19-WINE AND DENIM

By the end of June, 1773, David in Rotterdam had received and sold several shipments of tobacco and realized a bigger return than anticipated, Jean-Baptiste Willermoz and François Johannot and their wives had come back from the south of France with interesting information along with several bottles of Burgundy wine and several meters of ‘de Nîmes’ cloth.

After debriefing Jean and François in his Farhgasse office, Mayer decided to give Gutle, his one and only confident, a full account of their trip. They sat down at the kitchen table, and Mayer started relating the great news Jean-Baptiste Willermoz and François Johannot were bringing back from France.

He first showed her a sample of the cloth. It had one weave of blue thread crossed with a weave of white thread, and the double-weave not only made for an interesting design, but gave it extra durability. Gutle thought the indigo colored cloth was beyond belief and wondered if poor people could afford it.

Mayer answered that it would sell for the same price as Indian or English cotton, and before Gutle had a chance to make a comment, Mayer reached for a bottle of burgundy wine, one of the many samples brought back by François. He picked up a funny curly piece of metal, drove it into the cork with a screwing motion and pulled the cork out of the bottle neck. He took two glasses, half-filled them, and they drank to their growing family.

Gutle thought the wine was too good to be true, but her mouth dropped upon learning how much money the wine and cloth was going to bring in. Mayer had started by explaining that Bouchard in Beaune was to receive a letter of exchange in the amount of £2500, or 1 shilling per bottle of wine once delivered in Rotterdam where David would presell it for 1/6 per bottle. David would give the new willing owners a letter of exchange guaranteeing them 3 shillings per bottle if delivered in New York where Haym would presell it for 4 shillings per bottle. 250000 bottles, or half a shipload, would thus generate a profit of £6000 in Rotterdam and another £12500 in New York City.

With regards to cloth, Dollfus was to receive a letter of exchange in the amount of £12000, or £10 per bolt of denim once delivered in Rotterdam where David would presell it for £12 per bolt. David would then give the new willing owners a letter of exchange guaranteeing them £15 per bolt if delivered in America where Haym would presell it for £17 per bolt. 6000 bolts of cotton, or half a shipload, would generate a profit of £12000 in Rotterdam and another £12000 in New York.

He concludes by repeating that since a work outfit made with denim cloth in America will cost less than one made with English or Indian cotton but last ten times longer, everybody will be fighting to buy it. Likewise, since the best wine in the world will only keep getting better in a bottle, all the bourgeois in America and England will want to fill their cellars with it. He then adds that though the profits appear to be huge, the price for these superb new products is well below what people will be willing to pay.

To help Gutle get over her choc, he starts relating the adventures of François’ trip to France. His party had started off by taking a river coach to Mainz. After spending a delightful night in a well-appointed inn, they set off the next day for Basel. River coaches were much more comfortable and a faster means of transportation, but only when going downriver, the rest of the time it was best to travel by stage coach. It took them five days by stage coach to reach Basel where friends were waiting for them.

After a day’s rest, they travelled by stage coach to Montbeliard , and from there they continued on by river coach to Chalon-sur-Saone, a town south of Beaune. Having made prior arrangements, a local winemaker whom they hadn’t seen in years welcomed them in his beautiful country estate. The next day, their host introduced Jean-Baptiste and François to Joseph Bouchard, a wine merchant from Beaune. They were told the Givors factory on the outskirts of Lyon was making glass using ovens fired by ground coal. And because glass made with coal instead of charcoal as a fuel was much stronger, and because the glassblowers had started using handheld molds, they now made less fragile and more uniformly shaped bottles more quickly. Because the bottle necks were thickened and had a standard diameter, it was now possible to use a one-size-fits-all cork stopper. Bouchard told them there was plenty of wine available, but getting fifty thousand glass bottles at a time might be a problem. He told them it was best to check with Michel Robichon who was the glassmaker in Givors. As for the corks, the cork slabs could be bought in quantity in Arles, transported to Beaune where they could be suitably shaped. All in all, he thought it was quite a feasible operation, and it would be no problem to fill the bottles with the best wine of the region and cork the bottles in a matter of days. Bouchard was already experimenting with the bottles, and he promised to give them wine samples on their return trip home. If Givors supplied bottles in sufficient quantity and at the expected price, he stated he could get the wine to Rotterdam via Basel for around nine pennies a bottle.

Jean-Baptiste and François were quite anxious to go to Givors to visit the glass factory and interview Michel Robichon, the owner. They left their wives with family in Lyon and continued on to Givors the following day when they reached the glass factory, they acquainted Robichon with Mayer’s idea of financing regular shipments of bottled wine using the services of Joseph Bouchard in Beaune. They told Michel they had talked to Joseph, and that his only concern was having enough bottles. Naturally, they wanted to see if his factory could supply lots of fifty thousand bottles on an ongoing basis.

Jean-Baptiste and François were happy to hear Michel say that he had just put in a second oven and that a third was on the way. Since one oven supplied enough glass to accommodate four glass masters, and since each master could turn out five hundred bottles a day, it meant that the production would soon be six thousand bottles a day, thirty-six thousand a week or some two million a year.

