the world of private banking

THE RISE OF tHE ROtHScHILDS
Surviving figures for the individual houses are patchy, especially before
1830. For the London house, no comprehensive accounts have survived before
1828, though there is a complete series of profit-and-loss accounts beginning
the following year. The accounts are simple: on one side all the year’s sales of
commodities, stocks and shares are listed; on the other, all the year’s purchases
and other costs; the difference is recorded as the annual profit or loss. Table 1.2
gives the ‘bottom line’ data for the period up until 1844.
Table 1.2 Profits and capital at N.M. Rothschild & Sons, 1829–1844 (£)
Profit/Loss Capital at end of year Profit as percentage of capital
1829 1,123,897
1830 -56,361 1,067,536 -5.0
1831 56,324 1,123,860 5.3
1832 58,919 1,182,779 5.2
1833 75,294 1,258,073 6.4
1834 303,939 1,562,011 24.2
1835 69,732 1,733,404 4.5
1836 -72,018 1,661,386 -4.2
1837 87,353 1,747,169 5.3
1838 83,124 1,820,706 4.8
1839 52,845 1,773,941 3.1
1840 30,937 1,804,878 1.7
1841 -49,769 1,755,109 -2.8
1842 40,451 1,795,560 2.3
1843 23,766 1,819,326 1.3
1844 170,977 1,990,303 9.4
Source: RAL, RFamFD/13F.
Plainly, there were substantial fluctuations in performance, ranging from the very
successful (1834), when profits were close to a quarter of capital, to the disappointing
(1830, 1836 and 1841). Averaged out, however, profits were rather unremarkable in
relation to capital compared with figures for other banks, though this may reflect the
fact that all expenses – including the partners’ interest on their capital shares – were
deducted before net profits were calculated. Thus the figure for profits (or losses)
shown here was simply added to (or deducted from) the previous year’s capital.
Other merchant banks seem to have defined profits quite differently, which makes
comparison in terms of profitability difficult: see on this point J. Armstrong and S. Jones, Business
Documents: Their Origins, Sources and Use in Historical Research (London/New York, 1987).