The House Of Rothschild Part 14

Initially, the biggest obstacle to the scheme was political inertia in Vienna itself. On the basis of a report drafted by Riepel after his visit to England, Salomon submitted a pet.i.tion to the Emperor to allow land to be acquired for the project. Predictably, it was shelved, the Crown Prince observing with true Habsburg insight that "Even the coach to Kagran isn't always full." The postal authorities also expressed reservations, fearing a threat to their monopoly. Undaunted, Salomon pressed on. He took over the horse-drawn railway line linking the Danube and the Gmundensee from an insolvent French engineer named Zola (the novelist's father), and commissioned Riepel to investigate the best possible route for the line to Moravia and Galicia. Finally, in April 1835-just six weeks after the death of the Emperor Franz -he felt ready to renew his appeal for imperial and royal backing. This time he was successful-an outcome which probably owed more to Metternich's and Kolowrat's decision to back the scheme than to the credibility of Salomon's claims that "the achievement of this great means of communication would be of benefit to the State and the public weal, no less than to those who join in the undertaking" and that the proposal was "based . . . strongly upon the interests of the common weal" and "entirely patriotic" motives.

It was agreed that a joint-stock company should be set up to construct a line between Vienna and Bochnia (south-east of Cracow). As a second thought, to ensure that there would be no royal change of mind, Salomon suggested that the line be called the "Kaiser-Ferdinands-Nordbahn." This appeal to royal vanity was successful. For good measure, he also sought-as he put it to Metternich-to "take such steps as may be appropriate for inducing such statesmen as are the bearers of honoured names to place themselves as patrons at the head of this national undertaking." Specifically, he sought to enlist Metternich, Kolowrat and the head of the imperial Treasury, Count Mittrowsky, as board members. This use of n.o.ble names to lend respectability to new companies-in return for financial perks-was a device widely employed in England and elsewhere; in the Austrian case it was essential to overcome royal and bureaucratic opposition.

In fact, the benefits of the Nordbahn-as the line was usually known-might well have ended up being greater for the "common weal" than for those who actually invested their money in it. The line was supposed to take ten years to build. The final stretch to Bochnia was not completed until 1858. It was supposed to cost 12 million gulden (1 million), roughly 16,600 gulden per mile. The actual figure was closer to 27,750 gulden. Yet-as so often in the history of railways-short-term benefits to investors tended to compensate for (or at least to distract from) such long-term cost overruns. From the moment the concession was granted, demand for shares in the firm dramatically outstripped supply. Of 12,000 shares (each worth 1,000 gulden), Salomon retained 8,000, so that just 4,000 were offered to the public. There were 27,490 applications, driving the share price up well above par.

These short-term capital gains help explain why other Austrian bankers hurried to compete-even when they realised better than Salomon the formidable practical problems involved. No sooner had he secured the Nordbahn concession than Sina pet.i.tioned to be granted the concession for the line from Vienna to Trieste, a pet.i.tion which enjoyed some official support on the familiar grounds that Sina, unlike Salomon, was Austrian born and hence a Habsburg subject. It is not wholly apparent why, after so many years of amicable co-operation in the realm of Austrian bond issues, the major Vienna banks failed to co-operate over railways; but Salomon did not fire the first shot. Indeed, in allowing Sina and Arnstein & Eskeles substantial shareholdings in the Nordbahn and according them due influence on the company'sIs provisional board of management, he was singularly accommodating. Unfortunately, the other bankers appear to have been intent on some sort of spoiling operation. At the second general meeting of the Nordbahn, Ludwig von Pereira (a partner at Arnstein & Eskeles) launched a well-researched technical critique of the engineering plans and financial projections, a move which succeeded in arousing the hitherto dormant anxieties of the Emperor. It was only with difficulty that Salomon and Riepel were able to rebut Pereira's criticisms, at least some of which, it must be said, were to prove quite justified. The climax of this prototypical boardroom battle came in October 1836, when Salomon moved a resolution demanding that the building of the railway be commenced or the company liquidated. With 76 out of the 83 votes in favour, he was able to force Sina and Eskeles to resign.

From the outset, Salomon had intended that the Nordbahn should be the basis for a succession of branch lines to the major cities on either side of it: his original pet.i.tion had specifically mentioned subsidiary lines to Brunn, Olmutz and Troppau. Even while he was locking horns with Pereira-and before a single rail had been laid down-he therefore continued to secure supplementary concessions from the government to allow him to add further branches: to Pressburg, to Bielitz, to Deutsch-Wagram and so on. Work finally began on the first stretch of line north from Vienna in 1837, and trains were running along the first section between Deutsch-Wagram and Florisdorf by the end of the following year. It was not until 1839, however, that freight and pa.s.sengers began to be carried between Vienna and Brunn, so that for more than two years the company was pouring money into materials and men (some 14,000 in all) for no return, and was kept going only by a Rothschild advance of some 8 million gulden. Small wonder Lionel felt it advisable to rea.s.sure Metternich that most English railways "will yield a profit of eight to ten per cent"; there was no sign at this stage that the Austrian line would do so, and its shares duly fell below par. As Salomon later recalled, the Nordbahn had required "the expenditure of large sums of money, and . . . patient waiting; sacrifices that I was called upon to make, to the amount of several hundred thousand."

Yet from 1841 onwards Salomon's senior manager Goldschmidt began to detect an improvement on his weekly visits to monitor traffic at the main terminus. As with the British railways, it was the unexpectedly large amount of pa.s.senger traffic-especially families of day-trippers on Sundays-which helped to boost receipts. As early as 1841 up to 10,000 people were regularly using the initial stretch of line from Vienna to the suburb of Vienna-Neustadt.2 In 1843 the shares rose for the first time since their issue above par to 103; a year later they reached 129 and by 1845 they stood at no less than 228. This represented a huge if belated capital gain to the original investors-above all, to Salomon himself. In 1843 the shares rose for the first time since their issue above par to 103; a year later they reached 129 and by 1845 they stood at no less than 228. This represented a huge if belated capital gain to the original investors-above all, to Salomon himself.

