The Rothschild Family presents a unique, well documented study of an evolution of banking systems and strategies from 1774 to the present day. What started as a small addon to an antiques business became a global banking dynasty. This phenomenon has an additional area of interest in that it was a Jewish business that enabled the family to transcend social and political limitations to hold political and financial control over sovereign governments. The intriguing chapter in this history was the family’s involvement in Palestine that ultimately led to the invention that was Israel.
Mayer Amschel Rothschild was the first Rothschild to engage in business that can properly be called banking. Mayer Amschel was an antiques dealer living in a small house in the Frankfurt Judengasse. In 1774, Mayer undertook small banking operations on the side of his merchanting. The business consisted mostly of extending credit to some of his clients. This small-scale operation was very successful and eventually became his main business. At the beginning of the 1790’s, Mayer Amschel Rothschild was no more than a prosperous antique-dealer. By 1797 he was one of the richest Jews in Frankfurt. The official figures for Mayers taxable wealth doubled to 4,000 Gulden by 1795. A year later in 1796, that figure was 60,000 Gulden. Mayer was listed as the tenth richest man in the Judengasse. Banking seemed like all the family needed. Yet, Mayer Amschel refused to ignore the new opportunities brought by the British industrial revolution. Before 1800, he sent his third son to build a manufacturing and communications network.
The Rothschilds superior communication network is the reason that Nathan was able to buy British consols (war bonds) in large quantities 24 hours before their value rose from word of the British victory at Waterloo. This investment is what made the Rothschild family great wealth. Upon the outbreak of the war, the family bought up all the gold they could to supply both sides of the war and profit from the interest. This strategy was based on the prediction that the Anglo-French war would be lengthy. After receiving word of the British victory a day before official word reached England, Nathan made “great purchases” of British consols on 20 July 1815. He purchased twice thereafter in October 1815 and October 1816. This action was likely a gamble to counter losses from the gold purchases. Nathan sold in November 1817 and profited what is worth today over £600 million. A partner at Barings, one of the Rothschilds great rivals wrote, “I must candidly confess that I have not the nerve for his [Nathans] operations. They are generally well-planned, with great cleverness and adroitness in execution – but he is in money what Bonaparte was in war.”
Reputation helped to spark the Rothschild international banking business. Immediately after Nathan sold his consols, he became considered by many as the “Bonaparte of finance”. The Austrian Chancellor Prince Metternich’s secretary referred to him in letters as the ‘Finanzbonaparten’. German poet Heinrich Heine declared, “Money is the god of our time, and Rothschild is his prophet.” Some even went on to explain Rothschild market domination in mystical terms, using Judaism. In reality, it was the Rothschild communication and information network that allowed them to seemingly predict the future. The Rothschild houses quickly gained influence over the entire European and British financial system as governments sought the family’s insight.
With Nathan’s guidance, the Rothschilds became integrated into the economic, financial and social framework of 19th century Europe. The core banking area became government secured financing. Figures show that between 1818 and 1832, 38 percent of all loans contracted to foreign governments were through Nathan Rothschild. In Paris, James de Rothschild held a monopoly over French Government finances. By 1830, they monopolised the bond issuances of the Belgian government. Through its banking wealth the financial house had become a major power in European politics. “Austria, England, France, Prussia, Russia, Baring and Rothschild” were labelled as the political powers of the time. This is illustrated in the 1865 loan correspondence between the Rothschilds and the Austrian government. The Rothschild ensured that the agreement terms were stipulated by them. The financial house had attained this level of power not long after Nathans great fortune.
Rothschilds formed the first international bond market. The Prussian loan of 1818 saw Rothschild across Europe organising loans with nations of The Holy Alliance, Austria, Prussia and Russia as well as smaller states in Italy and Germany. These nations had emerged from the Anglo-French war with dire finances. The loans to Prussia were issued in Sterling, not Thaler. The interest was to be paid in London. The effects of this process were a globalisation of financial markets. It became possible to trade any Rothschild issues bond at any Rothschild house in Europe. Investors in parts of Europe could purchase bonds of other countries, including Britain. The Times declared Nathan “the first introducer of foreign loans into Britain.” Heinrich Bender, in his book On the Traffic in State Bonds (1825) stated that one of the Rothschilds principal contributions to modern economic development was the international bond market; “Any owner of government bonds… can collect the interest at his convenience in several different places without any effort.” From the London house, the Rothschilds sold French, Prussian, Russian, Austrian, Neapolitan, and Brazilian bonds. Any and all Rothschild issued bonds were denominated in Sterling not their own currency. The Rothschild system of bonds was unique. It was the only means of international bond investment at the time. As a result, the family held a basic monopoly on government bond issuances outside of the bond’s country of origin. The newly international financial system in Europe opened new opportunities for investors and bankers.
