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The Vienna house: history

S M von Rothschild, Vienna

Origins

The House of Rothschild first became involved with Austrian finance through the handling of English subsidy payments to her allies during and directly after the Napoleonic wars. Prince Metternich, Austrian Minister for Foreign Affairs, and Count Stadion, Austrian Minister of Finance were impressed with the recommendation of the house of Rothschild from Baron von Limburger (the German plenipotentary of the English Commissary-in-Chief, Herries) in 1815. The following year the Rothschild partnership of three banks in Frankfurt, London and Paris, won a contract to handle some of the French indemnity payments to Vienna and so impressed Count von Stadion with their reliability in remitting the subsidies without making undue profits that he recommended the Rothschilds for an elevation to the Austrian nobility. The Rothschild family received the title 'von' by Imperial Austrian decree in 1817.

The Rothschilds and Metternich

In 1820 Prince Metternich, Austrian Minister for Foreign Affairs, entered into negotiations with the House of Rothschild for a large loan that was to take the form of a lottery. The complicated arrangements for this enormous loan demanded the presence of a Rothschild in Vienna and thus Salomon Mayer (1774-1855), who had been handling Rothschild affairs with Austria, moved to the city and established a bank there. In March 1820, the Rothschild links with Austria were further cemented when Nathan Rothschild was appointed Austrian Consul in London; his brother James was created Austrian Consul-General in Paris the following year. 

Trade in commodities

Mercantile trade in the shipment and distribution of commodities, such as cotton, sugar and tobacco from the Americas, generated a sizeable proportion of the Rothschilds’ annual profits. In 1844 S M von Rothschild won a contract to import cigars from Havana for free delivery in Vienna. About 17 million cigars were imported, which increased Salomon’s popularity, since the Viennese had been denied access to genuine Havana cigars by import restrictions imposed by a State tobacco monopoly.

Railways and steel

Rothschild operations in Vienna included investment in the country’s railway network; Salomon was granted the concession to construct a railway linking Bochnia and Vienna in 1832. The Kaiser-Ferdinands-Nordbahn, as it became known when Salomon cleverly secured Imperial patronage for the railway, was finally completed in 1858. Strategically located in the middle of the Ostravian coal and iron fields in the present-day Czech Republic, the Witkowitz (Vitkovice) works was in the early 19th century, the Austrian Empire's major centre for the production first of iron and later steel. Salomon von Rothschild, recognising the advantage of being able to provide his own materials for the developing European rail networks (including his own in Austria) acquired Witkowitz in 1842. The purchase was spectacularly successful. The plant was expanded, the workforce grew. Numerous dwellings and social facilities were built and Witkowitz, once a village, grew into an industrial city.  After Salomon's death in 1855, his son Anselm (1803-1874), was the able head of the Viennese House.

The descendants of Salomon von Rothschild

The Viennese bank was directed by Salomon until the revolution of 1848. Thereafter he confined himself to his French cháteau, and the firm was managed by his only son, Anselm (1803-1874). Anselm recognised that only one of his sons, Albert (1844-1911), would suceed him in the business. Three of Albert's sons, Alphonse (1878-1942), Louis (1882-1955) and Eugène (1884-1976) succeeded him on his death in 1911. 

The twentieth century

Witkowitz (Vitkovice) remained in Rothschild hands for nearly a century, latterly in partnership with another Viennese banking family, the Gutmanns. In 1936, preparing for the eventuality of war, the family transferred their shares to the Alliance Assurance Company in London, a move which served eventually only to delay the seizure of the plant by the Nazis. S M von Rothschild, under the direction of Louis remained in Vienna until the invasion of the Nazis in 1938. Alphonse and Eugène escaped from Vienna at the Anschluß in 1938.

In March 1938 the firm of S M von Rothschild was placed under compulsory administration by a new Austrian Credit Institute for Public Enterprise and Works. Louis, a former chairman of the Creditanstalt, was held prisoner under house arrest for a year before finally settling in the USA, after handing over most of his Austrian assets to the the new regime. In 1939, S M von Rothschild was then put under the temporary control of the German firm of Merck, Finck & Co., and finally sold to them, with the newly founded Vienna Bankhaus E.v Nicolai taking over in 1940. After the war, the Austrian family received some recompense but opted not to re-establish the business of S M von Rothschild.

In 1945, the new Czechoslovak Government introduced legislation to nationalise the nation's major industries, including iron and steel production at Witkowitz (Vitkovice), which was fully nationalised by 1948. Compensation for Witkowitz (Vitkovice), shareholders was negotiated by the Alliance Assurance Company with the Foreign Compensation Commission in 1951. In 1953, the Rothschild family received c.£1m in compensation and a final distribution to shareholders together with the surrender of Alliance Vitkovice units was made in August 1962.