A History of the Rothschild Family

EDITOR'S NOTE: An earlier version of this article cited an estimate of the combined net worth of the Rothschilds at $350 billion. That estimate came from a source that did not meet Investopedia's standards and we have consequently retracted it. An estimate that the Rothschilds controlled more than $2 trillion in assets was also inadequately sourced and retracted.

The Rothschild Family

The Rothschilds are an influential banking dynasty originating in Frankfurt. The family empire was established by Mayer Amschel Rothschild in the 18th century and grew in prominence under his fives sons: Nathan Mayer, James Mayer, Salomon Mayer, Carl Mayer and Amschel Mayer. The Rothschilds were pioneers in the development of international finance, having established branches in London, Paris, Vienna and Naples, in addition to their native Frankfurt.

From a small business engaged in trading goods and foreign exchange, the Rothschild family grew their business activities to include merchant banking, private banking, asset management, mergers and acquisitions, insurance, venture capital, pensions and investments, sovereign debt and commodities. They have also invested in major infrastructure projects such as bridges, tunnels and railways andmost notablythe Suez Canal. Other business interests include hotels, media, transportation and wine.

Key Takeaways

  • The Rothschild family grew in prominence in Europe beginning in the 18th century when Mayer Amschel Rothschild founded the family empire in Frankfurt.
  • Mayer Rothschild sent sons to establish banking operations in London, Paris, Vienna and Naples, in addition to keeping a son in Frankfurt.
  • The family profited greatly during the Napoleonic Wars by helping the British government with its finances.
  • In his will, Mayer Rothschild left strict instructions that titles and property could only be passed down through male heirs, which encouraged marriage among family members.

Mayer Amschel Rothschild: The Founder

Mayer Amschel Rothschild (1744–1812) grew up in Frankfurt's Judengasse, the narrow lane where the city's 3,000 Jewish residents were confined to live. Conditions were overcrowded and harsh. Jewish people could not leave at night, on Sundays and Christian holidays. They were barred from visiting public gardens or coffee shops, and could not walk in public in groups of more than two.

Mayer Rothschild learned business at a young age. His father, Amschel Moses Rothschild, dealt in silk cloth and exchanged currency. One of Mayer's first jobs was sorting coins acquired through Frankfurt's semi-annual trade fairs, which attracted buyers and sellers throughout the region.

His parents died of smallpox when Mayer was twelve. He lived with relatives, who sent him to Hannover to apprentice with Simon Wolf Oppenheimer, a prominent Jewish banking house. There, Mayer was exposed to foreign trade and finance, and learned about rare coins from places such as ancient Rome, Persia and the Byzantine Empire. The collectors of these coins were princes and other men of wealth. The Jewish men who transacted with them were called "court Jews," or court factors, meaning they did business with nobility. 

The Beginnings of a Banking Empire

Mayer Rothschild returned to Frankfurt in 1763 at the age of 19 and joined his brothers in the trading business started by their father. Mayer became a dealer in rare coins and won the patronage of Crown Prince Wilhelm of Hesse, who had also bought coins from Mayer's father. This was an important business relationship for Mayer, as it grew to include other financial services and helped Mayer to develop ties with other nobles. Crown Prince Wilhelm was heir to immense wealth and later assumed the title Wilhelm IX, Landgrave of Hesse-Kessel.

In 1769, Rothschild asked Wilhelm for the title of court factor, or crown agent. The honorary title signified that Mayer had performed services for royalty and allowed him to hang from his house a shield with the Hesse and Hanau coat of arms that effectively advertised this fact.

In 1770, Mayer married Gutle Schanpper, the daughter of a money changer and court factor. She gave birth to the couple's ten children. They had five sons and five daughters.

The Rothschild family history dates to the 1450s in Frankfurt.

Expanding and Controlling the Rothschild Footprint

The Rothschild banking empire grew rapidly during the French Revolution. Mayer Rothschild facilitated payments from Britain for the hiring of Hessian mercenary soldiers.

