The Rothschild Family

German financiers

• Amschel Mayer Rothschild
• Born: June 12, 1773
• Birthplace: Frankfurt am Main (now in Germany)
• Died: December 6, 1855
• Place of death: Frankfurt am Main (now in Germany)

• Carl Mayer Rothschild
• Born: April 24, 1788
• Birthplace: Frankfurt am Main (now in Germany)
• Died: March 10, 1855
• Place of death: Naples, Kingdom of the Two Sicilies (now in Italy)

The Rothschild family developed one of the most successful banking and investment companies of all time. By locating branches in a number of major cities while keeping the business a family matter, they coordinated international operations and provided services to clients and governments that were unavailable elsewhere.

Early Lives

Mayer Amschel Rothschild was born in the Frankfurt ghetto in 1744. His parents died only eleven years later of smallpox, but traveling with his peddler father had already had an impact on the boy. In the patchwork of principalities making up the eighteenth century Holy Roman Empire, even a minor trader might visit several countries in a day or two. Mayer Amschel was thus introduced at an early age to the mysteries of money exchanging. Although his parents had enrolled him in a Jewish religious school that prepared students to be scholars, after their deaths he was able to convince relatives that he would be better off in a business career. In 1757, an apprenticeship at the Oppenheimer Bank in Hannover was arranged. He returned to Frankfurt in 1763.

Mayer Amschel had become a dealer in rare coins, and in 1765 a connection made in Hannover arranged for him to display his wares for Prince William of Hesse, whose avarice was legendary. For four years, Mayer Amschel sold coins at bargain prices to the prince, getting little for his trouble. Later, however, he was able to buy the house the family had been renting, which became his home and office. He had an illustrated catalog printed. Most important, he married Gutle Schnapper in 1770. The union was fruitful: Five sons and five daughters grew to adulthood. The sons—Amschel, Salomon, Nathan, Carl, and James—would build the family business into a worldwide concern.

Mayer Amschel continued to court William, who was combining enterprises such as renting mercenaries to England for use in America and an inheritance to become enormously wealthy. His break came because of a friendship with Carl Buderus, William’s chief financial adviser. Mayer Amschel had given Buderus a valuable coin, and upon making a second visit to William in his new establishment in Kassel, Mayer Amschel got his first commission. This was the beginning of a relationship that proved extremely profitable to all concerned. By the 1790’s, the family was comfortably well off and about to embark on the enterprise that would make it an international financial force.

Lives’ Work

Annoyed by the haughtiness of an English cotton salesperson, the twenty-one-year-old Nathan resolved to go to England and conduct business for the family; he would become the most successful of the entire clan. The stocky, powerful Nathan was roundheaded with coarse features; his speech was crude, and he never lost his German accent. Interested in little but business, he was soon established as a major financier and trader in a variety of commodities, taking good advantage of the demands created by the French Revolutionary Wars. On the Continent, the Rothschilds were of enormous service in concealing valuables from the emperor’s rapacious agents, but in England Nathan, at least at times, used the funds transferred for investment in bonds in more speculative investments. When he had to account for sums, he bought the requested bonds, making up the interest so that William of Hesse earned as much as if the bonds had been bought when ordered. This was all arranged in partnership with Carl Buderus, who helped hide the operation from William and became rich in the process.

The Rothschild firm was now extremely successful, thanks to its financial manipulations. Another factor was the increased business provoked in London and Frankfurt by the French blockade, which forced the opening of new markets as well as shifting old ones to Rothschild advantage. In 1810, the firm was renamed M. A. Rothschild and Sons, with Mayer Amschel and the four sons still in Frankfurt having shares—Nathan, in enemy territory, could get nothing legally but was promised his share when the political situation made it possible.

Nathan had, the year before, established his own bank in England and was beginning to be brought into government financial arrangements. In 1814, he had a hand in the very profitable process of collecting loans and transferring the funds to the duke of Wellington in the Peninsula. In addition, he created an excellent system of couriers, carrier pigeons, and other means of communication, which usually meant that he had information about European events before his competitors and often was able to buy or sell government bonds to advantage. While Nathan was expanding the holdings of the English branch, his brothers were spreading family institutions around Europe. James had settled in Paris, where he had had some opportunity to help with Nathan’s efforts to supply money to Wellington in Spain.

In 1819, a wave of liberal-nationalist feeling broke over the German Confederation, threatening the Rothschilds both as bankers who supported the conservative policies of Metternich and as Jews. The family was urged to abandon Frankfurt for Paris. Upon hearing of this, Metternich sent word that the Rothschilds would be welcome in Vienna, and subsequently he arranged for the Rothschild bank to raise an enormous loan for the Austrian government. Despite some troubling moments and charges of corruption, the bonds involved proved profitable for the bank and a good investment for purchasers. As the loan required much attention, Salomon opened a branch of the bank in Vienna. In 1821, Carl, the least forceful of the brothers, became the agent for the bank to raise a loan in Naples to help the Austrian government with the cost of maintaining an occupation to prevent revolution. His success not only improved the standing of the family in Vienna but also resulted in his remaining to open a new branch. In 1822, Metternich requested that the emperor bestow baronies on the five brothers.

