Imperial Germany’s Jewish Banker

Gerson Bleichröder rose highest of all Jews in Imperial Germany. He was the Rothschild of Berlin, his wealth second only to Alfred Krupp’s. He was the first Prussian Jew to become a “von” without conversion to Christianity. What carried him to greatness was his association with Bismarck. Bleichröder was Bismarck’s financial agent and adviser for more than thirty years—from the early days when Bismarck was Prussian representative at the Frankfurt Diet until his own death in 1893. He handled Bismarck’s private accounts and directed Bismarck’s investments on a basis profitable to both. Throughout these thirty years Bismarck saw more of Bleichröder than of any minister or diplomat, perhaps more even than of Emperor William I.

To outward appearance Bleichröder enjoyed a political position of incomparable power and a social position of incomparable grandeur. This position had a fatal flaw. Bleichröder was a Jew. Like most German Jews he anticipated that he would be gradually accepted as an equal citizen without abandoning his Jewish faith or character. This did not happen. Prussian noblemen and still more Prussian officers were traditionally anti-Semitic. Even the aristocrats who sought Bleichröder’s financial assistance when they were in trouble spoke contemptuously of him. Even Bismarck’s son Herbert referred to him always as “the filthy Jew.”

In the 1880s a new demagogic anti-Semitism developed and Bleichröder was among its principal targets. Despite his wealth and the power it brought, he remained always a Hausjude—providing essential services but admitted only by the back door. Bismarck alone was above such feelings. There is a characteristic exchange in the period just before Bismarck’s fall. Bleichröder had for once gone against Bismarck’s direction and promoted a Russian loan. Herbert Bismarck wrote indignantly, “When this money-grubbing Semite can earn a few million, then he could not care less what happened to Papa or the Fatherland.” Bismarck scribbled in the margin, “Who would?”

Yet even Bismarck treated Bleichröder as a Hausjude when he came to write his memoirs. There is no mention of Bleichröder in the two volumes of memoirs which were published during Bismarck’s lifetime and only a single casual one in the volume published after his death. Nor did the editors of Bismarck’s letters include any to Bleichröder. It seemed that Bleichröder’s story could never be told. Now rich sources have been revealed. The private archives of the family firm found a refuge in New York. They contain thousands of letters to Bleichröder throughout his career—letters from William I and Leopold II, from German ministers and officials, from the Rothschilds, from Disraeli, and from countless political informants. There were also letters from Bismarck’s wife, from his sons and from his secretaries. Bismarck preferred to communicate his views and wishes only in conversation.

This was only a beginning. David S. Landes and Fritz Stern had access to Bleichröder’s correspondence with the House of Rothschild in Paris and particularly his personal letters to Baron James de Rothschild who died in 1868. They went to Bismarck’s estate at Friedrichsruh and there they found in a loft above the stables over a thousand letters from Bleichröder to Bismarck and members of his family, dealing with everything from private finance to grand policy. There were other sources: police records; reports by the French ambassador in Berlin; correspondence with Disraeli housed at Hughenden; the files of the Alliance Israélite in Paris. Bleichröder’s story could at last be told.

To be precise there are two stories in this book as its title indicates. The first is the story of Bismarck’s finances and of the influence Bleichröder had on German policy. The second is the story of Bleichröder’s social position, a forewarning and parable of what was later to be the fate of the Jewish people in Germany. The first story is the more sensational, the second is the more profound. Together they make a book of great interest and often of great significance.

Bleichröder began his career as the Rothschild agent in Berlin where the Rothschilds had no house of their own. When Bismarck was at Frankfurt Bleichröder acted sometimes for the Rothschilds and sometimes for himself. Gradually his position improved. The Rothschilds were pro-French and pro-Austrian by tradition and family connection. Bleichröder was a loyal Prussian. When Bismarck became Prussian minister president (not Prussian chancellor as Stern describes him) he moved first against Austria and then against France. The Rothschilds were not his allies. Bleichröder was. The way was open for him to become “Bismarck’s banker.” Very early Bleichröder performed a vital service. As war against Austria approached Prussia needed money and because of the quarrel between king and Diet could raise none by borrowing. Bleichröder provided the money and thus made war against Austria possible. During the Franco-Prussian war Bleichröder was again active. He handled the technical side of the French indemnity, a service for which he received somewhat strangely the Iron Cross. He also made the secret payments which induced Ludwig II of Bavaria to press the imperial position on William I. With this Bleichröder’s fortunes were made.

