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The Vienna branch of the Rothschild banking consortium was established by Salomon Rothschild in 1815, after the end of the Napoleonic Wars. His brother Carl established the Naples branch only a few years after him. The biggest struggle that the Rothschild's faced during these early years was acceptance. Anti-Semitism kept them out of the elite social circles, necessary realms of connection making, and thus hindered business. This was especially felt in Vienna and Naples.
Salomon wasnt even able to buy a home in Vienna until 1842, as there were laws forbidding Jews from owning property within the Imperial capital. Through his wealth alone was he able to receive an exemption from this rule. He and his brother Carl in Naples were hesitant to purchase much real estate, though, for fear of the anti-Semitic backlash which it might incur, since real estate was seen as a sign of aristocracy. The Rothschild's frequently found themselves left off of the guest lists of influential balls.
They countered this by throwing their own balls, which, by their extravagance alone, eventually attracted the clientele they were after. It wasnt until the late 1830 s that senior government officials such as Metternich and Get would dine with Salomon. Once they established themselves, however, they became less cautious in hiding their blithe disregard for social rank. They detested such events, but held them for their business worth only.
Salomon was especially known for his disapproval and extravagance. He was also known to eat too much, drink too much, to be rude, to surround himself with sycophants, and for having a lecherous passion for very young girls. He felt he was uneducated, an opinion of him held at the time by many other social and political elites, and thus he tried to refrain from social events as much as possible. The family's social efforts, trying as they were, did pay off though. Francis I made all of the brothers Barons, if for no other reason than for the fragileness of the Metternich regime and the vast influence of the Rothschild's. Salomon and Carl went about making their money in much the same way as their brothers.
Wars meant profits for them, however it was peace and stability that they desired. They continued in international business dealings, but moved more into government securities, insurance company stocks, and shares in industrial companies, adopting fully to the industrial revolution with their investments in railways, mining, and other such industries. The droughts of 1846 and 1847, and subsequent food shortages, led the Rothschild's into their most trying time. The money markets of Europe were showing instability, and Austria was no exception.
As trouble began brewing on the Viennese market, Metternich urgently requested that Salomon contrive some plan which would ward off the impending crisis. By September of that year, it seemed that Salomon had succeeded in averting an immeasurable calamity. However, that feeling did not last long. The growing unrest in central Europe called for more and more money to maintain order. Metternich turned to Salomon as the key source of this money.
The largest of which was a loan of 80 million gulden to be paid over five years granted by Salomon along with several other banking houses. With all of the disturbances in the market caused by the food shortage, Salomon was happy to have any business at all, even though he had over-drawn the Vienna house by over twice as much of its actual capital. He believed, however, that the Frankfurt house would temporarily make up the difference. This decision was made on his own, without consulting the other houses, who had doubts about the arrangement.
Their doubts proved justified, as the loans became to be one of Salomon's greatest errors. The endeavor might have been profitable if five years of peace and prosperity in Europe had at least been probable. The money was supposed to be for railroad investments, but was known to really be for putting down insurrections, in Lombardy and Venetia primarily. The governments credit was already questionable at best, and became weaker and weaker as unrest grew and the money necessary to quell the various uprisings increased.
The Austrian budget rose 30 % between the years 1842 and 1847. Metternich didnt care however, and continued to request or even demand more money from Salomon, having confidence that the uprisings would pass. Salomon, along with the rest of the Rothschild's, had vested interests in keeping the standing regimes in power. This was not necessarily because they were in favor of the politics of those governments but rather because they had so much money invested in these governments, for which there was no guarantee that they would be repaid by a revolutionary government. They did not like the idea of revolutions establishing republics or socialist economies either, as their wealth was based on capitalism. Thus, Salomon was even more willing to keep Metternich in power.
The Rothschild's and Metternich, who was known to them as uncle, also had a long and close past. In addition to handling the finances of Metternich, who had little family wealth of his own, they also collaborated closely with Metternich's administration through financial, political, and diplomatic networking being exchanged in both directions. The courier system of the Rothschild's was a key element to this, as well as access to their various influential clientele. They were also known to extend risky loans to key political figures in order to keep up good ties. Thus, the Rothschild's were seen by the nationalists as the paymasters of the established regime, as without the Rothschild's they would not have had the funds necessary to hold power. By 1848, the Rothschild's were much more closely identified with the regimes than in 1830.
