“Rothschild investments in Spain, 1856-1930” Foreign Financial Institutions & National Financial Systems 7-8 June 2013 Warsaw, Poland “Rothschild investments in Spain, 1856-1930” Miguel A. López-Morell University of Murcia European Association for Banking and Financial History (EABH) e.V.

Rothschilds in Spain. A hazardous context: A Global investment project in a risky country 1800: 20.0 Million km2 Empire in decadence 1821: 0.5+0.4 Million km2 Political instability

Spanish national budget, 1814-1900

Rothschilds in Spain. A hazardous context: A Global investment project in a risky country 1800: 20.0 Million km2 Empire in decadence 1821: 0.5+0.4 Million km2 Political instability A weak economy

“Optimists” (Prados, Gómez Mendoza, Fraile, Coll, Tortella(2), etc): Foreign Investments in Spain. Debates: “Pessimists” (Sánchez Albornoz, Nadal, Tortella(1), Comín, Escudero, Muñoz, etc.) Railways: compete with industry in capital markets. Mining: colonial “island”. “Indirect compensations” to foreign capital. “Optimists” (Prados, Gómez Mendoza, Fraile, Coll, Tortella(2), etc): Endogenous versus exogenous explanation of Spain’s underdevelopment. Foreign direct investments helped to attract capital, compensate trade balance and lack of entrepreneur factor, etc.

Fixed capital formation in Spain (% of GDP) Source: Carreras (1999)

20 biggest entreprises in Spain (By assets) 20 biggest entreprises in Spain (By assets). (Foreign entreprises in red) R. 1917 1930 1948 1 Caminos de Hierro del Norte Ferrocarriles de Madrid a Zaragoza y Alicante Red Nacional de los Ferrocarriles Españoles (R.E.N.F.E) 2 Telefónica Nacional de España 3 Banco de España Hispano-americana de Electricidad (CHADE) 4 Rio Tinto Co. Ltd. Barcelona Traction Light &Power Co. Ltd. Ebro Irrigation & Power Co. Ltd. 5 Ferrocarriles Andaluces Hidroeléctrica Ibérica (IBERDUERO) 6 General Azucarera de España Arrendataria del Monopolio de Petróleos (CAMPSA) 7 Catalana de Gas y Electricidad Royale Asturienne des Mines Banco Hispano Americano 8 Ferrocarriles de Madrid a Caceres y Portugal Minera y Metalúrgica Peñarroya Española de Construcción Naval 9 Banco Español de Crédito 10 Ferrocarriles de Zafra a Huelva Franco Española del Ferrocarril de Tánger a Fez Banco de Bilbao 11 Energía Eléctrica de Cataluña Banco de Vizcaya 12 Unión Eléctrica Madrileña 13 Ferroc. de Medina del Campo a Zamora y de Orense a Vigo. Sevillana de Electricidad 14 Tharsis Sulphur & Copper Co. Ltd. 15 Barcelonesa de Electricidad Cía. Arrendataria de Tabacos Altos Hornos de Vizcaya 16 Metalúrgica Duró- Felguera Transatlántica Empresa Nacional Bazán 17 Unión Española de Explosivos 18 Ferrocarriles del Oeste de España Empresa Nacional Calvo Sotelo (ENCASO) 19 Transmediterránea Tabacalera S.A. 20 Banco Hispanoamericano Hidroeléctrica Española Source: Carreras y Tafunell (1993) y Tortella, T. (2000).

Rothschild Investments in Spain Description of main investments (chronology, intensity and sectors) Quantifying these investments as a whole during each period. Patterns of behaviour and means used by the Rothschild House to get success. Finally, consequences and profitability of the process: For Rothschild family, as private investor. For the Spanish economy.

Stages: 1: Financing Wellington and Liberals in Spain, 1811-1891. 2: From railway investments to mining, 1856-1918. 3: Crisis, restructuration and flight , 1919-1941.

Mercury from the Almadén, chronology: 1800-1830: State monopoly breakdown. 1830-1847: 1st Rothschild Monopoly. (Auctions) 1847-1856: 2nd Rothschild Monopoly. (Mercury backed Loans) 1857-1866: Spanish Government recuperate direct sales . 1866-1921: 3rd Rothschild Monopoly (Sales on commission)

Accumulated capital flows from the House of Rothschild to Spanish public institutions and the relation with the deficit, 1830-1900 (millions of pesetas).