Thereafter Bleichröder rarely tried to influence policy. Romanian affairs were the great exception. Bleichröder, like the Alliance Israélite, was anxious to improve the position of the Romanian Jews. Bismarck acquiesced and at the Congress of Berlin made this improvement a pre-condition for the international recognition of Romania. There was a price to pay: Bleichröder should clear up the mess of Romanian railroad finances created by incompetent and often dishonest German financiers. Bleichröder acquiesced in his turn. His “von” was actually given him in return for his loans and gifts to Prussian aristocrats who had lost money in Romanian railroads. In the end Bismarck cheated Bleichröder. He used the Jewish question to secure a favorable settlement in regard to the railroad. Once the Romanian state took over responsibility for the railroad finances the treatment of the Jews was forgotten. By 1913 only 361 Jews had been naturalized in Romania.

Apart from this affair Bleichröder usually followed Bismarck’s directions, though he did not always agree with them. Their differences were sharpest over Russia. At the time of the foundation of the German Empire the greatest part of German foreign investment was in Russian state or railroad bonds, including 70 percent of Bismarck’s own securities. In 1879 Bismarck made an alliance with Austria-Hungary and from then on wished to reduce the German stake in Russia. Sometimes Bleichröder gave way and sold Russian bonds. Soon he would get back into them. His motive was purely financial: Russian bonds were thought to be the safest and the most profitable in Europe. Bismarck was concerned to weaken Russia or at any rate to make a demonstration against her. In the long run Bismarck got his way—a striking proof that in nineteenth-century Europe, and probably in the twentieth, statesmen dictated to financiers and not the other way around.

There are many other examples in Bleichröder’s record. He was a financier of the old school, not a company promoter. His main activity was to act as agent for the loans of foreign government and foreign railroads. Sometimes this overlapped with politics. Nearly all German investment was in Europe, even when the Russian loans were cut down, and in eastern Europe at that. It is strange that a financier as experienced as Bleichröder should have regarded Serbian or Bulgarian bonds as safer investments than, say, German heavy industry. But so it was. When Bismarck intervened it was on political grounds. He did not wish to build up Serbia against Austria or to compete with Russia in Bulgaria. However he had no objection when Bleichröder participated in the Orient Railway and thus cleared the way for German control of the Baghdad Railway later.

Bleichröder did not share Bismarck’s belated interest in colonies. For that matter Bismarck had little enthusiasm for colonies himself. No Bleichröder money went directly into the German colonial empire. But in a way Bleichröder, too, became a financial imperialist. He extended his flotations overseas, first to Mexico and then to China. He dabbled in Turkish and to a lesser extent Egyptian stocks. This latter was a political move to give Bismarck a stake in the Egyptian question as a weapon to be used against, or sometimes in favor of, Great Britain. Altogether Bleichröder’s investment policy illustrates anew the general principle that the rewards of financial imperialism were to be found in the derelict empires from Turkey to China and not in the colonial areas which were acquired with such bombast.

The record of Bismarck’s private finances offers curiously few sensations. Bismarck was extremely cautious in financial matters, putting security before profit. It is extraordinary that with this financial temperament he could show such daring in politics. But even there he settled for caution, peace, and security in the end. Bleichröder conformed to Bismarck’s wishes which indeed were in line with his own inclination. As Stern writes, “Bismarck and Bleichröder put together a conservative portfolio that would appall any ‘growth-oriented’ financier of today.” Bismarck did not hold any industrial securities. Hence, like Bleichröder, he escaped the great crash of 1873. Sometimes he used his political knowledge to make a change. Thus in 1874 he sold all his Russian bonds because of the news that Count Peter Shulavov had been made Russian ambassador to London: “If in times like these the Russians send away the brightest man they have, then one can bet ten to one that they are on the verge of some stupidity. Hence it was time to sell Russian state securities.”

In fact Bismarck guessed wrong: Russia was not involved in war until 1877. Between 1874 and 1889 Bismarck stuck to domestic securities: Prussian state bonds, mortgage bonds, and railroad securities, In 1890, just before his fall, he sold the bulk of his Prussian bonds and bought Egyptian bonds instead. Did Bismarck expect a slump from his remaining in office or from his leaving it? At any rate he made a 5 percent profit when he sold his Egyptian bonds in June 1890. Stern calculates overall that Bleichröder provided Bismarck with a 4 percent capital gain in most years, regardless of the state of the market.