Amschel, the only brother to be orthodox or slim, remained in Frankfurt, eventually becoming treasurer to the German Confederation and extremely influential in the financial policy-making of the Prussian government. The Rothschilds had become part of the economic and social elite.

Trouble arose when the Revolution of 1830 toppled the Bourbon government, for James Rothschild, deeply involved with government finance, did not believe the government was in trouble. Initial losses were serious, but the excellent communications system maintained by the family allowed Nathan and Salomon to sell French securities early and to rebuy at great profits. James’s dependable, fiscally conservative management soon caught the attention of the July Monarch, Louis-Philippe, and James was brought back into a major role in French government finance.

The death of Nathan, while in Frankfurt to attend the 1836 wedding of his son Lionel, left James in Paris as the head of the family. Increasingly involved in the finances of both the government and Louis-Philippe personally, James’s fortune approached fifty million pounds. His circle of friends included both aristocrats and intellectuals such as George Sand and Honoré de Balzac. Always pressed to support one cause or another, James gave generously only to be criticized for meanness by the rejected and unsatisfied.

In the middle of the century, the Rothschild business interest turned to railroads, resulting in much profit in Austria, Italy, and France. Efforts were also made to support international peace, as in 1840 when in Paris and Vienna the governments were soothed so that war would not destroy prosperity. In 1848, Carl persuaded the government of Naples to make liberal concessions to the revolutionaries and defuse the threat that in so many places led to violence.

In Paris, revolution again proved expensive. Not only was money invested in government securities at risk but also James’s villa in the Bois de Boulogne was burned by the mob. In Vienna, Salomon had to abandon his house to the mob; Salomon went to Frankfurt, never returning to Vienna. James clung to his base in Paris and, by attaching himself to Eugène Cavaignac, minister of war in the new revolutionary government, was soon back in the thick of politics and finance. Having been the bitter foes of Napoleon I, the Rothschilds were hardly eager for the advent of another. Their hopes were frustrated, however, when Louis-Napoleon Bonaparte was elected president of the Second Republic and then in 1852 declared himself Emperor Napoleon IIII29IIII III.

In England, Lionel (1808-1879), already prominent in the business when his father died, became senior partner aided by his brothers, Mayer, Anthony, and Nathaniel. The second English generation began to move the family into traditional English upper-class patterns. Estates were purchased; Rothschilds were also becoming known for charity, art collecting, and hunting. Although the patriarch might not have approved of his sons’ charitable impulses or artistic and sporting avocations, he would have been warmly in favor of their efforts to further the removal of civil and social disabilities from Jews. Although few Rothschilds felt much affinity for the outward forms of religion, they remained sensitive to their heritage.

Lionel, who devoted himself to the business, was urged by his friend, the great conservative politician Benjamin Disraeli, to seek a seat in the House of Commons. As members had to take an oath “on my true faith as a Christian,” Jews were barred. In 1847, Lionel was elected to Parliament as a Liberal candidate for the City of London (the business district of the metropolis); although Commons passed a bill to allow him to take his seat, the bill was rejected by the House of Lords. Six times over the next eleven years, Lionel was reelected only to be turned away, despite the support of Disraeli. Finally in 1858, after a seventh electoral triumph, the Lords yielded, and Lionel became the first practicing Jew to be a member of Parliament.

Membership in Parliament was only one element of becoming prominent in English society. The upper classes were tied together by relationships forged in public schools (the equivalent of private preparatory schools in the United States) and the two universities. As the University of Oxford had a religious test for graduation, the University of Cambridge was the institution for those of nonorthodox religious opinions; Cambridge did, however, require attendance at Anglican chapel.

Although exceptions had been made for Lionel’s brother Mayer and at least one other Jew, the requirement was not dropped by the university until 1856, and even then individual colleges could retain it. The change facilitated the matriculation of Lionel’s son Nathan Mayer (called Natty) in 1859. Having distinguished himself socially at Cambridge and certainly having no lack of wealth, Natty made himself a force in Liberal politics and in 1885 became the first Jewish peer. His cousin Hannah married the earl of Rosebery, a future prime minister, in 1878. Thus by the end of the nineteenth century, the Rothschilds were not only among the most wealthy of the English but also were firmly ensconced among the social and political elite.

