emperor. In spite of being restricted to a narrowly circumscribed range of retail, moneylending or pawnbrokerage businesses, a number of families managed to become prosperous by the end of the 18th century, foremost the "Speyer" family. Rothschilds had been small-scale peddlers, and Mayer Amschel himself had been a moderately successful retailer, a dealer in bills of exchange as well as a more traditional court Jew. When Mayer Amschel died in 1812 he was a fully enfranchised citizen of Frankfurt [at least on paper; true equality was still a long way off] . The walls of the ghetto had come down and he had laid the groundwork for the rise of his family to world renown.

The speed and breadth of the Rothschilds' rapid rise is something that even historians today find difficult to explain.J.P. v. Bethmann in Sarkowicz, p.61.] ["Neither Bethmann nor Gontard was Jewish. Yet there is no question that, by the later eighteenth century, it was Jews who had come to be seen as the most enterprising operators when it came to money-changing and all kinds of lending. After more than a century of scholarly reflection on the subject, it is still hard to say quite why this was." Ferguson, ch.1.]

Börne described Mayer Amschel thus: cquote|Old Rothschild was a pious man, piety and kindness personified. He was a charitable face with a goatee, on his head a triangular pointed hat, his dress not just modest but almost shabby.That is how he walked the streets of Frankfurt, and he was always surrounded by as retinue of paupers to whom he dispensed alms or good advice.

When Prince William became the sovereign in 1785, Mayer Amschel reinforced his activities in his direction, aided by his ally Buderus, the man who held the Landgrave's purse strings. Mayer Amschel's young sons supporrted him increasingly, aiding the House of Rothschild's rise to fortune. The two older sons Amschel Mayer and Salomon Mayer probably made partner in 1796. In 1800 they and their father, at the latter's request, became imperial court factors, based on their deliveries to the army. In 1802 Mayer Amschel attained the appointment of his sons as masters of the war payroll, and in 1803 he himself rose to the post of court agent in Kassel where he maintained a branch office.J.P. v. Bethmann in Sarkowicz, p.63]

The Landgrave (since 1803 Elector) was one of the richest rulers of the age thanks to the "English subsidies", i.e., the sale of his subjects as soldiers. He invested the profits by turning them into loans, for which he accepted interest from creditors in the form of bills of exchange. From 1801 Rothschild took an ever greater part in the dealings of the Landgrave. Trade in government bonds had now gained in importance; there were bond issues for Denmark, Hessen-Darmstadt, Kurbaden, and the Johanniterorden. But Mayer Rothschild also entered into financial transactions with the Princes of Ysenburg, Büdingen and Thurn und Taxis.J.P. v. Bethmann in Sarkowicz, p.64.]

What boosted Rothschild's fortunes, however, was the managing of the exiled Elector's assets. Mayer Amschel transferred liquidity to Nathan in England who advised that the Elector's "getaway money" be invested in English government bonds. In 1807 finally Mayer Amschel was the sole banker to the Elector. In 1806 Karl Theodor von Dalberg became Prince primate of the Rheinbund and lord of Frankfurt, from 1810 as Grand Duke. Mayer Amschel quickly adapted and entered into a relationship with Dalberg. He lent him money for his extravagant lifestyle and financed his journey to Paris in 1810 to attend the wedding of Napolean and Marie Louise. This earned his youngest son Jacob (James) a residency permit for Paris. In addition Dalberg warned Rothschild when his connection to the absconded Elector became a threat for Rothschild. At the same time Simon Moritz von Bethmann also maintained a most cordial relationship with Dahlberg.J.P. v. Bethmann in Sarkowicz, p.65.]

Frankfurt's Jews had greeted Dalberg's instatement in 1806 with high hopes but at first they were disappointed. It was only in 1811 that they received the legal status of citizens. However, as Paul Arnsberg writes in his book, "Geschichte der Frankfurter Juden", cquote|this was no act of government resulting from liberal and enlightened principles but instead a horse trade involving money; happiness did not figure as a motive.For the Grand Duchy, emancipation meant that it would lose the annual protection money from the Jews, which it could ill afford. Therefore a "tax commutation payment" was determined, and the Jews of Frankfurt had to purchase their freedom with 440,000 gulden. The Israelitic Community nominated a committee of five men to handle the matter, one of them being Mayer Amschel. In addition Rothschild procured the cash amounts that the Community was unable to raise through the discounting of bills of exchange, including the second installment in the form of debentures with a term of ten years, a major tranche of which was handled by the "Gebrüder Bethmann" bank.J.P. v. Bethmann in Sarkowicz, p.66.]

