Bethmanns and Rothschilds

The House of Bethmann and the House of Rothschild were the two banking dynasties of Frankfurt am Main. For several decades their affairs were closely intertwined while involved in a rivalry. On occasion, they would cooperate as business partners, partially due to the pro-emancipation outlook of Simon Moritz von Bethmann, and the pair's shared goal of enfranchising the Jews of Frankfurt.

Historical background

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. Jewish people were confined to narrow, unhealthy ghettos, and threatened by outbreaks of mob violence when the Jews came in handy as scapegoats. 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. In Frankfurt, these were augmented by the 1820 constitution for the Grand Duchy of Hesse, and from the specific provisions concerning Jews in the supplement to the Frankfurt constitution and the Frankfurt council decree of 1824. ^[1]

Similar traditions

Both the Bethmann family and the Rothschilds inherited generational wealth. The Bethmanns had been tax collectors and involved in minting or managing money since their origins in 15th-century northern Germany. Mayer Amschel's father had been a foreign currency trader and pawnbroker. He first gained access to the Prince of Hesse by catering to his penchant for rare coins.

The rapid rise of the banking firm of Gebrüder (= Brothers) Bethmann after its founding in 1748 made the Bethmann family gulden millionaires – one of the richest families in Frankfurt during the second half of the 18th century. ^[2] Johann Philipp, Simon Moritz and Johann Jakob pioneered a new model of international filial cooperation that would be perfected half a century later by the five sons of Mayer Amschel. Despite their later start, the Rothschilds became even richer and more powerful during the first half of the 19th century than the Bethmanns had ever been.

Frankfurt's richest families

Estates in Frankfurt worth at least 800,000 guldens between 1700 and 1816 ^[3]

Name	Occupation	Estate in gulden
Jakob Bolongaro	Snuff tobacco manufacturer	2,000,000
Johann Philipp Bethmann	Banker	2,000,000
Peter Heinrich Bethmann-Metzler	Banker	2,000,000
Johann Jakob Bethmann-Hollweg	Banker	1,500,000
Johann Friedrich Städel	Merchant	1,414,472
Simon Moritz Bethmann	Banker	1,370,000
Brothers Bernard	Snuff tobacco producers	1,250,000
Peter Anton Bolongaro-Crevenna	Tobacco manufacturer	1,110,000
Johann Jakob Casimir Leonhardi	Raw materials for pharmacies	1,107,203
Franz Maria Schweitzer	Merchant	1,042,748
Viktor Bolongaro-Simonetta	Banker and tobacco producer	1,000,000
Peter Anton Brentano	Spices and foodstuffs	934,766
Heinrich Bernus	Banker	800,000
Johann Bernus	Banker	800,000
Jakob Bernus-Peltzer	Banker	800,000
Viktor Bolongaro-Simonetta	Tobacco producer	800,000
Johann Peter von Leonhardi	Raw materials for pharmacies	800,000
Harnier	Court banker	800,000
Mayer Amschel Rothschild	Banker	800,000
Rüppel	Court banker	800,000

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 time span. The first is a glimpse at the beginnings of the Rothschilds' rise. The year is 1794, but as yet Gebrüder Bethmann is too powerful for the upstart to break into the game.

In addition to the Christian banking firm of Simon Moritz von Bethmann, which had been established in Frankfurt for centuries [sic], and four other firms, Buderus [in 1794] put forward the name of the crown agent Rothschild as suitable for carrying out the transaction. The landgrave, however, attached far too much attention to his old connection with Bethmann, at that time the outstanding banking firm in Germany, and with the other old established firms, and on this occasion too Rothschild was left out. ^[4]

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

' Since arriving here,' the Bremen burgomaster Smidt wrote from Frankfort, 'I have found to my great astonishment that people like the Bethmanns, Gontards and Brentanos eat and drink with prominent Jews, invite them to their houses and are invited back. When I expressed my surprise I was told that no financial transaction of any importance could be carried out without the cooperation of these people, they had to be treated as friends and it was not desirable to fall out with them.' ^[5]

The shock of the bigoted burgomaster was shared by many of his contemporaries, who were unhappy with the advances minorities in Germany were making.

Johann Philipp Freiherr von Bethmann

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

In his essay for the book, Bethmann notes the initial rivalry between the two Houses as bankers to the Landgrave, and Elector of Hesse, which however soon gave way to the preferment of Rothschild. ^[6] Simon Moritz von Bethmann at first found this setback hard to take and complained about the aggressive style of doing business exhibited by the Rothschilds. ^[7]

Eventually, however, he came to express respect for Mayer Amschel's five sons:

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.