Salomon also attempted to stabilize the Austrian market by bailing out the Eskeles House. The Eskeles House was another prominent banking house in Austria, that Salomon had acted in partnership with previously, and also owed 1 million gulden. A domino effect of banks closing had begun in Frankfurt, with the Haber House in 1847, and Eskeles seemed next. Salomon felt morally bound to bail them out and stop the crash. Again, without consulting the other houses, Salmon extended credit to the Eskeles House. On March 14 th, Metternich resigned, after crowds clashed with troops in Vienna.
The collapse of the Hapsburg authority set off a chain reaction of unrest throughout Europe, and outright revolt against Austrian rule in Venice and Milan. Salomon soon found himself straddled with large quantities of metalli que stock, the debt of bailing out Eskeles, and many government securities whose values had dropped significantly, and the greater part of his assets in industrial shares, which the revolutions had rendered unsellable. A small feud issued between the houses, as Salomon owed so much money to Frankfurt. Amschel in Frankfurt was also partly o blame as it was he that allowed Salomon tower extend himself so much. Salomon's son Anselm came down to Vienna from Frankfurt in 1848 to take over, to the casualty of the relationship with his father. This marked the end of the dominance of the second generation, and was itself a revolution within the house.
The burden of the crisis rested on the shoulders of the Naples, Frankfurt, and especially London branches of the family, as they were less affected by the revolutions. Luckily for London, the Revolution never spread to England, most directly because of the repeal of the Corn Laws and the suspension of the Bank Charter Act in 1847. Naples didnt have as much of a loss as Vienna because the revolution was a complete failure in Naples, unlike other places in Italy such as Sicily. They were therefore able to send money to bail out their less fortunate siblings. It was the family unity that Mayer Amschel instilled in them that allowed the Rothschild's to survive. Their survival was also aided by the relaxation of monetary policies of the European central banks.
In Vienna the national bank imposed a ban on silver exports and, in May 1847, suspended convertibility. There was also a strong threat of too much paper money entering circulation without enough specie backing, which would lead to inflation. The Rothschild's luckily had access to silver in America and in England, which was crucial to enabling them to replenish the countries reserves. Their skill as bankers also allowed them to survive, as the were able to negotiate and bargain with the Austrian Treasury, to which they now owed large sums of money, to allowed them to postpone payment; a situation similar to that in Naples.
They did not fear the bloodiness of the Revolutions nearly as much as of their own purses bleeding. Throughout this whole period, Salomon stayed in Vienna, despite much cause for fear. Rothschild properties were singled out for attacks, especially during the June Days. They were also threatened in the nationalist presses with confiscation of property if wages werent raised and conditions improved. In Naples, Carl, Nat, and Adolph were much more nervous as anti-Semitism there was felt more heavily.
Throughout Europe, anti-Rothschild sentiment grew, as material inequality rose, despite the family's efforts to counteract this feeling through various philanthropic measures. Before 1830, donations were made primarily to Jewish causes alone, but thereafter were made to causes that the Hapsburg elite approved of. In 1835, for example, Salomon offered to build an aqueduct to counter drought from the Danube to Vienna. In 1838, he gave financial assistance to victims of river floods. He also gave financial assistance to victims of fires that ravished Hamburg in 1842. However, all these philanthropic acts could not seal the divide between rich and poor.
The poor knew all too well that the Rothschild's were in no way suffering as they were. Although the family which before the Revolutions had more wealth than the bank of England lost the better part of that fortune thereafter, they were in no way poor. In 1847 for example, in the midst of an economic slump, they were still able to build, with immense amounts of money, a lavish new office in the Renngasse. The House continued to grow after the 1850 s, expanding their markets and investments. However, it no longer enjoyed the unchallenged position it held previously. Joint stock banks and deposit banks proved a strong threat to the Rothschild system.
The weaker Naples branch was dissolved in 1861. The Vienna branch, survived the competition however, and remained until the German invasion of Austria in 1938. Bibliography:
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