For Christmas, I recovered my burnt copies of Niall Ferguson's history of the Rothschild family. I had previously read the first book, The House of Rothschild: Money's Prophets, 1798-1848 prior to writing book notes on makeoutcity.com. (These books fit into Ferguson's scholarly work, rather than his more political tracts, Empire and Colossus.)#

The second book, The House of Rothschild: The World's Banker, 1849-1998 picks up where the last left off and covers the apex of Rothschild influence and their slow decline in the twentieth century. For a brief introduction to the Rothschilds, I recommend the Wikipedia page.#

Quick note: As the sections indicate, by this time many of the first-generation had passed. Specifically Nathan, the former "king of the Kings of the Jews," passing the crown to James in France. Early on there was beginning to be some problems between the various houses. Frankfurt was technically the master of Vienna and Naples, and was on slightly poor relations with London and Paris due to Amschel's identification with the government more than his family in some regards. The various branches of the family tried to keep together by inter-marriage, but slowly the became separated and more nationalistic.

I - Uncles and Nephews#

One - Charlotte's Dream (1849-1858)#

This chapter mostly covers the Jewish Emancipation in Britain and the Rothschild's role in that affair, with particular emphasis on Lionel becoming an MP, although not the first Jewish MP. Lionel was offered a baronetcy, but the Rothschilds would hold out for a peerage, a matter that an interesting quip came from:#

While others wasted no time in entering the breach made by Salomons--among them his brother Mayer, who became High Sheriff of Buckinhamshire in February--Lionel did nothing. Even when he himself was offered a baronetcy by the new Prime Minister, Lord John Russell, he stubbornly refused to accept it--to the dismay of his relatives. His stated reasons for doing so suggest that Lionel had a trait of petulance: he was reluctant to accept an honour which had already been bestowed on two other Jews, and would be content with nothing less than a peerage. Prince Albert reported him as saying: "[Y]ou have nothing higher to offer me?" This was bluntness worth of his father, but his mother Hannah was incensed... [p. 25]

Two - The Era of Mobility (1849-1858)#

This chapter is so named because of the Crédit Mobilier, a new French joint-stock bank created in competition with the Rothschilds. Although, many such banks were created and could all offer competition throughout Europe. As the chapter explains, although the competition was initially serious, the Rothschilds learned and dealt with it through various means, such as creating their own joint-stocks, such as the Austrian Creditanstalt.#

The conflicts with the Mobilier in France led to some great humour from James, the first generation son, whose sarcasm was renowned:

James [..] commissioned Feydeau to undertake a speculation on his behalf--in the form of a purchase of a thousand Crédit Mobilier shares. He did this no fewer than fives times [...] [James explained:]

Vat do you mean, my young friend? ... I do not mock you at all. Listen: I haf the greatest possible confitence in the chenius of Messrs Pereire. They are the greatest financiers on this earth. I am a family man, and I am happy to infest a part of my little fortune in their affairs. I only regret one thing, and that is that I cannot entrust all off my capital to such clefer men. [p. 58]

Many people in France preferred the idea of the Crédit Mobilier because of the greater involvement of the "people" rather than just haute finance, but although they did not disappear, they did not overrun the Rothschilds as the summary explains:

By the end of 1858, then, the challenge posed to the Rothschilds' position not only within France, but right across the European continent, had been quashed. This had largely been possible because, while the Pereires' [founders of Crédit Mobilier] resources remained fundamentally Parisian, the Rothschilds were an authentic multinational, with a business empire which expanded during the 1850s as far afield as the new goldfields of California and Australia. The Rothschilds' superior resources made it possible for them to reimpose their dominance over European public finance in the period of the Crimean War. At the same time, their alliance with the Banque de France ensured that when the downturn came in 1856-7, the convertibility of the currency was maintained and reforms which might have eased the Pereires' overstretched position were rejected. [...] The increasing complexity of the Rothschild business empire makes it harder to consider it as a single, integrated entity after this period, though there is no question that James himself considered it still to be one. Before 1859 the Rothschilds had been fortunate in one signal respect: they had lent to the winning side in the Crimean War, not to the loser. The real test would come in the period 1859-70, when they would find themselves repeatedly on both sides of decisive conflicts which were to recast the map of Europe. [p. 89]