— Simon Moritz von Bethmann ^[8]

The Philanthropic was a Jewish secondary school co-financed by Rothschild, with a contribution from Bethmann, in 1804. It reopened in 2006 as the I.E. Lichtigfeld school, a Jewish elementary and middle school also open to non-Jews.

1850 lithograph of the Frankfurt terminus of the Taunus railroad, a venture jointly financed by Bethmanns and Rothschilds together with the bankers Grunelius, Dufay, John, and Borgnis. Opened in 1840, it was one of Germany's first steam railroads.

On occasion the fierce rivals would cooperate, for example in raising the tax commutation payments demanded as the price of freedom for Frankfurt's Jews. In 1812 Grand Duke Karl Theodor von Dalberg appointed Simon Moritz von Bethmann and Mayer Amschel Rothschild as members of the electoral body (Wahlkollegium) for the district of Frankfurt. Bethmann supported the Philanthropin, the secondary school of Frankfurt's Israelite Community, both in words and in deed in the form of several thousand gulden grants. Amschel Mayer von Rothschild, Mayer Amschel's eldest son, and the Staatsrat Simon Moritz were among the bankers arguing for the establishment of a reserve bank that would issue its own currency in 1824. Both banks co-promoted the construction of the first railroad in the Rhine Main Region in 1836. ^[8]

At the time of Mayer Amschel's birth, Frankfurt's Jews were still "serfs" in "slavery", as Ludwig Börne said, not mincing his words. Since the reign of Frederick II in the 13th century, they were "servants of the Imperial treasury". ^[9] In spite of being restricted to a narrowly circumscribed range of retail, moneylending or pawn brokerage 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. ^[10] The walls of the ghetto had come down and he had laid the groundwork for the rise of his family to world renown. ^[8]

The speed and breadth of the Rothschilds' rapid rise is something that even historians today find difficult to explain. ^{[11] [12]}

Börne described Mayer Amschel thus:

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 a retinue of paupers to whom he dispensed alms or good advice.

— Ludwig Borne ^[11]

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 supported him increasingly, aiding the House of Rothschild's rise to fortune. The two older sons Amschel Mayer and Salomon Mayer probably made partners 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. ^[13]

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 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. ^[14]

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 Napoleon 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 to Rothschild. At the same time Simon Moritz von Bethmann also maintained a most cordial relationship with Dahlberg. ^[15]

Frankfurt's Jews had greeted Dalberg's statement 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,

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.

— Paul Arnsberg

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 guldens. 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. ^[16]

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. ^[17] However, the major advantage of Mayer Amschel and his sons was that they perceived new business areas quickly and were informed 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. ^[18]

The Freiherr rounds out his account by noting 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. ^[18]

Fritz Stern

The quote below from Fritz Stern shows that in 1852, the House of Bethmann was still strong enough to be wheeled out as a credible threat when the occasion called for it. The House of Rothschild was then at the pinnacle of its power and influence throughout Europe. Of course, as private banks owned by personally liable shareholder-directors, both were about to be challenged and eventually eclipsed by the new joint-stock banking corporations, such as the Disconto-Gesellschaft.

[In 1852] Bismarck's anger persisted; he suspected the Rothschilds of being more afraid of Austria than of Prussia. He dismissed their entreaties and refused their invitations; he appealed to the Prussian prime minister, Otto von Manteuffel, to appoint the gentile rivals of the Rothschilds, the House of Bethmann, as Prussia's court bankers.

— Fritz Stern ^[19]

Simon Moritz von Bethmann, in his own words

[In 1817] Amschel Mayer regarded the head of the house of Bethmann, which was being more and more overshadowed by the Rothschilds, as a natural enemy of the Jews; but Bethmann refused to admit that this was so. 'If Herr James,' he wrote at the time to David Parish, 'will but visit me at Frankfort, he will soon realize that I am not influenced by any nonsense about Christians and that I have no prejudice against a reputable Jew. I have often attempted in vain to disabuse Amschel of the stupid illusion that I am opposed to the demands of the Jewish community at Frankfort in so far as they are reasonable. The fact that I am suspected by my fellow Christians of taking the Jewish side should convince him, if nothing else will, that he has no ground for this attitude.'

—  Simon Moritz Bethmann ^[20]

One of the few times that the Staatsrat allowed himself to get "hot under the collar". The exasperation he expressed came from a feeling of being squeezed from two sides – his fellow Christians 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.