Yet it would be unjust to Salomon to suggest that he operated with the short-term speculative gains solely in mind. On the contrary, he genuinely does seem to have had an entrepreneurial vision of an integrated Austrian transport system. Not only did he envisage from the outset a railway which would link Galicia and Moravia to the imperial capital and southwards to Italy; he hoped also to extend his network into Hungary. A good ill.u.s.tration of the extraordinary-almost mes sianic-role Salomon saw himself playing in the Habsburg lands in this period is provided by the police report of his trip to Pressburg in June 1844 to attend a meeting of the Central Hungarian Railway Company. It was little short of a royal visit. The Danube steamer made an unscheduled stop at Konigsplatz to allow him to disembark. The occupants of rooms at the Hotel zur Sonne were unceremoniously evicted from their rooms to make way for the Rothschild party, despite the fact that they planned to return to Vienna by coach that night. And when it was rumoured that the mercurial Hungarian reformer Istvan Szechenyi-who was already running his own Danube steams.h.i.+p company-intended to support a challenge by Sina to Salomon's dominance of the Central Hungarian board, the venue of the meeting was hastily changed. To cap it all, Salomon responded to the flattering toasts proposed in his honour that evening by Carl Esterhazy, Andra.s.sy and other pro-Rothschild bigwigs with a pompous speech, concluding that he would follow the example of his schoolmaster who told his pupils: "I am going but I am leaving my cloak behind, and it will tell me what everybody has done, and how they have behaved in my absence." Salomon's self-importance can hardly have been diminished by the enthusiastic welcome he had received earlier in the day from the local Jewish community, a crowd of whom gathered on the river bank to greet him. "Count Esterhazy," the police observer reported, frustrated their intention of according the Baron a special welcome, as he would not allow the Jews to carry out their scheme of letting off forty rockets. They were restrained even from shouting their welcome which in view of the ill feeling between the citizens and the Jews here, might easily have led to a breach of the peace.

Esterhazy might be willing to ingratiate himself with the Austrian railway king, but he had no desire to let Salomon's poor co-religionists bask in his reflected glory.

Nor was Salomon content to dominate the development of the Habsburg railway system. He also pursued a strategy of "vertical integration" (bringing together different stages in a particular economic process under a single corporate roof ). As early as 1831 he saw the need to foster independent Austrian supplies of iron and steel, so that the development of the imperial railways would not be reliant on imports from the foundries of Britain. Although his first bid to purchase the Witkowitz Ironworks company in the Ostravian coalfields was unsuccessful (because as a Jew he was prohibited from owning land), he was able to lease the works indirectly from the Archibishop of Olmutz, Count Chotek, in 1841 by setting up a company in partners.h.i.+p with the banker Geymuller. When Geymuller went bankrupt soon after, Salomon pet.i.tioned again to be allowed to buy the works and this time was successful. The Witkowitz works-the first in the Habsburg Empire to use the puddling process necessary for the production of rails-was to remain one of the Austrian house's princ.i.p.al industrial a.s.sets for almost a century. At the same time, Salomon began to interest himself in coal mining.

Finally, Salomon's vision of a rail link from Vienna to Trieste led him to expand Rothschild interests beyond land transportation into s.h.i.+pping, taking a leading role in the foundation of the Austrian Steams.h.i.+p Company or Austrian Lloyd in 1835. When the company got into difficulties in the 1830s, Salomon gave it the same life-saving injection of capital he gave the Nordbahn at the same time, in the form of a 500,000 gulden loan in return for a mortgage on the company's seven steamers. As with the Nordbahn, the investment proved a sound one, with profits rising from around 82,000 gulden to nearly 370,000 gulden between 1841 and 1847. Salomon's decision to invest in a salt factory in Venice at around this time needs to be seen as part of a strategy of expansion into the Adriatic region.

The question which remained to be answered was whether this bold business strategy would prove financially sustainable. As we have seen, there had been a recurrent need to inject cash into the various concerns which Salomon was seeking to knit together. Such strategies of vertical integration, though apparently rational, do not always deliver the internal gains in efficiency and economies of scale they seem to imply. Moreover, loosely connected business empires of the sort he was building are often especially vulnerable to a deterioration in economic conditions. Unfortunately for Salomon, such a deterioration was fast approaching.

Frankfurt: The Taunusbahn.

By comparison with its Vienna branch, the Frankfurt house itself played a relatively modest role in railway finance before 1848. This may have been a matter of temperament; it is more likely to have reflected the different political environment of southern Germany in the Vormarz era. Although (like the British state) the Austrian state did little to facilitate the building of railways other than to grant concessions, it was at least a single ent.i.ty, so that negotiations for a line stretching as far as the Nordbahn could be conducted at the imperial level. In southern Germany, by contrast, even relatively short railway lines could cross multiple state borders, and therefore required co-operation between several governments. Particularist jealousies, however, meant that such co-operation was rarely forthcoming; indeed, the larger states self-consciously pursued railway policies which were designed to maximise their own internal cohesion at the expense of inter-state communications. In Bavaria (where the first German railway was opened to link Nuremberg with Furth less than four miles away), as well as in Baden, Wurttemberg and Hanover, the construction of railways was undertaken on the Belgian model by the state governments themselves. Here, therefore, the most that the Rothschilds could do was to underwrite the bonds issued to finance railway building. The state nearest to them, Hesse-Ka.s.sel, by contrast, allowed some railways to be constructed privately, as did Prussia and Saxony. The result was a degree of confusion which precluded a grand strategy of the sort adopted by Salomon in Vienna and doomed to disappointment the hope expressed in the Leipzig-based Allgemeine Zeitung des Judenthums Allgemeine Zeitung des Judenthums in 1837 that "the House of Rothschild [would] unerringly place itself at the head of a movement which will completely reshape the European monetary system: the destruction of the trade in paper [meaning stock exchange speculation] [and] the injection of capital into industry." in 1837 that "the House of Rothschild [would] unerringly place itself at the head of a movement which will completely reshape the European monetary system: the destruction of the trade in paper [meaning stock exchange speculation] [and] the injection of capital into industry."

As early as January 1836, Amschel ran into difficulties when he sought to secure a concession for a line between Frankfurt (a free city) and Mainz (in Hesse-Darmstadt), which naturally had also to pa.s.s through Hesse-Ka.s.sel: three separate jurisdictions for a line of less than twenty miles. It took seventeen months merely to secure the legislation needed for the compulsory purchase of land in Hesse-Ka.s.sel. When in 1838 a concession was secured from the Frankfurt Senate for the so-called Taunusbahn, Amschel and Bethmann had to buy out a rival company which had been authorised to build a line along a parallel route by the authorities in Ka.s.sel. A similar conflict arose in the case of the plan to link Cologne to the Belgian network between the proponents (led by David Hansemann) and opponents (led by Ludolf Camphausen) of a route through Aix-la-Chapelle. A merger of their two companies to produce the Rheinische Eisenbahngesellschaft could be achieved only at the price of Camphausen's withdrawal.