Sometimes Bleichröder performed special services for Bismarck. He often made stock options available, a perfectly legitimate activity at that time. He took 4 percent mortgages on Bismarck’s estates so that Bismarck could extend them. He audited Bismarck’s accounts. He handled the dealings with tax inspectors though here he was sometimes troubled by Bismarck’s sharp practice. Bleichröder also thought that too much of Bismarck’s fortune was sunk in his landed estates. But Bismarck took no notice and in time received more money from his timber than from his salary. He also rigged the public finances in his own favor, as with the duties on timber and the distillery tax. But Bismarck’s financial tricks were trivial. He became rich by entrusting his affairs to a devoted, conservative, and by the standards of the time scrupulously honest banker.

Certainly Bleichröder was more considerate of Bismarck than of anyone else. Aristocrats and ministers could not count so unquestioningly on Bleichröder’s aid. Nor could even William I. In 1884 William, then eighty-two, wrote to Bleichröder in his own hand that he had known a Mme de Karsky “for a very long time,” and that her husband was “in dire straits.” Would Bleichröder kindly support Karsky’s project for a railroad in Russian Poland? A little later William I took up the cause of his lady-friend’s husband with Tsar Alexander III and invited him too to back the railroad. Bleichröder went through the motions of investigating the railroad and did nothing. Mme de Karsky wrote pleading letters in bad French. In 1886 William I wrote once more: “If you can help, I am certain you will.” Bleichröder did not put any of his money in the Karsky railroad.

Thus Bleichröder treated with emperors and chancellors as an equal. His house in Berlin was unsurpassed. In 1878 he entertained all the delegates to the Congress of Berlin at a grand party. Disraeli wrote to Queen Victoria: “The banqueting hall, very vast and very lofty, and indeed the whole of the mansion, is built of every species of rare marble, and, where it is not marble, it is gold.” The only absentee was Prime Minister Bismarck who, in Disraeli’s words, “never appears, except occasionally at a Royal Table.” Yet despite this glory all was in the last resort dust and ashes. Bleichröder was a principal target for anti-Semitism. Every setback in German prosperity, beginning with the great crash of 1873, was attributed to him. Later a legal scandal was trumped up against him and he could get no assistance from the German government or from any of his aristocratic acquaintances.

Yet Germans and Jews had much in common. As Heine remarked, Jews are like the people among whom they live, only more so. Bleichröder had all the German virtues. He was industrious, honest, and appreciative of learning. He was intensely patriotic and conservative. He had also, like most Germans, “a kind of pompous subservience.” He was a steadfast Jew but he was also Gerson von Bleichröder who walked on the western side of the Sieges-Allee away from the Jews “because the eastern side smelled too much of garlic”—a typically anti-Semitic remark.

When Bleichröder died in 1893 Bismarck was represented at the funeral by his daughter and a very large wreath. The funeral was attended by the diplomatic corps, members of the government, the high bureaucracy, and the international business community. At the request of the family the police took special precautions against any anti-Semitic demonstration or the distribution of a vicious pamphlet on the death of “the most wretched Jew.” Afterward the Bleichröder family sent 100,000 marks to the mayor of Berlin ostensibly in honor of the deceased, actually in acknowledgment of the police precautions.

Gerson von Bleichröder left a flourishing bank and a fortune of between 36 million and 40 million marks. His sons proved feckless and incapable of carrying on the firm. It was taken over by his partner Julius Schwabach, whose son Paul became curiously enough a close friend of Holstein, one of Bleichröder’s bitterest enemies. The bank continued to exist on a more modest basis until Hitler’s accession to power. It then moved to New York where it still retains the Bleichröder name.

This was not quite the end of the story. In January 1942 Bleichröder’s grandson Curt applied for exemption from deportation and for “a chance through Arisierung to find a useful place again as officer.” Curt cited in justification of the plea his war wounds in the First World War and his services to the conservative cause at the time of the Kapp putsch and in the Stahlhelm. The letter was signed, “Heil Hitler!” Edgar, another grandson, also applied for Arisierung because of his services to the Nazi movement. SS Obersturmbannführer Adolf Eichmann turned down both requests. However because of their injuries in the First World War the two Bleichröders would be exempted from deportation, “but it is intended that in the process of finally clearing up the Jewish question in the Reich territory they will be put in a ghetto for old people [Altersghetto] within the Reich.” The two brothers escaped to Switzerland where Curt, being penniless, was given a coat by the Red Cross. From a palace of marble and gold to an Altersghetto. Such was the fate ultimately offered to the Bleichröders by the Reich which their grandfather had served so devotedly.