Three - Nationalism and the Multinational (1859-1863)#

This chapter deals with the conflicts of interest within the Rothschild system when their home countries (Britain, France, Austria, Germany, and Italy) were at war and in general competition.#

In the beginning of the chapter is priceless bit of James' humour:

[Count Camillo Bense di Cavour, the first Prime Minister of the newly unified Italy] came to Paris [...]. "So, M. le baron," he was heard to ask James, "is it true that the bourse would rise by two francs the day I resign as Prime Minister?" "Oh, monsieur le comte," replied James, "you underestimate yourself!" [p. 91]

James was an interesting character and Ferguson relates his view of States:

He preferred to think of states as businesses--not such an unreasonable elision considering how many Italian politicians (Cavour and Bastogi, for example) had banking backgrounds. Thus where historians (following contemporary intellectuals) have seen nation-building, James saw merges and demergers, and this illuminates his response to Austria's predicament after 1859. Piedmont's hostile takeover of Italy made sense and had succeeded; Austria was financially weak in the wake of defeat as before; therefore she should sell her rights over Venetia or Holstein to the poweres which could afford them--Italy and Prussia. It faintly puzzled him that the Austrian Emperor preferred to suffer further military defeats rather than to commercialise Habsburg decline in this fashion. After all, it made no difference to James whether Venetia was governed from Vienna or Turin or Florence; he continued to think of the map of Europe in terms of railways rather than borders. [p. 100]

Finally, I'll close with some more of James:

"At the bourse, there comes a time when, if you want to succeed, you have to speak Hebrew."; "You ask, do I know what causes the bourse to rise and fall? If I knew that I would be a rich man!" [...] But, his most famous jokes [...] subtly mocked the Emperor. "L'Empire, c'est la baisse" defies translation: literally "the Empire means a falling market," this pun on Napoleon's famous claim that the Empire meant "la paix" was to prove a damning epitaph for Napolean's regime. [p. 110]

Four - Blood and Silver (1863-1867)#

This chapter explains the various ways that the Rothschild successfully and unsuccessfully influenced European politics during this time. Their lack of effect in Prussia was to be recurring problem as we shall see.#

Five - Bonds and Iron (1867-1870)#

This chapter primarily concerns the leading up to the Franco-Prussian war and the death of James.#

The obituary of James is interesting:

James's death marked the end of an era in more ways than one. He was the last of the generation which had been born in the Frankfurt Judengasse. Having inherited the mantle of his brother, Nathan in 1837, he had helped steer the family firm through the worst storm in its history in 1848. While conceding greater autonomy to the London house, he had largely checked the centrifugal forces generated by conflicts of temperament and interest within the family. He had transformed the Paris house, adding to its original accepting and issuing functions a new role as an industrial investment bank with its own railway "empire." In 1815 the capital of the Paris house he founded bad been £55,000; by 1852 the figure was £3,541,700 and just ten years after his death £16,914,000. What made this achievement so remarkable was that fact that James had managed to withstand not only periodic financial crises, but also a succession of severe political crises: 1830, 1848, and 1852. And he had exerted for nearly four decades a unique influence over French foreign policy and European international relations in general. [p. 156]

II - Cousins#

Six - Reich, Republic, Rentes (1870-1873)#

The Franco-Prussian war was bad news for the Rothschilds, although Ferguson makes the case that they handled it remarkably well. If you have the book, I particularly found the discussion on pages 204 and 205 on the comparison between the Third Republic and the Weimar Republic to be very interesting, although it is too long to quote in detail. The crux of the matter is that while they seem analogous, there were important differences that made the reparations imposed on France possible (and profitable for the Rothschilds,) while not possible for Germany (Ferguson says he agrees with Keynes on this matter, but I don't know his argument.)#