The sudden influx of foreign capital propelled the banking community of Britain to an ‘Aristocratic’ lifestyle and status. Merchant bankers and bankers were almost totally integrated into aristocratic circles before WWI. This is evident in marriages occurring between aristocratic land-owing families and banking families. Social life shows that the two ‘classes’ spent time together. This also occurred on a smaller scale in Europe. Rothschilds engaged frequently with European aristocracy. At a ball held by James in Paris, according to Heine, the guests were ‘a strictly selected set of aristocratic illustrations, able to make an impression by reason of great name or high rank or beauty and finery.’ London Rothschilds also made use of their new properties, becoming more hospitable to the upper classes of Britain. In July 1838, Lionel Rothschild hosted a ball to which over 500 people were invited. Among the guest list were the dukes of Cambridge, Sussex, Somerset and Wellington. In Frankfurt, Rothschilds dinner guests included the King of Wurttemburg, Prince Lowenstein and Prince Wittgenstein. It is likely that the numerous parties and balls were a means to useful news and lucrative business. Nathan was clearly hosting only for the latter; “Here we have stinking balls night after night, you have no idea how sweaty the old French ladies smell after a long waltz.” Nathan complained in 1843. The family was able to overcome the harsh boundaries of class status present in the 19th century Europe as non-aristocratic and Jewish. Rothschilds were considered by many middle class and royalty to be of equal or higher status than themselves. It appeared that they shared the same opinion of themselves. In multiple letters, various Rothschilds referred to themselves in such was as “our royal family.” The family wealth changed the family to become ‘entitled’, in the same way royalty and aristocracy were.
The Rothschilds actively cultivated relationships with individual politicians. The government finance system of the time enabled such figures to have enormous impact. There was a clear understanding of the link between government, political decision making and its effects on financial markets. Government budgets and their finances were of importance to the family as it was a significant portion of their business. Nathan himself said in 1817; “My Business… consists entirely in government transactions and bank operations.” The relationship was symbiotic with politicians and their governments seeking out the Rothschild for; financial advice, loans and even political and financial information. It was substantial that a Jew could have such an impact on politics of nations and states where they may not have any rights at all due to their faith.
The issue was that in many countries, the Jews were treated almost as if they were foreigners and had certain restrictions placed on them by government edict. Local monarchs and small kingdoms of Germany largely treated Jews as second class citizens. This limited integration of Jews into the social fabric of several European societies. With the vast accumulation of wealth by the Rothschilds this system of separation was placed under threat. In this period, social connection was an integral of finance and political life. This limited the effectiveness of interaction which meant a solidification of financial dealings within the Jewish community itself.
The banking system, transformed by the Rothschilds, had a strong socio-religious component which meant that the system was insular and closed. Members were essentially Jews (often Rothschilds) who had the preeminent position in banks. This accumulation of wealth through banking saw an increase in pride and a strident reaction to anti-Semitism, which contributed to the popularisation of Zionism from the very late 19th century. Today, the Rothschild banking network is more exclusive than ever through means of central banking.