All this helps explain why Amschel and his nephew Anselm preferred to let other banks in the region take the lead in such negotiations. As Anselm explained in 1838, "here in Germany, railways get off the ground only with a great deal of effort." It was not untypical that the Elector of Hesse-Ka.s.sel's son expected Amschel to secure him a bribe from the company seeking the Frankfurt-Ka.s.sel concession. Quite apart from the time wasted in negotiations, he grumbled, railway shares in Frankfurt were being adversely affected by such delays. The Rhineland company's, for example, fell by around 20 per cent in 1838 after cost overruns had necessitated an issue of 6,000 new shares. It was therefore not the Rothschilds but the Oppenheims and Bethmanns who took the lead in private railway building in south-west Germany, though Amschel was happy to partic.i.p.ate as a sleeping partner. It was Oppenheim who led the Rhineland consortium, taking around 25 per cent of its 3 million thaler capital, compared with a combined Paris and Frankfurt Rothschild holding of just a fortieth; similarly, it was the Bethmanns who led the 200,000 Taunusbahn consortium. By comparison with these activities, there were easier profits to be made from issuing the Baden government's railway bonds, though this business also had to be shared with others; or acting as the agent for British locomotive exporters, notably George Stephenson. By the mid-1840s the Frankfurt house was confining itself to floating state bonds earmarked for railways (for example, for Hesse-Ka.s.sel in 1845), turning down private schemes like the Leipzig-Frankfurt line proposed the same year. When Anthony visited Frankfurt in 1844, he was impressed by the "tremendous speculation" in railway shares, but viewed the phenomenon with a marked detachment.

Political fragmentation (and entrepreneurial differences) also explain the very limited involvement of the Rothschilds in Italian railway building before 1848. Although there is some evidence that the London and Paris houses bought shares in the Milanese railway line built in the mid-1830s, this interest soon waned. The following year approaches to James by an Italian company planning a line between Florence and Leghorn were politely rebuffed. As James put it, "We have enough railways of our own [in France] without embarking on those of Italy as well." Schemes for railways in the Two Sicilies and the Papal states were discussed in the 1840s, but-despite Metternich's (somewhat unexpected) encouragement in the latter case-did not get far beyond the drawing board.

"The Chief Rabbi of the Rive Droite"

When he felt like flattering James, Heine sometimes gave the impression that he had been the fons et origo fons et origo of the French railway network. of the French railway network.3 "Herr von Rothschild alone discovered Emile Pereire, the Pontifex Maximus of railways, and he immediately made him his chief engineer . . ." It was really the other way round: Pereire "discovered" Rothschild, in the sense that he persuaded James to commit his enormous financial resources to railways. It was an unlikely partners.h.i.+p, which reflected James's susceptibility to clever men of letters as much as his financial ac.u.men. True, Emile and his younger brother Isaac were Jews, like James; but there the resemblances ended. Where James was an immigrant from Germany, the Pereires were Sephardic Jews whose grandfather had left Spain and settled in Bordeaux. Moreover, where James had no explicit political or philosophical allegiances, the Pereires were disciples of comte Henri de Saint-Simon, the utopian prophet of a technocratic, corpo ratist industrial society in which the "productive" cla.s.ses would displace the idle and rule benignly under the influence of a "new Christianity." "Herr von Rothschild alone discovered Emile Pereire, the Pontifex Maximus of railways, and he immediately made him his chief engineer . . ." It was really the other way round: Pereire "discovered" Rothschild, in the sense that he persuaded James to commit his enormous financial resources to railways. It was an unlikely partners.h.i.+p, which reflected James's susceptibility to clever men of letters as much as his financial ac.u.men. True, Emile and his younger brother Isaac were Jews, like James; but there the resemblances ended. Where James was an immigrant from Germany, the Pereires were Sephardic Jews whose grandfather had left Spain and settled in Bordeaux. Moreover, where James had no explicit political or philosophical allegiances, the Pereires were disciples of comte Henri de Saint-Simon, the utopian prophet of a technocratic, corpo ratist industrial society in which the "productive" cla.s.ses would displace the idle and rule benignly under the influence of a "new Christianity."

For such men, partners.h.i.+p with the Rothschilds represented a perilous compromise, if not a Faustian pact: the Pereires' friend Prosper Enfantin hesitated to become a.s.sociated with "the d.a.m.ned soul of a Rothschild." Yet Emile Pereire was enough of a realist to grasp the indispensability of Rothschild financial support if he really was to write his projects "on the earth" rather than just on the pages of papers like the National National. Between them, he and his brother could muster no more than 30,000 francs. Yet their pilot project-a railway from Paris to Pecq in the elegant suburb of Saint-Germain-would cost, they estimated, more than a hundred times as much to construct. As Emile put it in May 1835, "The involvement of the Rothschild bank in the railway from Paris to Saint-Germain is not only of great importance for this particular venture; it will necessarily have a determining influence on the later realisation of all the great industrial undertakings."

Wisely, the Pereires did not pin all their hopes on James. Having secured political backing from Emile Legrand, the Director-General of the Ponts et Chaussees (in effect, the Department of Transport) and the more sceptical Thiers (who dismissed the railway as a "toy"), they approached Adolphe d'Eichthal and Auguste Thurneyssen for the 200,000 francs needed to secure the initial concession, and then recruited J. C. Davillier as well as James to act as shareholders. In fact, d'Eichthal had as big a stake as James-23.5 per cent of the original 5 million franc capital. As an advertis.e.m.e.nt for investment in future railways, the Saint-Germain line was a qualified success. The twelve mile track cost a good deal more to build than had been antic.i.p.ated (11 million francs instead of 3.9 million) and the volume of pa.s.senger traffic fluctuated much more than had been antic.i.p.ated, soaring on summer Sundays and plummeting on winter weekdays. On the other hand it was completed and opened ahead of schedule in August 1837, and in the first three years of its operation the Pereires succeeded in reducing running costs from 52 to 44 per cent of gross receipts, ensuring that the shareholders were not disappointed. James was a convert. As he wrote to his nephew Anthony in June 1836, after himself taking the train through Belgium on his way to Frankfurt: I would recommend that we don't sell any St-Germain shares for the time being, because I believe that there will be a substantial rise in these. I am absolutely convinced that people in France simply have no idea how easy it is to travel by such means . . . I want to tell you, the cheaper one sets the price, the more pa.s.sengers there will be, and the greater will be the profit one stands to make. Having seen what has been happening in Antwerp, I am more and more convinced that this is a lucrative and successful enterprise. I am certain that in twenty years' time there won't be a single Postmaster left in the world, and people will only travel by train . . . I am in love with the railway.

