FINANCIAL DYNASTIES.

Otago Witness, Issue 3250, 28 June 1916, Page 63

FINANCIAL DYNASTIES.

HOW MONEY TALKS IN PEACE AND WAR. In the old days the term dynasty was applied only to' royalty, but now it is often used "to describe the succession of financiers of international repute, who ho'd in their hands the intricate network of international credit and are in a very Ted sense the power behind the throne. No ruler, however autocratic, no government however democratic, can meet an economic crisis, go to war, or even reconstruct their finances during peace without consulting these financial potentates, who have their thumbs on the pulse of commerce and hold in their hand the sinews of war. Tho rise of these Napoleons of finance is a comparatively recent _ commercial development. Such historic houses as the Rolhschi'ds date, of course, from Napoleonic times, but the rite of other financial dynasties is a more recent phenomenon, resulting for th"_> mo=t part from the unpre endentedly rapid commercial exploitation of the United States of America. The Rothschilds. — The story o'f financial dynasties in the modern sense may be said to begin with Meyer Amschel Rothschild, the founder of the" great financial''house which to this day controls to a large extent the intricate workings of international credit. Meyer Amschel Roth-child carried on bus'ness ai a banker, money-changer, and dealer in curios at Frankfort in the second half of the eighteenth century. He attracted the attention of the Elector William I of Hesse-Cassel, evidently a shrewd jurlge of men, who appointed him Court agent and supported him in his career of loan contractor to the European Governments. In the year 1803 Meyer Rothschild lent a large sum of money to the Danish Government, and thus started the business of international financier which is still carried on. As showing the trust which the Elector William repised in his financial adviser, when the former fled after the battle of Jena in 1836 he left his fortune in Rothschild's hands. The banker returned the whole sum with interest on the Elector's return in 1815. Meyer Rothschild left five sons, whose influence speedily became recognised in the Chancelleries of Europe. Of these Meyer, the eldest, carried on the original business in Frankfort; Soloman settled first in Berlin and then in Vienna; Nathan came to London; Karl went to Naples, and Jacob to Paris. Nathan came to England first as a young man of 20, in 1797, was naturalised in 1804, and in the following year started a branch of the business in New Court, St. Swithin's lane. Be Tore" long he was entrusted by the British Government with the payment of foreign subsidies. During the Napoleonic wars he rendered invaluable assistance to England. Ho acted as agent for the British Government in the Peninsular war. He also organised a system of couriers and a pigeon post for communication with the Continent, and, after making a cool million out of the news, he was the first to announce the victory of Waterloo to the British Government. In addition to all this, Nathan Meyer de Rothschild undertook loans for several "European countries. He was made a baron of the Austrian Empire, but never assumed the title. The English Rothschilds.— In London the chief management of the Rothschild banking house, on the death of ,Nn.than Meyer de Rothschild, descended to his eldest son, Lionel Nathan, who in 1838 assumed the dignity of Austrian baron conferred on his father. Baron Rothschild was entrusted with the raising of loans for the Irish famine in 1847; Crimean expenses. 1856; and Turkov. 1B58; and was also engaged in many financial transactions of national importance. Evidence of his popularity in the country of his adoption and his fidelity to the faith of his fathers is to be found in the fact that ho was elected M.P. for the City of London ; but, as a Jew, declined to take the oath in the Christian fashion. He was, however, repeatedly re-elected, and his staunchness was largely instrumental in securing the removal of legal disabilities against Jews, which was followed by his taking his seat in 1858. Baron Rothschild interested himself in many philanthropic movements, and is generally supposed to have been the original of Sidonia in Disraeli's "Coning3by." The Rothschild dynasty in this country is continued to this day. American Magnates.— The financial monarchy of the new and rapidly-developing commercial world of America may be said to be divided between Mr J. P. Morgan and Mr J. D. Rockefeller. The latter i 3 generally believed to be the richest man in tho world. It has been officially stated that the Morgan and Rockefeller interests between them control over one-third of the active wealth and natural resources of the United States. The total assets of these two groups of businesses are placed at £7,942,067,000—an almost inconceivably vast sum, more than four times the' annual cost of the great war to Great Britain. They include works of industrial and public utility, railroads, banks and other financial 'institutions, as well as mining and oil properties. Tho nominal lieads of these financial dynasties do not, of course, exercise personal control over all this vast network of affairs, but by means of the " interlocking" system of directorate they exercise a dominating influence over industrial and financial affairs on a scale only given to the monarchs of the world's greatest Powers. Even the hobbies of these moneyed magnates are conducted on a princely scale. Collecting art treasures was the hobby of the late Mr Pierpont Morgan. Some idea of the way in which he lavished

money in this connection may be gathered from the fact that he once paid £70,000 for a small inlaid table of the Louis XVI period, and £IOO,OOO for a picture. Mr Rockefeller and Mr Carnegie vie with one another in tho magnitude of their philanthropic schemes. The Carnegie Millions. —

