All set for great things if left to itself
David Kynaston conjures up the City in the year of The Spectator's birth, when the first Rothschild was at his pillar in the Royal Exchange
0 ne man dominates the City of London in 1828. A short, heavy figure with protruding lips and bulbous eyes, now in his early
fifties, Nathan Mayer Rothschild is the nonpareil financier of his generation — perhaps of any generation.
It is 20 years since, as the third son of a Frankfurt merchant, he opened a permanent office in the City, at first in Great St Helen's Street but soon moving to New Court in St Swithin's Lane. During that time he has conducted audacious bullion operations for the British government during the latter stages of the Napoleonic wars; done much in peacetime to set London on the path to replacing Amsterdam as the world's leading financial centre by raising large loans for foreign states; and most recently been almost single-handedly responsible for averting the City from catastrophe during the intense financial and commercial crisis ol 1825-6, caused by rash speculation in new industrial concerns and (sometimes fictitious) South American republics. Jealous rivals have put it about that what really saved the day was the fluke of Bank of England officials stumbling across a box of unissued pound notes. but those in the know concede — albeit grudgingly — that what really made the difference was the major infusion of gold that Rothschild managed to secure from France.
He is such a virtuoso operator, such an indispensable man, that he seldom indulges in honeyed words. That indefatigable diarist Mrs Arbuthnot asks him what they think in the City of the Prime Minister, the Duke of Wellington. 'He says they have unbounded confidence in him. I ask what they think of Mr Peel, and he says they do not think about him at all.' Nor does the just-emerging cult of the gifted amateur impress him. 'I do not read books, I do not play cards. I do not go to the theatre, my only pleasure is my business,' he curtly reminds a brother in danger of backsliding. 'As long as we have a good business and are rich everybody will flatter us.'
At least twice a week, on foreign post days, Rothschild is to be seen at the Royal Exchange, with its uncovered courtyard and array of merchants from all over the world. There, leaning against his favourite pillar, he conducts his extensive foreign-exchange operations, fixing the rate without hesitation and rarely troubling to take a note, hut back at New Court unfailingly dictating the details to his clerks.
On the Royal Exchange's first floor, the insurance market Lloyd's — in situ there since 1774 — is settling down as one of London's most enviable clubs. On the other side of Bank Crossing lies George Dance's Mansion House, criticised by one unduly carping guidebook as 'deficient in magnificence'. And across the road is the Bank of England itself, newly rebuilt by Sir John Soane along masterly lines, with its sublime yet elegant Bank Stock Office. Lothbuty Court, Consols Transfer Office, Rotunda, and Five Pound Note Office.
Not that most of the men who run the Bank of England are objects of great awe. The pattern, almost from the Bank's foundation in 1694. is for every other year one solid. unimagi - native merchant to replace another solid, unimaginative merchant as governor, accurately reflecting the City's still strongly mercantile character. But in 1828 itself the new deputy governor — and therefore a shoo-in for the governorship in due course — is John Horsley Palmer, who not only heads a prominent East India house, but also has a sure grasp of monetary questions, theoretical as well as practical. At last the Old Lady, recently disparaged by David Ricardo as 'the company of merchants', is about to raise its game.
It needs to, because great questions are afoot. The return to the gold standard in 1821 was far from popular at the time, even though an ungrateful City is now starting to convince itself that it was always in favour. The growing move towards free trade is similarly resisted, even though those few with a gasp of the bigger picture realise that it will inflict some short-term pain to vested interests (such as the West India merchants) but bring immeasurable benefits to the Square Mile as a whole. And it is not yet even grudgingly accepted, especially in the parlours of the most exclusive private banks, that the age of joint-stock banking is implacably dawning.
The City, in short, has even less idea than most about how the financial and commercial 19th century is going to unfold. Least of all the animal spirits that people the crowded, noisy, rumbustious floor of the Stock Exchange in Cape! Court, just to the east of the Bank. A myriad of small firms of brokers and jobbers are, like everywhere else in the City, jostling for favour and position; rumours, usually ill-founded, spread like wildfire; practical jokes (including the deployment of fictitious securities such as Chinese Turnpikes), boisterous singing and often dangerous horseplay (tuner slides' et al.) brighten up dull days, of which there are many as business struggles to recover after the nervous shock of 1825-6; and with few exceptions, the prevailing horizon by which decisions are made is not next year, not next month, not even tomorrow, but the next hour, the next minute.
One newcomer to the City watches it all with sour disapproval, ever-vigilant eyes, and no perceptible sense of humour. Joshua Bates, a dour, puritanical Bostonian of wide mercantile experience, has just become a partner in Baring Brothers, with a brief to restore that merchant bank to its pre-Rothschild ascendancy. 'You are the most uniformly laborious man I know,' one colleague observes, while he himself puts his trust in a 'system of secrecy', a 'rigid economy', and the avoidance of 'all pride and ostentation and unnecessary show. As long as men like Bates are minding the shop at 8 Bishopsgate, there will never be a Barings crisis.
Open to outside talent, gathering critical mass and blessed by benign forces largely beyond its comprehension, the City in 1828 — like The Spectator — is poised for great things. All that is now needed is for interfering ministers, dismal economists and tender consciences to let the money machine get on with it.
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