'Excuse me,' I said. There was a sudden silence as the bickering grandees stopped and turned to me.

'Yes?'

'You are forgetting the main point,' I said, 'which is that this is deliberate. That certain people in France are deliberately exploiting this situation to destroy the credibility of London. Barings has played into their hands and created their opportunity, but this situation would not have arisen without a conscious policy. As things stand, there is nothing you can do. You know it. The only possible option is to surrender on the best terms you can get.'

A terrible silence greeted these remarks; it was as though I had thrown a bucket of ice over the meeting.

'I beg your pardon?'

'Barings will stop unless it is saved. The banks could club together and put up enough money, but daren't. There will be a run on gold, because the French and Russians are withdrawing large amounts just for that purpose. So, at present Barings will go down, taking London's credibility and the entire funding structure of world trade with it.'

The iciness persisted.

'You need more gold and you need it by Thursday morning at the very latest. And there are only two places you can get it from. The Bank of France and the Bank of Russia.'

'Berlin, Vienna?' asked Wilkinson. 'It is the standard policy of Britain always to ally with the opponents of those attacking us.'

Here Goschen stirred. 'Impossible, I think. Even if they wished to help us, which I strongly doubt, the Bank of Berlin was set up to make it impossible – illegal – for it to operate in the international market. If it was done, it would take weeks to organise. The same goes for Austria, and the Italians have so little gold that they have none to lend. Mr Cort is correct in his judgement.'

'There are then two possibilities,' I went on. 'Either France and Russia are determined to push this to the end, in which case there is nothing we can do. We simply have to accept our fate. Or they can be persuaded to change their minds. In which case we have to discuss what they want. And give it to them.'

Goschen turned to Wilkinson. 'Your area, I think. What might they want?'

Wilkinson sucked in his breath. 'If this is as serious as you all seem to think, they can ask for anything. The Russians could demand a free hand in the Black Sea and in Afghanistan. The French could demand similar independence in Egypt, the Sudan, Thailand.'

Goschen looked faintly sick. Lidderdale turned ashen. Revelstoke smiled sweetly.

'And all we have in return,' I said, 'is the Samson option. Which is to say, the certainty that, while a catastrophe might destroy us, it would also bring calamity to French banking and industry as well, and starve Russia of credit when it is in desperate need of it. I assume – in fact, I know – that there are people in France who do not want such a thing. We need to talk to them and get them on to our side swiftly. And we need to bring in the Rothschilds.'

At the mere mention of the name, the atmosphere lightened. However much Barings had (temporarily, it turned out) eclipsed the Rothschilds in recent decades, their name was still magical. Their wealth, acumen, and the fervent belief that they knew and saw everything through their vast private network of informants and correspondents made them figures to be admired or reviled in equal measure. With the Rothschilds on your side anything was possible; with them as an enemy, disaster was certain.

The head of the English branch at the time was Natty Rothschild, a stout fellow who had been running affairs in this country for more than ten years. He had wide political interests, although he had never got on with Gladstone, and had demonstrated on many occasions his patriotism: it was Rothschilds, not Barings, which had stumped up the cash for Disraeli to buy the Suez Canal; Rothschilds again who intervened in the eighties to stabilise Egypt's finances, and then to float a loan from which it derived little profit. A bizarre combination of the Jewish banker and the Catholic Cardinal Manning had acted together to resolve the crippling dockers' strike in 1889. All in all, Natty Rothschild had demonstrated a solid appreciation of his duties, and how to merge these with the need for personal profit. In only two areas did emotion get in the way: Natty Rothschild hated the Russians, but he detested Barings more.

He arrived after lunch, and it was remarkable to see how even the Governor of the Bank and the Chancellor deferred to his opinions. He was not a warm fellow, although I had heard that he could be gregarious and charming in company. Rather his manner was taciturn, with an aloof- ness it was hard not to see as disdainful and arrogant. Certainly poor Lord Revelstoke withered even more when he walked into the room. So he should; the battle for supremacy between the two houses was now over for ever, and Barings had lost. All that remained to discover was whether Rothschild would react with magnanimity or vindictiveness.

First Goschen briefed him on the details, then Lidderdale, and then I was asked to present my interpretation. Throughout, Rothschild listened absolutely silently, stroking his closely cropped beard every now and then, but otherwise barely moving. As I finished, he poured another cup of tea and stirred methodically.

'Fascinating,' he said eventually, in his thick, deep voice. 'Quite fascinating. Are you quite sure of all this?'

'I am sure of the facts,' I replied. 'Naturally, the interpretation is my own. But it fits what has been happening in the markets this morning.'

He nodded. 'But at the moment the urgent problem is how to stabilise the situation here.'

'Mr Cort advocates surrender,' Goschen said sourly.

I blushed. 'If I am correct . . .'

'You would destroy Britain's strategic position throughout the world.'

'If the stakes are so high, then surely the Government must intervene.'

'I have already explained why that is impossible,' Goschen said. 'And why it would be counterproductive. This must be resolved within the City of London itself.'

'Mr Cort,' Rothschild said, ignoring the chorus of protest from the others, 'at some stage you must tell me a little more about who you are, and why you are here. For the time being, these others here seem to think you have a right to speak. Tell me – in your own words – what you recommend.'

'The City must organise a fund to rescue Barings. Or at least to get it through the next few weeks, until it can realise its assets and stop in an orderly fashion. That can only be done – you would only have the time to do that – if the Bank of France reversed its policy of withdrawing bullion from London. And if the Russians stopped pulling gold out of Barings. Better still if they signalled their intention of depositing some more. In the circumstances, the rate of interest they might demand could be high, and not payable solely in money. But at the very least we need to know their terms. May I ask if your bank has heard anything about this?'

'Nothing has been communicated to me. But that is no surprise. There are no close relations at the moment between us and the Bank of France. There are many in France who detest the Rothschilds as much as they detest the English. The question is what to do about it. As it seems the British Empire is insufficiently important for the Government to risk its own reputation, then I, like you, feel we have no alternative but to explore other possibilities.'

And so it was settled. I was to return to Paris as soon as possible, with a letter to Alphonse de Rothschild and instructions to discover what, if any, price the French would accept. At the same time I was to organise a veritable insurrection amongst the moneyed elite of France, have them storming the barricades of the Banque de France, demanding calm in the markets. And I was to do this without citing the authority of the British Government in any way. This was to be a deal between bankers. It must not have anything to do with foreign policy. There would be no concessions there whatsoever.