The Pereires always conceived of the Saint-Germain line as the nucleus of a much larger railway system. Their hope was to concentrate as much of the traffic into and out of Paris as they could through the Saint-Germain line and into the terminus station they built at the Gare Saint-Lazare. At the same time, they always hoped to avoid financial dependence on any single banker. This was easily attained as French railways were financed from an early stage by consortiums, reinforcing a tendency towards the formation of loose business "groups" which had already manifested itself on the Paris bond market. However, the project of a Pereire-led monopoly on rail traffic in and out of Paris inevitably aroused both financial compet.i.tion and political opposition. Thus, when the brothers embarked on the next phase of their programme-a line between Paris and Versailles, running along the right bank of the Seine-the move did not go unchallenged. The "Rive Droite" was a financial as well as a geographical extension of the original Saint-Germain line: de Rothschild Freres were the largest shareholder with just under a third of the 11 million franc capital; the other major shareholders were once again d'Eichthal, Davillier and Thurneyssen, with an additional 16 per cent being provided by the house of J. Lefebvre & Cie.

At first James was optimistic about his investment. Shares in both the Saint-Germain and the Rive Droite soared: the former reaching a high of 950, compared with an issue price of 500 francs. "Profit smiles," wrote James gleefully as he sold a couple of hundred. "[To] go from 500 to 950 is quite nice." However, he was disturbed to hear that "that miserable Fould is organising a subscription for our railway on which we have been labouring for such a long time." After "a campaign of intrigues" in the Chamber of Deputies, the Fould brothers and their partners secured a rival concession to build a parallel line to Versailles along the left left bank of the Seine. "Well, this will ruin everything," James lamented, "and one can't do anything any more in this world." The absurdity of the ensuing rivalry was not lost on contemporaries. Heine ridiculed "the Chief Rabbi of the Rive Droite, Baron Rothschild" and "the Chief Rabbi of the Rive Gauche": bank of the Seine. "Well, this will ruin everything," James lamented, "and one can't do anything any more in this world." The absurdity of the ensuing rivalry was not lost on contemporaries. Heine ridiculed "the Chief Rabbi of the Rive Droite, Baron Rothschild" and "the Chief Rabbi of the Rive Gauche": For the French Jews, as for the French as a whole, gold is the G.o.d of our times and industry the prevailing religion. In this respect, it is possible to divide the Jews of this country into two sects: the sect of the Right Bank and the sect of the Left Bank. These names refer to the two railways which lead to Versailles, the one along the right bank of the Seine, the other along the left bank, which are run by two famous rabbis of finance, who rub each other up the wrong way as much as Rabbi Sham mai and Rabbi Hillel in the ancient city of Babylon.

For the investors concerned, however, it was no laughing matter. There was not enough traffic between Paris and Versailles to justify the existence of two lines, and the actual returns and dividends on the shares of the new companies were correspondingly meagre (especially as there were cost overruns during construction).4 The Saint-Germain shares also began to be affected by the rising cost of expanding the line's capacity to accommodate the increased traffic not only of the Versailles line but of other proposed branches, which necessitated a series of three loans from its bankers totalling around 10 million francs. More generally, the proliferation of new industrial companies was beginning to exhaust the market's appet.i.te for new shares: as James warned grimly in September 1837, "One of these days it will start to stink . . . because too many shares are arriving on the scene." A sudden slump in the market almost exactly a year later forced the rival Versailles lines to discuss some kind of merger, the prime objective of which, as far as James was concerned, was to sc.r.a.p the Rive Gauche altogether with a view to boosting the shares of the Rive Droite. In the end the Rothschild company effectively took over the Fould company and both were later absorbed into the Ouest line in 1851. The Saint-Germain shares also began to be affected by the rising cost of expanding the line's capacity to accommodate the increased traffic not only of the Versailles line but of other proposed branches, which necessitated a series of three loans from its bankers totalling around 10 million francs. More generally, the proliferation of new industrial companies was beginning to exhaust the market's appet.i.te for new shares: as James warned grimly in September 1837, "One of these days it will start to stink . . . because too many shares are arriving on the scene." A sudden slump in the market almost exactly a year later forced the rival Versailles lines to discuss some kind of merger, the prime objective of which, as far as James was concerned, was to sc.r.a.p the Rive Gauche altogether with a view to boosting the shares of the Rive Droite. In the end the Rothschild company effectively took over the Fould company and both were later absorbed into the Ouest line in 1851.

These problems help explain the difficulties which beset the next phase of the Pereires' activity. From an early stage they had envisaged much longer railway lines than the initial connections to Saint-Germain and Versailles. Of the various plans they considered, the most ambitious was for a railway connection between France and Belgium, where the first state-financed lines were already operating. This project had substantial political appeal to the French government, which, as we have seen, was keen to a.s.sert its influence over its newly independent neighbour. It also appealed greatly to James, who had been impressed by the Belgian lines he had used on his way to Frankfurt, as well as attracting the interest of British railway entrepreneurs like George Stephenson and the Belgium-based John c.o.c.kerill. However, the Societe Generale-which would have been the obvious financial partner for the Rothschilds-was lukewarm in its response. After much prevarication, the governor of the Societe Generale, Meeus, indicated that he "did not want his name to be a.s.sociated with the Belgian railway," as it would be "too risky" and he put "honour before everything, money second." For his part, James took the view from an early stage that "if [Meeus] is not prepared to . . . join then we will have to stay away from the project for we don't want to make enemies of them." But it was not only Meeus who had reservations about the project. James also came under pressure from the Frankfurt house to drop it: the proposed line was, as Anselm put it, just "too long."

Although it was partly due to the diplomatic crisis over Belgium of 1838-9, the stalling of the plan for a Paris-Brussels connection primarily reflected the lack of confidence of continental bankers in their own ability to finance major railway lines without state a.s.sistance (or perhaps their desire to get their hands on subsidies). As early as December 1836 James was toying with the idea of some kind of state subvention to make the proposed Northern Line (or "Nord" for short) more attractive to investors. "It is a difficult business," he told his nephews in London, "because the bankers here [in Paris] are not inclined to support it. Don't you think that it [would be] possible to sell a great deal in London if the French Government [were] to guarantee an interest payment at 3 per cent?" James could see the difficulties with such an arrangement, however. "If we had chosen to go for the interest," he reported a few days later, "then every scoundrel would have appeared on the scene and would have made plans and would have placed obstacles in our path. Secondly, I believe that the [government's] credit might have suffered terribly as a result of such a move because every other departement would have demanded the same terms." On the other hand, he discerned that the Nord would never be built without some sort of state support. The alternative method of subsidy he contemplated at this time was a straightforward "gift" of a third of its estimated cost: "We calculate the cost of the Railway to be 75 million and the Government will give 25 million without expecting to receive anything in return as encouragement for the boys." Without a subsidy, James argued, it would be impossible to sell enough shares to the public, no matter how "crazy about railways" they were; or rather the shares would be sold, but would not rise by the 15 or 20 per cent which investors were coming to expect. This, however, seems to have been unacceptable to Meeus. It may also be that, as Leon Faucher suspected, the French government was wary of such involvement. James regarded "Legrand, whose a.s.sistance we much require . . . [as] no great friend of ours."

