The Rothschild Secrets of Success: How to Build Capital in Crises

2024 Author: Richard Flannagan | [email protected]. Last modified: 2023-12-15 23:55

Once, the son of Nathan Rothschild asked his father how many peoples there are in the world. He replied that there are two peoples that you need to know about - the family and everyone else. This principle can be considered the main one for the dynasty, whose surname has symbolized wealth and luxury for several centuries. History has shown that these people not only know how to create capital, but also masterfully use any events in the world for their own benefit.

The history of the Rothschild dynasty began in the 18th century. Its ancestor was Amschel Moses Bauer, over whose shop in the Jewish quarter in Frankfurt a red shield with a golden Roman eagle hung as a sign. It was this sign that gave rise to the popular nickname ("Rot Schild" in German - red shield), which later became a surname. Bauer's son Mayer Amschel registered this word as a generic name, thus becoming the first Rothschild.

The boy was being prepared for a spiritual career, but he did not become a rabbi, preferring to work with finances. He continued his father's business - he became a seller of old coins and antiques. In those days, this business was not as profitable as it is today. Collecting could only be afforded to aristocrats who, moreover, had a decent income, so the young Rothschild began to look for clients among the elite. Gradually he managed to become a supplier of coins and gold to the princely house of Hesse-Kassel. The coin exchange shop turned into a bank, and by the end of the 18th century, Mayer Rothschild had already become the personal banker of Elector Wilhelm I. When his shining patron, fleeing from Napoleon, was hiding (the beginning of the 19th century became a turbulent time for Europe), Mayer Rothschild not only did not suffer from the crisis, but also managed to turn the situation to his advantage, continuing to collect funds from debtors. This is how the unique talent of this family manifested itself for the first time - the ability to turn political games into profit. Revolutions, wars and any other conflicts, surprisingly, most often brought them new income. While others were sinking, the Rothschilds grew richer. By the beginning of the 19th century, Mayer's fortune already exceeded 1 million thalers, and after his death, his total capital was twice as much as the assets of the Bank of France.

Another principle later elevated to the rule was nepotism. Only relatives were the only reliable partners for the Rothschilds for centuries, and I must say that this tactic justified itself so much that many European bankers then also adopted it. Having married at the age of 27, the founder of the dynasty managed to raise ten children - five daughters and five sons. They all became his assistants in business. The girls dealt with the paperwork, the boys first took the goods and delivered the goods, and then became the mainstay of the family business, when the father decided to expand it to the whole of Europe. The spouses of the children, by the way, also entered into a common business, but only as assistants of the second plan. The first of the Rothschilds even specifically stipulated this principle in his will. This detailed document has become a real family development plan for many years to come. In it, Mayer very clearly separated the role of his direct male descendants from all other family members, entrusting only them with the further management of the family business:

Mayer Amschel founded Mayer Amschel Rothschild & Sons on September 27, 1810. The main occupation of the bankers was government loans in an unprecedented amount until that time. The father sent five sons to the largest European capitals, and each of them became the successor of the family business in these "branches". Amschel, the eldest son, ran all the affairs of the family home in Frankfurt, Nathan founded a company in London, James in Paris, Solomon in Vienna, and Karl (Kalman) in Naples. Formally, these were independent firms, but in fact all the brothers did "one thing" so much that they were called "fingers of the same hand." The Rothschild family even had their own courier service, which made it possible at that time to exchange information as quickly as possible. By the way, it is the possession of this unique resource that has always helped bankers to react in time to world events.

There is a well-known case of how the family managed to profit at the Battle of Waterloo. Thanks to agents, Nathan Rothschild received the news of the defeat of Napoleon before anyone else. After that, he began to actively sell British shares on the stock exchange. Other players decided that Napoleon won (everyone knew that the Rothschilds were in control of the situation), and, buying into misinformation, they also began to sell English papers. When their price fell to a minimum, Nathan bought everything on the cheap, and after the news of the real outcome of the battle was published, he made a profit of 40 million pounds.

Thanks to their unique entrepreneurial spirit, the Rothschilds have become heroes of folk legends and stories over the years. Their name has become synonymous with fabulous wealth. Today this friendly family does not give up its positions, although it behaves much more modestly, avoiding demonstrative luxury and donating large sums to charity. At the end of 2010, Baron Benjamin Rothschild shared with the press the secret of his family's success during the latest global financial crisis:. The total fortune of the family was estimated in 2012 at 1.7 trillion dollars.

Read about how another rich man, whose name has also become a household name, amassed his capital in the review: John Rockefeller and Laura Spelman: Billions, austerity and 50 years of family harmony