Seven - "The Caucasian Royal Family"#

This chapter opens with a quote from Sir Charles Dilke, "I could see how strangely like a Royal family the Rothschilds are in one respect--namely, that they all quarrel with one another; but are united as against the world." (p. 221) And continues to elaborate on how the third generation of Rothschilds became even more integrated into the social elite and acted as a royal family in many respects (although they were known for a long time as the "Kings of the Jews.")#

Also in the chapter is a detailed discussion of the third generation and the way that the family business was suffering from the policy of family control. The story of Salomon James is special, but a bit typical:#

It was James's younger sons who struggled. The Goncourts observed in 1862 how imperiously Salomon James (b. 1835) was treated by his father. After losing a million francs at the bourse, he:

received this letter from the father of millions: "Mr. Salomon Rothschild will go to spend the night at Ferrières, where he will receive instructions which concern him." The next day, he received the order to leave for Frankfurt. Two years passed in the counting house there; he believed his penance was over; he wrote to his father who replied: "Mr Salomon's business is not yet finished." And a new order sent him to spend a couple of years in the United States.

This was a caricature but one based on reality, as a letter from James to his elder sons in August 1861 indicates. Offering his sons 100,000 francs apiece of new Piedmontese bonds, he explicitly ordered that Salomon should have "nothing to do with realising them and should give the matter no thought at all, as I wish to avoid at any price giving him an opportunity to speak with brokers or coming once again into contact with the open market... I do not want to allow ideas of speculation to enter his head again." He was never admitted into the partnership as an associé.

Eight - Jewish Questions#

Throughout their history, the Rothschilds were involved to varying extents in the wider Jewish community. Earlier, the five original brothers dealt with some persecution in Damascus, and later the London family fought for more political rights for Jews. But, throughout the time many smaller things were done and many influences were attempted to make the lives of persecuted co-religionists better. This chapter deals with some of those issues, from the schools and hospitals created by the ladies of the House; to the political influence exerted in trying to help Jews in Eastern Europe and Russia; to the lack of hard support for Zionism, due to their assimilationist attitude.#

Nine - "On the Side of Imperialism" (1874-1885)#

This chapter focuses mainly on the interaction between the London and Paris houses over the growing English control of Egypt and how the Rothschild had been important players in this matter, as financiers and political figures (as more had since become MPs in London.)#

Ten - Party Politics#

Natty, son of Lionel, son of Nathaniel, the eldest son of the London family, had followed his father's footsteps to become an MP and eventually also became an English peer. Initially, they were associated with the Liberals who backed the Jewish emancipation, but this chapter describes how Natty and the others became more and more associated with the Conservatives and the strong defense, imperialist wing of that party.#

The chapter also discusses the French family a bit and contains an interesting quote from Alphonse (James' eldest son) on laissez-faire:#

I have never understood what is meant by "haute banque." What does it mean the "haute banque"? There are richer men and poorer men and that's all there is to it! Some are richer today and will be poorer tomorrow... Everyone is subject to such variations--everyone without exception! And no one can boast of being able to escape them. As for these agglomerations of capital, it is money which circulates ... [and] bears fruit. It's the wealth of nations! If you frighten it away, or threaten it, it will disappear. And, on that day, all will be lost. That will be the end of the prosperity of the country. Capital is labor! Apart from some unfortunate exceptions ... each man ... has that share of the available capital that his intelligence, energy, and industry merit. [p. 338]

Ferguson notes that this is particular evidence of the Rothschilds' extreme "social and political isolation [...] as the new century approached." Keep this quote in mind when I later quote the 3rd Lord Rothschild.

