The West India loan
Nathan Mayer Rothschild (1777-1836), a supporter of the abolition of the slave trade, played a role in a transaction which was significant in advancing the abolitionist cause. In August 1833, the British government led by the reformist Whig Earl Grey, passed the Slave Emancipation Act, giving all slaves in the British empire their freedom, albeit after a set period of years. Under the terms of the Act, slave owners received compensation for the 'loss of their slaves' in the form of a government grant; in contrast, enslaved people received no compensation. Compensation was abhorrent to abolitionists, such as Nathan, but under the leadership of Sir Thomas Fowell Buxton MP, enough came to accept it as a necessary evil in order to achieve the greater goal of the abolition of slavery.
The 1833 Act did not come into force until 1 August 1834. Nathan Rothschild was the contractor (with other members of a consortium) for the ‘West India loan’ of 1835 (also referred to in some sources as the ‘West Indies loan’) which raised the greater part of the £20 million required by the British government to make the compensation payments. On 29 July 1835 Viscount Melbourne and Thomas Spring Rice (Prime Minister and Chancellor of the Exchequer respectively) explained the terms of the contract to around thirty interested parties. The loan would not be raised through a bond issued by a banking house but through the sale of British government consols and long annuities to the highest bidder. Concerns were expressed about the wisdom of removing so much money from circulation, and the ability of the Bank of England to supply sufficient bullion to meet subscribers’ obligations. Perhaps as a result of these concerns, on Monday 3 August 1835 only one tender was presented, all others having been withdrawn: the remaining tender was from “Mr Rothschild, Mr Montefiore, Mr Ricardo, Sir J. Reid”. It fell below the Treasury’s reserve offer, but after some short consultation, the group agreed to accept the government’s terms.
Regretfully, as is common for many of the early loan issues of the London house, there appears to be very little trace of the West India loan in the holdings of the Archive. As the loan did not take the form of a bond issued by the London bank, there is no documentation in the loans series. Nathan Mayer Rothschild died in 1836.
Contemporary reports published in The Times are an important source of information about the mechanics of the loan.
Papers of Thomas Fowell Buxton MP are at the Weston Library, Bodleian Libraries, University of Oxford. Papers of Earl Grey are at Durham University. They include correspondence with Buxton, and notes on the compensation issue. Treasury and Colonial Office papers held by The National Archives at Kew include protests against the proposed compensation, and distribution of compensation money to former slave owners principally concerning the Slave Compensation Commission. Professor Abigail Green’s book, Moses Montefiore: Jewish Liberator, Imperial Hero (Harvard: 2010) will be of interest, and Professor Niall Ferguson’s official history of the London Rothschild bank, The World's Banker: the history of the house of Rothschild, (London: Weidenfeld & Nicolson, 1998) provides general background to Rothschild business of the period.