Michel added one cautionary note. The factory was presently getting its high-quality ground coal from Rive-de-Gier, a mine situated fifteen kilometers from Givors. The canal that was meant to transport the coal by barge was not yet completed, and the mine owners had to use mules to bring the coal to Givors. They had some twelve hundred mules in all, with two trains of four hundred mules making a daily turnaround while the remainder rested. With each mule carrying eighty kilograms of coal, it averaged out to a daily supply of around sixty tons. But since most of the coal was destined for the south of France, if he was to add extra ovens, he might not be able to get enough coal. However, he would put a little pressure on the coal mine owners by reminding them that his factory was operating under the Royal Seal, and was to be supplied in priority. But that was down the road. For now, there was more than enough coal to fire up the second oven, and it would take less than two weeks to produce the fifty thousand bottles. He could have molds made with logo indentations in order to identify the wine, and before shipping the bottles to Joseph Bouchard in Chalon-sur-Saone, he would package them in fifty bottle capacity wicker baskets.

Jean-Baptiste and François were happy and wasted no time getting back to Lyon where their wives were waiting. They spent a few days visiting family and friends, but they couldn’t wait to carry on downriver to Arles by water coach. It took them only three days to reach Arles under very comfortable conditions, and from there, it was a short trip by land coach to Nîmes where they had written ahead to Jean André, the owner of the cloth factory in Genoa, Italy.

When they finally met with Jean, Jean-Baptiste and François were pleasantly surprised to hear that he had every intention of going ahead with the production of the double-weave indigo cloth. They couldn’t believe it when Jean added that he was planning to move the production of this very promising cloth from Genoa to Mulhouse which was not far from Basel on the Rhine. It was a Huguenot city-state bordering France and the thousands of jobs being created were needed to help the growing economy. It didn’t cost much more to bring the raw cotton and indigo from the Americas up the Rhone instead of to Genoa, and because one of the two rivers that ran through Mulhouse had soft water and was perfect for dyeing cloth, the savings would more than offset the added transportation cost.

There were already fifteen cotton factories and more than two thousand cotton workers in Mulhouse, and with the advent of the flying shuttle, the spinning carding frame powered by a water wheel, two recent inventions developed in England, the cost of producing cotton cloth had dropped while the quality and production had increased dramatically. With the added planned production, Mulhouse would become the biggest cotton manufacturing center in continental Europe, and because the city was independent of France, they weren’t affected by the embargo imposed by France on the production of cotton fabrics. Understandably, since the demand for cotton cloth was exploding, the fabric would no doubt attract high prices for years to come.

Jean told them that his cotton mills would be operational within a few months. He had already bought an existing factory on the Mulhouse riverfront, and the equipment being fabricated by local artisans was likely finished by now. Jean told them his director in Mulhouse would soon be able to deliver twelve hundred bolts of the finished indigo double-weave product to Basel on a regular basis for around £10 per bolt. They confirmed that with Jean-Henri Dollfus, the man running the Mulhouse factory, on their way back to Frankfurt. Dollfus had already received several barges of raw cotton from the French West Indies along with indigo.

Before Gutle had a chance to give vent to her unbelief, Mayer sat down at his desk to write to Joseph Bouchard in Beaune and Jean André in Nîmes telling them he was willing to buy as much product as possible at the agreed price. There was no time to lose for the letters had to be translated by François before being sent on. He was telling Joseph Bouchard to deliver all the grand cru Burgundy wine he could bottle. Mayer would give him a letter of exchange redeemable upon delivery in Rotterdam and would willingly give him a down payment if he so wished. He then addressed a letter to Jean André asking him if he would agree to the same financial conditions. Just like with the wine, Mayer would buy all the cloth that could be delivered to David in Rotterdam where the letter of exchange would be redeemed.

Soon, it would be possible to redeem Mayer’s bills of exchange, and even use them as currency, in Frankfurt, Rotterdam and the 13 Colonies, not including the counting houses that would soon open in London and Basel. He had contacted Moses Haim Montefiore in Rotterdam, the friend who had helped David Schiff get settled, asking him if he was interested in running a counting house in London. Moses had replied by return mail that he had been thinking of settling permanently in London, and running a counting house for Mayer in that city was more than he could have hoped for.

By the end of 1773, David was receiving tobacco on a regular basis and he had dispatched the first shipments of Burgundy wine and denim cloth. In both Rotterdam and New York, everything always presold at a price better than anticipated, and Mayer’s counting houses were becoming financial institutions of note. He was now ready for his next venture.

He wrote to Haym asking him to come to Frankfurt as soon as possible. Haym was to first go to Williamsburg in Virginia and introduce himself to as many members of the House of Burgesses as possible in order to see what the political climate was in that very important southern colony. Virginia’s leaders had always been stalwart supporters of the Crown. However, some die-hard loyalists had started being upset with the English Parliament just like in the colonies up north, and Mayer wanted to confirm that. Haym was to identify any leader who stood out in his opposition to the Crown, preferably someone who was imposing, ambitious and vain.

The very powerful Bank of England, by way of the English Parliament, was treating the 13 Colonies as a parent would a child. Although the pound was the official currency, the Bank of England supplied very little sterling in order to facilitate trade. The colonials were reduced to using tobacco, wampum and the like when they couldn’t get their hands on Spanish dollars. The lack of credit, the unjust rate of exchange between the Spanish dollar and the Pound, the lack of representation in decision making, and the unjust taxes forced upon the colonials by the Mother Country was making for an explosive situation.

Mayer was honest and had enough specie to redeem all the paper he was issuing, and because his counting houses on both sides of the Atlantic used the same conversion rates, his paper was in high demand. In all his counting houses one pound had the same value as the Spanish dollar, and 1oz of gold was worth 15 oz. of silver. And since the British insisted on a colonial conversion rate of 4 Spanish dollars to the Pound, it gave Mayer’s American counting houses a serious edge over the English. Necessarily, all bills originating from the colonies were expressed in Spanish Dollars, whereas all merchandise coming from Rotterdam was valued in Pounds, as this greatly advantaged the American colonials. Since Mayer’s counting houses only accepted gold and silver as payment, and since Haym was instructed to never exchange Spanish dollars for Pounds, the great disparity in the English exchange rate didn’t affect his counting house.

