W. Sombart -- On the Rothschilds and the Creation of the Modern Stock Exchange

[CrackSmokeRepublican]

The old Jew Scams then continue today...note the mention of fostering "demand"... much like GS/JPM  "J-Tribing" many international markets these days...--CSR

--------

In the period of early capitalism, the Stock Exchanges of other towns lagged far behind those of Amsterdam and London. Even in Paris it was not until towards the end of the 18th century that business became at all brisk. The beginnings of stock speculation (or Agiotage, as it is called in France) can be traced to the early 18th century; Ranke78 discovered the term Agioteur in a letter of Elisabeth Charlotte, dated 18th January, 1711. The writer is of the opinion that the term had some connexion with the billets de monnaye (bills) but that it was unknown before. It would seem, therefore, that the Law period left no lasting impression. For even in the 1730's the economic pre-eminence of England and Holland, both more capitalistically advanced than their neighbour, was felt in France. One writer of the time makes this clear.

"The circulation of stock is one of the sources of great wealth to our neighbours; they have a bank, dividends are paid, and stock and shares are sold." Apparently then such was not the case in France. Even in 1785, an edict (7th August) proclaimed that "the King is informed that for some time past a new kind of commodity has been introduced into the capital" — viz., stocks and shares.   

The condition of comparative unimportance which Stock Exchange activities occupied in France during the 18th century is a direct indication that the Jews had little influence on the economic life of France (and especially of Paris) in that period. The cities in which they resided, such as Lyons or Bordeaux, were hardly favourable to the development of stockbroking. In Lyons, however, there was for a short space, in the 16th century, a fairly brisk trade in what would to-day be called securities, but no satisfactory reasons have as yet been offered to explain it.80 Anyhow, it had no after-effects.

But to return to Paris. What stockbroking it had it probably owed to the Jews. The centre of this business was in the Rue Quincampoix, which later became notorious through the swindles connected with the name of Law. Now in this particular street there lived, in the words of a reliable authority,81 "many Jews." Be that as it may, the man with whom the first stock speculations in France were connected, one who was a greater master of the art of manipulation than even Law, was Samuel Bernard, the well-known financier of Louis XIV. No wonder then that the billets de monnaye, when they became merely bits of valueless paper, were nicknamed Bernardines.82 And as for John Law, his knowledge of the mechanism of the Stock Exchange had been acquired in Amsterdam.83 Whether he was himself a Jew (it has been held84 that Law == Levy) I have been unable to discover. It is, however, quite possible. Was not his father a "goldsmith" (and banker)? He was, it is true, a Christian, but that is not necessarily a proof of his non-Jewishness. The Jewish appearance of the man in portraits (for example, in the German edition (1720) of his Money and Trade Considered) rather supports the thesis that he was a Jew. On the other hand, the peculiar mixture of the lordling and the adventurer which characterized his nature is against the assumption.

In Germany the Exchanges of Frankfort and Hamburg, the two Jewish towns par excellence, alone reached a position of any importance. Illustrations of the Jewish influence have already been dealt with. As for Berlin, it may be said that the Stock Exchange there was a Jewish institution from its very inception. At the beginning of the last century, even before 1812, when they were emancipated, the Jews predominated numerically on the Exchange. Of the four Presidents, two were Jews; and the whole Stock Exchange Committee was made up as follows: — 4 Presidents, 10 Wardens of the two Gilds, 1 of the Elbe Seamen's Gild, and 8 "of the merchants of the Jewish nation, elected thereto." Out of a total of 23, therefore, 10 were Jews. That is to say, professing Jews: it is impossible to determine whether, and how many, baptized Jews and crypto-Jews were in the committee. As it is, their number shows plainly enough that stockbroking had its large quota of Jews. Of six sworn bill-brokers three were Jews. Further, of the two sworn brokers in cotton and silk, one was a Jew, and his substitute was also a Jew. That is to say, of a total of three, two were Jews.85
Stockbroking so far as Germany in the 18th century was concerned was carried on only in Hamburg and Frankfort. Already at the beginning of that century trading in securities was forbidden. A proclamation of the Hamburg Council, dated 19th July, 1720, expresses itself as follows:
— "The Council has heard to its abhorrence and great disgust, that certain private citizens, under the pretext of founding an assurance company, have on their own authority commenced business as dealers in shares. The Council fears that harmful consequences may ensue therefrom as well to the public at large, as also to the said private citizens."86 It seems that the powers that be were only voicing the general feeling in the matter; "the dangerous and wickedly ruinous trade in stocks and shares" a writer of the tune87 indignantly called it.

