#198 Nathan Rothschild (Rothschild Family Dynasty)

**David Senra** (0:00)
All banks have histories. Only the Rothschilds have a mythology.
Ever since the second decade of the 19th century, there has been speculation about the origins and extent of the family's wealth, about the social implications of their meteoric upward mobility, about their political influence, not only in the five countries where there were Rothschild houses, but throughout the world.
The five houses work together so closely that it's impossible to discuss the history of one without discussing the history of all five. They were the component parts of a multinational bank. Unlike modern multinationals, however, this was always a family firm.
Perhaps the most important point to grasp about the multinational partnership is that for most of the century, between 1815 and 1914, it was easily the biggest bank in the world.
In terms of their combined capital, the Rothschilds were in a league of their own. The 20th century has no equivalent. Not even the biggest of today's international banking corporations enjoys the relative supremacy enjoyed by the Rothschilds in their heyday, just as no individual today owns a large share of the world's wealth as Nathan Rothschild did as an individual.
The economic history of capitalism is therefore incomplete until some attempt has been made to explain how the Rothschilds became so phenomenally rich.
What exactly was the business the Rothschilds did?
That was an excerpt from the book that I'm gonna talk to you about today, which is The House of Rothschild, Money's Prophets from 1798 to 1848 And it was written by Niall Ferguson. And this is part two in a series I'm doing on the Rothschilds. Last, the last podcast I did was on the founder, the patriarch of the Rothschild family dynasty. That was Meyer Rothschild. He's also in this book, but I'm gonna focus mostly on what happens after he dies, when his third son, Nathan, is actually the one that takes control of the family. So let's go back to this introduction where I was just reading from, where I left off with the author saying, you're trying to make an economic history of capitalism. We have to figure out how the richest family in the world's ever seen, or what's rumored to be. We really don't actually know what exactly was the business that they did. And so in the introduction, he spends a little bit of time trying to describe this. And a lot of this is just gonna remain unknown. And so one of the things I'm gonna focus on really is like the traits and the ideas that the Rothschilds had, as opposed to trying to document where a lot of their money came from because they were extremely secretive and we don't actually know that much. So it says, to answer these questions properly, it's necessary to understand something of the 19th century public finance. For it was by lending to governments or by speculating in existing government bonds that the Rothschilds made a very large part of their colossal fortune. And so then he goes to describe, Niall Ferguson goes on to describe, like what is the problem that governments are having at this point that the Rothschilds are presenting their services as a solution to? And he says, all 19th century states occasionally ran budget deficits, meaning their tax revenues were usually insufficient to meet their expenditures. It was war and the preparation for war which generally precipitated the biggest increases in expenditures.
So the easiest way to distill this down is governments needed money to kill other humans and there was no sophisticated financial markets for which they can borrow easily. He says, the deficits were not easily financed, national capital markets were not very developed, borrowing was very expensive. And so you read that and you're like, okay, they're gonna try to help the finance needs of governments in Europe throughout the time. Well, where are they getting this money from? And so I talked a little bit about this last in the last book, but Meyer Rothschild winds up managing later on in his life. And this takes several years for him to do and he does it in like small steps. But he wanted to managing one of the largest fortunes in Europe at the time. It's this small German state called Hess Castle. And it says it was effectively run by its ruler at a profit through the hiring out of his subjects as mercenaries to other states, including he sold. So he sells essentially peasants, like the people that he's in charge of, forcibly to fight in other wars, including the American Revolution. And because the need for soldiers was so high, the demand was so high, and the supply was so low, he made a ton of money.