On the Continent, Rothschild fortunes were more mixed during the middle years of the nineteenth century. In 1855, three of the original five brothers died: Carl of Naples, Salomon of Vienna, and Amschel of Frankfurt. The family was not quickly welcomed into the confidences of Napoleon III’s government, although James’s personal tie to the Empress Eugénie prevented complete ostracism. Although the French Rothschilds were frozen out of the organization of the Crédit Mobilier, a new French financial institution that, with government support, was enormously successful, Anselm, the son of Salomon of Vienna, took the lead in developing the Kreditanstalt, a similar business in Vienna.

By the late 1850’s, a third generation—Alphonse of Paris (James lived until 1868), Anselm of Vienna, Lionel of London, and Mayer Carl of Frankfurt—were cooperating as well as the original brothers had. The Italian War of 1859-1860 strained the Crédit Mobilier, resulting in a cosmetic reconciliation between the emperor and the Rothschilds. The same war began Italian unification, and, with the collapse of Naples as an independent state, the Rothschild Bank there was closed. It would not be reopened.

A growing public role was common for the family during the late nineteenth century. The Franco-Prussian War (1870-1871) did the Rothschild business no real harm and, because the bank managed the payment of the French indemnity, in the long run resulted in a profit. In England, Alfred Rothschild was appointed a director of the Bank of England in 1868, and, when Natty became a peer, his cousin Ferdinand replaced him in Parliament.

The end of the century found Rothschilds still running the family business but pursuing widely divergent nonbusiness interests. For example, Edmond devoted his time and money to supporting the establishment of colonies of poor Jews in Palestine, Lionel Walter (1868-1937) became well known as a naturalist, and Henri (1872-1947) was a successful physician and playwright.

Significance

The Rothschild family holds an extraordinary place in the world of international finance. In less than fifty years, the family went from poverty in the Frankfurt ghetto to control of one of the richest and most powerful banks in the world. Further, the family held its place throughout the turbulent nineteenth century. The Rothschild Bank was an early example of an international company with the twist that its branches were all controlled directly by family members and operated with an eye to the benefit of the entire clan. It is not surprising that, with their wealth and excellent communications system, the family was involved in the public financial operations in all the countries in which they had banks. More unusual is that, despite some use of bribery, the Rothschilds do not seem to have enriched themselves via corruption. The members of the family have generally been committed to serious public service as well as to profit-making.

Rothschilds have also done much to eliminate discrimination against Jews. Never stinting in the use of money and renown in the cause of coreligionists, they accomplished much. Elimination of restrictions on Jewish property holding in Habsburg territories; access to the Parliament, university, and peerage in England; and membership in the social elite of France are only some of their achievements. If noblesse oblige can be applied to the status of wealth, then it seems appropriate for the four generations of Rothschilds between 1758 and 1900.

Bibliography

Corti, Count Egon Caesar. The Rise of the House of Rothschild. Translated by Brian Lunn and Beatrix Lunn. London: Victor Gollancz, 1928. An account of the early years of the Rothschild rise to prominence and wealth. Its focus on the first generations makes it particularly useful, because the early years are generally less well known.

Cowles, Virginia. The Rothschilds: A Family of Fortune. New York: Alfred A. Knopf, 1973. A popular family history recounting the story of the Rothschilds from their origins in eighteenth century Frankfurt to multinational prominence during the mid-twentieth century. The book is well written and corrects some of the most common myths about the Rothschilds, but it does leave other legends untouched.

Davis, Richard. The English Rothschilds. Chapel Hill: University of North Carolina Press, 1983. The author, an excellent scholar, based this book on the Rothschild family papers and a detailed knowledge of the period; the style makes it a volume for both the general reader and the serious student. There is no better source of information or bibliography for the English branch of the family.

Ferguson, Niall. The House of Rothschild: Money’s Prophets, 1798-1848. New York: Penguin Books, 1999.

‗‗‗‗‗‗‗. The House of Rothschild: The World’s Banker, 1849-1998. Rev. ed. New York: Penguin Books, 2000. Meticulously detailed, balanced, and readable account of the Rothschild family’s rise and decline. Focuses on the family’s public career, not on the personal and psychological aspects of individual family members.

Lottman, Herbert R. The French Rothschilds: The Great Banking Dynasty Through Two Turbulent Centuries. New York: Crown, 1995. Focuses on the French branch of the family, providing a detailed and accessible chronicle of its history from the reign of Napoleon Bonaparte through the government of François Mitterrand.

Morton, Frederic. Rothschilds: A Family Portrait. New York: Atheneum, 1962. Useful account of the family’s history. The general focus makes it particularly desirable for the study of the family rather than of individual members.

Roth, Cecil. The Magnificent Rothschilds. London: Robert Hale, 1939. Long the standard general history of the family, this book, while still valuable, is dated. It is a complete, well-researched, and well-written account.