2nd: From railway investments to mining, 1856-1918. S. Sebastián Bayona Bilbao Leon Palencia Burgos Valladolid Alar Zamora Zaragoza MZA railways lines Legend: Madrid (Agency) Pereire railway lines (Norte) Alcazar de San Juan Manzanares Toledo Almadén Mines Albacete Alicante Cartagena

Second Phase of industrial Investments: 1874-1920 Second Phase of industrial Investments: Plombiéres (Belgium) L’Estaque (Marsella) Saint Lary (French Pirienees) 1879-1900 Deutsch et Cie. Rio Tinto 1889-1920 MZA (2nd) 1874-1898 1881-1920 Peñarroya Santander El Ferrol Port Bou Crotona (Italy) Badalona Valladolid Ariza Zaragoza Barcelona Tarragona Legend: MZA railways lines Madrid Peñarroya railway lines Rio Tinto railway lines Toledo Rio Tinto pyrite mines To Lisbon And Porto Peñarroya pyrite mines Alcazar de San Juan Peñarroya lead mines Ciudad Real Mérida Albacete Peñarroya coal mines San Quintín Manzanares MZA coal mines Badajoz Puertollano Alicante Peñarroya lead foundry Peñarroya Linares Rio tinto Copper foundry Port Talbot (Wales) Córdoba Reunión Peñarroya zinc foundry Rio Tinto Cartagena Peñarroya sulphuric acid plant Seville Rio Tinto sulphuric acid plant Huelva Megrine (Argelia) Deutsch et Cie. refineries Descheter (Philadelfia) Wilmington (Delaware) Roanake (Virginia) USA Electric plants Other Rio Tinto chemical plants Other Peñarroya chemical plants

3: Crisis, restructuration and flight , 1919-1941 Loss of network coordination: End of Family agreements (1909). Gradual dismantling of agencies. (1931 Bauer & Cia breakdown) Economic and political crisis: Worldwide slump of commodities markets (1920 and 1929). Nationalist policy: Fiscal pressure. Nationalizations (1941 RENFE) Anti-Semitisim: 1938: expulsion from Austria 1940: Rothschild Frères confiscation Lost of control and relevance

Rothschild Investments in Spain Description of main investments (chronology, intensity and sectors) Quantifying these investments as a whole during each period.

and from operations made by the Rothschild House Table 2. Private and public investments in Spain as a whole, coming from foreign capital and from operations made by the Rothschild House (Figure in millions of current francs). Origin of the investment 1851-1860 1861-1870 1871-1880 1881-1890 1891-1900 1901-1913 Totals National Total (a) 2.282,9 4.443,5 5.148,8 7.374,5 6.814,8 15.137,8 41.202,3 Foreign (b) 338,9 609,9 488,1 718 382,7 737,6 3.265,2 Rothschild (c) 165,9 147,7 270,3 106,6 52,6 173,1 916,2 % (b) about (a) 14,8 13,7 9,5 9,7 5,6 4,9 7,9 (c) about (b) 50,4 24,2 55,4 23,5 28,1 (c) about (a) 7,3 3,3 5,2 1,4 0,8 1,1 2,2 Sources: Carreras, “industrialización, una perspectiva a largo plazo”, pp. 42, Broder, “Les investtissements étrangers en Espagne pp. 45 y 62, amended by Chastagnaret, L’Espagne, puissance minière , p. 754), and Appendix 1.

Graph 4. Percentage of participation in Rothschild industries in each subsector in Spain, 1856-1936. Sources: Artola (1978), Tortella (1973), Salkied (1987), Carreras (1989), Tomás (1991), Coll and Sudria (1987), Nadal (1975), Pérez de Perceval and Sánchez Picón (2000); MZA and Peñarroya ledgers; Rothschild Archives, Paris, 132AQ139

FOUNDATIONS OF THE ROTHSCHILDS’ ACTIVITIES IN SPAIN: 1. Financial competitiveness.

Interest rates on Rothschild loans to Spanish public institutions, compared to other reference rates (1860-1900).

Source: Rothschild Archive Royal Mint Refinery (London) Source: Rothschild Archive Flandreau (1995), p. 218

Graph 5: Equity and security issue of the companies controlled by the Rothschilds in Spain, 1857-1930 (Pounds Sterling). Source: ARP, 132AQ139.

FOUNDATIONS OF THE ROTHSCHILDS’ ACTIVITIES IN SPAIN: 1. Financial competitiveness. 2. Control of markets (reluctance to competition).

