the world of private banking
the world of private banking
the world of private banking
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22<br />
THE WORLD OF PRIVAtE BANKING<br />
The most striking point about James’s outpouring is <strong>the</strong> way he equated ‘religion’<br />
with endogamy: ‘pride in religion’ meant, in practice, intermarriage within <strong>the</strong><br />
Rothschild family ‘so that <strong>the</strong> fortune would stay inside <strong>the</strong> family’.<br />
It is not enough to explain <strong>the</strong> Rothschilds’ success purely in terms <strong>of</strong> <strong>the</strong>ir overdeveloped<br />
sense <strong>of</strong> familial solidarity, <strong>of</strong> course. O<strong>the</strong>r Jewish <strong>banking</strong> families<br />
established <strong>the</strong>mselves in multiple locations; but none came close to enjoying <strong>the</strong><br />
Rothschilds’ financial success. One fur<strong>the</strong>r explanation is that <strong>the</strong> Rothschilds<br />
evolved a peculiarly effective set <strong>of</strong> business ‘rules’ and practices; <strong>the</strong> essence <strong>of</strong><br />
<strong>the</strong> familial structure <strong>of</strong> <strong>the</strong> firm was that <strong>the</strong>se were <strong>the</strong>n passed from generation<br />
to generation. Indeed, it is possible to find examples <strong>of</strong> Mayer Amschel’s greatgrandchildren<br />
repeating his precepts in <strong>the</strong>ir correspondence with one ano<strong>the</strong>r.<br />
Conspicuous by its absence, it should be noted right away, was any regard for<br />
systematic accounting, despite Mayer Amschel’s repeated admonitions on this<br />
subject. For example, in August 1814 – a critical moment in <strong>the</strong> firm’s history<br />
– Salomon and Amschel had to confess that <strong>the</strong>y were ‘completely confused and<br />
do not know where <strong>the</strong> money is’. ‘Toge<strong>the</strong>r we are all rich and if all <strong>the</strong> five <strong>of</strong> us<br />
are taken into consideration we are worth quite a lot’, wrote Salomon anxiously to<br />
Nathan. ‘But where is <strong>the</strong> money?’ 79 ‘The payments we have to make are big, far<br />
too big’, lamented Salomon <strong>the</strong> following year. ‘Dear Nathan, you write that you<br />
have one million or two million over <strong>the</strong>re. Well you really must have, because<br />
our bro<strong>the</strong>r Amschel is bust. We are bust. Carl is bust. So one <strong>of</strong> us must have <strong>the</strong><br />
money.’ In fact, <strong>the</strong> continental Rothschilds only averted ‘bankruptcy’ at this time<br />
by means <strong>of</strong> short-term borrowing. 80 As Salomon said, too much <strong>of</strong> <strong>the</strong>ir accounting<br />
was being done ‘in <strong>the</strong> head’ instead <strong>of</strong> on paper. 81 In fact, it was not until February<br />
1816 that Nathan remitted sufficient funds to Frankfurt ‘to pay all our debts’. 82<br />
Matters only improved gradually. Double-entry book-keeping was introduced<br />
in Paris and Frankfurt between 1816 and 1818. 83 Pr<strong>of</strong>it-and-loss accounts<br />
apparently began to be kept in London in 1828, and prior to 1873 balance sheets<br />
79<br />
RAL, T29/173, XI/109/0/7/13, Amschel to James, 22 Aug. 1814; RAL, T29/181,<br />
XI/109/0/8/7, Salomon to Nathan, London, 31 Aug.<br />
80<br />
RAL, XI/109/2/2/97, Amschel to his bro<strong>the</strong>rs, 21 Sept. 1815; RAL, XI/109/2/2/115,<br />
Amschel to his bro<strong>the</strong>rs, 28 Sept.; RAL, XI/109/2/2/116, Amschel to Carl and Nathan,<br />
28 Sept.; RAL, XI/109/2/2/120, James and Salomon to Nathan, London, Sept.; RAL,<br />
XI/109/2/2/119, Salomon, Paris, to Nathan, London, 30 Sept.; RAL, XI/109/2/1/58,<br />
Salomon to Nathan, undated fragment, c. Oct.<br />
81<br />
RAL, XI/109/2/2/129, Salomon, Paris, to Nathan, London, 4 Oct. 1815; RAL,<br />
T30, XI/109/2/2/167, Salomon and James, Paris, to Nathan, London, 11 Nov.; RAL,<br />
XI/109/2/2/175, Carl, Amsterdam, to Nathan, London, 20 Nov.<br />
82<br />
RAL, T31, XI/109/4/1/7, Amschel, Frankfurt, to Nathan, London, 5 Jan. 1816;<br />
RAL, T31/87/2, XI/109/4, Amschel, Frankfurt, to James, Paris, 1 Feb.<br />
83<br />
RAL, T32/49/1, XI/109/5A, Amschel, Berlin, to Carl, 19 July 1816; RAL, T33/22,<br />
XI/109/5B, James, Paris, to Nathan, London, 14 Oct.; RAL, T33/283/1, XI/109/5B, same to<br />
same, 18 Oct.; RAL, T64 /212/3, Carl, Frankfurt, to Salomon, April 1818.