Five years later, Bethmann expressed his thoughts in a less passionate manner in another letter.

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, and none of them disapproves of another's conduct in business even if the outcome should not meet 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 ^[21]

Summary

While the sources do not indicate that Bethmanns and Rothschilds were friends—and while the curiosity and appreciation the Bethmanns expressed for the Rothschilds were not reciprocated in equal measure—in the rough-and-tumble world of international finance, complicated further by the delicate state of Judeo-Christian relations and the burden of history, the keen rivals and (less frequently) gimlet-eyed business partners did manage, as far as can be told, transform grudging respect into a more cordial relationship.

Yes, my dear fellow, it all amounts to this: in order to do something you must be something. We think Dante was great, but he had a civilization 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 ^[22]

Notes

1. Preissler, pp.30-31.
2. Voelcker, p.111
3. Roth, p.58
4. Corti 2001, p.16
5. Corti 2001, p.263
6. 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.
7. J.P. v. Bethmann in Sarkowicz, p.59.
8. J.P. v. Bethmann quoting Simon Moritz von Bethmann in Sarkowicz, p.60.
9. Latin: servitus camera imperialism.
10. at least on paper; true equality was still a long way off
11. J.P. v. Bethmann in Sarkowicz, p.61.
12. "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.
13. J.P. v. Bethmann in Sarkowicz, p.63
14. J.P. v. Bethmann in Sarkowicz, p.64.
15. J.P. v. Bethmann in Sarkowicz, p.65.
16. J.P. v. Bethmann in Sarkowicz, p.66.
17. For a contrasting view, see Preissler.
18. J.P. v. Bethmann in Sarkowicz, p.68.
19. Stern 1979, p.16.
20. Corti 2001, p.190
21. quoted in: Achterberg, p.38
22. Ferguson, ch.1

Bibliography

• Claus Helbing: Die Bethmanns. Aus der Geschichte eines alten Handelshauses zu Frankfurt am Main. Gericke (publishers), Wiesbaden 1948. (in German)
• Alexander Dietz: Frankfurter Handelsgeschichte, Glashütten 1971, reprint of 1925 edition (in German)
• 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   978-0-89499-058-8, Amazon.co.uk searchable online view (in English)
• Erich Achterberg: Frankfurter Bankherren, 2nd revised edition. Fritz Knapp Verlag, Frankfurt am Main 1971. This book was published without an ISBN. (in German)
• Fritz Stern: Gold and Iron: Bismark, Bleichroder, and the Building of the German Empire. Vintage, 1979, ISBN   978-0-394-74034-8 (in English)
• Heinrich Voelcker: Die Stadt Goethes. Frankfurt am Main im 18. Jahrhundert. 1982 reprint of 1932 edition (with preface by Ludwig Landmann), Verlag Weidlich, ISBN   3-8035-1153-4 (in German)
• Bernd Baehring: Börsen-Zeiten: Frankfurt in vier Jahrhunderten zwischen Antwerpen, Wien, New York und Berlin, published by Frankfurt Stock Exchange, Frankfurt am Main, 1985, ISBN   3-925483-00-4 (in German)
• Dietmar Preissler: Frühantisemitismus in der Freien Stadt Frankfurt und im Großherzogtum Hessen (1810-1860). Universitätsverlag Carl Winter, Heidelberg, 1989, ISBN   3-533-04129-8 (in German)
• Wolfgang Klötzer (ed.): Frankfurter Biographie. Erster Band A-L. Verlag Waldemar Kramer (publishers), Frankfurt am Main 1994, ISBN   3-7829-0444-3 (in German)
• Hans Sarkowicz (ed.): Die großen Frankfurter, Frankfurt am Main and Leipzig, 1994, ISBN   3-458-16561-4 (in German)
• Ralf Roth: Stadt und Bürgertum in Frankfurt am Main, Oldenbourg Wissenschaftsverlag, Munich, 1996, ISBN   978-3-486-56188-3 (in German)
• Carl-Ludwig Holtfrerich: Frankfurt as a Financial Center: From Medieval Trade Fair to European Banking Centre, Munich, 1999, ISBN   3-406-45671-5, Google Books Preview (in English)
• Niall Ferguson: The House of Rothschild. Volume 1, Money's Prophets: 1798-1848. Penguin, 1999, ISBN   978-0-14-024084-9 (in English)

External links

• Banks portal

• Niall Ferguson: The House of Rothschild, vol. 1. Table of contents and beginning of the first chapter.