Collusive agreements of Rothschild firms in Spain MZA: Peñarroya: Natural Monopoly (no parallel lines in Spain) 1909: International lead producers Cartel Agreements with Norte: 1876 agreement (common tariffs) 1899-1920 (market sharing in north Spain) Single sales office: Minerais & Metaux (1917-1936ss). Agreements to restrict competition in Spain: Rio Tinto: Lead: agreements with Figueroa Agreements with Tharsis and Mason &Barry: 1878-1884 (prices + market sharing) 1905-1921 (market sharing) Superphosphates: agreements with Rio Tinto Zinc: agreements with Asturiana Copper monopoly (Secretan) (1887-1889) Deutsch et Cie: Copper producers oligopoly 1895-1901 Cartel of producers (1879-1914): Restriction of competition, prices, Centralization of purchases etc. Pirites Association Agreement (1923-1926) European Pyrites Corporation (1926-1930’)

FOUNDATIONS OF THE ROTHSCHILDS’ ACTIVITIES IN SPAIN: 1. Financial superiority and self-sufficiency. 2. Control of markets. 3. Flexibility in corporate strategies

Peñarroya Rio Tinto Mining Manufacturing Distribution Zinc Metallurgy Lead Desplatación Coal Byproducts Electricity Chemical Products Peñarroya Puertollano Cartagena Marsella Bleiberg Linares Sociedad Española de Tejidos Industriales Sociedad de ConstruccionesElectromecánicas Société des Fonderies de Mégrine Sociéte des Produits chimiques du Nord (E. Kulhlmann) Sociedad Franco-Española de Almacenes Generales de Depósitos Distribution Ste. Minerais & Metaux (copper) (electricity) Belmez Field Puertollano Lead Minery Coal V. del Duque Claudio Santa Bárbara San Quintín La Carolina S. de Cartagena Mazarrón Cie. Internationale Industrielle et Minière Compañía Minera de Badajoz Peñarroya Copper metallurgy Productos Químicos onubenses Port Talbot (Wales) Deschelter (Philadelfia) Wilmington (Delaware) Roanake (Virginia) Río Tinto Electricity Chemical Products Minas de Río Tinto Pyrites Phosfates Compagnie Argelienne des Phosphates Pyrites Company Ltd. Rio Tinto LEGEND: Major Control Participation Major Supply Parctal Supply

FOUNDATIONS OF THE ROTHSCHILDS’ ACTIVITIES IN SPAIN: 1. Financial superiority and self-sufficiency. 2. Control of markets. 3. Flexibility in corporate strategies 4. Effectiveness of their business network (circulation of information)

The Madrid Agency in the Rothschild business in the 19th century Source: own elaboration from the Paris and London Archives.

Family links between Rothschild agencies in South Europe = Marriages Kalman Meier (Rothschild o Bauer) Salman Esther Moses Amschel Moses Sorle (Rothschild) David Weisweiller Otros 3 hijos Moses Amschel Rothschild Mayer Amschel Rothschild 1743-1812 Calman David Weisweiller 1734-1820 Salomon Bauer Cecile Bauer Isaac Gabriel Landauer 1760-1826 Julie Hamel-Goldscmidt 1769-1841 Adeleid Rothschild JacobD. Goldsmidt 1783-1847 1 Blümle Töplitz Henriette Weisweiller 1817-1885 Leopold-Jacob Golsmidt 1811-1885 Amschel Goldsmidt Jetschen Goldsmidt 2 ¿ ¿ Kinel Busweiler (Pirmasens) Theresa Landauer 1799- Moses Goldschmidt 1803-1891 Nannette Landauer 1803-1891 Gabriel Landauer 1794- Katarina Landauer 1803-1879 Emilio Morpurgo ¿ ¿ Güttle Goldschmidt David Weisweiller 1774-1818 ¿ Otros 5 hijos Alexander Goldschmidt 1840- Ignaz Bauer 1784- Nina Bauer 1795-1873 Elio Morpurgo 1803- ¿ 10 hijos Salomon Morpurgo 1800-1849 1 ¿ Auguste Leopoldine Weisweiller ¿ Emmanuel Bauer 1789- Lisette Bauer 1798- ¿ Leopold Weisweiller -1871 Giacchino Morpurgo Rudolfine Weisweiller Josef Landauer 1793-1855 Rosalie Bauer 1796-1864 2 Fanny Landauer 1789-1858 Jules Morpurgo Lydia Levy Barent Cohen Moriz Bauer 1788-1833 1 Otros 3 hijos Emile Landauer 1817-1840 Maria Landauer 1832-1921 Ignaz Landauer 1826-1833 Louisa Landauer 1819-1853 Pauline Morpurgo 1848- Otros 6 hijos Adeline Cohen 1799-1877 Hannah Cohen 1783-1850 Fritz Perugia 1857-1908 2 Charlotte Landauer 1820-1842 Sigmund Landauer 1827- Henrietta Landauer 1821-1855 Pauline Landauer 1839-1848 David Weisweiller Nathan Mayer Rothschild 1777-1836 Hermine Bauer -1872 Henrietta Perugia 1855- John Helbert 1785-1861 Teodore Bauer 1822- Bernard Bauer 1829-1903 3 Freidrich Schey Hermione Landauer 1822-1904 Moritz Landauer 1830- Nina Landauer 1825-1892 Aquille Perugia -1865 Maria Perugia 1862-1937 Adeline Helbert -1892 Daniel Weisweiller 1814-1892 Isald Weisweiller Pauline Bauer 1821-1903 Ignaz Leopold Weil 1800-1873 Adolf Landauer 1829-1855 EdouardLandauer 1831-1888 Gustave Landauer 1818-1886 Vinzenze Landauer 1824-1856 Lisa Perugia Leopold Rothschild 1847-1917 Jifine Weisweiller Otros 5 hijos Mathilde Betty Weisweiller (1855-1897) Alfred J. Weil 1849-1888 Thedore Porges (1843-1907) ¿ Lisa Parente Joseph Baron Morpurgo 1805- Ellen H. Worms 1836- Henrietta Landauer 1858- Maurice Weil Ida Morpurgo 1844- Ignacio Salomón Bauer 1827-1895 Louisa Morpurgo Adela Weisweiller 1845-1925 Guillermo Ettling -1882 Virginia Morpurgo Emilio Morpurgo Louis Cahen d’Anvers Rosa Landauer Gustavo Bauer 1865-1916 María de la Concepción Bauer (1869-) Manuel Bauer 1872-1895 Fernando Bauer 1873-1943 0tros 3 hijos Mariano Ruiz de Arana Duque de Baena José María María Concepción Concepción García Rendueles Moriz Baron Schey Paul Schey 1854- Evelina Landauer 1859-1930 Emile Landauer Irene Landauer -1936 Ignacio Bauer (1891-1961) Eduardo Bauer (?-1939) Alfredo Bauer (1893-1956) Gisela von Ephrussi Otros, 3 hijos Otros 2 hijos Philipp Schey 1881-1957? Emy Schey 1879- Victor von Ephrussi Familia Goldsmih Olga de Gunzburg María López Chicheri Alvaro Gonzalo Mariano Alix Schey 1911-1982 Guy de Rothschild 1909-2007 Lili von Goldsmih-Rothschild Minka Schey David de Rothschild 1942- Source: Rothschild archive, London