Were Jews here also the originators? So much at least is certain, that the impetus to stock-dealing came from the circles of the assurers, as is apparent from the above-mentioned proclamation of 1720. Now, as a matter of fact, it is known that Jews actively stimulated the growth of marine insurance in Hamburg.88 Any further evidence as to Stock Exchange influences is only indirect. The same applies to Frankfort The first certain trace dates from 1817, and refers to Augsburg. There is on record the decision of a court of law in a bill case of the 14th February in the year mentioned. A motion to enforce payment of the difference in the price of a credit-instrument which rose owing to the rise of the market- rate was dismissed, on the ground that it was of the nature of a game of hazard. The sum in question was 17,630 florins, and the original contract was for delivery of 90,000 florins' worth of lottery tickets in the Bavarian State Lottery. The plaintiff's name was Heymann, the defendant's H. E. Ullmann! This is the first attested case of speculation in bonds in Germany.89

But with the year 1817 we reach a period which differed from the preceding one, and which I consider as opening a new epoch in the history of Stock Exchange transactions. Why new? What were its special features that it should be described by that dreadful word "modern"? Judgments on the Stock Exchange by contemporaries then and now show how widely different a position it occupies to-day from what it did even a hundred years ago.

Until well on in the 18th century, even in capitalistic circles, speculation in the public funds was looked at askance. The standard commercial handbooks and dictionaries in English, French, Italian and German, which have come down to us from the 18th century, either make no mention at all of dealings in stocks (especially in the economically "backward" countries), or if, like Postlethwayt, they do treat of the subject, they cannot sufficiently express their contempt for it. The view concerning the Stock Exchange which is to-day held by the petty trader, the small shopkeeper or the farmer was in the 18th century that of the rich merchant. When in 1733 Sir John Barnard's Bill (to prevent the "infamous practice of stock-jobbing") was being discussed in the House of Commons, all the speakers were unanimous in their condemnation of the business. Half a generation later the same harsh terms are to be found in the pages of Postlethwayt, who refers to "those mountebanks we very properly call stockbrokers." Stock-jobbing he regards as a "public grievance," which has become "scandalous, to the nation."90 No wonder that the legislation of the period completely forbade the business. But the dislike of the Stock Exchange went deeper still. It was bound up with an aversion for what the Exchange rested on — securities in general. Naturally the interests of the State coincided with those who defended the trade in securities, so that Ruler and Jobber were ranged as a lonely couple on one side, while everybody else was on the other — save only those who indulged in the purchase of securities. In truth, the National Debt was looked upon as something of which States had need to be ashamed, and the best men of their generation were agreed that its growth was an evil which should be combated by all possible means. Thinkers and practical men were united on this point. In commercial circles the question was seriously discussed how the public debt could
be paid off, and it was even suggested that the State should disavow its responsibilities in connexion with the debt, and so wipe it out. And this in England in the second half of the 18th century!91 Nor were the theorists of the time differently minded. The system of public borrowing is called by David Hume "a practice . . . ruinous beyond all controversy;"92 Adam Smith writes of "the ruinous practice of funding," "the ruinous expedient of perpetual funding ... has gradually enfeebled every State which has adopted it" . . . "the progress of the enormous debts, which at present oppress and will in the long run probably ruin all the great nations of Europe."93 In these opinions, as always, Adam Smith is the mirror of the economic conditions of his age, a period of early capitalistic development, and nothing distinguishes it from our own so well as the fact that in the complete system of Adam Smith there is no niche available for the study of securities, or of the Stock Exchange and its business.

About the same time, however, a book appeared which dealt only with credit and its blessings, with the Stock Exchange and its significance; a book which may be justly termed the "Song of Songs" of Public Debts and share-dealing; a book which looked to the Future, as the Wealth of Nations looked to the Past. I refer to the Traité du credit et de la circulation, published in 1771 from the pen of Joseph de Pinto. Now Pinto was a Portuguese Jew, hence my special reference to him in this connexion. In his pages may be found the very arguments which have been put forward in the 19th century in defence of public credit, of dealings in securities and of speculation in the public funds. If Adam Smith in his system be said to stand at the end ofthe period in which the Stock Exchange was in its infancy, Pinto may be regarded as standing at the beginning of the modern era with its theory of credit, in which stock and share speculation have become the centre of economic activity, and the Stock Exchange the heart of the body economic.

