TH

CHAPTER VI

The House of Rothschild Rides the Storm

HE control of the business of the House of Rothschild, established as it was in five different centers in Europe, had become exceedingly difficult with the passage of time as a result of the enormous extension of its operations and their intimate interactions with the events of general European politics. It is true that Nathan quietly exerted an influence that tended to harmonize the often conflicting aims of the various branches; but on account of the primitive nature of the communication at that time, and the inadequate postal arrangements, it was impossible, in spite of all the efforts he made, for him to supervise everything.

The result was that each brother had a fairly wide scope within his own center, it being left entirely to his own judgment within certain limits to do what he considered best in the interests of the firm as a whole. Between Vienna, Frankfort, Paris, and London, these places being linked up on the main European routes, communication was easier. It was just the least gifted of the brothers, Carl, who was practically isolated from the others at Naples, and therefore often had to travel personally to Paris and London in order to get into touch with his brothers.

A final solution of the problem of the Austrian troops at Naples had become urgently necessary. Since the end of the year 1822, Neapolitan statesmen had been constantly protesting that the Austrian Army of Occupation should be reduced, in view of the enormous expense of maintaining it. Memorandum after memorandum, ex

plaining the intolerable burden and the necessity of relieving the situation, was sent in. The Congress of Vienna had decided that the occupying forces should be reduced to 35,000 men; but before this decision was put into effect (August, 1824) the Austrian government had already realized savings to the extent of about 6,500,000 florins out of the sums paid by Naples.2 This fact naturally soon leaked out and caused great dissatisfaction in the kingdom,3 especially as a rumor was abroad that the government would shortly reduce the pay of all those in its service.

The greater part of Naples public securities was held abroad. Of the annual interest, only about two million ducats remained in the country itself, while the balance constituted a tribute that Naples had to pay to foreign capitalists. The budget suffered from the malady of a constantly growing deficit, which rose to 3,800,000 ducats in 1825. This meant that the interest on foreign debt. was only slightly less than the state's annual deficit.

Count Apponyi, afterwards ambassador in Paris, had been sent to Naples by Metternich to examine the situation on the spot. "Cavaliere de' Medici," he reported,* "regards the presence of our troops as nothing but an intolerable burden. As finance minister he trembles at the idea that the foreign occupation may last until after 1826, and by compelling him to take refuge in another loan, still more increase the state's terrifying deficit. This caused him to say to Rothschild a few days ago: 'If the Austrian troops remain here after the limit of time fixed by the convention, I am determined to hand in my resignation.'"

Fundamentally Carl Rothschild was absolutely on the side of the finance minister. It was not in accordance with his wishes that the expenses of the occupation should lead to the whole internal economy of the state being thrown into confusion, so that the loans handled and

issued by the House of Rothschild would run the risk of declining seriously in value. He began, therefore, noticeably to adopt the Neapolitan point of view, and gradually to forget to consider the interests of Austria, although he owed his position in Naples to that country.

He too favored speedy evacuation, especially as the new king, who had succeeded to the throne in January, 1825, and on whom he wanted to make a good impression, cherished the same wish. At Vienna he was actually suspected of supporting the Neapolitan finance minister in his obstinate efforts to recover part of the moneys paid out to the Austrian troops on the ground that they were excessive. The Neapolitan government was claiming the repayment of 1,013,398 ducats as excess payments made only up to November, 1821, and proposed to retain 100,000 ducats each month from the moneys payable to the Austrian war account until the adjustment should have been fully effected. Austria offered only 650,000 gulden in satisfaction, and was contemplating making deductions even from this amount. However, she was afraid of any public dispute in the matter. The quartermaster-general himself admitted in a letter to Count Nádasdy that the estimate of 650,000 florins was too low. He said that in his view it would be better to agree to the amount demanded by the Neapolitan government as a lump sum, rather than to allow the matter to be discussed in detail, as that would be too damaging to Austria."

Ficquelmont also expressed his fears that innumerable claims might arise, the airing of which would be unpleasant for Austria. He offered to arrange for the settlement of the matter, "without publicity and without compromising the dignity of our government," asking only that the repayments should not be made out of the resources of the I. and R. war-chest at Naples, but through the House of Rothschild. For direct repay

ments through the war-chest would furnish proof that savings had been effected out of the lump sums paid by Naples.

"Looking at the matter coldly and impartially," he added, "we find that we are to refund only the portion of the excess payments attributable to the period between February and November 30, 1821."

But Vienna was not prepared to refund the money so quickly, and hesitated about making it available. Medici urgently needed the money, and would not wait any longer. He therefore applied to Carl Rothschild, informing him that the royal treasury required 1,500,000 ducats in excess of its normal revenue. He asked Rothschild to advance this sum, offering as partial security the claim exceeding a million ducats which had been recognized by Austria."

Carl Rothschild immediately sent Medici's letter to Vienna in order to ascertain the imperial government's attitude in the matter. As, however, it was not yet inclined to give way, in spite of Ficquelmont's representations, it simply put the letter by. Nevertheless, in return for special securities in the event of Austria failing to pay, Carl Rothschild advanced 1,200,000 ducats, because he attached great value to being on good terms with Medici and the new king.

This brought him into great favor in high quarters, a fact which Carl exploited to create a position for himself in society in Naples, as his brothers had done elsewhere. During the winter of 1826 many distinguished foreigners flocked to the beautiful city of the south; amongst them were Leopold of Saxe-Coburg-afterwards King Leopold I of Belgium -the Duke of Lucca, and other princes, as well as several wealthy English families. "This greatly enlivens our social gatherings," Carl said in a private letter." "Amateur companies perform French plays; there are balls and soirées-in a word, in spite of everything, life is very gay. . . ."

Meanwhile, as the result of representations made by Solomon to Metternich, 10 the House of Rothschild had been informed that there was no objection to crediting to the House of Rothschild the moneys which Austria would finally refund to Naples. Their total, however, remained undefined, and as it went very much against the grain to pay these amounts at all, Metternich was somewhat annoyed that the House of Rothschild should intervene in the matter.

At the end of December, 1826, Emperor Francis and Metternich decided finally to evacuate the Two Sicilies, although not without emphatically warning the king never to think of changing the form of government. On the occasion of the Austrians' leaving, General Frimont, the officer in command, had recommended various persons for decorations, including the finance minister Medici and Carl Rothschild. In view of the attitude adopted by both of these in the matter of the rebates, Vienna was not prepared to consider the suggestion. Metternich minuted on the proposal that Medici ought not to receive any distinction,11 since he already possessed the Grand Cross of the Order of St. Stephen, and that Baron Rothschild should not receive one "because he is not qualified to receive the distinction suggested." This was, in effect, a reply to the new attitude which Carl Rothschild had assumed. People in Vienna were almost inclined to call him a traitor or a deserter.

The negotiations regarding the refund of the excessive payments made for the support of the army continued for some time. Austria maintained her resistance against paying in full the amount demanded, until the King of Naples finally yielded, in order not to upset the agreement arrived at. But he wished at least to receive the interest on the excess that had been paid.

A memorandum on the matter states: 12 "The king does not doubt that the difficult circumstances in which Naples has been forced to accept her onerous obligation to the