Up until this point, the government had confined itself to devising bold schemes for a national network of major lines radiating outwards from Paris. For example, the Mole ministry in May 1837 had envisaged six princ.i.p.al railways linking Paris to Belgium in the north, Orleans in the south, Rouen in the north-west and Mulhouse in the east, with separate links to Lyon and Ma.r.s.eille in the far south. A year later, Legrand envisaged a total of nine major lines, adding links to Nantes and Bordeaux in the west and south-west as well as a link from Lyon to Basle. However, there was opposition to the planned system of concessions, and such plans remained no more than suggestions until the 1840s. This left the private sector more or less to its own devices.

James soon formed the view that "the various railways have to be viewed as cousins of each other and when [the share price of] one rises the others will then follow." However, there was a tendency for more than one "family" of railway financiers to emerge. For example, James was happy to lend financial support to Paulin Talabot, the driving force behind the Grand-Combe line, which aimed to link the coal mines of the Grande Combe (near Ales) to Beaucaire and ultimately Ma.r.s.eille. A visit to the Midi in 1838 seems to have convinced him that the area would be ideal for railway development, and he had no objection to advancing 6 million francs to keep the project afloat in late 1839. By contrast, he was more wary of the route to Bordeaux, and limited his involvement to a small shareholding in the company set up to build the line from Paris to Orleans-a wise decision, as the company folded in August 1839. The concession was subsequently granted to an Anglo-French partners.h.i.+p of Charles Laffitte and the English financier Edward Blount, which also won the concession to link Paris and Boulogne via Amiens. Despite the fact that the Orleans line was obliged to use the Saint-Lazare terminus controlled by the Saint-Germain company, a fierce rivalry soon developed between the Laffitte-Blount group and the Rothschild group.

The 1839 crisis increased James's desire to involve the state in the financing of railways, if only to bolster the performance of Saint-Germain and Rive Droite shares. Here, as with international affairs, his bullying of French politicians was unabashed. "In the event that the Government is not prepared to do anything with regard to the Rive Droite," he told his nephews in June 1839, "then I will see to it that it is attacked in all the newspapers." Two months later he went further: If they are indeed making things very difficult for you then you should tell them that I wrote you that I am resigning from my position as administrator [of the Rive Droite company] and at the same time I will be announcing in the newspaper that due to the implacable opposition of the present Ministry we have been forced to relinquish our position and to a.s.sure the general public that as long as the Ministry of Commerce remains in the hands of the current inc.u.mbents we will completely withdraw from doing any business in the industrials. If you put this to Marshal Soult then I can promise you that M. Dufour will change his att.i.tude. If you can't gain someone's friends.h.i.+p then you have to make them fear you.

As these remarks suggest, James's influence over sections of the French press was an important weapon in his railway policy.

It was the question of the line to Belgium, however, which was to become the most notorious example of French governmental subservience to Rothschild financial power. Even before the various diplomatic storms of 1839 and 1840 had died away, James returned to the idea of a Northern railway more convinced than ever that it would be "a good piece of business." The idea he now advanced to ministers was that the government should guarantee to pay the interest on railway bonds bonds (4 per cent) for a specified period-a suggestion of Emile Pereire's designed to appeal to the more cautious investors who regarded private sector shares as too risky. Now the government proved more receptive. The principle enunciated in Legrand's law of 1842 was that the state would purchase the rights of way and construct the railways and buildings, leasing the lines to the railway companies, who would provide the rolling stock and run trains for specified periods. What this meant in practice, however, took years to resolve, especially in the case of the Belgian line. (4 per cent) for a specified period-a suggestion of Emile Pereire's designed to appeal to the more cautious investors who regarded private sector shares as too risky. Now the government proved more receptive. The principle enunciated in Legrand's law of 1842 was that the state would purchase the rights of way and construct the railways and buildings, leasing the lines to the railway companies, who would provide the rolling stock and run trains for specified periods. What this meant in practice, however, took years to resolve, especially in the case of the Belgian line.

In James's eyes, the route north from Paris to Lille and Valenciennes promised to be the most profitable of all the main French lines because it would link the French market not only to Belgium but (via branch lines to Calais and Dunkirk) to England; the prospect of a government subsidy made it "a golden business opportunity." But precisely for that reason there was bound to be political opposition to giving the Rothschilds the concession. "Well now, my dear Nat," complained James when it seemed that the government was going to deny him, "the business with our railways is not working out at all. The whole world is against us. People say we are a monopoly and that we want all the railways for they can see that it would not be possible to build the Belgian [railway] without us." James was right. Although the two sides failed to reach a final agreement until 1845, the government ultimately seemed to have no alternative but to deal with the Rothschilds. A crucial factor was the government's own need to borrow precisely in order to finance the Legrand plan. James's near-monopoly on issues of rentes gave him an invaluable lever in the negotiations leading to the award of the Nord concession. As he commented with satisfaction in December 1842: "If we get the loan then we are masters over the railways. The Finance Minister said to me today, 'I won't do anything without you and the whole Ministry shares my views. The railway from Belgium will be offered to you in preference to anyone else.' "

In two respects, it might be thought, James had to compromise in order to win. Firstly, the Pereires' dream that the line would terminate at the Gare Saint-Lazare had to be jettisoned, despite the negative impact this had on Saint-Germain shares. Secondly, James's rivals were allowed to partic.i.p.ate in the consortium which founded the company: with the continuing reluctance of Meeus to commit the Societe Generale to a major stake in the company, James had no alternative but to allot substantial shareholdings to Laffitte-Blount, Hottinguer and other lesser rivals. Yet in practice these were minor concessions. It would seem that James felt less strongly about having Saint-Lazare as the terminus than Pereire; as for his fellow investors, none of them could pretend that they were anything other than junior partners. Laffitte had hoped to revive his own long-standing ambitions by launching a single, grandiose loan to construct the entire network envisaged by Legrand; in becoming little more than a sleeping partner, he was effectively admitting defeat yet again.