Silently, but none the less surely, public opinion veered round in favour of dealings in securities and of the recognition of the Stock Exchange as a necessity. Public opinion grew as these grew, and step by step, hostile legislation was removed, so that when the Napoleonic wars were over and peace reigned once more, the Stock Exchange began to take on enormous dimensions.

We see, then, that there is some justification for speaking of a new period in the history of the Stock Exchange. What were the actual changes? And to what extent were the Jews concerned in bringing about the new state of affairs?

There was not much modification in the mechanism of the Stock Exchange; that was complete as early as 1688, when de la Vega published his book. Naturally, subsidiary kinds of business activities cropped up here and there, and of these, too, Jews were generally the originators. Thus I have discovered94 that the business of insurance was established (in Germany) by W. Z. Wertheimer in Frankfort, and that of the peculiar form of ship chartering known as "Heuergeschäft" Jews were the founders.

But the rise of subsidiary businesses was not the salient point in the development of Stock Exchange activities. It was rather the extensive and intensive growth of the volume of business. The enormous increase in the number of securities which have appeared in the market since the beginning of the 19th century, and the rapidity with which they came before the public, are facts too well known to need repetition. But with this increase came also an extension of speculation. Until about the middle of the 18th century, speculation in London and Amsterdam may be compared to little ripples on the face of the water. It was not till 1763, as a reliable informant tells us, that the first private loan was floated in Amsterdam. Previously what speculation there was was limited to public bonds, "but during the last war a vast ocean of annuities flooded the market."95 Even so, there were only fortyfour different kinds of securities on the Amsterdam Exchange about the middle of the century. Of these, twenty-five were bonds of internal, and six of German loans. When the century closed, the first category of bonds numbered eighty, and the second thirty.96 Then came a sudden upward movement, especially after the defeat of Napoleon. From the first establishment of the Amsterdam Exchange until the year 1770, a total debt of 250,000,000 Gulden had been dealt in; whereas in fourteen years (1808–22) one London firm alone issued a greater sum —
22,000,000 pounds. All this is common knowledge; and the identity of that one London firm, which in a decade floated so vast a sum on the market, does not need further indication.   

With the mention of this firm, and of its four branches, we have touched on the connexion between the extensive growth of Stock Exchange activities and the Jewish influence upon it. For the expansion of the share market between 1800 and 1850 was also the expansion of the house of Rothschild and its appendages. The name Rothschild refers to more than the firm: it stands for the whole of Jewish influence on the Stock Exchange. By the aid of that influence the Rothschilds were enabled to attain to their powerful position — it may even be said to their unique position — in the market for Government securities. It was no exaggeration to assert that in many a land the minister of finance who could not come to an agreement with this firm might as well close the doors of his exchequer. "There is only one power in Europe," was a dictum well-known about the middle of the 19th century, "and that is Rothschild: a dozen other banks are his underlings, his soldiers are all honest merchants and workmen, and speculation is his sword" (A. Weil). Heine's wit, in passages that are surely too well-known to need quoting, has demonstrated the importance of the family better far than any table of figures.

I have not the least intention of writing here a history of the Rothschilds, even in outline. The reader will find ample material97 at his disposal should he wish to acquaint himself with the fortunes of this remarkable family. All I shall do will be to point out one or two characteristics which the modern Stock Exchange owes to them, in order to make clear that not only quantitatively, but also qualitatively, the Stock Exchange bears the impress of the Rothschilds (and therefore of the Jew).

