Meyer Anselm Rothschild was born in the Frankfort ghetto in 1743. His father was a small tradesman who, perhaps, did a little moneychanging. The family, originally named Bauer, lived in a small cramped ghetto dwelling that bore as its distinguishing mark a red shield. Thus they came by the name they later adopted.
He had the good luck to have five dynamic and intelligent sons - or maybe it was more than luck; maybe it was inheritance, and training, and the burning desire to rise in the world.
In the following selection we skip the early parts of the story; how Meyer got started, how the young boys began to forge ahead, through hard work and shrewdness and any way they could, like "buying" the influence of Buderus, the confidential adviser of the Landgrave of Hesse-Cassel, a German prince who had more money than he knew what to do with. And we leave the close of the story to your imagination, or what you remember of the legends of the wealth and influence of the Rothschild banking firms to this day.
We are now to look at the larger ingots of the Rothschild fortune in the casting. Up to 1806 their riches were like a victory at chess - an accumulation of small advantages. These riches were now about to swell swiftly into an immense tumorous growth.
The Frankfort brothers were making their modest accumulations up to 1795 in small-scale moneylending, handling bills of exchange, but chiefly in trading, in textiles, coffee, tea, sugar, and, perhaps, indigo. England was the great market for these things. Save for textiles, they flowed in from her colonies. In textiles, the industrial revolution was well under way, and she had become the chief wool- and cotton-cloth weaver of the world. But with the rise of the war trade these Rothschild profits began to soar. Nathan, then twenty-two, was sent to Manchester as a sort of buyer of cloth. This was a stroke of fortune, for Nathan was the family genius, and England was to be the financial capital of the world.
The young, short, obese Frankforter, looking almost comical, speaking but little English heavily macerated by the strange Yiddish pronunciation of his ghetto German, was a blaze of business energy. He boasted that he quickly multiplied his £20,000 capital to £60,000 - but he was a most mendacious witness when boasting of his prowess as a money-maker. However, he did prosper amazingly. In 1804 he went to London to extend his operations.
There had been a pause in the fighting in Europe after the Treaties of Lunéville in 1801 and Amiens in 1802. But in 1803 England resumed naval warfare on France and by 1806 the whole Continent was aflame with the new assault upon Napoleon when Russia, Prussia, and Austria united in the attack. And once again, upon an even greater scale, the war profiteers proceeded to multiply their gains.
We now see Nathan leading his brothers in four swift episodes which were to land the five brothers among the richest houses in Europe. As late as 1810 they were unknown to official London as capitalists. In 1815 they were the bankers for the British government and the most powerful single unofficial force in Europe. . . .
The first episode involved an adventure in large-scale smuggling. In 1806 Napoleon decided to crush England's commerce, to strike the despised shopkeeper whose flourishing trade nourished the armies of England. He declared his famous commercial blockade. England replied with an embargo and a blockade of all French ports. As the whole Continent needed British goods desperately, what had been a profitable war trade now became a more profitable smuggling industry. The Rothschilds had been making large profits in this war trade. They now, under Nathan's leadership, plunged into the smuggling adventure with all their resources.
Fortune favored them. With Nathan in England and the brothers on the Continent the firm was well equipped for the job. Moreover, Napoleon was soon to learn that the hand with which he sought to strangle England was also starving France; that the hated shopkeepers of perfidious Albion had upon their shelves merchandise that Frenchmen sorely needed. England too, which outwardly sealed the ports of France, found she needed markets in France and in Europe to create for her the credits essential to get funds to her allies. And so one necessity yielded to another. Napoleon, while publicly thundering destruction to the trade of England, managed to open a back door into France through which greatly needed supplies could be smuggled.
We had the spectacle of both governments winking at their decrees and smugglers actually squeezing past conniving officials the merchandise France wanted. Indeed, by a decree in the summer of 1810, the Emperor actually legalized and regulated the outlaw commerce. The bootleg captains clandestinely sneaked their contraband into France at Gravelines under the eyes and protection and patrol of the police at a port officially set aside for the traffic. The Rothschilds made the most of this. . . .
