FINANCIAL DYNASTIES.

Pukekohe & Waiuku Times, Volume 5, Issue 197, 4 August 1916, Page 3 (Supplement)

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 oft'cn used to describe the succession of financiers of international repute, who hold in their hands the intricate network of international credit and are. in a very real 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 the'r finances during peace, withuc consulting these financial potentates, who liavo their thumbs on tho pulse of commerce and lio'd m iiieir hands the sinews of war. The rise of these Napoleons of finance is a comparatively recent commercial development. Such historic houses as the Rothschilds date, of course, from Napoleonic times, but the rise of other financial dynasties is a more recent phenomenon, resulting for tho 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 of the great financial house which to this day controls to a large extent the intricate workings of international credit. Meye. Amschel Rothschild carried on business as a banker, money-changer, and dealer in curios at Frankfort in the second half of the 18th century. He attracted the attention of the Elector William 1. of Hasse-Cassel, evidently a shrewd judge of men, who appointed him Court agent and supported h'm in his career ol 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 reposed in his financial adviser, when tho former flod ;>fter tho battle of Jena in 180(5, he left h's fortune in Rothschild's hands. The banker returned tho whole sum with interest on the Elector's return in ISIS. Meyer Rothschild left five sons, whose influenco speedily became recognised in the Chancelleries of Europe. Of these Meyer, the eldest, carried on the original business in Frankfort; Solomon settled first in Berlin and then 'n Vienna; Nathan came to London; Karl went to Nap'es; and Jacob to Paris. Nathan canity 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. 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 agent for the British Government in the Peninsular War. He also organised a system of couriers and a pigeon post for communication with tho 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 do Rothschild undertook loans for several European countries. He was made a baron of the Austrian Empire, but utver assumed the title.

THE ENGLISH ROTHSCHILDS. In London the chief management of l!:o Rothschild banking house, on tho •death of Nathan Meyer de Rothschild, descended to his eldest sou, Lionel Nathan, who in 1838 assumed the dignity of Austrian baron conferred on liis father. Baron Rothschild was entrusted with thj raising of loans tor the Irish Famine in 1847 ; Crimean Expenses, ISSC; and Turkey, 18o8; 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 he was elected M.P. for the. Cty of Lond-',n; but, as a Jew, declined to take the oath in the Christian fashion. He was, however, repeatedly rc-e'ected, and his staunchness was largely instrumental in securing the removal of legal disabilities against Jews, which was followed by his taking his seat in 18-38. Baron Rothschild interested himself in many philanthropic movements and is generally supposed to have been the original of Sidouia in Disraeli's "Coningsby." The Uotlischild dynasty in tli's country is continued to this day.

AMERICAN MAGNATES. Tiie financial monarchy of the new and rapidly-develop'ng commercial world of America may be said to be divided between Mr. J. P. Morgan and Mr. J. 1). 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 resoums of the United States. The total assets of these two groups of burlinesses aro placed at 17.1)42,0(57,IKJO, an almost inconceivably va>t sum more than four times the annual cost ot tlie great war to this country. They include works of industrial and public utility, railroad-, banks and other financial institutions, as well tus mining and oil properties. The nominal heads of these financial dynasties do not, «.t < ourse, exorcise |)ers;)iia! control over all ill s vast network of affairs, but l.v means c.! the " inter-locking" system of directorate tiny exercise a dominating influ. no ovi r industrial and financial aftaiis (ill a r-cale only given to the monarchs of the world's greatest Powers.

Even the lobbies of these moneyed magnates are conducted on a princely senile. Collecting art treasures wai; the hobby of the late Mr. Pierpont Morgan. Some idea of tlio way in which he lavvhod money in this connection may bo withered from tlio lar-t. that- h>' fane ]>ai(i "tTn.OOO for a small inlaid tab'e of the Louis XVI. period, and L'lOO.OOi) for a picture. Mr. R:«kife'!er and -Mi. Carnegie vie with one another in the magnitude of 1 heir philanthropic .obelises.

TIIK CAIIXKfiIK .MILLIONS. In the year 1«>00 Andrew Carnegie was not only :< very r;ch man. but one oi the m w-t p ivverful in the world of ■ ii< 11 istry. H,> was, too, one of the shi ewdest, and most audacious men in America, ami when the Pennsylvania ILtdioa<J re liim il to allow him greater ielia f t-. tor e.i'Tving his iron and uteel

good- ironi I': 11 . b 11 i'k f» the sea. lie retorted tlat | : ,. wonld build his own 11"; • erv>-y s were actually m.'"!e, i *rr.< •!••• ' .is independent, and did mi* li'- seek his capital in Wall strce*.. A 1 ili.. same time lie proceeded to start many gigantic and s ;n atinoal » nI .-rpri. that the financial world took fright. It is sad that Carnejr;e s real motive wa.s to get someone to buy him out : that he had mado up his mind to retire, but instead of waiting for orders, lie started out to build bonfires round his bus 1 -

ncss rivals' camps. They became nervous, and appealed to J. P. Morgan for assistance and advice. The idea of a huge corporation or trust wars 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 — tho 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 manageemnt side, but >t was felt that only J. P. Morgan cou'd arrange for the financing ot' 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 mas-, of financial detail involved in the flotation of such a gigantic enterprise. The " Bi 1 lion 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 the shares, thus justifying Mr. Morgan's confidence. THE MORGAN INTERESTS. Tho late -Mr. Pierpont Morgan was not a self-made man in the ordinary sense of the word. He had not, like his fa mo us contemporary, .folin D. Rockefeller, to begin at the beginning, but started life with all the advantages of the son of a successful banker. After a 'ong apprenticeship he war, nlbe, 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 in the project of bringing a number of North Atlantic steamship lines under one management. Early in 1903 the charter of the proposed new steamsihip organisation was obtained. It was called the International Mercantile Marine Go., 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 capital of 140 million dollars in 1902. Thus in three years ho organised and financed three of the largest industrial and commercial combinations tiie 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 do'lars in gold when the United States Government took over the Panama Canal.

THE SASSOONS 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 Bushire and later to Bombay. He secured the contract for building the huge Sassoon Dock at Bombay and afterwards became a member tof the Legislative Council. Eventually he settled m England, and was made a baronet in 1890. He spent largo 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 wea'thy firm of merchants and bankers of India, London, and China. The marriage of Sir Philip Sassoon, son of the second baronet, to Aline, daughter of Baron Gustavo de Rothschild, is an interesting example of the fact that the relations ot great financial houses are not necessarily devoid of romance.