The first feature to be observed is that, since the appearance of the Rothschilds, the stock market has become international. This was only to be expected, considering the enormous extension of Stock Exchange activities, which necessitated the flow of vast sums from all parts of the inhabited world to the borrowing centres. To-day the internationalization of the stock market is an accepted fact; at the commencement of the 19th century it was regarded with nothing short of amazement. When in 1808, during the Peninsular War, Nathan Rothschild undertook in London to attend to the pay of the English army in Spain, his action was regarded as a stupendous achievement, and indeed, laid the foundation of all his influence. Until 1798 only the Frankfort firm had been in existence; in that year one of the sons of Mayer Amschel established a branch in London, another son settled in Paris in 1812, a third in Vienna in 1816, and a fourth in Naples in 1820. The conditions were thus given whereby a foreign loan might be treated as though it were an internal loan, and gradually the public became accustomed to investing their capital in foreign securities, seeing that the interest could be paid at home in coins of the realm. Writers of the early 19th century describe it as a marvellous thing that "every holder of Government stock . . . can receive his dividends in various places at his convenience without any difficulty. The Rothschilds in Frankfort pay interest for many Governments; the Paris house pays the dividends on the Austrian Métalliques, the Neapolitan Rentes, the Anglo-Neapolitan Loan either in London, Naples or Paris."98   

The circle of possible investors was thus enlarged. But the Rothschilds were also alive to the importance of obtaining every available penny that could be borrowed, and for this purpose they skilfully utilized the machinery of the Stock Exchange for floating loans. As far as can be judged from contemporary records,99 the issue by the Rothschilds of the Austrian bonds in 1820–1 was an epoch-making event, both in public borrowing and in Stock Exchange business. For the first time all the ropes were pulled to create a demand for the shares, and speculations in Government stocks may be stated to have begun on this occasion, at least on the Continent.

"To create a demand" was henceforth the watchword of the Stock Exchange. "To create a demand" was the object in view when, by means of systematic buying and selling, changes were brought about in price; and the Rothschilds devoted themselves to the business from the first.100 In a sense, they carried on what the French called agiotage, and this was something quite new for a great banking firm to do. In reality the Rothschilds only adopted the methods of the Amsterdam Jews for artificially influencing the market, but they applied them to a new purpose — the placing of fresh securities before the public. The changed relation of the banker to the Stock Exchange on the one hand, and to the public on the other, will become more apparent when we have glanced at the new activities which loomed on the horizon at this period — the age of the Rothschilds — and began to play an independent role. I mean the business of bringing out loans.

The Creation of Securities

The business of bringing out loans is an attempt to obtain profit by means of the creation of securities. It is important because it represents a capitalistic force of exceedingly great power. Henceforth, stocks and shares come into being not because of the needs of those who require money and depend on credit, but quite independently, as a form of capitalistic enterprise. Hitherto the possible investor was waited for until he came; now he is sought out. The loan-floater becomes, as it were, aggressive; he gives the impetus to the borrowing movement. But this is hardly ever noticeable. We see how it works, however, when small States require loans; we may imagine a kind of "commercial traveller in loans." "Now we have wealthy firms with large machinery, whose time and staff are devoted to hunting about the world for Powers for whom to bring out loans."101

Naturally, the loan-floater's relation to the Stock Exchange and the public changes. He must be aggressive and pushful, now that his main work is to get people to take up shares.

There is as yet no satisfactory history of the business of bringing out loans. We do not know, therefore, when it first began; its origins, however, no doubt reach back into the 18th century, and probably there were three well marked stages in its growth.

In the first of these, either a bank or a wealthy individual (who, in the pre-Stock Exchange period himself made the loan) was entrusted with the placing of the debt in return for a commission. Such was the method adopted in Austria throughout the whole of the 18th century:

"Loans of fairly large sums, especially those contracted abroad, were
usually obtained through the intervention of a bank or a group of financiers.
The firm in question arranged, by means of public subscription,
for the supply of the amount needed; handed over the sum to the borrower
or his agent; undertook' the payment of interest and portions of
the principal to the individual lenders — out of their own funds if need
be; all, of course, for a consideration."102

But about the middle of the 18th century there were already "dealers in loans." In 1769 there were Italian and Dutch firms who would willingly undertake the floating of loans.103 Adam Smith's description of this business makes the matter plainer still. "In England . . . the merchants are generally the people who advance money to Government. But by advancing it they do not mean to diminish, but, on the contrary, to increase their mercantile capitals; and unless theyexpected to sell with some profit their share in the subscription for a new loan, they never would subscribe." In France, on the other hand, those concerned in the finances were people of private means, who advanced their own money.104