The next episode has to do with the Rothschilds and the difficulties of the Duke of Wellington on the Peninsula. And this historians have managed to envelope in no end of fog. One minimizes it. Another accepts Nathan's own version that it was undertaken as a patriotic adventure to aid Lord Wellington in Portugal and Spain. Another describes it as the daring enterprise of a freebooter banker from which he made numberless millions and thus laid the groundwork of his whole fortune. And none clears up the procedure by which the enterprise was carried on. The facts as far as they may be unraveled follow.
In 1808 Napoleon forced his brother upon the throne of Spain. Madrid revolted and improvised a large army. England saw an opportunity in this to drive the usurper out of the Peninsula, and sent an army to Portugal. Wellington was one of its generals, but in 1809 became commander in chief.
The great problem was to get supplies to Wellington. Oporto and Lisbon were 600 and 800 miles from the nearest English port, and the sea was infested with enemy ships and privateers. Metal was too scarce to permit so much risk in its shipment, and Wellington needed money to pay his troops and purchase certain local supplies.
There grew up much the same bitter controversy about this as there had been between Lloyd George and the apologists of General Kitchener in the First World War over the inadequacy of supplies and funds. Wellington felt himself trapped. In desperation he began to purchase supplies from Portuguese merchants and to pay them with bills on the English Treasury. These bills were not much good in the hands of Portuguese and Spanish merchants until they were exchanged for gold or silver. Hence a trade sprang up in the notes, carried on by Sicilian, Italian, and Maltese bankers known as the "Cab", with headquarters at Malta. They bought the notes from the local merchants at small prices and relayed them through a series of hands and discounts until they reached London.
This made everything Wellington bought cost several hundred per cent more than even the high war prices in vogue. The Treasury protested. Wellington hurled back criticisms at the Treasury and the Commissary General. He said bitterly that the government cared nothing about his armies. His men, he wrote, remained unpaid for two months and had to sell their shoes and clothing for food and medicines. He intimated that England should abandon the whole expedition. "A starving army is worse than none", he complained. "We want everything and get nothing." He protested against the red tape and inefficiency of the Commissary which "must trace a biscuit from London to the man's mouth at the frontier". He went so far as to threaten to embark his army out of Portugal, leaving England exposed to the peril of an invasion, when her king would then learn something of the horrors of war.
Being in the smuggling trade Nathan of course knew all about this. This traffic in notes was too enticing to be resisted. And he went into it. How deeply he actually went in and how he managed it are by no means clear. One account has it that he summoned his brothers, Carl and Solomon, and later James; that Carl traveled to the Spanish border and bought up the notes with gold, then returned, meeting his brother Solomon halfway, exchanging his bills for a fresh supply of coin brought by Solomon, who then made his way to the French coast where he met Nathan, with whom he again exchanged notes for gold, Nathan taking the Wellington bills to London and exchanging them for guineas. . . .
[A] new turn of affairs arose out of the following facts. Rothschild's difficulty in the Wellington note traffic was gold. The guinea . . . was an article of luxury. Every quarter of the globe was ransacked for specie. The Rothschilds, with their expanding trade areas, were doubtless able to gather a great deal. But there was a limit. In London a ship of the East India Company brought in a cargo of gold. According to custom, it was offered at public auction. Nathan Rothschild bought this for £800,000, using all the cash and credit he had, plus the funds of the Elector in his charge. In later years he said he planned to send this to Wellington. Some historians have accepted this version. But the notion that this predatory man entertained any such fantastic stratagem attended with so much risk is as preposterous as the yarn about his father sacrificing his whole fortune for the Elector and the Elector insisting on lending the Rothschilds all his cash without interest. He was merely planning to extend his traffic in the Wellington scrip and other war trade.
Rothschild was surprised to find himself summoned a day or two after this purchase to the office of John Charles Herries, Commissary General. The Commissary must have been no less surprised at the squat, blunt, Frankforter, looking and talking like a Jewish comedian taken from a London music-hall stage. Herries says that at this time Rothschild was wholly unknown in London official circles as a capitalist. Nathan was asked why he had bought the gold. What did he propose to do with it? It was the hour of fate for the Rothschilds. He might have lied - a course he would have pursued with as sweet a conscience as when he bought Buderus and other public officials. But he caught here a glance of the long turnpike of time. He told Herries why he had bought the gold - to buy Wellington's bills. Herries said the government wanted the gold and Rothschild promptly sold it to him at a large profit.