Mayer’s counting houses were gaining in international status, and he had more than he needed to finance a meeting of the 13 Colonies. The colonies’ representatives would not question the help of Haym Salomon, for it was only natural for a rich friend who profited so much from colonial trade to help out. Once the Americans gained their independence, they would look upon Mayer’s counting house as an honest, dependable source of credit, and Mayer would take control of the 13 Colonies’ monetary system just like the Bank of England bankers had done with that of England a century before, but he would do it anonymously

18-INTERNATIONAL TRADE

Mayer sat down and wrote Haym that he was to go ahead with the tobacco shipment. He told him he would confirm it with David who would then get the necessary warehouses built in Rotterdam. Haym was to get the best tobacco available, for high quality products attracted higher prices and could be sold more easily.
As for the wine and denim, he told him he was acquainted with two Frenchmen in Frankfurt who were in a position to help. Jean-Baptiste Willermoz had a silk factory in Lyon, France, but spent a lot of time in Frankfurt where another Frenchman, François Johannot, operated a silk factory as well. The high-end silk business wasn’t doing so well and they would certainly welcome a chance to get involved in a more lucrative business. Mayer was certain that Jean-Baptiste, François, and their wives would welcome a chance to have a first class, fully financed voyage to the south of France while inquiring about the availability of bottled wine and denim cloth. The offer to leave winter behind them, visit family and friends in Lyon, and bask in the Mediterranean sun was a powerful enticement.
With the help of Jean-Baptiste and François he was certain he would soon be financing wine and denim shipments to Rotterdam, London and NYC. This would work out extremely well, for wine and denim shipments would go down the Rhine by barge to Rotterdam, and the same barges would come back up the Rhine with arms and military supplies for Prince William along with pre-ordered manufactured goods to cities along the way. In anticipation, he was arranging to have more of the Roman-type barges constructed in Hanau. So far, his barges on the Rhine were proving to be quite a success, and because they all flew the Prince’s colours, they hadn’t been harassed by the bandit lords and forced to pay tolls. He intended to continue the same modus operandi with the wine and denim shipments.
He finished his letter to Haym, and took it to the Thurn and Taxis office for delivery to America. He came back in time to have supper with Gutle and his precious little Yochana. He told Gutle he was planning to go to Rotterdam to acquaint David with the latest developments, and that he would be gone at most three weeks. When prompted by Gutle, he proceeded to tell her what was on his mind.
He had already told her how the Sephardi Jews had joined up with the Huguenots and created the Bank of England in 1694. He explained that he saw an opportunity to do the same in America. The Americans needed credit, and since the Bank of England bankers weren’t providing it, he would. Everybody trusted his bills of exchange, and they were already widely accepted on both sides of the Atlantic. If he helped the Americans win their independence from England, his bank would then be automatically recognized as the official bank of America when the time came.
For now, he was planning to finance shipments of high-quality products in both directions across the Atlantic. When merchants became convinced that his bills could be redeemed for specie and on demand on both sides of the Atlantic, and that his exchange rates for Thalers, the Spanish pound and the sterling pound were fixed and fair, he was sure that instead of going through the trouble and cost of redeeming them they would just sign them over to third, fourth, and fifth parties. On the other hand, David and Haym would be instructed to only accept specie regarding all sales. As more of his bills circulated, more species would accumulate and both counting houses could then issue more bills of exchange. As he waited for the sale of the first shipment of tobacco in Rotterdam, he was already making plans to send Jean-Baptiste and François to France to look into the wine and denim possibilities.
As Gutle grasped the huge sums of money that were involved, she worried about her family and told him this wasn’t what she had expected when she married him. Mayer reassured her. He had no intention of showing his wealth and letting everybody know how rich he was. He told her that his name would never be officially connected to anything he did because he didn’t want to stir up feelings of envy and hatred. He told her he was not interested in flaunting his wealth. The only things that mattered were his family and his extended family, and what he wanted above all else was for her to be proud of him.
He explained how he planned to finance the Americans in their fight for independence, and once achieved, how he would create a bank for them without their ever knowing who he was. His financial operations would be international in nature, and that would ensure his success and his anonymity. His counting houses on both sides of the Atlantic would be run by people who didn’t officially answer to him, like Haym and David. Because each counting house had to interact with the others, they would be independent and yet firmly part of the whole. Notwithstanding the fact he trusted his agents with his life, the counting houses would be accountable to each other and to Mayer without his ever having to be present.
Mayer intended to surround himself with Ashkenazim who would become an extended family network, and he would use goys only when he had to. Haym may have been a Sephardi, but he was like a brother. He respected and trusted David and Haym, and by giving them everything they could possibly want, he was sure of their respect and loyalty, and this allowed Mayer to work in anonymity. Maintaining anonymity, making astounding amounts of money and being magnanimous and honest in all transactions at all times was the key for lasting success.
Gutle loved this man, and as he picked up Yochana and started singing from the Torah, she was the happiest woman in the world. She didn’t want to lose that. But she also knew that if Mayer didn’t follow his dream, he would cease to be the man he was, and she could not bear that.
The next morning, before leaving to meet with Jean-Baptiste and François, Mayer told her how important that meeting was. French wine was the best in the world, and there was talk that the Burgundy wine could be bottled in uniform-sized bottles. The other product had to do with cloth. The Huguenots, in wanting to have a country of their own, had emigrated to the Prince-Bishopric of Basel where they were weaving cotton cloth which was in great demand, but which was forbidden in France proper. They grew cotton in the Caribbean islands and were shipping it up the Rhone-Saone-Doubs river system to Montbéliard and then by land to Mulhouse, the industrial center near Basel.
Mayer wanted Jean-Baptiste and François to look into those two products. If it turned out as he expected, he would consult with Haym, authorize the shipments, and then help the Americans gain their independence. He would start by financing a meeting of the thirteen colonies with the aim of creating some kind of government. He would find and finance leaders who were opposed to English rule, and since Virginia was the most sophisticated politically, that’s where he planned to concentrate his efforts.