Where did the specialists in this business come from? Not from among the bankers, who in the 18th century floated loans, but in all probability from among the dealers in stock and shares. Towards the end of the 18th century the charmed circle of London bankers who had the monopoly of bringing out Government loans was broken through by competition from the ranks of the stockholders. Here, too, it was a Jewish firm that took the initiative, and brought the emission of loans into connexion with the Stock Exchange. I refer to the "Rothschilds of the 18th century," the men who predominated in 'Change Alley in those days — Abraham and Benjamin Goldsmid. In 1792 they came forward as the first members of the Stock Exchange105 to compete with the bankers of London in the bringing out of the new loan, and from that date until the death of the second brother, Abraham, which occurred in 1810, this firm controlled the money market. Perhaps we may account them as the first "loan specialists," whom the Rothschilds succeeded. But even if there is some doubt about the Goldsmids' claim, there can be no possible doubt about the Rothschilds', who were thus certainly the first in the field.

But it is obvious that only a few wealthy firms could subsist by the business of issuing public loans. After all, the demand was comparatively limited. But as soon as opportunities offered themselves for the creation of securities for private needs, a very wide field of activity was ready for ploughing. All that was necessary was to create a big demand artificially, and this tendency gave birth to company-promoting and mortgage business.

Company-promoting is carried on by firms "whose business it professedly is to make money by manufacturing stocks and shares wholesale and forcing them upon the public" (Crump). The strength of the motive power that thus began to actuate economic activities need scarcely be described. It was not to the interest of undertakers, some of no small importance, to create fresh capital by the issue of new stock or by extending the old, without any reference at all to the question as to whether there was a demand for the stock or not.

Who first started this form of business? It will not be difficult to show that even if the Jews did not actually establish it, they certainly helped forward its development.

The first ray of light on this matter, as far as we can make out, is once again the activity of the Rothschilds. The railway boom of the 1830's made it possible to carry on company-promoting on a large scale. The Rothschilds, as well as other Jewish houses (the d'Eichthals, the Foulds, etc.), were the first in the field, and brought this branch of business to a flourishing condition.

The extent of the participation may be gathered in some degree from the length of the lines built, or the amount of capital subscribed. But the actual share of the individual firms cannot be estimated. Nevertheless, we know that the Rothschilds "built" the Northern Railway in France, the Northern Railway in Austria, the Austro-Italian Railway, and many more.

Further, judging from the views of contemporaries, it would appear that the Rothschilds were really the first "Railway Kings." In 1843 the Augsburger Allgemeine Zeitung wrote as follows: "When in the last few years speculation became rife in industrial undertakings, and railways grew to be a necessity for the Continent, the Rothschilds took the plunge and placed themselves at the head of the new movement." The house of Rothschild set the fashion in railway building as it had done before in public loans. "Scarcely a company that was started in Germany but looked to the goodwill of Rothschild. Those in which he had no say were not very successful, and little could be made out of them."106 Statements such as these, in which friend and foe agree, are significant enough.

Ever since those days the activity of floating companies has become a specialty of Jewish undertakers. In the first place, the very biggest men, such as Baron Hirsch or Dr. Strousberg, were Jews. But the rank and file, too, have many Jews among them. A glance at the figures on the next page concerning the promotion of companies in Germany in the two years 1871–3 suffices to show that an astoundingly large number of Jews participated in the work.107 But these figures do not tell the whole story. In the first place, they form only a selection of the whole, and refer (of set purpose) to the "shaky" companies, from which the Jews will probably have kept away; and secondly, in many cases, the Jews were behind the scenes as controlling influences, and those in the foreground were merely puppets. Even so the figures will serve a useful purpose.

The tendency is perhaps best seen where private banking is still important, as it is in England. Here, as I am told on the best authority, of the 63 banks in the Bankers' Almanack for 1904, 33 were Jewish firms, or at least with a strong Jewish interest, and of these 33, 13 were firstclass concerns.

