Gerson von Bleichröder (22 December 182218 February 1893) was a Jewish German banker and close confidant of Otto von Bismarck. He served as Bismarck's financial agent, especially when the Prussian king required financial independence from the United Prussian Diet during the critical period of German unification. He became the second non-converted Jew in Prussia to be granted a hereditary title of nobility.
Family background and early life Gerson's family name probably originated from , a town in the Prussian region in the historical province of Saxony, east of present-day , Germany. We know that Gerson's grandfather, Gerson Jacob, was born in the 1740s and as a young man went to Berlin, having received the right of residency there, since the Jewish community needed a gravedigger (the position also carried with it certain religious obligations). In Berlin, he married Suze Aaron, the daughter of a protected Jew (), which provided additional employment opportunities and was a significant achievement for upwardly mobile Gerson Jacob.
Gerson Jacob had four sons. His eldest son, Samuel Bleichröder, opened a currency exchange office () in 1803 in a remote corner of Berlin, which would later grow into the banking firm of S. Bleichröder. In those early years, Berlin was an between East and West and there was a demand for exchange services of the many principalities of the Holy Roman Empire. Business improved when the French occupied Berlin in 1806. Samuel's shop also sold lottery tickets for such funds as army widows and disabled soldiers. By the late 1820s, Samuel had progressed to merchant-banker status and had established initial contacts with the Rothschilds, the international banking house.
Bleichröder was born in Berlin. Gerson first joined the family business in 1839. In 1855 upon the death of his father, Gerson became the head of the banking firm. The bank maintained close contacts with the Rothschild family; the banking house of Bleichröder acted as a branch office in Berlin of the Rothschilds' bank.
In the nineteenth century, the Rothschild banking house represented the interests of the Austrian-controlled German Confederation in Europe. In the conflict that developed between the rapidly expanding Kingdom of Prussia and the pro-Austrian German Confederation, the Rothschild Bank found itself largely caught in an uncomfortable middle position.
Meeting Bismarck Since 1851, Otto von Bismarck had been serving as the Prussian ambassador to the German Confederation headquartered at , a free city of the Confederation in what is now western Germany. However, in March 1858, Bismarck was appointed ambassador to the Russian Empire. Before leaving Frankfurt for St. Petersburg, Russia, Bismarck consulted with Baron Mayer Carl von Rothschild for the name of a Berlin banker to handle his personal finances as well as Prussian state business. Why Bismarck would ask the Rothschild Bank to recommend a competing bank is not hard to understand. Everyone in Frankfurt knew that Prussia would have to distance itself from the Rothschild Bank given the Rothschilds' close relations with Prussia's main rivalAustria-Hungary. However, neither Bismarck nor Prussia wanted to sever relations and totally alienate the Rothschilds. What better way to avoid this fissure with the Rothschilds than to ask the Rothschilds to provide the name of an alternative bank.
The Rothschilds recommended Gerson Bleichröder, who took over Bismarck's private banking, as well as the transfer of credits or placing of loans on behalf of the Prussian state and, after 1871, the German Empire. Thus, Bleichröder became intimately involved with not only Bismarck personally but also, through Bismarck, with the inner dynamics of the subsequent unification of Germany.
Unification of the German States In the decades following Bismarck's death, it became an article of faith among German historians that the man Bismarck, through his own efforts, was most responsible for Germany's unification under the Prussian throne. This proposition, based on the "Great Man Theory" of history, has been effectively challenged by recent historians. Importantly, German economic historian argued that the customs union of northern Germany, not Bismarck, was the most important agent in unifying Germany.
At the end of the Napoleonic era, the largely German-speaking territory in Central Europe was a vast patchwork of small principalities, duchies, and kingdoms, with the Austrian Empire, as the largest German-speaking state, assuming leadership. The Congress of Vienna in 1815 established the German Confederation, which organized nearly all the German-speaking states under the control of the dual authority of Austria and Prussia. However, Prussia was clearly the weaker power in this dual authority within the German Confederation. Economically, the Austrian Empire based itself on the landowning aristocracy. This landowning aristocracy required the Austrian state to maintain high tariffs against the cheap imports of raw farm products. This kept prices of food products within the Austrian Empire higher than in other areas of Europe. Prussia, because of its location near the Baltic Sea, was an up-and-coming power in Europe based on the new economy of trade, commerce and manufacturing. As an economy based largely on trade, the Prussian economy thrived only when barriers to trade were reducedbarriers like high protective tariffs on imports from other countries. Accordingly, Prussia united with other German states in 1818 to form a customs unionthe . The states that joined the were other German states that profited from trade and thus favored low tariffs or even free trade. Generally, the states that joined the were located in the northern part of the German-speaking region of Europe. The was a Prussian-dominated economic union of German-speaking states.
