- The news that the bankers Rothschild are to withdraw
from the gold market, in which they have been a major player for two centuries,
has been hailed as the end of an era.
-
- In one sense, of course, it is. This was the company
that smuggled gold coins across the English Channel to finance the Duke
of Wellington's advance through France to his final triumph at Waterloo
over Napoleon (who, it turned out, had also borrowed money from the Rothschilds).
-
- But in another way it marks out the continuation of an
even older tradition - the ability of the family which has founded one
of the world's largest private banking dynasties to sustain their secretive
fortune, which industry insiders count not in billions but in trillions,
and keep it within the family.
-
- Secrecy has been a hallmark of the Rothschilds from the
outset. Mayer Amschel Rothschild, the son of an itinerant money lender
and goldsmith who settled in the Jewish ghetto in Frankfurt-am-Main in
1744, specialised not just in clever accounting practices but also kept
secret books and subterranean vaults which he ensured were never the privy
of auditor, lawyer or taxman.
-
- As the paterfamilias became more successful he despatched
four of his five sons to different European capitals to take advantage
of the rise of capitalism and the growth of international trade. Nathan
he sent to London, James to Paris, Saloman to Vienna, and Carl to Naples,
keeping the eldest, Amschel, at home with him in Prussia. Of these the
two most important proved to be London and Paris, where the two main branches
of the family developed a friendly rivalry, with the English branch developing
the edge in business and the French in philanthropy, the arts and winemaking.
But then in 1996 Amschel Rothschild, a 41-year-old man who had lived in
the flamboyant style of many of his ancestors, hanged himself in a Paris
hotel room. He was the Rothschild who had been groomed to take over as
head of the English arm of the dynasty.
-
- So when the bank's chairman Sir Evelyn de Rothschild
retired earlier this year the succession passed to the French side of the
family. Baron David de Rothschild, who had been running the family's Paris-based
bank, inherited.
-
- None of the Rothschild enterprises have been banks in
the sense as understood by the man or woman in the street. What Mayer Rothschild
founded in the 1760s was a business which grew from the humble beginning
of selling rare coins to becoming the prime moneylender to greedy and spendthrift
governments across Europe. One German contemporary quipped that Mayer was
"the pride of Israel ... before whose money box kings and emperors
humbly bow". And the novelist Thackeray said of Nathan that he was
"not king of the Jews, but the Jew of the kings". The brothers
financed both sides in the Napoleonic wars and in the Austro-Prussian war
too.
-
- It has long been supposed that Nathan increased the family
fortune 20-fold by speculating on the outcome of the Battle of Waterloo
in 1815. The Rothschilds had a network of agents throughout Europe who,
using fast boats, coded letters and carrier pigeons, got information to
the family ahead of official sources. Victor Rothschild, third baron and
former chairman of the London bank, N M Rothschild, always maintained that
Nathan had made a killing by encouraging rumours that Wellington had lost
when he knew he had won, though the historian Niall Ferguson in his magisterial
history of the family recently disputed that.
-
- Certainly, for all the family motto of Concordia, Integritas,
Industria (Unity, Integrity, Industry), Nathan's ability to depress stock
prices by using the network of agents to spread rumours, true or false,
and then buy the stock up after people panicked, was legendary.
-
- More significant, however, was that in the process the
Rothschilds created the world of banking as we know it today. Nathan operated
principally as an underwriter and speculator in the early 19th-century
bond market. He and his brothers invented, or at any rate popularised,
the government bond, which allowed investors, big and small, to buy bits
of the debts of sovereign states by purchasing fixed-interest bearer bonds.
-
- Governments liked this because they could use them to
raise colossal sums of money. Investors liked them because they could be
traded - at prices that fluctuated in relation to the performance of the
issuing government - and shrewd investors could make big sums. It brought
investment in railways, the industrial revolution and ventures like the
Suez Canal. The Rothschilds got a cut of everything.
-
- It was a new kind of power. "I care not what puppet
is placed upon the throne of England to rule the Empire on which the sun
never sets. The man who controls Britain's money supply controls the British
Empire, and I control the British money supply," Nathan said. The
family developed a lack of awe for the powerful and important. A pompous
aristocrat one day called on Nathan who was head down at his desk. Without
looking up, the banker said: "Take a chair." His caller, affronted,
said: "You are speaking to the Prince of Thurn and Taxis." To
which Rothschild replied: "Take two chairs." At one point he
even rescued the Bank of England after a run on gold caused the collapse
of 145 banks. In 1885 he was given the hereditary title of Baron Rothschild.
-
- Many of the distinct characteristics of the family can
be traced back to the will of the founder Mayer Rothschild. It stipulated
that no public inventory should be made of his estate; that key positions
in the House of Rothschild were to be held by family members; that the
eldest son should inherit unless the rest agreed otherwise; that the family
was to intermarry with first and second cousins to keep the fortune together;
that anyone disputing these terms would be struck from the will. And that
all this should apply in perpetuity.
-
- In part this was about preserving not just their Jewish
identity but a self-conscious position as role models for their poorer
co-religionists. The Rothschilds expended much effort and money pressing
for Jewish emancipation and equality across the continent.