Rothschilds profited from the upheavals and political developments from 1792 onward. Economic policy, the needs of the military, societal reforms and the development of private capitalism all led to a need for more money, so that the function of a banker as debt intermediary and money procurer became more pronounced. In addition religious tensions decreased, and thus also prejudice against the Jews. [For a contrasting view, see Preissler.] However, the major advantage of Mayer Amschel and his sons was that they perceived new business areas quickly and were imformed quickly, accurately and comprehensively. This could only be done based on joint action in a framework of mutual trust, which required joint deliberations before each operation. Moreover Mayer Amschel himself had always been very mobile, traveling great distances in postal carriages with secret compartments.J.P. v. Bethmann in Sarkowicz, p.68.]

The Freiherr finally notes the charity of Mayer Amschel Rothschild, who gave to the needy regardless of their creed and was prepared at any time to travel and walk on behalf of those requiring his assistance.

Fritz Stern

Finally a quote from Fritz Stern, which shows that in 1852, the House of Bethmann was still strong enough to serve as a credible threat to the Rothschilds.

Simon Moritz von Bethmann, in his own words

Said with more than a little warmth, an indication of the exasperation Bethmann felt at being squeezed from two sides – his Christian fellows who resented him for working to remove their privileges vis-à-vis the Jews, and the Rothschilds in whom centuries of persecution had embedded suspicion and wariness.

cquote|I appreciate that the Rothschilds are highly useful instruments for the government and far be it from me to chide or to envy them. The unity among the brothers contributes much to their bloom. None of them ever allows any of the others to be criticized in the least, none of them disapproves of another's conduct in business even if the outcome should not meet with expectations. Given the skill and the caution of the brothers, it is to be expected that their commerce will progress, nay to be hoped, for a toppling of this colossus would be terrible.Letter written from Vienna in 1822 [quoted in: Achterberg, p.38] |Bethmann at his cool and collected best, dispassionately looking out for the common weal.

Conclusion

From all the sources, one does not get the impression that Bethmanns and Rothschilds were close friends. It also appears that the curiosity and appreciation the Bethmanns had for the Rothschilds were not reciprocated in equal measure. However, in the rough-and-tumble world of international finance, complicated further by the delicate state of Judeo-Christian relations and the heavy burden of history, it was an achievement that the keen rivals and (less frequently) gimlet-eyed business partners did manage, as far as can be told, to preserve something else always: more than just grudging admiration, a genuine respect for each other.

cquote|Yes, my dear fellow, it all amounts to this: in order to do something you must be something. We think Dante great, but he had a civilisation of centuries behind him; the House of Rothschild is rich but it has required more than one generation to attain such wealth. Such things all lie deeper than one thinks.--J.W.v.GOETHE, October 1828, quoted in Ferguson

Notes

External links

[http://www.businessweek.com/chapter/ferguson.htm Niall Ferguson: The House of Rothschild, vol. 1.] Table of contents and first chapter.

Bibliography

* Claus Helbing: "Die Bethmanns. Aus der Geschichte eines alten Handelshauses zu Frankfurt am Main". Gericke (publishers), Wiesbaden 1948.
* Alexander Dietz: "Frankfurter Handelsgeschichte", Glashütten 1971, reprint of 1925 edition
* Egon Caesar Conte Corti: "Rise of the House of Rothschild", B. Lunn (translator), Books for Business 2001 (reprint of 1928 translation published by Gollancz), ISBN 978-0894990588, [http://www.amazon.co.uk/House-Rothschild-Count-Caesar-Corti/dp/0894990586/ref=ed_oe_p Amazon.co.uk searchable online view]
* Erich Achterberg: "Frankfurter Bankherren", 2nd revised edition. Fritz Knapp Verlag, Frankfurt am Main 1971. This book was published without an ISBN
* Fritz Stern: "Gold and Iron". Vintage, 1979, ISBN-13: 978-0394740348
* Dietmar Preissler: "Frühantisemitismus in der Freien Stadt Frankfurt und im Großherzogtum Hessen (1810-1860)". Universitätsverlag Carl Winter, Heidelberg 1989, ISBN 3-533-04129-8
* Wolfgang Klötzer (ed.): "Frankfurter Biographie. Erster Band A-L". Verlag Waldemar Kramer (publishers), Frankfurt am Main 1994, ISBN 3-7829-0444-3
* Hans Sarkowicz (ed.): "Die großen Frankfurter", Frankfurt am Main and Leipzig, 1994, ISBN 3-458-16561-4
* Carl-Ludwig Holtfrerich: "Finanzplatz Frankfurt", Munich, 1999, ISBN 3-406-45184-5:* Carl-Ludwig Holtfrerich: "Frankfurt as a Financial Center: From Medieval Trade Fair to European Banking Centre", Munich, 1999, ISBN 3406456715, [http://books.google.de/books?id=UAY9ugffPXQC&printsec=frontcover&dq=Holtfrerich&lr=lang_en&num=100&as_brr=0&sig=ACfU3U3GUl3UXxX23JE9JovtYdoIqZdJoA Google Books Preview]
* Niall Ferguson: "The House of Rothschild. Volume 1, Money's Prophets: 1798-1848". Penguin, 1999, ISBN 978-0140240849