The House of Rothschild
by Niall Ferguson

Review by Cheryl Bolen

The House of Rothschild:
Money’s Prophets 1798-1848
By Niall Ferguson
Viking, 1998
$34.95
698 pages

Niall Ferguson’s work is not for the casual reader interested in the Rothschild’s astounding half-a-century climb from Frankfurt’s Jewish ghetto to spectacular wealth and power in European capitals from London to Vienna. The House of Rothschild is a complex work on the mechanism of European economy during the years he chronicles. Absent are the details that humanize most biographies. This comprehensive book — larger than an average-size book — has 112 pages of notes in type so small the average adult cannot read.

For the writing of the book, Ferguson took a five-year leave of absence from his position on the Modern History Faculty at Oxford University.

Much information presented here is new, some of it becoming available after the Soviet government (which received it from Nazis who had confiscated Rothschild financial records in World War II) released it in 1990 following the end of the Cold War.

Earliest records of the Rothschild family were written in Judendeutsch, German written in Hebrew characters. Many of these business communications survive.

Though he never lived outside of Frankfurt’s Jewish slum, coin merchant Mayer Amschel Rothschild (1744-1812), groomed his five sons to disperse to European capitals and amass the largest fortune in the world. Son Amschel (born in 1773) stayed in Germany. Solomon (born in 1774) went to Vienna. Nathan (born in 1777) became an English citizen. Carl (born in 1788) was dispatched to Naples. And James (1792) would become one of the most powerful men in France.

After their father’s death during the Napoleonic wars, Nathan emerged as the most powerful brother. Indeed, he was the Bill Gates of his era — only richer! At his death in 1835, Nathan was worth .62 percent of the United Kingdom’s gross domestic product, or 3.5 million pounds. (Bill Gates’ wealth is .49 percent of the U.S. GDP.) Nathan had accumulated 160,000 times the per capita national income. Had he followed the English custom of leaving his fortune to the eldest of his four sons, that son (Lionel) would have been the richest man in England, but the wealth was distributed among all four sons. When their uncle James (of the French branch of the family) died in 1868, he was the richest man in Europe.

During the years treated in this book, the Rothschild family business was solely owned by the Rothschild brothers and could only be passed down through the male branch of the family, a practice that continued until the 1960s. Amschel’s five daughters and their husbands were forbidden to hold ownership in the business. (Nevertheless, they all lived extremely comfortably.) Amschel’s will is quite clear on this matter: "I hereby decree and therefore wish that my daughters and sons-in-law and their heirs have no share in the capital of the firm ‘Mayer Amschel Rothschild & Sons’ and even less that they are able or are permitted to make a claim against it for whatever reason. Rather, the said firm shall exclusively belong to and be owned by my sons."

According to Ferguson, three factors contributed to the Rothschild financial success: closeness to the center of political life, the speed with which news or events throughout Europe could be transmitted, and the ability to manipulate that news to other investors.

By cultivating men in high government positions, Amschel (liberally dispersing bribes, which were not prohibited as they are now) rose from being a coin merchant to a money broker. Each of his sons followed suit in their adopted countries, with Nathan forming a profitable bond with John Charles Harries, the English Commissary-in-Chief.

Nathan had come to England in 1799 and settled in Manchester as a textile importer. Though he could speak nothing but German, he quickly multiplied his initial investment by reaching agreements with textile manufacturers from Manchester to Scotland. He found that by being willing to pay cash he could sometimes strike deals at 15 to 20 percent below the market price. He also traveled to France, Brussels, and the Netherlands selling his cloth cheaper than his competitors. Ten years later he had moved to London and was brokering (and smuggling) gold bullion. The scale of Nathan’s gold purchases must have caught Harries’ attention because in 1814 Nathan was called upon to finance Wellington’s army.

Ferguson also debunks the Rothschild’s "Waterloo Myth." For nearly two centuries the source of the Rothschild wealth has been attributed to the fact Nathan was the first man in England to learn of the English victory at Waterloo (because of the Rothschild’s superior courier service) and was therefore able to make a fortune when the stock market opened the following day. However, according to Ferguson, Nathan’s profit on the stock trading could not have exceeded 7,000 pounds. Nevertheless, between 1815 (the year of Waterloo) and 1818, the Rothschild capital nearly quadrupled — to an estimated 1,772,000 pounds.

"England is our bread basket," said Solomon, the second eldest brother. He also said, "My brother in London (Nathan) is the commanding general." Indeed, Nathan had an infinite capacity for taking risks, much to his elder brothers’ shattered nerves. "You really want to go out in the rain without getting wet," Nathan scolded his brothers. He also had an infinite capacity for work. "I do not read books, I do not play cards, I do not go to the theatre. My only pleasure is my business," Nathan said.

While many wealthy Jews in England (like Benjamin Disraeli) converted to Christianity, the Rothschilds held firmly to their faith.

Another Rothschild family precedent began during the era covered in this book: The only person good enough to wed a Rothschild is another Rothschild. Therefore, in 1824 32-year-old James wed Solomon’s daughter, Betty, who was nineteen.

All five brothers were named Austrian barons in 1822, but Nathan chose not to use the title. When Queen Victoria raised Nathan’s grandson to a baron 63 years later, he broke with English tradition, insisting upon retaining the family name of Rothschild.

— Reviewed by Cheryl Bolen, whose hero of her October book, One Golden Ring, was inspired by the Rothschilds.