15-DAVID TO ROTTERDAM

Mayer lived near the waterfront and often walked down to the river’s edge to listen to the hustle and bustle of ships being loaded and unloaded. This was a good place to think. Mayer was very interested in trade generally, and he was mesmerized by all the exotic merchandise coming from unheard-of parts of the world, but he saw it with the eyes of a banker, not those of a merchant.

The only bank in existence was the Bank of England, and it was a bank model Mayer wanted to duplicate. It was made up of a group of private bankers who had the exclusive right to lend money to the English Government. If the people’s representatives wanted to launch a government project before taxes were collected, as was always the case, they went to the bankers for a loan. It was a bankers’ heaven, for not only were they sure of being repaid, but they could choose what loans were to be made. And by having the sole right to issue bank notes, they controlled the monetary system of England.

Mayer was already a banker of sorts for Prince William, and he took his commitment to the Principality of Hanau very seriously. However, it didn’t stop him from planning to bankroll his own operations. His plan had to do with the Hessian troops being recruited for England. William was spending much too much money outfitting and arming those troops. Military supplies came mainly from France and England and were shipped through Bremerhaven up north. Because William didn’t buy directly from the suppliers, and because the route was long and crossed many German states, everything cost much more than it should. If Mayer had someone in Rotterdam buy everything directly from the suppliers, and if he then transported everything in his own barges up the Rhine River, he would make a handsome profit while lowering his benefactor’s costs. Even though this meant doing business, the risk was almost nonexistent, and it was a way of seriously increasing his capital.

For a hundred years now, since the Treaty of Westphalia, the Rhine River had been open to free trade. It was forbidden for local lords to collect tolls, and most of the castles along the Rhine River had been put out of commission prior to the treaty. Nonetheless, renegade lords still collected tolls, and that hampered inland commerce. But Mayer knew that if his barges flew the Hesse-Kassel colors, no one would dare stop them and make them pay, for everybody knew that the State of Hesse had a lot of troops at the ready.

Frankfurt was a port on the Main River, a river that flowed into the great Rhine River a few kilometers to the west. Mayer had talked with the shipbuilders in Hanau about getting large barges built, proposing a model like that once used by the Romans to bring in wheat from Gaul. It was a large barge about thirty-five meters long, six meters wide, with a draught of one meter, which could carry around twenty tons. It had a cabin in the back for cooking and sleeping, a square sail in the middle, and it allowed for ten oarsmen. The local mariners all agreed such a barge was ideal for travelling upstream on the Rhine. Upon leaving Rotterdam, it could run with the tide, and then the sail could be used to run with the prevailing west wind while the rowers pulled and steered as needed. Of course, sailing downstream from Frankfurt would be a lot easier.

Such a barge was affordable to build and a cost-effective way to transport goods, even with a ten-man crew. Mayer would start with one barge and have more built as needed. He would establish a counting house in Rotterdam where his broker would fill orders and have the goods waiting for the next barge. When the barge arrived, the goods coming from Frankfurt would be unloaded and stored in a warehouse, and the military supplies waiting in another warehouse would be loaded unto the barge headed for Frankfurt. All special orders for exotic products purchased from the East India Company would be unloaded in Frankfurt, Hanau or some port on the Rhine, while the military supplies would go to Hanau.

The Huguenots who had settled in the Hesse region more than a hundred years before were great entrepreneurs, and among other things, they set up foundries that produced high quality iron. They also made stylish furniture, glassware, tin ware, leather products, fine silks, and clocks. They even manufactured artillery pieces, called serpentines, known for their precision and durability. In Hanau, the Goldsmiths’ House was actually an art center for the training of goldsmiths and silversmiths. Lithographers, engravers and artisans developed and used the latest techniques in the making of jewelry, in printing and in the minting of very attractive coins. Mayer knew that the manufactured products coming out of Hesse would be sure to sell easily in Rotterdam.

All goods at both ends would be bought at the lowest cost and sold at the highest price, making sure that the highest price was the price that everybody was willing and ready to pay. The considerable profits thus realized would remain in the counting houses at either end, and would be used to buy ever more merchandise going in both directions. There would be a considerable buildup of specie at both ends, and the counting houses could then start printing their own bills of exchange. Since both counting houses would always adhere to a strict code of ethics imposed by Mayer, where the bills would be redeemed on demand at all times, they would gain the confidence of the local business community and become widely accepted. The increased credit would allow more businessmen to do more business, and profits would increase. Bills of exchange had a multiplier effect, and that was what banking was all about.

All he needed was to find a man who would want to go and settle in Rotterdam. As for the amount of money needed to build the barges and fill the initial orders at both ends, it was insignificant, considering his already considerable wealth. The first name that crossed his mind for the job in Rotterdam was that of young David Schiff. Since David and his wife Hannah lived upstairs in the same house, Mayer knew them well, and he had taken the young man under his wing. David had proven to be brilliant in the bills of exchange business.