Because of the rising power of the , Frederick William IV (1795–1861), king of Prussia from the death of his father in 1840 until 1861, began to entertain visions of a new political union of German states which would grow out of the . The Austrian-controlled German Confederation had been disbanded during the Revolution of 1848. Frederick William IV's chief minister from 25 April 1849, until November 1850, was General Joseph von Radowitz. Radowitz now sought to establish a new Prussian-dominated union to replace the old German Confederation. In October 1850, an agreement was made to have an assembly of all German states meet in the city of Erfurt, Germany to form this "Prussian Union". At the time of the Erfurt Union, Bismarck did not have any use for the proposed union of German states under Prussian leadership. Just why Bismarck of all people would refuse to support a unification in Germany under Prussian leadership in 1850 and just ten years later become the chief spokesman for just such a Prussian-led union of German states is curious, but as strong as the was in 1850, the customs union, by 1860, had become much more influential over the economies of its members.
Between 1850 and 1860, the members of the adopted a common currency, a common postal system and a common commercial code. Later the signed various reciprocal treaties with nations outside the customs union, culminating in the signing of a reciprocal treaty with France in 1862. From this position of power, the brought about the rapid industrialization of northern Germany and became a prime reason for Prussian involvement in the Second Schleswig-Holstein War of 1864. As result of that war, two predominately German-speaking duchies, and were ceded by Denmark and annexed by Prussia and Austria. Another war, the Austro-Prussian War of 1866, and the dramatic military defeat of Austria at the Battle of Sadowa, resulted in both and being ceded only to Prussia. Neither of these duchies had much in the way of mineral wealth or industry. Even as late as the middle of the twentieth century, both duchies remained predominately rural with only 24% of the total population living in the main cities of Kiel and Lübeck. However, the duchies were to have a great impact on the industrialization of northern Germany because of their location and topography. As early as 1784, a canal had been operating across the neck of the Jutland peninsula on which Denmark is located. This canal was known as the Eider Canal because it largely followed the winding Eider river across the Jutland peninsula. The Eider Canal saved a great deal of time and money by eliminating the need of ships to sail the long and dangerous route around the Jutland peninsula to deliver cargo from the Baltic Sea to the North Sea and . However, by 1860, shipping had gone from sail to steam and the Eider Canal had been largely outdated. Accordingly, rebuilding of the Eider Canal or construction of a new canal was drastically needed. After the annexation of by Prussia, the Prussian government set about improving the Eider Canal by building a new canal along a shorter, more direct route and by widening the canal to fit modern ships. Commercial pressure encouraged the development of the new canal which, when completed in 1887, was named the Kaiser Willhelm Canal. Indeed, the economic motivation behind the canal most probably was the main motivation for the war on Denmark in the first place.
The Schleswig-Holstein War of 1864 was the first of three wars that brought about the Germany's unification into a single state under the Prussian crown's authority. The other two were the Austro-Prussian War of 1866 and the Franco-Prussian War of 1870. In January 1871, at a ceremony in Versailles, William I of Prussia was crowned German Emperor of a now unified German Empire. Against this background German Empire building, relationship of Gerson Bleichröder and Otto von Bismarck played itself out.
Banker for Bismarck and the Prussian State
Gerson Bleichröder served Bismarck at several crucial points during the period of time that Bismarck was the chief minister to the Prussian king. As a result of the Schleswig War of 1864, Prussia and Austria, as joint victors in that war, were awarded the two German-speaking duchies of and on 1 August 1864. Prussia annexed the more northern duchy of , while Austria was given annexation control over the more southern duchy of . Austria did not share any border with the newly acquired duchies, but the duchy of was located between to the north and Prussian-controlled territories to the south. Austria sought to create difficulties for its up-and-coming rivalPrussiaby entertaining the idea of inviting the heir of the deposed House of Schleswig-Holstein-Sonderburg-AugustenburgDuke Frederick VIII of Augustenburgback to administer the duchy. This solution was intolerable to Prussia because the Duke of Augustenburg was related to the royal family of Denmark. The Prussians feared that Danish troops would return to same frontier that they had occupied prior to the war. Furthermore, the Prussian-annexed duchy (where the Prussian government was intending to upgrade the Kiel Canal) would be isolated from the rest of Prussian Germany.
Accordingly, a plan was developed for Prussia to purchase all Austrian rights to the duchies before any transfer of those rights could be made to Duke Frederick. The deal had a good chance of succeeding because the Austria Empire was in financial trouble at the time. Gerson Bleichröder opened secret negotiations with Moritz Ritter von Goldschmidt to pay a large sum of money to Austria for any and all rights to the two duchies of and . In the end, the administration of was not settled until 1866, after the Austro-Prussian War.