FINANCIAL DYNASTIES.

Wanganui Chronicle, Volume LX, Issue 16704, 24 July 1916, Page 3

FINANCIAL DYNASTIES.

HOW MONEY TALKS IN PEACE AND WAR.

In the old days the term dynasty was only applied to royalty, but now it is oftin uoed to describe the succession of financiers of international repute, who hold in their hands the intricate network of international credit and art, in a ver\- real sense the power behind the throne. No ruler,, Jiowever autocratic, no government, however democratic, can meet an economic crisis, go to war, or even reconstruct the'r finances during peace, withut consulting these financial potentates, who have their thumbs on the pulse of commerce and hold ]n their hands the sinews of war. Tho rit*> of these Napoleons of finance is a comparatively recent commercial. development. Such historic bouses as the Rothschilds date, of course, from Napoleonic times, but the rise 01 other financial dynasties is a more recent phenomenon, resulting for the most part from the unprecedentedly rapid commercial exploitation of the United States of America.

THE ROTHSCHILDS

The (story of financial dynasties in the modern sense may be said to begin with Meyer Amschel Rothschild, the founder oi" the great financial house which to tills day controls to a large extent the intricate workings of international credit.' Meyer Amschel Rothschild carried on business as a banker, money-changer, and dealer in curios at Frankfort in the second half or the 13th century. He attracted the attention of the Elector William I. of Hesse-Cjissel, evidently a shrewd judge of men, who appointed him Court agent and supported him in .his career of Joan 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 fttill carried on. As showing the trust which the Elector William reposed in his financial advisor, wiien the 'former fled ;vjter the battle of Jena in 1806, he left his fortune in Rothschild's hands. The banker returned tho 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 m Frankfort; Solomon settled first in Berlin and then in Vienna; Nathan came to London; Karl went to -Napes; and Jacob to Paris. Nathan came to England iirst as a young, man of 20, in L 797, waa naturalised in 1804, and in the following year started a branch of the business in New Court, ISt. Swithin's Lane. Before long he was entrusted by the British Government with the payment of foreign subsidies. During the Napoleonic wars he rendered Invaluable assistance to England. He acted as agont 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 n 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 v baron of the Austrian Empire, but never assumed the title.

THE ENGLISH ROTHSCHILDS

In London the chi^ef management of the Rothschild titaniiiiig- house, on tho (.death of Nathan Meyer de Rothschild, .descended to his eldest son, Lionel .Nathan,' vAvho in 183S assumed the dig'liity- of Austrian baron conferred on ■his. father. Baron Rothschild was entrusted with the raising of loans tor the Irish Famine in 1847; Crimean Expenses, 1856; and Turkey, 1858; 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 f'a'th of 'his fathers is to be found in the fact that he 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 ISSB. Baron Rothschild interested himself in many philanthropic movements and is generally supposed to have been the original of Sidonia in Disraeli's "Coningsby." The Rothschild dynasty in this country is continued to "this day.

AMERICAN MAGNATES

The financial monarchy of the new and rapidly-developmg commercial world of America may be said to bo divided between Mr. J. P. Morgan and Mr. ,j. D. Rockefeller. The latter is generally believed to be the richest man in the world. It has been officially stated that the Morgan and Rockefeller interests between them control over one-third of the actual 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 suni, more than four times the annual cost of the great war to this country. They include works of industrial and public utility, railroads, banks and other financial institutions, as well as mining and oil properties. The nominal heads of these financial dynasties do not. of course, exercise personal control over all this vast network of affairs, but by means of the "inter-locking" system of directorate they exercise a dominating influence over industrial and financial affairs on a scale only given to the

monarchs of the woriJ'G greatest Pow-ei-rf. Even the hobbies of these moneyed magnates are conducted on a princely scriio. 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 £100.000 for a picture. Mr. Rockefeller and Mr. Carnegie vie with one another in the magnitude of their philanthropic schemes.

THE CARNEGIE MILLIONS

In tlio year 1900 Andrew Carnegie wns not only a very rich man, but one o( the mosct powerful m 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 surveys were actually made. Carnegie was independent, and did not have to seek hit? capital in Wall Street. At the same time he pro r ceeded to start so many gigantic- and sensatinoai enterprises that the financial world took iright. It is sad that Carnegie's real motive was to get someone to buy him out; that he had made up his mind to retire, but instead of waiting for orders, he started out to build bonfires round his business rivals' camps,. They became nervous, and appealed to .1. P. Morgan for assistance and advice. The idea of a huge corporation or trust was mooted by John W. 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 the smallest cost —the harmonising of plants to save transport of raw materials 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 manageenmt side, but 't 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 to 100 million dollars. The scheme, when fully worked out, represented the creation of new capital aggregating about 1400 million dollars. Mr. Morgan's mind grasped and arranged the mass of financial deta'l 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 greater wonder was the promptness with which the American public bought tho shares, thus justifying Mr. Morgan's confidence.

THE MORGAN INTERESTS

Tlie late Mr. PierpOnt 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 begin at the beginning, but started life with all the advantages of the son of a siiceessful banker. After a. long apprenticeship he was albe, by his foresight, courage, and energy, to enlarge the scope of his operations until they became worldwide. Following on his amazingly successful organisation, of the United States Steel Trust, Mr. Morgan interested himself, m the- project of bringing a number of 3sbx'th /Atlantic steamship lines xaidei* one management. ;ICa,~rly in 1903 the charter of the proposed new steamship organisation was obtained. It was called the International Mercantile Marine 00., but was more popularly known as the North Atlantic Steamship Trust, and had a capital of 120 million dollars. Mr. Morgan was also responsible for the flotation of the 'Harvester" Trust with a capita! of 140 million dollars 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,----000,000 dollars in gold when the United States Government took over the Panama Canal.

THE BASSOONS OF BAGDAD

Another financial dynasty which lias found a domicile in London had a picturesque and romantic origin. In the year 1818 there was born in the famous old city of Bagdad one Abdullah avid Sassoon, who grew up to become a prosperous merchant, and then removed to Bushiro and later to Bombay. He secured the contract for building the huge Sassoon Dock at Bombay and afterwards became a member t o f the LegiV-tive Council. Jiventually lie settled m England, and was made a baronet in 18(J0. He spent large sums in philanthropic works both m India a;id in England. His son. Sir Jacob Sassoon. succeeded him ay head of the Indian branch of this, extremely wea'thy firm of merchants and banker's of India, London, and China. The marriage of Sir Philip Sassoon, son of the second baronet, to Aline, daughter of Baron Gustave do Rothschild, i« an interesting example of th c fact that the relations of great "financial houses are not necessarily devoid of romance.