Of late, David had been showing signs of unrest. He didn’t like the idea of his family growing up in the Judengasse ghetto, and Mayer could understand why. David didn’t come right out and say it, but Mayer knew. David had spoken of Rotterdam as being an attractive place to live, but what he didn’t know was that it had many drawbacks for an Ashkenazi Jew. The Sephardi Jews, who ran the East India Company and ruled the oceans of the world, were wealthy Jews from the Iberian Peninsula. They were rich, proud and even arrogant. Those Jews didn’t think very highly of Ashkenazim coming from Eastern Europe. However, if David accepted, Mayer would give him enough money to settle in properly, for projecting an image was very important. But there was another problem in that the Sephardim didn’t worship the way Ashkenazim did, and David wouldn’t be welcome in their synagogue. No matter, he would make David an offer while making it very clear what problems his family was going to face.

The ghetto was flourishing. The people were vibrant and united, and their faith made them strong. Judengasse had a fine stone synagogue, plenty of good clean water, good sewers, a fine hospital, its own kosher slaughterhouse, a yeshiva and a rabbi who was a prince of knowledge. Though the inhabitants were often harassed and humiliated when they left the ghetto and were not free to move about at night and on Sundays, in many ways they were better off than the goys living outside the ghetto.

David agreed that the community was one big family, but he was overcome by feelings of hate and revenge when a goy treated his wife Hannah like a whore. One day he would retaliate, and his life and that of Hannah would be compromised. When Mayer offered to set him up in a fine counting house with all the money needed to hire a professional staff, purchase warehouse space, build a house for his family, and have all the necessary expense money to look like a successful businessman, he couldn’t believe his good fortune.

David readily accepted the generous offer but wondered how he could ever repay Mayer. Mayer told him that he would be making his weight in thalers many times over, and repayment didn’t enter the picture. He told David that though Ashkenazim in Rotterdam were poor and were assisted by the community, and that the Sephardim wouldn’t be happy welcoming another Jewish ‘rag dealer’, ‘another mouth to feed’, things would be different for David. Mayer would introduce him to an Italian Jew named Moses Montefiore, a well-connected Sephardi who would help him get established.

14-MAYER AMSCHEL ROTHSCHILD

Mayer Amschel Rothschild, the greatest man who ever lived, though almost completely unknown to most of us, was born in 1744 in the Frankfurt Jewish ghetto of Judengasse. In August, 1770, when he married, he was already wealthy enough to have the open street sewer replaced by state of the art sewers running behind the rows of high narrow houses on either side of the street, making sure plenty of fresh water from the Main River flowed through them.

When he was eleven, his parents, who lived in Judengasse, had sent him off to a yeshiva near Nuremberg to study the Torah in the hope of his becoming a rabbi. Unfortunately, they died during a smallpox epidemic, and he was orphaned at twelve. That’s when his future father-in-law, Wolf Salomon Schnapper, contacted Wolf Jacob Oppenheimer in Hanover and asked him if he would take in the young man as an apprentice in his bank.

At the Oppenheimer Bank, everybody thought very highly of him because he had developed, thanks to his father, a very quick mind when it came to handling money and buying and selling rare coins. Then, he got his first big break. Frederic II, Landgrave of Hesse-Kassel, needed a favor. His court Jew was Jacob Oppenheimer, and he had sent for him because he was worried about his son William. Frederic had converted to Catholicism, and his Protestant wife had divorced him. When his father, the previous landgrave, died in 1760, he had sent Frederic to Kassel and given the principality of Hanau to his grandson William. William had been raised a Calvinist, and the thriving Calvinist community in Hanau wanted nothing to do with Frederic and Catholics.

The Calvinists, also called Huguenots, came from France. They were the great businessmen of the day. The French kings, had always enforced the ‘one God, one king, one nation’ concept, and for centuries the Catholic Church had persecuted and massacred those who didn’t agree. After repeated atrocities committed against them, hundreds of thousands of Huguenots migrated to more clement lands, places like the Netherlands, Hesse-Hanau, England, America and South Africa. Having endured unspeakable ills at the hands of the papist kings, Huguenots developed a deep hatred for Catholics, and by the same token, became more tolerant towards Jews.

Because of William’s young age, Frederic’s English ex-wife, Mary, was made regent. In wanting to protect William, in spite of his feelings for his ex-wife, Frederic decided to provide him with a financial advisor. He had hoped that Jacob Oppenheimer would personally take on the job. But because Hanau was five days by stagecoach from Hanover, Jacob told him it wasn’t practical for him to do so and recommended Mayer instead.

Frederic knew that Mayer lived in Frankfurt which was near Hanau. He also knew that Mayer had met his son William when they were boys. When Frederic had been Prince of Hanau, Mayer had accompanied his father Moses on one of his trips to the principality. His father had rare coins to offer Frederic who happened to be an avid coin collector. Young William had been curious about Mayer’s clothes and had wanted to have a yellow star like the one stitched to his coat. William never forgot the boy with the funny clothes.

Frederic remembered him as well, but because he was still only nineteen, he wondered how much wisdom and experience that young man could have. After being assured by Jacob that the Oppenheimer Bank would stand behind him and advise him, Frederic agreed to meet with him, and was satisfied with what he saw. Mayer then went to Hanau to meet with William and his mother who were quite pleased with him as well. So, Mayer started putting the principality’s finances in order, and unavoidably, he met General von Estorff who had been sent by Frederic to take charge of the principality’s troops. Hanau was a garrison city, but Mayer didn’t yet know what that implied.