When the contract was finally awarded in September 1845, the Paris and London houses were the biggest shareholders-with a 25.7 per cent stake of the 200 million franc capital, compared with Hottinguer's 20.15 per cent and Laffitte-Blount's 19.5-and held the key executive positions. The only real compromises which had to be made related to the specific terms of the contract: the subsidy to be paid per mile of track constructed; the duration of the period during which the company would run it; the level of fares to be charged for the three cla.s.ses of pa.s.senger; and the regularity of services. But these were political rather than commercial compromises, reflecting the need to overcome opposition within the Chamber of Deputies (where an influential group of deputies favoured complete public sector construction and control of railways). Similarly, James's decision to withdraw altogether from the consortium bidding three months later for the Paris-Lyon concession was designed to ensure that he could make the most compet.i.tive bid for the Creil-Saint-Quentin line being auctioned simultaneously.

The winning of the Nord concession needs to be seen as part of a general carving-up of the primary French railway network-a process in which the Rothschilds played a leading role. Although the Nord was the line in which James most visibly interested himself, it was by no means the only one. As we have seen, he had contemplated taking a modest share in the Paris-Lyon line. He had also thought of involving himself in the line to Bordeaux, and in 1844 formed a consortium to bid for the concession. Although the line was awarded to another company, he was soon seeking some kind of partners.h.i.+p with it to finance the connection from Bordeaux to Cette. The Rothschilds also took a substantial shareholding in the company which had won the Paris-Strasbourg concession; and it had a small stake in the Lyon-Avignon concession too. Smaller players vied with one another to see who could win the backing of "the all powerful name of the House of Rothschild" for their companies. All this was part of an early move towards the concentration of owners.h.i.+p within the French railway industry which Saint-Simonians like Enfantin sought to encourage. In fact, though they lacked Enfantin's grandiose vision, the bankers did not need much persuading. As early as 1844 Hottinguer, Blanc and d'Eichthal were proposing to James that "with respect to the grand affair of the railroad from Calais to Avignon . . . we should all write & endeavour to get the whole line of railroads so as to avoid compet.i.tion, that we should interest all the different companies & then all of us put together." By November 1845 the craze for "fusions"-that is, mergers between railway companies-was in full swing. "You have no idea what a quant.i.ty of people are in the Counting House for the fusion of Creil & St Quentin a Lyons," reported Anselm, "which fusion creates such a confusion that our office is rather like an inn in Switzerland where all the tourists run in after a long excursion in the Mountains." The time-consuming contest for concessions had begun to pall. Increasingly, collaboration seemed more rational than compet.i.tion.

Geographical concentration was also taking place. In securing the biggest shareholding in the Nord line and a majority of the Creil-Saint-Quentin line's capital (both in partners.h.i.+p with Hottinguer and Laffitte-Blount), James ensured that he controlled the two major rail links north to Belgium, to say nothing of two important routes within Paris-a total of 388 miles of line. This represented a formidable geographical base for the pan-European railway empire he was beginning to dream of.

The English Connection.

The att.i.tude of James's English nephews towards all these projects was at first, to say the least, ambivalent. James delegated a good deal of the detailed work on railway finance to them-especially to Anthony, who consequently became more expert than his uncle. Yet he and his brothers never wholly lost the suspicion of industrial finance which they had acquired at New Court. "There is nothing new here-but Railroad Companies," complained Anthony in May 1838, "and there are so many that one gets quite sick of them-there is such a Jealousy on the part . . . of the other Companies that [one?] is a little disquieted." Nat admitted that the Paris house did "not think much of our poor London house in these [railway] matters"; but he himself never tired of pointing out the disadvantages of the Nord project. "We are continually bored with Pereire & Eichtahl [sic] [trying] to induce us to go largely into the railroad to Chartres," he complained in the spring of 1842. "The stinking railroads engross all our attention & for my part I wish his . . . Majesty had them all, they only give us trouble & bother & no remuneration . . . I am by no means anxious that the house shd go largely into railroad concerns." "We are up to our necks in steam," he grumbled a few weeks later, "& get nothing for all the bother & trouble." At times he denied that the railways would be profitable: "People are afraid of holding the shares and of travelling by the railroad." At other times, it was the attendant risks he objected to: For my part I hope & trust we shall have nothing more to do with the Be[lgia]n railroad than to take a lot of shares which we will be able to sell when good opportunity offers-I am by no means desirous of going up to one's neck in a stinking railroad & if the least thing happens one [soils?] one's breeches, whilst others know all about it & when we wish to be acquainted with the occurrence we must address ourselves to Pereire-Besides the bother & trouble with the Govt . . .

But the criticism he most frequently expressed was that becoming involved in operating railways-as opposed to speculating in their shares-could tie up capital in a potentially dangerous way: I am against the [Belgian railway] affair because I am afraid of the anxiety, bother & trouble which it will surely occasion us-the moral responsibility of it will rest entirely on us, & I wd sooner leave to others the profit which the shares are likely to bring than engage in a concern of such magnitude without the possibility of attending to it properly-Such is my way of thinking & most sincerely do I trust the Baron will remain satisfied with purely financial affairs which we understand & which we can get out of when we think fit.

Nat was delighted when the Nord concession appeared to fall through, and alarmed when it was finally granted. Although less hostile than his brother, Anthony could be almost as unenthusiastic. "As regards the Railroad," he told Lionel in June 1842, "I think the best thing is . . . not to have anything to do with them."

These att.i.tudes reveal a fundamental difference of att.i.tude, though how far this was a generational difference and how far a matter of milieu is hard to say: the fact that Anselm, who had spent most of his working life in Paris or Frankfurt, also opposed too much involvement in railways suggests a generation gap of some sort. In admitting that "in these times the conservative feeling has the ascendant over the acquiring sentiment-with me at least," Nat spoke for all the younger Rothschilds. Like the Journal des Debats Journal des Debats, they were inclined to fear that in bidding for the Nord concession James was bidding "for the privilege to ruin himself." As Nat put it, contemplating the extent of their commitments, by hook & by crook we shall have lots of shares in the market & probably deeply engaged in them all-I have no doubt if things remain as they at present are all share concerns will turn out uncommmonly well, but G.o.d forbid if the least political or financial crisis were to take place what wd become of all the shares?

"The Baron," however, was too embroiled in "wheeling and dealing" with the plethora of new scrip and shares coming on to the market seriously to contemplate such an eventuality.

