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Name: The House of Rothschild
Rating: 4.2 (90 reviews)
Author: Niall Ferguson

Niall Ferguson

Money’s Prophets 1798–1848

4.2 (90 ratings)

21 mins

Topics

Socialism & Capitalist Critique Wealth

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The House of Rothschild
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What’s in it for me? Learn about the famously wealthy Rothschild family.

What does the name Rothschild mean to you? While many people associate the name with a wealthy Jewish family or a thriving investment banking company, most probably don’t know that Rothschild was in fact the biggest bank in the world during the nineteenth century!

In these blinks, you’ll learn how the Rothschild family’s multinational partnership secured their immense financial success, and how their proximity to Europe’s political elite and their Jewish lineage gave rise to a series of family myths.

By peeling back the many layers of the Rothschild family’s story, you’ll better understand the historical reality of its most mysterious figures, as well as one of the most successful businesses in the history of capitalism.

You’ll also learn

how antiques made Mayer Rothschild’s office flood with bags of money;
how bribery ended up playing an important role in the family business; and
which initiatives the Rothschilds took to advance Jewish emancipation.

Mayer Amschel Rothschild established the Rothschild banking business in Frankfurt amid widespread anti-Jewish sentiment.

The Rothschild family was among the richest and most influential families of the nineteenth century. But how did they come to enjoy such a coveted position?

It all began with Mayer Amschel Rothschild (1744–1812), father of the famous Rothschild brothers. However, as a Jew in Frankfurt, Mayer Amschel didn’t have the easiest start to his career.

During the eighteenth century, Jews in Frankfurt faced persistent, systematic discrimination and intensely anti-Jewish attitudes.

Virtually every aspect of the lives of Frankfurt Jews was affected by this anti-Semitism. Jews were confined to a ghetto, a single narrow street called the Judengasse (Jews’ Lane), with gates erected at either end. They were forbidden to live outside the Judengasse, and likewise forbidden to stay overnight anywhere else.

Jews were barred from entering major public gathering places like parks, inns, coffee houses and the town’s promenades. For Frankfurt Jews, a major portion of life was spent within the high walls and gates of the Judengasse.

Yet, amid Frankfurt’s anti-Jewish sentiment, Mayer Amschel Rothschild still managed to start a successful banking business.

Unlike most eighteenth-century German towns, Frankfurt was a center of commerce, which necessarily went hand in hand with banking.

Mayer Amschel’s journey into banking began after he’d established himself as Frankfurt’s leading antique dealer. With the capital he accumulated through buying and selling these goods, Mayer Amschel began extending credit to his growing network of suppliers and customers, thus firmly planting himself in the world of banking.

By 1800, he ranked among the richest Jews in Frankfurt, owing in no small part to his success in banking. In fact, his business was turning over so much cash that bags of money would often lie around the Rothschild office, filling the cupboards and piling up on the floor.

Nathan Rothschild took the banking business to England; when his father died, the firm was passed on to the five Rothschild sons.

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.

The Rothschilds made profits by giving loans to governments and with the help of their “commanding general.”

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.

The Rothschilds’ close contact with political elites gave rise to myths that fostered hostility.

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 never forgot their “co-religionists” and advocated for Jewish emancipation.

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.

The Rothschilds’ success lay in their unique communications network and the cooperation between the five houses.

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.

The death of Nathan Rothschild affected not only the Rothschild house, but the entire world.

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.

Patronage of the arts was important to the Rothschild family.

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 Rothschilds’ investments in railways made them targets for the social revolutions of 1848.

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.

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What is The House of Rothschild about?

The House of Rothschild (1998) offers a detailed, insider look into the famed Rothschild family’s multinational partnership. By examining the relationships and strategies that launched the Rothschilds to success, the book demystifies this historic family, making their meteoric rise to tremendous wealth and fame much easier to understand.

Best quote from The House of Rothschild

All banks have histories . . . only the Rothschilds, however, have a mythology.

—Niall Ferguson

Who should read The House of Rothschild?

Anyone with an interest in European history
Anyone curious about the world of banking in the nineteenth century
Anyone fascinated by the enduring Rothschild myth

About the Author

Niall Ferguson is an author, political commentator and fellow and tutor of modern history at Jesus College, University of Oxford. His previous works include Paper and Iron: Hamburg Business and German Politics in the Era of Inflation 1897–1927 and the best-selling book Virtual History: Alternatives and Counterfactuals.

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