He was becoming a sort of a one-man branch of the Oppenheimer Bank, and things were going smoothly when he found out why Frederic had sent the general to Hanau. For years, Hesse-Kassel had been receiving huge annual retainer fees from England in order to keep an army of Hessian soldiers at the ready. Up until then, the soldiers had been mainly recruited in Kassel. However, in wanting to improve Prince William’s finances, Frederic, who was now Landgrave of Hesse-Kassel, figured that more soldiers could be recruited in Hanau. Huge sums of money representing that portion of retainer fees due Hanau were sent to William, and Mayer suddenly had the responsibility of managing millions of thalers. He had taken it in stride and had made sound investments. With the help of the court Jews in the ghetto, he got the highest return on the investments, and he gave Prince William useful advice regarding expenditures. He was much appreciated and was given the official title of court Jew which allowed him to get married.

Frederic was related to the English King who was thinking of using Hessian soldiers in America. In an armed conflict, the English Parliament could intervene more quickly without having to explain everything to taxpayers, thereby avoiding arousing passions. The English parliamentarians preferred having German troops fighting English settlers, and by paying a retainer fee to Hesse-Kassel, they could have troops on the ground at a very short notice and at a much lesser cost.

Prince William used the huge retainer fees to improve the infrastructure of the Principality of Hanau. He always paid Mayer well, and the recruits received their pay whether in training or on active duty. When they were required to go and fight, they did so for a specified amount of time, and Mayer made sure their families were properly compensated.

William’s father, Frederic, maintained around ten thousand troops in Kassel, and William, with the help of General von Estorff, maintained around two thousand in Hanau. The Oppenheimer Bank had always invested the retainer fees for Frederic, but in wanting to help his son, it was now Mayer who was investing the huge sums handed over to William in Hanau. Mayer made huge commissions, and after convincing the Prince that Hanau should have its own mint, it was set up in the Walloon House, also called the Goldsmiths’ House, a building adjacent to the castle.

The silver bullion coming in from Kassel represented millions of thalers, and most of it had to be minted and invested by Mayer, and his personal fortune increased dramatically. Court Jews invested money for the princes, but also lent them money, and very often commissions weren’t paid and loans not repaid. On a whim, the princes would even do away with the court Jew altogether. The horrible execution of Joseph Suss Oppenheimer just a few years back in Stuttgart was still fresh in everybody’s mind. But although Prince William was an honorable man, Mayer decided to be secretive and keep his personal business to himself, just in case. He was not at all interested in flaunting his talents or his wares, he just wanted to be the best he could be at what he was doing. Nobody knew how much money he had, they just knew he wasn’t poor. Humility was a better route in reaching one’s goals anyway. As far as Mayer was concerned, the most important thing in the world was to have a family, and to live among a trusting caring people, for if one didn’t have that, he had nothing.

But he was ambitious, and since Frederic, William and Jacob had full confidence in him, he decided to make them a proposition. The German people weren’t united, and there were hundreds of principalities who did as they pleased with currency, so Mayer decided to standardize the thaler in the State of Hesse. In other words, he wanted to mint a thaler that would be accepted throughout the state and beyond. Because Frederic and William, thanks to the English, had more silver bullion than any other German prince, and because Frankfurt, one of the most important German trading center, was in Hesse, his initiative was bound to succeed.

13-INDUSTRIAL REVOLUTION

The Anglican religion, England’s state religion, can hardly be called protestant like the Lutheran or Calvinist religions, it’s a pseudo Catholic religion. When King Henry VIII personally replaced the Pope as head of the Church of England, he and the country remained very much Catholic. In time, that church was strongly influenced by the Puritans and the Lollards who had followed John Wycliffe’s teachings and wanted to change the liturgy, but it remained true to its Roman Catholic roots. The strong anti-royalist or anti-papist feelings in England in the 17th century were a sign of the growing opposition to Church abuse, of course, but the Catholic Church’s demise was mainly due to the work of the Jews and the Huguenots who had created the East India Company in Amsterdam, in 1602. As the company dominated world trade, its owners became very powerful, and they were more determined than ever to destroy their mortal enemy, the Holy Roman Empire, or the Ancien Regimes of Europe.

When Charles I was decapitated in 1649, it marked the beginning of the end for the Absolute Kings of Divine Right and the Ancien Regime of England. At that time, the East India Company effectively controlled the economy of the Netherlands, but it had always wanted to move its headquarters from Amsterdam to the City in London. However, because Cromwell had disappointed his sponsors when he failed to establish a proper parliamentary system in England, they had had to postpone democracy for another 40 years until the circumstances were favorable for William and Mary to wear the crown.

In 1694, once established in the City at the helm of the Bank of England, investment in research and development (R&D) could start in earnest. Because they were sure to have their loans repaid in a timely and just fashion, they invested with abandon and launched what became known as the Industrial Revolution. Thanks to ready credit, the English economy became dynamic, and European know-how flowed into the country. The bankers then started financing infrastructure projects in order to facilitate tax collection, internal trade, commerce and exchange of ideas. However, developing road and canal transport didn’t happen overnight, and the Industrial Revolution had to wait for the steam engine to really get started.

Denis Papin, a Huguenot from Hesse, had developed the cylinder and piston concept as early as 1695, but the use of steam was not fully exploited until James Watt invented the condenser in 1765. The Industrial Revolution coincided with the creation of the Bank of North America and Elie Whitney’s mindboggling invention, the cotton gin with interchangeable parts, in 1781. The main industry of the times, cotton, had experienced a great leap forward with the invention of the flying shuttle in 1733, the spinning Jenny in 1764, and the spinning frame in 1769, but it was the use of steam power and the invention of the cotton gin that revolutionized the greatest industry of the times.

