The House of Rothschild summary

Of Mayer Amschel Rothschild’s many clients, the most important was William IX, Hereditary Prince, Landgrave and Elector (Kurfürst) of the former German state of Hesse-Kassel. According to the Rothschild myth, it was this relationship with William IX that formed the real foundation of the Rothschild fortune.

When Napoleon declared his intention to end the reign of the House of Hesse-Kassel, William had little choice but to flee. According to legend, it was at this critical moment that William turned to Rothschild, hastily leaving his entire fortune in Rothschild’s hands.

By the 1830s, the Rothschilds had amassed about £4 million in wealth – more than ten times that of their biggest competitor, Baring Brothers & Co. So what led to the Rothschild brothers’ immense success?

In part, this success stemmed from the profits the Rothschilds made by giving loans to European governments.

At the turn of the nineteenth century, it was a matter of course that European politicians would accept favors from bankers. Investment tips and outright bribes would be rewarded with things like economically relevant inside information or favoritism when a loan was needed.

The Rothschilds also engaged in this practice, and in doing so maintained close contact with the political elite of their time.

The Rothschilds’ wealth and influence afforded them a privileged social status – this despite belonging to a class that had been historically disadvantaged, even in the Rothschilds’ time.

For example, the Rothschilds owned prestigious residences, where they would host dinners for the high society of the time. They even went on to acquire noble status in 1817, a formal confirmation of their privileged position in society.

For years, people have wanted to know the Rothschilds’ secret. While there is no single reason that can explain their financial success, there are at least two factors that we can identify as critical to their incredible prosperity.

The first is the development of the brothers’ communications network.

In June 1836, a dark shadow was cast over the Rothschild family: Nathan Rothschild was dying. By the end of July of the same year, he lapsed into a violent fever and passed away. Inevitably, Nathan Rothschild’s death shifted the constellation of power in the Rothschild family.

Since the death of their father Mayer Amschel in 1812, Nathan had been the leader of the Rothschild brothers. Even to the outside world, Nathan was seen as the crucial pillar upon which the entire Rothschild house rested.

For the Rothschilds, an important source of enjoyment – and prestige – was patronage of the arts.

Indeed, the family had amassed a great collection of prestigious works of art over the years. But it was the art created in seventeenth-century Holland that the family was most drawn to. In 1840, for example, James Rothschild purchased works by Rembrandt, Peter Paul Rubens and Anthony van Dyck.

The mid-1830s marked a shift in the Rothschilds’ financial focus toward industrial finance. In particular, the Rothschilds invested heavily in the emerging business of railway construction.

The Rothschilds played a leading role in developing the French railway network due to the profits that railways promised at the time.