In this context, Nat's description of James's contrasting mood is especially illuminating: [T]he Baron is in a sort of fever about it, he thinks it a good business, & is afraid of it, he fancies the rival company will get it & then regrets it doubly, on the other hand he trembles head & foot at the idea of having to direct a railroad company of such importance without being able to do without such a pair of jobbers as Eichthal & Pereire.

James knew the risks, in other words, but could not face losing the business to his rivals; his nephews were less furiously compet.i.tive. Nat's view "with respect to the railroad [was] not to be too greedy & not to wish to jouer le grand role, we may take a share & a good large one & take our profit thereon but not a.s.sume more responsibility than others." James, by contrast, could not resist playing "le grand role." He had no illusions about the dangers and difficulties involved in "trying to do too much at once," but nevertheless exhorted his nephews to "apply themselves seriously": I urgently beg you to take on several new brokers so that we can do business on an equal footing with the others and try to put some life into the railway business. I feel that the world wants to find something new each year with which to busy itself. At the moment "industry" seems to be the fas.h.i.+onable thing. If that is the case and we decide to enter the fray then we have to apply ourselves seriously to the business and will have to engage in doing business even if there is nothing to be earned only so that we stay busy.

Enfantin was not wrong when he suggested that "playing at railways" had supplanted even playing politics in James's affections: "Playing at gossip with Thiers, Guizot or Mole-a game which Louis Philippe plays so well-is child's play for Rothschild, which he scarcely deigns to play; he profits from its ups and downs, but for his part he plays at railways . . . that was the great game for strong men."

Yet James's project ultimately depended on the London house, in that only the resources of the London capital market could satisfy the demands of the projected line, even with government subsidies. The Nord would, as Nat saw, only be "a capital concern if we can get some good people in London to go largely into it." "[I]t is impossible for us to undertake so extensive a line unless backed by English capitalists," he advised Lionel. In particular, he urged him to involve Glyn's, the one City house which had interested itself seriously in railways, and George Stephenson, whose engineering expertise would be invaluable. Given the obvious importance of the branch lines from the Nord to the Channel coast, other English businessmen were not slow to become involved, though not all were welcome: the attempts of David Salomons to elbow his way into the business were a source of considerable irritation. The fact that there was so much English interest in the line may explain why Nat's opposition to involvement diminished during 1843. If nothing else, he came to believe that the shares would jump to a "famous high price" and "go like hot rolls" on issue. Sure enough, French railway shares were a great success on the London market. As Mayer reported: The people here are quite determined upon entering every undertaking that is brought out in your good country, no matter whether it is a railroad or loan . . . [G]iven the fortune being made here by the share jobbers one has no doubt that, however immense the scheme may appear to be, a very strong party will be made.

Despite their reservations about the long-term profitability of French railways, the London brothers could not help taking pride in the superior capacity of the British market. "I hope that you have sold a good lot of the Northern Shares," Anthony urged Lionel in September 1845. "Try my dear Rabbi to show that the English people can take off as many shares as the stinking French frogs." His youngest brother expressed the same feeling the following year: "The more I see, I am convinced the more there is no place like our old New Court; where would all the rubbishy French shares be if we did not support them? I think we may give ourselves a few airs and be as great men as the others." Such chauvinistic sentiments were another important aspect of the Rothschild generation gap.

The combination of James's entrepreneurial vision and the London market's capacity was a recipe for success. As the price of Nord shares soared from 500 francs to 760, his gamble on the line seemed amply justified. Even his London nephews had to acknowledge that its prospects seemed excellent: its daily takings exceeded 20,000 francs as soon as it opened, despite the fact that the line was far from complete and the company was short of capable engine-drivers. Although that was roughly half its projected income, it still promised a respectable return to the operators-and more, with a little fine-tuning. James was soon following his brother Salomon's example, exploring the possibility of "vertical integration" in the form of further investment in Belgian coal mines. "Everyone thinks that coal is like gold," he enthused, a view which even the cautious Anselm could not dispute. The 3 million franc investment which the Paris house made in coal mines (in conjunction with the Talabot brothers) would, he was confident, "become with a little time a most capital concern as the consumption of coal becomes stronger day to day owing to so many railroads on the continent and the progress of industry . . ." The Nord could get its coal at a compet.i.tive price; by the same token, the transportation of Belgian coal became a staple of the railway line's revenue.

Those critics who had accused him of being interested only in a quick profit on railway issues now had to recant: like Salomon, James was building up a substantial portfolio of long-term industrial investments, at the core of which was his stake in the Nord. It was a profoundly important departure, not least because the London house chose not to do the same. This was the safer option in the short run, and undoubtedly reduced New Court's exposure when the market for railway shares slumped in 1847-8; but in the long run it meant that only the Paris house would share in the immense capital gains realised by investors in industry during the second half of the century.

The Impact of Rail.

The economic significance of railways can be quantified with some degree of precision. Between 1828 and 1848 around 1,250 miles of track were built in France, with peaks of investment in 1841, 1843 and 1846-7. In the first instance, the railways were financed by a mult.i.tude of small companies-between 1826 and 1838 around 500 societes en commandite societes en commandite were formed with nominal capital of 520 million francs. In 1845 alone, twenty-eight companies were set up with almost as much capital. The Rothschilds were without question the dominant force in this process. To be sure, their name figures in only four out of thirty-two concessions granted between 1835 and 1846. But of 225 million francs contributed by French banks to railway capital formation between 1835 and 1846, the Rothschilds accounted for 84.6 million-38 per cent of the total, and nearly a tenth of all capital subscribed. were formed with nominal capital of 520 million francs. In 1845 alone, twenty-eight companies were set up with almost as much capital. The Rothschilds were without question the dominant force in this process. To be sure, their name figures in only four out of thirty-two concessions granted between 1835 and 1846. But of 225 million francs contributed by French banks to railway capital formation between 1835 and 1846, the Rothschilds accounted for 84.6 million-38 per cent of the total, and nearly a tenth of all capital subscribed.

This dominance was in many ways quite natural. Apart from the superior resources of de Rothschild Freres compared with its French rivals, James had the unique advantage of a direct familial link to the London market. This was crucial, for without British capital (and technology), the progress of French railway construction would without question have been slower. It has been roughly estimated that half the capital invested in French railways by 1847 was British, and only a quarter of French locomotives were domestically produced. The role of the state in the railway boom can also be quantified. From 1840, when the first state subsidies began to be paid out by the new Ministry of Public Works, until 1849, around 7.2 million francs were spent annually on railways by the state, between a fifth and a quarter of annual average gross investment. In aggregate terms, this would generally be considered by modern economic historians as money well spent. Problematic though it is to calculate exactly the "social savings" generated by railways (in the form not only of more efficient internal and external communications but also of "backward linkages" to the coal, iron and steel industries), France would unquestionably have been worse off without them.