On the iron side of things, railroads started being built in early 19th century, but the rails were made with wrought iron and were not durable. Sir Henry Bessemer, another Huguenot, changed all that when he invented a steel making process in 1856. In his blast furnaces, air oxidized and raised the temperature of the molten pig iron, while a small quantity of molten pig iron containing manganese was added and converted the whole large mass of molten iron into steel in just minutes, without the need for any additional fuel. That’s when track started being laid non-stop across Europe and America. In 1876, limestone was added to draw out phosphorous and make the steel less brittle, turning it into the wondrous material we know today.

Samuel Morse invented the telegraph in 1844, Elias Howe, the sewing machine, in 1846, Graham Bell, the telephone, in 1876, Thomas Edison, the light bulb in 1879, Galileo Ferraris & Nikola Tesla, the A/C motor in 1888, and Charles Steinmetz, the A/C transformer in 1893. When George Westinghouse bought Tesla’s invention and started distributing A/C electrical current over long distances, the whole world lit up.

The Bank of England created in 1694 was the catalyst for the Industrial Revolution, but it didn’t get started until steam power became a functional everyday reality. But more was to come. Because the Bank of England was made up of dozens of private bankers, it didn’t speak with one voice, and though the bankers had become very powerful, they had also become very English, and very parochial. It wasn’t until the first genuine international banker created the Bank of North America in 1781, and officially took over the English monetary system in 1810, did the world have an international financial institution that spoke with one voice. Today, two hundred years after that takeover, we are the ones who enjoy the benefits of the great market economies made possible by that man and his dynasty.

11-VERSAILLES

 

France had so many indirect taxes, and they were so complex, that the king, who was forever broke, was quite happy to farm out the tax-collecting chores to accelerate cash flow. The Farmers General, as they were called, would buy a six-year lease for a price corresponding to the total amount of taxes they deemed they could collect in that period of time. Obviously, the estimates were always on the low side, but the king, forever short of money and anxious to get at these huge upfront sums of money, wasn’t inclined to negotiate to any great extent. As one would expect, since the Farmers General kept all the taxes collected and acted in the name of the king, they used very aggressive tactics in dealing with the citizens.

The Farmers General became fabulously rich, pocketing as much as half of the total taxes paid out by the citizens. They would also routinely coerce and blackmail the producers in order to buy their goods at ridiculously low prices, and then they would sell the same goods to city merchants at the other end at exorbitant prices. They were the most hated men of the realm and much of the bitterness was directed at the king, for they acted in his name. When a finance minister was to be named, they directly influenced the king in his choice, thus getting the most accommodating candidate. When Nicolas Fouquet was named Superintendent of Finances, the East India Company shareholders were offered a great opportunity.

Louis XIV was a born megalomaniac, and in 1661, he was humiliated by Nicolas Fouquet who was suspected of having doubtful dealings with the Farmers General. Fouquet had invited the king to his magnificent château de Vaux-le-Vicomte that he had just built, and the king upon seeing the magnificence and the beauty of the domain, not only envied his achievement but wondered where all the money to build it had come from. Smelling a rat, he confiscated Fouquet’s assets and threw him in prison.

The shareholders of the East India Company seized the opportunity and relieved the King’s rancour by making all necessary credit available through third parties so that he could build the most sumptuous kingly residence in the world, the chateau de Versailles. Louis XIV proceeded to hire the great artisans that had created the château de Vaux-le-Vicomte, architect Louis Le Vau, painter Charles Le Brun, and garden designer André le Nôtre, and construction began.

By this time, the owners of the East India Company were the masters of international trade and commerce and their navy ruled the oceans of the world. The shareholders of the East India Company were Jews and Huguenots, and although they were business men and bankers first and foremost, they harbored a festering hatred directed at the Holy Roman Empire, the politico-religious institution that had persecuted them for centuries. They were intent on bringing it down, and the obvious starting point was France, the cornerstone of that empire. In financing the construction of the chateau de Versailles, they were looking well ahead. They had found a way to divide in order to better conquer when the time came. By separating the seat of power from the people, Versailles was twenty kilometers from Paris, the king would become vulnerable. Eventually, Versailles would be perceived as a den of vipers living off the misery of the people, and the King would easily be brought down. The occult financing of the chateau de Versailles by the Amsterdam financiers was the seed that would develop into the French Revolution a hundred years later.

By 1789, bread continued to be the most important ingredient in a Frenchman’s diet. It was central to people’s lives, and though it was the corrupt Farmers General who controlled the supply of cereal and created famines, the bakers were the ones perceived as profiting from dearth and famine and making huge profits by selling this vital commodity at a high price. Bakers were often accused of hoarding stocks and were frequently assaulted. Being lynched became the occupational hazard of bakers. So, limiting the supply of cereal was a very easy way to create unrest in the major urban centers.

There was such unrest in the realm when the tennis court oath under the leadership of Mirabeau in June, 1789, the taking of the Bastille under the sponsorship of Louis-Phillippe d’Orléans in July, and the March on Versailles under the guard of Lafayette in October, were carried out. These incidents were obviously organized by well-paid East India Company agents, and the March on Versailles is perhaps the one that best shows that. In October of that year, a very odd crowd of transvestites went to Versailles to fetch the royal family, “the baker, the baker’s wife, and the baker’s apprentice” as their chant went. The untypically aggressive ‘ladies’ even entered the royal residence while Lafayette and his mounted guard made no attempt to stop them. How such an ungainly disguised group could go to Versailles, capture and bring back the royals to Paris with Lafayette’s National Guard standing by is a mystery that the history books fail to examine.