-
- Their Jewish solidarity was not heterogeneous. In 1938
Nathan's great-great-grandson, Victor, shocked an audience by saying that
in spite of "the slow murder of 600,000 people" on the continent
"we probably all agree that there is something unsatisfactory in refugees
encroaching on the privacy of our country, even for relatively short periods
of time." And the family split over the question of the dream of a
Jewish homeland, with some members supporting the first Zionist settlement
in Palestine and the Balfour declaration and others opposing it on the
grounds that it would encourage anti-Semites to question the existing national
identities of assimilated Jews around the rest of the world. None of which
has allayed the wild fears of anti-Semites who throughout the 20th century
branded the Rothschilds as part of a Jewish plot to take over the world.
-
- The world has changed around the Rothschilds. At one
point Nathan Rothschild was the richest man in Britain and probably in
the world. In today's terms he was wealthier than Bill Gates. But they
never gained the foothold in America they needed. The world became corporate.
Private banking got left behind.
-
- Still, the family has moved down only from fabulously
rich to enormously wealthy. And they adjusted to the times. They made billions
in the 1980s from Margaret Thatcher's privatisations of state-owned industries
on which they advised. In France after their bank was nationalised by the
Socialist president Francois Mitterrand they slowly built a new business
which, under Baron David de Rothschild, has risen to the top ranks of the
merger and acquisition league tables. They have pulled out of retail fund
management - into which they went with much fanfare only three years back
- and now they are pulling out of oil and gold in favour of the higher-margin
areas of private banking and wealth management.
-
- Do not spend too many tears. In 1997 the family's Swiss
holding company increased its profits by 66 per cent. The firm is not called
Rothschild Continuation for nothing.
-
- Mayer Amschel Rothschild (1743-1812), Founder of the
family business
-
- Mayer, orphaned at the age of 12, was forced to make
his own living with the help of the good name of his father in Frankfurt.
He carved out a self-taught career as a dealer in coins and medals, branching
out into state loans and trade in general commodities. He established the
family name by placing a Roman eagle on a red shield (Rothschild in German)
over the door of his counting house.
-
- Mayer established one of the Rothschild firm's principles:
to settle for less profit to ensure long-term business ties. A brisk market
in English textiles prompted him to send one of five sons, Nathan, to England.
-
- Jacob, 4th Baron Rothschild (b. 1936), Head of the English
side of the family
-
- Chairman of NM Rothschild before resigning in 1980 to
run Rothschild Investment Trust. He chaired the National Heritage Memorial
Fund, handing out £1.2bn of lottery grants. He restored Waddesdon
Manor, right, the family pile, and chairs Yad Hanadiv, the family foundation
in Israel, which donated the Knesset and Supreme Court to the state
-
- David de Rothschild (b. 1942), Head of the French family
-
- The head of the French family, David de Rothschild has
escaped two catastrophes in France: he was born in New York after the Luftwaffe
seized the family home in Paris and his mother fled from Nazi Europe; and,
in 1981, President Mitterrand nationalised the French financial empire,
Banque Rothschild. David and his cousins started afresh with PO Gestion,
renamed PO Banque and then Rothschild & Cie Banque.
-
- Seven Generations and two Centuries of Banking
-
- 1760s - The orphaned Mayer Amschel Rothschild starts
a
- coins and medals business in Frankfurt
-
- 1789 - Mayer appointed an agent to William IX of Hanau
-
- 1798 - Mayer's son Nathan leaves Frankfurt to become
a
- textile and general merchant in Manchester
-
- 1812 - Nathan's brother James establishes a banking
- house in Paris
-
- 1815 - The English branch of the Rothschilds supply
- gold to the Duke of Wellington's campaign at Waterloo
-
- 1820 - Nathan's brother settles in Vienna; his brother
- Carl starts a business in Naples
-
- 1836 - Nathan dies
-
- 1840 - NM Rothschild and Sons becomes one of the Bank
- of England's bullion brokers
-
- 1850s - Great houses are built. Bordeaux vineyards of
- Mouton and Lafite are acquired
-
- 1875 - Lionel de Rothschild raises finance for British
- stake in the Suez Canal
-
- 1887 - Rothschilds funds the creation of the diamond
- dealers De Beers
-
- 1901 - With no male heirs, the Frankfurt dynasty comes
- to an end
-
- 1919 - NM Rothschild & Sons chair new daily fixing
of
- the gold price
-
- 1926 - The company finances the spread of the London
- Underground
-
- 1929 - Beginning of difficult years for family. Wall
- Street crash; rise of Nazi Europe
-
- 1960s - Rothschilds look to US; start of Rothschild
- Inc
-
- 1981 - France nationalises the highly successful Paris
- House but the family refuses defeat and starts new
- business.
-
- 1985 - Rothschilds advises on British Gas
- privatisation
-
- 2004 - An international banking dynasty, Rothschild
- have 40 countries worldwide
-
- © 2004 Independent Digital (UK) Ltd
- http://news.independent.co.uk/uk/this_britain/story.jsp?story=511881
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