Yet contemporaries did not tend to a.s.sess the Rothschilds' role in railways in such arid, macroeconomic terms. In general, they were more concerned with the distribution of the benefits generated by the railway boom than with their developmental impact. They were also more concerned with the social costs of railways than modern economic historians. This helps to explain why the cultural and political responses to the railways were in such stark contrast to their macroeconomic impact.

To be sure, there was no shortage of writers who were ready and willing to "puff " rail travel as the wonder of the age. The 1830s and 1840s saw a spate of odes and hymns to the railway, a cla.s.sic example of which was composed by an obscure poetaster named Hugelmann to mark the inauguration of the Nord line on June 14, 1846. It was ent.i.tled simply: "To Rothschild": A dragon hurtled through s.p.a.ce, Throwing fire down on the lanes; A genius covered its face; Put its powerful hands in chains; And turning towards our world He threw up the dust in a whirl With the smoking beast in his thrall He transported it with a firm hold; Then showing this giant in chains To the waiting millions of men, He says: "I will make you some reins; Be enslaved; here is my gold . . ."

He speaks and the mountain sides yield, They fall and their clifftops descend; The dragon traverses the fields, The earth it shakes under its bonds; Germans, united with Gaul, For this power their defences let fall Who is come back to life to recall The forts that the emperors quit, And whose urn, as it inclines Disperses his seed divine On the running board lined with ermine And the labourers' humble hamlet.

Even the usually acerbic Heine was-on occasion-moved to write in a similar, if rather less hyperbolic, vein. "All eyes are now turned to the House of Rothschild," he reported when James's intention to bid for the Nord concession was first made public, "which represents the society formed to construct the Northern French railway system in a way that is financially as sound as it is socially praiseworthy. The House of Rothschild, which in former times directed its talents and resources exclusively to the needs of governments, now places itself at the head of great national undertakings, devoting its enormous capital and its immeasurable credit to the advancement of industry and the prosperity of the people." When the lines to Orleans and Rouen were opened in May 1843, Heine was positively lyrical in his enthusiasm. He detected in Paris a tremor, which is felt by everyone, unless he has been sent into solitary confinement. The whole population of Paris const.i.tutes at this moment a chain, which communicates the electric shock from one person to another. While the great ma.s.s of people gapes astounded and dumb-struck at the outward manifestation of these great motive forces, the philosopher is seized by a strange horror, the way we always feel when the most monstrous, unheard of thing happens, the consequences of which are unforeseeable and incalculable. Let us just say that our entire existence is being ripped up and hurled on to new tracks; that new relations.h.i.+ps, pleasures and torments await us, and the unknown exerts its ghastly fascination, irresistible, yet at the same time fearful. Our forefathers must have felt the same when America was discovered, when the invention of gunpowder announced itself with the first shots, when the printing press sent the first proof copies of the Word of G.o.d into the world. The railways are another such providential event . . .

Yet already Heine sounded a characteristically ambivalent note of warning when he considered the political influence which the railways were conferring on those who built them. The "ruling aristocracy of money," he suggested, exercised "more and more control every day over the rudder of state": "Soon those people will const.i.tute not only the supervisory board of the railway company, but also the supervisory board of our entire civil society." For Heine, the most intriguing aspect of the railway boom was the way that aristocratic and military elites (even admirals) flocked to a.s.sociate themselves with it. They lent their names as non-executive directors and invested their savings. They were even reduced to begging for share options in new companies like the Nord: [E]very share which members of this house [of Rothschild] grants to individuals is really a great favour-speaking plainly I should say that it is in fact a present of money which M. de Rothschild makes his friends. The shares ultimately issued . . . are from the beginning worth several hundred francs above par, and whoever asks Baron James de Rothschild for such shares at par, begs from him in the literal sense of the word. But then-the whole world is begging from him; he is inundated by begging letters, and where the greatest aristocrats have set such a n.o.ble example, begging can no longer be considered a disgrace.

Heine was not alone in portraying James's mutation into a railway baron in an essentially light-hearted light. Rothschild railway jokes were another characteristic by-product of the era. Punning on the double meaning of the French action action (a share) the writer Prosper Merimee told Madame de Montijo a typical one in February 1846: (a share) the writer Prosper Merimee told Madame de Montijo a typical one in February 1846: The rabbi who teaches the children of M. de Rothschild asked one of them, a young lad of seven, if he knew the difference between a good action and a bad action. "Without a doubt," replied the child. "A good action is an action of the Nord, a bad action is an action of the Rive Gauche." Believe me, that boy will not lose his father's millions.

Seven years later, Count Nesselrode told his cousin a "mot de Rothschild" which may even have been true as well as archetypal. "Count Ta.s.silo Festeticz consulted him about the investment of a considerable sum. 'M. le comte,' Rothschild told him, 'if you want your capital without interest, buy land. If you want your interest without capital, buy shares.' " "It happened in Paris," added Nesselrode, "but it is universally true." Such anecdotes are too easily dismissed as apocryphal. But the Rothschilds' private correspondence confirms that at least one of them was not far from the truth. In November 1848 Betty told her son Alphonse how his four-year-old brother Edmond had "got into the habit of taking my prayer book for his devotions. And yesterday, in one of his pious outbursts, what if he doesn't say, 'I pray to our good Lord G.o.d for Papa [and] for the chemin de fer du Nord chemin de fer du Nord !' " !' "

Yet not everyone was so amused. In the course of the 1840s, a growing number of journalists began to express hostility towards what they regarded as a dangerous and corrupting private monopoly. Above all, the Nord concession came to symbolise what more radical critics of the July Monarchy regarded as its fundamental rottenness. It began in newspapers like the Courrier Francais Courrier Francais, the Reforme Reforme, the Univers Univers and the and the Quotidienne Quotidienne. But it took its most virulent form in cheaply produced polemical books and pamphlets like Alphonse Toussenel's The Jews, Kings of the Epoch: A History of Financial Feudalism The Jews, Kings of the Epoch: A History of Financial Feudalism.

In some respects, Toussenel was in a tradition dating back to the 1820s of radical critics who laced their diatribes against political corruption with a strong dose of anti-Semitism. The thrust of his argument was directed against the financial terms under which the Nord concession had been granted (and could just as easily have been made without reference to James's Jewishness). According to Toussenel, the government had effectivel