The East India Company was established in 1600 and was made up of patient and determined men. It took control of international commerce as early as 1624 when it established a foothold on the shores of the Hudson River in America and especially when it took possession of Cape Town in 1652. The owners created democracy by financing an independent parliament in 1689, and creating the Bank of England in 1694. Sure of having their loans repaid by the people’s parliament, they financed unlimited research and development which became known as the Industrial Revolution.

Following a hundred years of mindboggling growth and wealth, they were ready to launch the French Revolution in 1789. In 1810, even though the Bank of England was taken over by the banking dynasty that had created the Bank of North America in 1781, the transition was harmonious, and investments in R&D continued to grow exponentially worldwide. The dynasty that took control of the Bank of England and the City then is the same that rules the financial world today, and we should consider ourselves very fortunate indeed.

8-MARRANOS

 

When the prelates decided to revamp the image of the revered messiah Apollonius by changing his name and turning him into the son of God, the founding fathers had a problem. The Apollonius lookalike had to be an Essene from Palestine, and that meant he had to be a Jew. How does one build a Roman religion based on the teachings of a Jew? Well, they did it by likening the money-lending Jews of the Temple of Jerusalem to Jews in general. By conjuring up a story where the invented messiah was violently opposed to the Jewish usurers, and where these same usurers were responsible for his horrible death on the cross, it would be one way to turn him into a very acceptable Jew. Furthermore, the faithful would readily accept the idea that Apollonius, their long-departed Greek messiah, had, some 300 years prior, accomplished miracles and was indeed the Son of God as touted by the prelates of the Church of Rome. Whether the results were desired or not, Jews would henceforth bear the Christ-killer stigma. Christians, believing that Jews were responsible for the death of their Christ, wouldn’t be unduly upset to see them tortured, burned at the stake, or despoiled and banned from their homes.

Geographically, France is the hub of Europe, and it naturally became the cornerstone of Christianity when the Church of Rome took over the administration of Gaul and the Western Roman Empire after Constantin’s departure for Byzantium. Clovis, a Frank, was the Church’s first anointed king of divine right, and during his reign, he did his best to persecute and convert the ‘barbarians’ who were by then called Arians.

Once the converting tactics were well under way, the Church of Rome turned its attention to the Jews. In 629 CE, the Pope directed King Dagobert to expulse the Jews from Christian Gaul. Later, in 996 CE, when King Robert the Pious came to power in France, he burned a great number of Jews at the stake. When in 1009 the Muslims burned the alleged Holy Sepulcher in Jerusalem, the Christians blamed the Jews, and consequently, many French Jews were again tortured and massacred. Later, in 1096, Jews started being systematically despoiled, and burned at the stake or expulsed from the realm. It was the start of the first crusade, and Philip 1st and his noblemen had taken advantage of the situation in order to replenish their coffers. By despoiling the Jews and expulsing them, they were killing two birds with one stone. Philip was not only doing his Christian duty but he had found a way to finance the crusade ordered by Pope Urban II. Over the next centuries, when King Philippe Augustus and others needed money they would let the Jews back in for a fee, and the whole process would start over again. However, in 1394, Charles VI officially declared the definite expulsion of Jews from France, and as many as 100 000 French Jews made their way to Spain.

They chose Spain not only because it was close to France, but it was also because the Muslims were by then in full control of Spain and were more tolerant towards other religious groups. But when the Christians reconquered the Iberian Peninsula in 1478, the Pope ordered an Inquisition as soon as it became feasible. The Jews were again forced to convert to Christianity, and if they refused, they were burned at the stake. Understandably, many Sephardim chose to convert while continuing to practise their religion in secret, and they became known as Marranos. In 1492, they were expelled from Spain and many of them fled to Portugal and Morocco.

In 1536, there was another Inquisition directed at Jews in Portugal. Once more, facing torture and death, many Jews fled. This time, because a world shattering event had just taken place in England, many of the great banking and shipbuilding Jewish families chose to go there. It had to do with Henry VIII after the Pope had refused to annul his marriage. The Pope, who was in the habit of arranging and annulling royal marriages for political and religious reasons, had refused to grant Henry VIII his divorce, and here’s why. King Henry had married a Spaniard, Catherine of Aragon, and since the Church of Rome considered the Kingdom of Spain much more important than the Kingdom of England, it was therefore unwilling to displease the King of Spain. When the Pope refused to grant Henry VIII his request, the latter was so determined to have a son that his present wife could not give him that he declared himself head of the Church in England, separated from Rome, and divorced Catherine.

In the process, England was deprived of the financial services of Rome. At first, Henry sold off all the unprofitable Church property and even had his friends rummage through the unsold properties for possible treasures and valuable materials, but it was a futile move. Most of the revenue derived from these operations ended up in the hands of those doing the demolishing and the selling, and very little revenue reached the state coffers. Not surprisingly, many old aristocratic families are to this day indebted and loyal to the King of England.

With no other option, Henry decided to admit the Jews back into England. The Jews had been expelled from England since 1290, but these were special Jews. The Marranos or Conversos, as they were called, professed to be Christians when in fact they still practised their religion in secret. But Henry overlooked their deceitfulness, for he was in dire financial straits and needed their financial skills. In accepting Jews for their financial skills and Huguenots for their great entrepreneurship, Henry caused a breach in the foundation of the Holy Roman Empire as a financial and political power.