But how was the Commissary General going to transmit it to Wellington? Rothschild said afterward the government didn't know. Why not use the House of Rothschild to transport it? It had the resources. It had branches in England and on the Continent. It had agents in France and Spain. It had successfully transported gold overland to the traders who had taken Wellington's bills. It could do the same thing for the government in a way the government could not do for itself. The House of Rothschild was an ally, deeply devoted to the interests of the Elector of Hesse and to the Austrian Emperor, and Nathan himself was a citizen of Britain. . . .
The fourth episode revolved around the last mighty effort of England and her wobbly Continental allies to drive Napoleon out of France. The vast disaster of Russia had undermined the Emperor's strength and reputation. It was a terrible economic blow to France. England rallied the allies to another great exertion of their united resources. In January, 1813, England agreed to send to Prussia and Russia large grants of money. Prussia was to get £666,666; Russia over a million. Each was to put new large levies of men into the field. Later in the year Austria, under Metternich's leadership, abandoned Napoleon and threw in her lot with the allies. England promised Metternich a million pounds. Later this was more than doubled.
Herries, the English Commissary, was now charged with the difficult task of getting these sums to Prussia, Austria, and Russia. It was a delicate job. England could not send that much gold to the Continent out of her already depleted resources. But if she sent bills to her allies the effect would be disastrous on international exchange, particularly British exchange.
The reader would do well to understand this. If a man in England wishes to send a hundred pounds to a man in Berlin, he can send gold. But if he does not wish to send gold he may hunt around for some man in England who has a hundred pounds due him from a man in Berlin. This first Englishman may buy from the second his hundred-pound claim against the man in Berlin. He may then send that claim to the man in Berlin to whom he owes his hundred pounds. That Berliner may then collect the hundred pounds from the Berliner who owed the bill in England.
Thus in a city like Vienna there are always a number of merchants who have bills due to them by men in London. Bankers buy up or discount these claims against London merchants and sell them to other Viennese who want to pay bills in London. Thus there is always a demand in Vienna for bills due by men in England. And here is where the trouble begins. If the demand for the bills is small and the supply great, the price of these bills will drop. A man in Vienna who has a bill of a hundred pounds due to him from a Londoner may have to sell it for only ninety pounds because the supply of London bills is very great.
Now if England were to send to a city like Vienna £168,000 in bills, added to all the other bills in Vienna due by Londoners, the price of these London bills would fall disastrously. That, indeed, is precisely what happened. The Austrian finance minister complained that he had to sell a thousand-pound bill for six hundred pounds. Thus, while England sent a bill for a thousand, the Austrian government got only six hundred. The remaining four hundred was absorbed by the bill brokers and bankers.
As England had to send over many millions to Russia, Prussia, and Austria, she was anxious to find a way of doing this without depressing the price of British paper, so that her allies would receive a thousand pounds for every thousand-pound bill sent. To do this delicate job Herries again called in Nathan Rothschild. The banker was commissioned, first, to manipulate the foreign-bill market so that exchange would not be against England - that is, that English bills and pounds would not decline in price; and, second, that the money would be transmitted to her allies without loss and without upsetting the foreign-exchange market.
And this job Nathan, with the aid of his brothers, did with great skill in the face of many difficulties. He did this partly by "going around" the bill market and partly by manipulating it.
At this time a large trade was flowing between England and the Continent. Continental powers were buying more from England than they were selling. Therefore, the price of English bills on trade alone would have been favorable. But when to the bills due by England on commercial transactions were added the millions due by her on the subsidies she promised, the natural drift of the market was against English bills.
It was the bills for the subsidies which caused the trouble. But all these, so far as Prussia and Russia were concerned, were delivered to Rothschild. Thus, he had in his hands the surplus of English bills. Now if he could get in his hands also a large supply of the Continental bills, it would be possible for him to feed either English or Continental bills into the market as might be necessary to keep prices balanced. To put into his hands still further control of the exchange, he bought bills through his brothers and his agents directly from merchants in the leading European ports before these bills got into the regular bill market.
