the world of private banking

CHAPTER 1
The Rise of the Rothschilds: the Family
Firm as Multinational
Niall Ferguson
This chapter attempts to explain the rapid rise of the Rothschild bank to a position of
supremacy in international finance between around 1810 and 1836. The first section
describes the size of the bank, which, for most of the nineteenth century, was the biggest
bank in the world in terms of capital. The second section discusses the business the
Rothschilds did, in particular their development of the international bond market. The
third section discusses the structure of the partnership. The fourth section shows how
intermarriage helped ensure that capital remained in the family. Finally, an attempt is
made to identify the Rothschilds’ distinctive business methods. These, it is suggested,
provide the best explanation for the Rothschilds’ astonishing success.
Between around 1810 and 1836, the five sons of Mayer Amschel Rothschild rose
from the obscurity of the Frankfurt Judengasse to attain a position of unequalled
power in international finance. Despite numerous economic and political crises
and the efforts of their competitors to match them, they still occupied that position
when the youngest of them died in 1868; and even after that their dominance was
only slowly eroded. So extraordinary did this achievement seem to contemporaries
that they often sought to explain it in mystical terms. According to one account
dating from the 1830s, the Rothschilds owed their fortune to the possession of a
mysterious ‘Hebrew talisman’. It was this which enabled Nathan Rothschild, the
founder of the London house, to become ‘the leviathan of the money markets of
Europe’. Similar stories were being told in the Russian Pale as late as the 1890s.
They form part of a complex web of fantasy which has been – and continues to be
– woven around the name Rothschild.
This chapter draws on my book The World’s Banker: a History of the House of
Rothschild (London, 1998). I would like to express my gratitude to Sir Evelyn de Rothschild
for giving me unrestricted access to the firm’s pre-1918 archive in London (henceforth
RAL), and to Victor Gray, Melanie Aspey and their assistants. I would also like to thank the
archivists at the Archives Nationales, Paris (henceforth AN), the Centre for the Preservation
of Historical and Documentary Collections, Moscow (henceforth CPHDCM) and the
Frankfurt Stadtarchiv, as well as those at the other archives and libraries I have used. I have
received invaluable research assistance from Abigail Green, Edward Lipman and Rainer
Liedtke, as well as Katherine Astill, Glen O’Hara, Harry Seekings and Andrew Vereker.
Anon., The Hebrew Talisman (London, 1840), pp. 28ff.
H. Iliowzi, ‘In the Pale’: Stories and Legends of the Russian Jews (Philadelphia, 1897).