In the year 1900 Andrew Carnegie was not onlv a very rich man, but one of tho most powerful'in the world of industry. He was, too, one of the shrewdest and most audacious men in America, and when the Pennsylvania railroad refused to allow him greater rebates for carrying his iron and steel goods from Pittsburg to the sea, he retorted that he would build his own railroad. The survey were actually made. Carnegie was independent, and did not have to seek his capital in Wall street. At the same time he proceeded to start so many gigantic and sensational enterprises that the financial world took fright. It is said that Carnegie's real motive was to get someone to buy him out: that he had made up his mind to Tetirc, but instead of waiting for orders, he started out to build bonfires round his business rivals' camps. They became -nervous, and appealed to J. P. Morgan for assistance and advice. The idea of a huge corporation or trust was mooted by John \V. Gates, of the Steel Wire Corporation, whose original conception was an international one. " The idea was to form a combination which would secure the largest and best output at tho smallest cost—the harmonising of plants to save transport of rawmaterials and products —the use of the most modern and efficient machinery to save labour. Doubtless many men such as Mr Schwab or John W. Gates could have organised such a corporation on the manufacturing and management side, but it was felt that only J. P. Morgan could arrange for the financing of such a vast proposition. It had to include 10 or 12 corporations, each with a capital ranging from 50,000,000d0l to 100,C00,000d01. Tho scheme, when fully worked out, repi-e----sented the creation of new capital aggregating about 1,400,000.C00d01. Mr Morgan's mind grasped and arranged the mass of financial detail involved in the flotation of such a gigantic enterprise. The "Billion Dollar Trust," as it was called, was the industrial wonder of the world when it was announced, but a still greaterwonder was the promptness with which tho American public bought the shares, thus justifying Mr Morgan's confidence. The Morgan Interests. — The late Mr Pierpoint Morgan was not a self-made man in the ordinary sense of the word. He had not, like his famous contemporary, John D. Rockefeller, to at the beginning, but started life with all the advantages of the son of a successflul banker. After a long appren-tice.-hip he was able, by his foresight, courage, and energy, to enlarge the scope of his operations until they became worldwide. / Following on his amazingly successful organisation of tho United States Steel Trust, Mr Morgan interested himself in the project of bringing a number of North Atlantic steamship lines under one management. Early in 1903 the charter of the proposed new steamship organisation was obtained. It was called the International Mercantile Marine Company, was more popularly known as the North. Atlantic Steamship Trust, and had a capital of 120,000.000d01. Mr Morgan was also responsible for the flotation of the "Harvester" Trust, with a capital of 140,000,C00d01, in 1902. Thus in three years he organised and financed three of the largest industrial and commercial combinations the world has yet seen. The Morgan dynasty is carried on by his son, Pierpont, who served his apprenticeship in his father's London house, and won his spurs by providing 40,000.000d0l in gold when the United States Government took over the Panama Canal. The Sassoons of Bagdad.— Another financial dynasty which has found a domicile in London had a picturesque and romantic origin. In the vear 1818 thero was born in the famous old city of Bagdad one Abdullah David Sassooii, who grew up to become a prosperous merchant, and then removed to Bushire and later to Bombay. He secured the contract for building the huge Sassoon Dock at Bombay, and afterwards became a member of 'the Legislative Council. Eventually ho settled in England, and was made a baronet in 1890. He spent large sums in philanthropic works both in India and in England. _ His son, Sir Jacob Sassoon, succeeded him as head of the Indian branch of this extremely wealthy firm of merchants and bankers of India, "London, and China. The marriage of Sir Philip Sassoon, son of the second baronet, to Aline, daughter if Baron Gustavo de Rothschild, is an interesting example of the fact that the relations of great financial houses are not necessarily devoid of romance.