In this way, controlling enough of the two streams of bills - bills against England and bills against Continental countries - he was able to protect the English pound sterling from declining. Of course, he had to use a large amount of his own large resources on the Continent to purchase Continental bills and to hold them. And always, of course, there would be balances in gold to be settled by England. But these balances never got into the channels of trade. They did not have to leave England always. For the Rothschilds could receive the gold in their English house, retaining it there, and paying it out from their Frankfort or Paris houses. . . .
Their resources had become enormous. After Napoleon's banishment Prussia was desperate for funds. Solomon Rothschild took £200,000 to the finance ministry himself from the British government. But the government said this was inadequate. On his own responsibility, out of the Rothschild funds, and without waiting for formal approval from England, Solomon handed over to the Austrian treasury another £150,000. Herries, of course, confirmed this. But this bold act and the display of large resources completely won the Prussian treasury. Solomon was made Commercial Adviser of the government.
Then came Napoleon's defeat and the entry of the allies into Paris. The Count of Provence, soon to be crowned Louis XVIII of France, was living in Buckinghamshire. He was broke and applied to the English government for funds to assure his march to the throne in the style becoming a king. Nathan accepted the English government's draft for five million francs in England, and when Louis arrived in France, James handed him the money. While all else had been done by Nathan in the darkest secrecy, this act he wished to be known. What more natural? The scion of a score of monarchs and a thousand years went to his throne with the francs of the poor and crusty bill merchant of Frankfort's Jew street jingling in his pockets.
With this event the Rothschilds could boast that they were bankers in the service of England, France, Germany, Austria, to say nothing of Russia and the smaller states. The great, gleaming, golden road was opened before them.
[start of notes]
I have in my possession a paper copy of The World of Business (Volume II), by Edward C. Bursk, Donald T. Clark, and Ralph W. Hidy, published in 1962 by Simon and Schuster in New York.
One of the first few pages has these details:
- The World of Business
- A selected library of the literature of business from the accounting code of Hammurabi to the 20th-century "Administrator's Prayer".
- Edited with commentaries notes by three members of the faculty of the Harvard Business School
-- Edward C. Bursk, Editor of the Harvard Business Review
-- Donald T. Clark, Librarian of the Baker Library
-- Ralph W. Hidy, Isidor Straus Professor of Business History
On pages 834-841, The World of Business contains an abridged version of the text from the original source.
Original source, cited by my source: John T. Flynn, "The Rothschilds", in Men of Wealth, Simon and Schuster, New York, copyright 1941, pp. 97-111 (abridged).
Google "john t flynn the rothschilds".
Right-click "Men of Wealth The Story of Twelve Significant Fortunes from the Renaissance to the Present Day_2.pdf" and choose Save Link As....
-> This is a PDF file.
Publisher: Mises Institute
Click "See other formats". This leads to
Under Download Options, choose Full Text.
Right-click "Rothschilds - Men of Wealth The Story of Twelve Significant Fortunes from the Renaissance to the Present Day_2_djvu.txt" and choose Save Link As....
-> This is a text file.
Details of the archive on archive.org:
Ocr: ABBYY FineReader 11.0
Scanner Internet Archive: HTML5 Uploader 1.6.3
Uploaded by Redpilled_Reader on February 27, 2016
I have used this text file as my starting text, selecting those excerpts which were used in the abridged version in my source. I then double-checked these excerpts against the text in the PDF file.
Changes from the original text:
- I have removed word-breaking hyphens.
- I have not preserved the original line breaks. I treat each paragraph as a single line.
- I have not preserved page divisions or page numbers.
- I have replaced the original indentation at the start of each paragraph with an empty line after each paragraph.
- I have substituted a hyphen with a space either side of it ( - ) for the em dash used in the original text.
- In the original text, the double quotation marks were curled to indicate whether they were positioned at the start or end of a phrase/sentence/sentence_group. I have replaced them with straight quotation marks.
- I have replaced curled apostrophes with straight single quotation marks.
- I have moved punctuation out from between quotation marks if it is not relevant to the text within those quotation marks.
=> "A starving army is worse than none," he complained.
=> "A starving army is worse than none", he complained.
- The phrase "We are now to look" in the sentence "We are now to look at the larger ingots of the Rothschild fortune in the casting." was originally set in small capitals, apart from the first letter W, which was set as a normal-sized capital letter.
- I have not included an image which was present in my source. It was an 1817 caricature of Nathan Rothschild by Richard Dighton.
[end of notes]