Central banking was invented by the Rothschild family and serves as the family’s entrance into politics abroad. The first central bank in the United States was the First Bank of the United States. It was chartered for 20 years beginning in 1791. Upon the charter running out, the US congress voted against its renewal. Nathan Mayer Rothschild was angered, stating; “Either the application for renewal of the charter is granted, or the United States will find itself involved in a most disastrous war.” Nathan issued after another, more intense threat; “Teach those impudent Americans a lesson. Bring them back to colonial status.” The following year in 1812, the British declare war on the United States. Now, people began to truly question Rothschild influence over European leaders and realised the importance of banks to a nation’s politics. Following the War of 1812, the Second Bank of the United States was opened, replacing the first and regaining control of the American money supply. The first example of a major public dissent to the bank is Andrew Jacksons presidency. His campaign slogan was “Jackson And No Bank!”. In 1833, President Andrew Jackson began removing deposits from the Rothschild bank and depositing them into banks directed by democratic bankers. The Second Bank of the United States contracted the money supply in response, at which point President Jackson makes his famous statement to the bank; “You are a den of thieves vipers, and I intend to route you out, and by the eternal god, I will route you out.” Gutle Schnaper, Mayer Amschel Rothschilds wife stated before her death in 1849, “If my sons did not want wars, there would be none.” The Rothschild family still have connections to the Federal Reserve of the United States.
The Federal Reserve system was drafted at a secret meeting that was attended by a Rothschild representative. The meeting was held in November 1910 at the Private resort of J.P Morgan. Senior partners of the J.P Morgan company were present, as well as Rockefeller representatives and Abraham Piatt Andrew, the Assistant secretary of the United State treasury. The Rothschild representative was Paul M. Warburg, an investment banker and author of 6 books and essay volumes about the Federal Reserve system and the role of central banks. The secrecy of the meeting was due to the American populations mistrust in the banks at the time, and the fact that the cartel agreement that would be formed between the banking factions would monopolise American banking. According to G. Edward Griffin, the objectives of the cartel agreement were to; “stop the growing competition form the nations newer banks; obtain a franchise to create money out of nothing for the purpose of lending: get control of the reserves of all banks so that more reckless ones would not be exposed to currency drains and bank runs: get the taxpayer to pick up the cartels inevitable losses; and convince congress that the purpose was to protect the public.” The plan aimed to place control of the monetary supply (inflation) and interest rates into the hands of a few banking families and companies, the Rothschilds one of them.
Writing the Federal Reserve Act into legislation transformed the future of the economy and financial structure of the world. It was written into legislation and handed to Senator Nelson Aldrich to push through congress. On 23rd December 1913, Woodrow Wilson wrote the Federal Reserve Act into law. Since then, the United States has experienced a more unstable economy. The Federal Reserve has presided over the crashes of 1920 and 1929; the Great Depression from 1929 to 1939; recessions in 1953, ’57. ’69, ’75, and ’81; a stock market “Black Monday” in 1987, and a 1000 per cent inflation rate which has destroyed 90 per cent of the American Dollars purchasing power. Years after writing the act into law, Woodrow Wilson wrote in regret;
“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilised world, no longer ruled by a Government of free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men.”
Senator Louis McFadden stated that “The Fed has usurped the Government.” Knowing the importance of the Federal Reserve to the United States economy and political system, and therefore the world economy and global politics, any possible Rothschild connections to the Federal Reserve should be taken into account for understanding the extent of the family’s influence. Much like the grey area of the alleged Federal Reserve connections, Rothschild influence over Israel today can be examined by past establishment.
The Rothschild family were the main driving force in establishing the nation of Israel. The Jewish-Zionist state germinated in the Palestinian settlement overseen and financed by Baron Edmond de Rothschild. The Jewish settlements began in 1883 and by 1889, seven settlements were under the Barons control. The settlements survived only with monthly subsidies financed by Edmond. The Baron, a maverick politician, negotiated with outside entities, particularly the rapidly declining Ottoman Empire, most noticeably with Sultan Abdul-Hamid II. Theodor Herzl, the nominal leader of the Zionist movement also met with the Sultan. Ultimately it was the Balfour Declaration driven by Britain’s desire to divide up the oil-rich lands of the Middle East that established a quasi-legitimacy of the Rothschild sponsored Jewish homeland in Palestine.
The history of the Rothschild banking dynasty provides a unique insight into how modern banking evolved from humble beginnings. This was highlighted by a movement from penny and dime, family banking into large-scale government banking, particularly in relation to the globalised issuing of bonds. The adjacent social phenomena were the strong Jewish heritage which also saw the maverick Baron Edmond de Rothschild lay the foundation for what was to become the Jewish-Zionist state of Israel.
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