the world of private banking

THE WORLD OF PRIVAtE BANKING
The other house for which detailed accounts survive is the much smaller
Naples house. Considering its size, the Naples house was singularly profitable,
especially in the first decade of its existence. Its average annual profits were more
than £30,000 between 1825 and 1829, at a time when its capital was little more
than £130,000; and throughout the 1830s and 1840s its profits averaged around
£20,000. Unlike the London Paris house, it appears never to have recorded a loss
prior to 1848, despite the financial crises of 1825, 1830 and 1836.
There are, unfortunately, no complete data for the profits of the Paris, Frankfurt
or Vienna houses in this period. In the French case, the only surviving figures are for
the years 1824–8, and they simply tell us the extent of the damage done to James’s
position by the crisis of 1825 (when his losses totalled no less than £356,000) and
the speed with which he recovered from the setback. However, it is possible to
infer average annual profits for all the houses from the combined capital accounts
(table 1.3), though the irregular periods which elapsed between agreements make
these a rather rough guide to performance. These suggest – rather unexpectedly
– that the London house was in fact the least economically successful of the three
principal Rothschild houses: average annual profits were significantly higher at
both Frankfurt and Paris for the period 1818–44.
Table 1.3
Average annual profits, five Rothschild houses, 1818–1844 (£thousands)
1818–25 1825–28 1828–36 1836–44 1818–44
Frankfurt 110 28 73 79 80
Paris 163 -8 38 67 75
London 57 14 69 34 49
Vienna 11 17
Naples 17 24
Total 330 85 209 221 231
Source: As table 1.1.
The question, of course, is whether it is legitimate to make such comparisons
when the houses were regarded by the partners as inseparably linked – as, indeed,
a single ‘general joint concern’. The balance sheets of the Naples house reveal
how inextricable the activities of the five houses were: between 1825 and 1850,
the share of its assets which were monies owed to it by the other Rothschild houses
was rarely less than 18 per cent and sometimes as much as 30 per cent. This
AN, 132 AQ 13/Bilans 06/1821–06/1842.
Calculated from the fragmentary evidence (primarily half-yearly figures) in AN, 132
AQ 3/2; CPHDCM, 637/1/6/34–42.
Gille, Maison Rothschild, vol. I, p. 248. Cf. CPHDCM, 637/1/6/20–21, Balance
Sheet of Naples House, 31 Dec. 1827.