The Madrid Agency in the Rothschild business in the 19th century Source: own elaboration from the Paris and London Archives.

Members of the MZA Executive Commitee, 1883-1932. Archive FFE

Rothschild Investments in Spain Description of main investments (intensity and the sectors) Quantifying these investments as a whole during each period. Patterns of behaviour and means used by the Rothschild House to achieve success. Finally, consequences and profitability of the process: The Rothschild family, as private investor. The Spanish economy.

Estimate of the net profits that can be accounted from the Rothschilds’ activities in Spain, 1856-1936. (Accumulated figures in millions of pesetas, 1913). L/T loans S/T credits Almadén Bullion sales Sovereign loans MZA Peñarroya Río Tinto Deutsch Totals 7.06 17.59 42.69 9.09 2.56 24.31 22.25 269.12 15.87 % 1.72% 4.28% 10.40% 2.21% 0.62% 5.92% 5.42% 65.55% 3.87%

made by Spain in the Rothschild House. (1856-1936). (1913 prices). Graph 6. Estimation of yearly profits accountable accrued from the investments made by Spain in the Rothschild House. (1856-1936). (1913 prices). MZA Peñarroya Rio Tinto Deutsch Totals (Pounds) 910.971 785.461 9.202.030 561.588 % 7,33% 6,68% 81,20% 4,79% Source: Appendix. Prices from Reher and Ballesteros (1993) and Ballesteros (1997

1856-1936 (millions of current pesetas). Capital entries from abroad through investments generated by the Rothschilds and their remuneration, 1856-1936 (millions of current pesetas). Annual capital flows from abroad to Spanish public institutions through Rothschild operations and the financial cost, 1856-1936 (millions of current pesetas).

Graph 7: Development of the stock operations by the Rothschild House in London with Rio Tinto shares, 1892-1914. (Sterling Pounds) Source: ARL, Stock Ledgers, 1/12/0-22.

CONCLUSIONS From Rothschilds’ point of view: Long run investment (not speculative) and diversify. Success in strategy and profitability. From the Spanish point of view: Key role in industrial and financial growth Compensated the insufficient national saving. Mobilized idle resources. Provided technology. Increased human capital stock. Consolidated a model of interaction (collusion) between State and financial sector Invigorated monopolies and oligopolistic structures. Promoted administrative corruption.

“Rothschild investments in Spain, 1856-1930” Foreign Financial Institutions & National Financial Systems 7-8 June 2013 Warsaw, Poland “Rothschild investments in Spain, 1856-1930” Miguel A. López-Morell University of Murcia European Association for Banking and Financial History (EABH) e.V.