sideration. Perhaps the Turks will give the Island of Candia as guarantee.

"Wellington also said to me that many people had been to him who wanted a guarantee. There is dissatisfaction with the Russian Peace in every respect. The cabinet has now decided for the present to remain quite calm and not to write a word to Russia, to keep quiet and to let come what may. I shall certainly not leave you without news as soon as I hear anything further."

Political considerations alone prevented the Rothschilds from participating in a Russian loan before the war, or in a Turkish loan after the war, for they had not been severely hit by such few failures as they had suffered, and their wealth had increased enormously during the last few years. So that the "banking firm of the five brothers of Europe," as the House of Rothschild was called in several papers, had several million of cash available, for which it was seeking profitable employment. As a result of their happy knack in floating loans that almost immediately afterward were most favorably quoted, all countries wanted to have recourse to the Rothschilds for their loans, and a positively jealous rivalry developed to secure their favor.

While needy states were seeking opportunities for obtaining money on credit, the brothers Rothschild were looking for safe and profitable investments for their accumulated capital. The state of Prussia again entered into negotiations with the banking firm. The 5% interest payable on the £5,000,000 loan of 1818 was a heavy burden on the state budget. All states at that time were endeavoring to convert their public debt, and the Prussian finance minister, Motz, wished to reduce the interest payable on the state debt of 36,000,000 thalers from 5% to 4%.

The finance minister entrusted the preliminary negotiations to Christian Rother, an important treasury official and president of the Public Debt Administration, who

had arranged the loan of 1818 with the Rothschilds. Rother asked 6 that he should not be hampered by detailed instructions, but that full confidence should be placed in him, as that was the only way in which he could be sure of success. From the start, Rother thought of no one but the Rothschilds. He went to Helgoland in July, 1829, where he met a confidential agent of Nathan's, and had a non-committal discussion with him about the business. He then went to Frankfort and negotiated with the house there. But he was offered conditions he could not accept.

"Gratuitous interference by business men here," Rother reported to his sovereign,5 "has caused the Frankfort house to suspect the possibility of making large profits. In the course of our conversation conditions emerged, all of which I had to reject as being damaging to the interests of your Royal Majesty. I stated definitely that I would have to transact the business in question through the shipping interests, unless Solomon von Rothschild at Vienna would carry on the further negotiations, as I could not undertake a journey to London."

Rother thereupon decided to negotiate with Solomon, who, as he believed, had unlimited confidence in him. He met him at Troppau on December 24. They agreedsubject to Nathan's concurrence-"after two days' discussion, which was sometimes heated," " on a draft agreement which Rother declared to be "extraordinarily advantageous," adding that "the state could not have secured such conditions through other channels or with other firms."

Rother wrote: "I have succeeded in obtaining what we wanted throughout-and in some matters far beyond my expectations-through the good nature of Solomon von Rothschild, who is really an estimable person."

Under the agreement the state of Prussia was to issue a new loan of £3,860,400 in 4 per cent Prussian bonds, at 982, through the House of Rothschild, the pro

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ceeds of which were to be devoted to redeeming a like amount of five per cent bonds of the 1818 loan within about two years. On signing the agreement Rother had to promise Solomon to indicate to his Royal Majesty that Solomon had not "done this business for financial gain, but regarded the whole affair as a matter of honor."

Benecke von Groeditzberg reported some details of the Troppau discussion to Berlin.67 "Solomon Rothschild told me at the time," he wrote, "that in concluding this business-a highly profitable one for the State of Prussia, in my opinion-he had had the honor of his House particularly in view. He attached the greatest value to demonstrating to the royal government of Prussia that the consolidation of its public credit and the fulfilment of the assurances which his House had given in this matter were of more importance in his eyes than any considerations of private profit.

"While I do not wish to suggest that the least value should be attached to the unimportant part which I have played in this transaction, I consider it to be my duty in all humility to inform your Excellency of the sentiments expressed by Herr von Rothschild, which I believe to be sincere. We owe it entirely to him and to the efforts of Herr Rother that this business has been put through to the credit and profit of Prussia's finances."

Rother similarly reported 68 to the king that this extraordinarily favorable agreement had far exceeded anything that he had expected.

Nathan in London and his brother at Frankfort were less well satisfied. At first they turned the agreement down absolutely; but they had misgivings about disavowing their brother in Vienna, and Nathan contented himself with sending Solomon's son Anselm, who was then twenty-seven years old, to Berlin, to delay the signature of the agreement, and to secure improvements and alleviations. He was to agree only if better conditions were unobtainable.

Rother offered a stout resistance, and in the end, after some mutual concessions of minor importance, the matter was settled. The £3,809,400 in 5% debentures still outstanding with respect to the 1818 loan were to be fully exchanged for 4% bonds for the same amount, by October 1, 1832, in five half-yearly transactions. Rother himself was very high in praise of his own work. "This contract," he reported to his sovereign, "is purely ad vantageous to the state, and constitutes the first example of a financial operation by a great state for the reduction of interest on a large scale in which the nominal amount of the debt has not been increased, the interest payable on a debt of about 27,000,000 thalers being reduced from 5 to 4%. The commission of 12% is quite negligible and scarcely covers the cost of such a transaction."

The king expressed his satisfaction with Rother, and wrote saying, "I gladly assure you also that the conditions have led me to the conviction that Baron Solomon von Rothschild concluded the agreement with you in the interests of the state of Prussia, as a matter affecting the honor of his house, wherefore I particularly instruct you to convey to him my satisfaction."

It was all an affair of "disinterestedness and honor," and Rother was zealous in emphasizing this aspect to his royal master. It was a matter of satisfaction to him, too, that the business had gone through so well, and in praising Solomon, he was indirectly praising himself for getting such good terms out of an astute business man. Yet in normal circumstances Solomon might have been able to make the transaction a highly profitable one. All that he needed was a continuance of fair weather on the bourse and the absence of any violent external influences, while the operation affecting the millions of pounds' worth of Prussian securities was carried through. Such conditions apparently obtained at the time, for the RussoTurkish war was over, the general situation in Europe

was tranquil, and there then seemed to be no risk in carrying through operations on the bourse.

Further loans immediately followed on that of Prussia. The Austrian government also wished gradually to proceed to the conversion of her 5% state debt to 4%, and the ministerial conference decided on the issue of a loan of from twenty to thirty million gulden 4% state debentures through the four native banking firms, in which Solomon Rothschild had come to be included, after the ruin of the Fries Bank.70

Count Kolowrat, who had been appointed head of the commission of the privy council to control the financial administration, had recommended this issue on the ground that the interest rates obtaining in Germany, France, England, and Holland were lower than 4% and a reduction in those countries either had been or was about to be undertaken. It did not seem that there was any prospect of political complications for some time.

The loan was decided upon, and on April 3, the emperor expressed his special satisfaction with the conduct of the four banks on this occasion.

Rothschild certainly endeavored to get rid of the bonds as speedily as possible, and invested all the ready cash in the three accounts of Marie Louise of Parma in the new 4% Métalliques bonds, at the issue price (subject to a commission for his trouble), on the ground that they were a particularly safe investment.

Metternich had to use Solomon's words "in constant and zealous endeavor to be of service to her Majesty the Archduchess," made it clear to him that he must devote himself as much as possible to the interests of the Montenuovo family.

"I have repeatedly endeavored to demonstrate," Rothschild replied,72 "that I am filled with the same zeal. To show this to her Majesty again, and also to please your Highness, I will now undertake to forego the commis