It is more difficult to determine the proportion of Jews in this calling in countries (e.g., Germany) where the private banker has been displaced by the joint-stock bank. But everything points to Jewish influence in the tendency of the joint-stock banks to act as company promoters. None of the decades of company-flotation, neither the fifties nor the seventies, nor still less the nineties, would have been conceivable without the co-operation of the speculative bank. The stupendous undertakings in railway construction owe their very existence to the banks, which advanced capital to limited companies of their own creation. Private firms, it is true, did no little in the same direction, but their means did not allow of rivalry with the great banks. In France, between 1842 and 1847, no less than 144 million francs were spent in railway building; in the following four years 130 millions, while from 1852 to 1854 the sum had reached 250 millions; in 1855 alone it was 500 millions, and in 1856 520 millions.108 It was the same in Germany. "The entire work of building our net of railways in this period (1848–70) . . . was carried through . . . with the assistance of banks."109

The reason for this is not far to seek. On the one hand, the increase of available capital, which was due to the rise of new joint-stock banks, paved the way for proportionately larger undertakings. On the other hand, since the joint-stock company in trying to obtain greater profits strove, harder than a private firm to add to its activities, all possible opportunities that presented themselves were utilized to the full.110 How did this special banking activity originate?111 I believe it may be traced to 1852, when the credits mobiliers112 were first established. The history of the crédit mobilier is well known.113 What interests us specially is that it owes its inception to two Portuguese Jews, Isaac and Emil Pereire, and that other Jews participated in it. The list of subscribers showed that the two Pereires together held 11,446 shares, and Fould-Oppenheim 11,445, that among the other large shareholders were Mallet Freres, Benjamin Fould, Torlonia (of Rome), Solomon Heine (of Hamburg), Oppenheim (of Cologne) — in other words, the chief representatives of European Jewry. The Rothschilds were not found in the ist, for the crédit mobilier was directed against them.

From Werner Sombart's  -- The Jews and Modern Capitalism, pages 70-79

http://mailstar.net/sombart-jews-capitalism.pdf

[CrackSmokeRepublican]

As it was then, as it is today...   :think:

In 1672 a complaint is heard from Brandenburg.69 "Jews go about
as chapmen among the villages and in the towns and force their wares
on people." A similar story comes from Frankfort-on-the-Oder,70 wherein
the details are fuller. Jews run after customers — the travellers to their
hotels, the nobility to their castles and the students to their lodgings.
And in Nikolsburg, in Austria, we are told71 that:

"the Jews have drawn
to themselves all the trade, all the money, all the goods. They wait outside
the city, try to strike up an acquaintance with travellers while they
are yet on the road, and endeavour to take away their custom from
Christian citizens."

How the Jews were ever on the look-out for new customers is described
by a well-informed writer of the early 19th century.72 It was a
practice with them, he says, "to pay frequent visits to all and sundry
places of public resort where, by reading the many news-sheets, they
sought to obtain knowledge of possibilities for doing business, and especially
of noting what strangers were expected to arrive; and by listening
to every conversation, to find out whose houses were in danger in
order to make bargains or contracts with them."

The streets in which the Jewish old clo' men lived were the scenes
of similar activities, the end in view always being the same. In fact, the
dealers sometimes seized the passer-by by the arm and tried to force him
to make purchases. This method of carrying on business is not unknown
in our modern cities; it was known in the Paris of the 18th century,
where it was associated with the fripiers, the old clo' dealers, who, as
we are informed,74 were for the most part Jews. One description of such
a scene is too good not to be quoted." "The touts of these disorderly
shops call to you uncivilly enough; and when one of them has invited
you, all the other shopkeepers on your road repeat the deafening invitation.
The wife, the daughter, the servant, the dogs, all howl in your ears.

. . . Sometimes these fellows seize an honest man by the arm, or by his
shoulder, and force him to enter in spite of himself; they make a pastime
of this unseemly game. . . ."    

We hear the same tale from a traveller who journeyed in Western
Germany about that time. "To walk in the streets of those places where
there are many Jews has become a nuisance. You are badgered by them
every minute and at every turn. You are constantly being asked. Can I
sell youanything? Won't you buy this, that or the other?"75

Or they turn into wandering traders in order to sweep in custom.

"The Jew thinks nothing of turning the seats in the porches into a shop
counter, often extending them by means of planks; he places a form or
table against the wall of any house he can get at, or even makes the front
passage into a shop; or, he hires a cart which becomes his moving shop,
and often enough he has the bad manners to pull up in front of a shop
which sells the same wares as he."76  

"Get hold of the customers" — that was the end and aim. Is it not
the guiding principle of the big industries of to-day? Is not the splendid
organization of a concern like the Allgemeine Elektrizitäts-Gesellschaft,
for example, directed to the same object?