Eleven - The Risks and Returns of Empire (1885-1902)#

Among this discussion of the extent of colonial finance the Rothschilds were involved in is an explanation of their association with de Beers. Often when people would like to sully the name of the Rothschilds, they exploit this connection, so the less glamorous story is good for breaking the myth of Rothschild support for the atrocities of Cecil Rhodes.#

A side note for those not in the know. Cecil Rhodes was the governor of South Africa and the initial director of de Beers, although never a majority shareholder. He later founded Rhodesia, after admiring King Leopold II's project in the Congo. In his will, whose executors were Lord Rothschild and someone else, he created the Rhodes Scholarship, which he described as "[T]ake the Jesuit's Constitution if obtainable and insert English Empire for Roman Catholic Religion."

Twelve - Finances and Alliances (1885-1906)
& Thirteen - The Military-Financial Complex (1906-1914)#

These chapter go together in their general tone. They tell the story of the slow decline of the previously held monopoly on public finance by the Rothschilds, and secondly, the way that the finance world influenced the alliances between the European nations. These and other interactions provide the story of the follow-up to World War I.#

Ferguson notes that Austria-Hungary and Germany were able to only deal with each other in their public financing, while other nations that may have culturally preferred alliance with them, were tied to their eventually allies through financial links.

III - Descendents#

Fourteen - Deluges (1915-1945)#

At this point the chapters begin to cover less as the time span and the number of Rothschilds are increased. This chapter deals primarily with what the Rothschilds were doing in World War I--some were fighting and Lord Rothschild was helping to advise the government; what they were doing in the inter-war time--dealing with the financial losses from the first war and trying to maintain financial security; and, what their experience was in World War II. The Rothschilds were very unlucky when Hitler came to power and it is amazing how much of their property was confiscated by his and other puppet governments or by Hitler personally. Furthermore, the institutions (schools, hospitals, etc) that they founded in Germany were "Aryanised" and all reference to the Rothschilds was erased. Reading this account is very upsetting, as any account of Naziism is due to be.#

At the end of the chapter, Ferguson writes:

Two members of the family died as a consequence of the Nazi policy of genocide. The aunt to whom Victor referred in his speech in the Lords in 1946 was his mother's eldest sister Aranka, who perished in Buchenwald. The other victim was Philippe's estranged wife Lili. "Why should the Germans harm me?" she had asked him in 1940. "I am from an old French Catholic family." Despite reverting to her original title, the comtesse de Chambure, she was arrested by the Gestapo in July 1944 and sent by the last transport to Ravensbrück where, her husband was later told, she was brutally murdered. It is thus the blackest of ironies that the only person named Rothschild killed by the Nazis was not a Jew and had disowned the family name. [p. 478]

Epilogue#

This final chapter is not scholarly and deals with the family after World War II. They have recovered much of their wealth and although are no longer the biggest bank, nor do they have the influence they once did, they are by no means no longer a contender. The Rothschild pyramid of companies (Ferguson has a complicated description of a large number of companies) is still controlled by the family and is one of the largest private banks.#

In the discussion of the post-war Rothschilds, there is this quote from the 3rd Lord Rothschild, who was a Labour party supporter:#

I do not believe that people should be allowed to have a lot of money unless they have earned it; being the son of a rich man is not a good enough reason ... We have come to associate Conservative rule with the following conditions: unemployment, under-nourishment, unpreparedness, unpopularity abroad, unequal ... education and opportunities, undeveloped resources and lack of opposition to Fascism ... The only time when some of these wrongs were put right was during the war when conditions and the Labour members of the Cabinet forced the State Control of basic industries and commodities on the Government .. The war showed up the stupidity of the old Tory idea that people will only work for private gain and therefore that private enterprise is more efficient than state enterprise ... The old days of unrestrained private enterprise for private profit are, I hope, gone forever ... Having a lot of money does not automatically mean one is happy ... The fact that under a Socialist Government the rich will not have so much money and advantages which they have not earned may be inconvenient to the rich; but this is unimportant, and I think that you will find that many rich people ... will not be unduly worried about this prospect. [p. 481]

(Thankfully, his son Jacob is not of the same mindset.)