In the early 1800s, Rothschild sent his sons to live in Naples, Vienna, Paris, and London, in addition to keeping a son in Frankfurt. With Mayer Rothschild's children spread across Europe, the five linked branches became, in effect, the first bank to transcend borders. Lending to governments to finance war operations over several centuries provided the Rothschild family with ample opportunity to accumulate bonds and build additional wealth in a range of different industries.

Before he died, Mayer Rothschild left strict instructions for his heirs on how they should handle family finances. He wanted to keep the fortune within the family and, as such, his will outlined a rigid patrilineal system of succession, whereby title and property could only pass through the male line and female descendants were excluded from any direct inheritance. This had the effect of encouraging marriages among family members.

Between 1824 and 1877, there were 36 marriages of Mayer Rothschild's male descendants. Of these, 30 married within the family. Most married first or second cousins. During this time, only four Rothschild women and two men married partners to whom they were not related.

Nathan Mayer Rothschild: International Financier

Of the four Rothschild sons who ventured out, third son Nathan (1777–1836) achieved the greatest success. Nathan moved to Manchester, England, in 1798 to set up a textile business. He later moved to London to establish himself as a banker, setting up N M Rothschild in 1810.

N M Rothschild & Sons is still in operation today. In 2019, the bank reported £1.87 billion in revenue and 76 billion euros in assets under management.

Like the other Rothschild banks, N M Rothschild & Sons furnished credit to the British government during times of crisis. During the Napoleonic Wars, the bank managed and financed subsidies the government sent to allies and lent funds to pay British troops, almost single-handedly financing the war effort.

In 1824, Nathan Rothschild and Moses Montefiore cofounded the Alliance Assurance Company, which today is part of the RSA Group. In 1835, Nathan secured the rights to mercury mines in Spain, gaining a virtual world monopoly on the chemical element, which is critical to refining gold and silver. This supply proved invaluable in 1852, when N M Rothschild & Sons began refining gold and silver for the Bank of England and the Royal Mint.

Growing Philanthropic Activities 

Nathan Rothschild contributed to many areas in the Jewish community. His family later expanded these charitable efforts to other populations in Paris and London. His earliest efforts went toward synagogues in London. This led to the formation of the United Synagogue, a group that helped streamline the causes of the smaller synagogues. Later, family members supported the development of Israel and helped construct housing and government buildings.

Nathan's youngest child, Louise, and her seven daughters took responsibility for many of the 30 Rothschild charitable foundations in Frankfurt. These foundations included public libraries, orphanages, hospitals, homes for the elderly, and special funds allocated for the purpose of education.

The Jews' Free School in London received extensive financial support. Educational efforts in Austria, France, and Israel were also made possible through Rothschilds' generosity. In addition to monies put toward education, the family gave an estimated 60,000 pieces of artwork to public institutions. The Rothschild family expanded the creation of social housing in the cities of London and Paris, and the Rothschild Foundation was created to further these efforts.

The House of Rothschild in the 20th Century

Wars, politics and family rivalries diminished the family fortune over the next 100 years. The Naples branch of the bank closed in 1863, and a lack of male heirs led to the closure of the Frankfurt branch in 1901. The Vienna branch was shuttered in 1938 following the Nazi invasion of Austria and the danger posed to Jews.

The Vichy government in France expropriated Rothschild Bordeaux properties during the war, and the Nazis confiscated millions of dollars worth of art and other precious objects from the Austrian branch of the family (a portion of these were returned by the Austrian government in 1998). Over the years, palatial Rothschild estates were donated to the British and French governments and other organizations and universities.

By the 1970s, three Rothschild banks remained: the London and Paris branches and a Swiss bank founded by Edmond Adolphe de Rothschild (1926–1997). In 1982, President Francois Mitterrand's socialist government dealt the Paris bank a fatal blow, nationalizing it and renaming it Compagnie Européenne de Banque. Despite his independence, Edmond came to the aid of his cousin, Baron David René James de Rothschild (1942), who stayed in Paris and in 1987 created Rothschild & Cie Banque. By 2003, the British and French banks were united with David as chair.

In 2008, all of the holdings were reorganized under a single company, a shareholder of Paris Orléans based in France, unifying the family businesses roughly two centuries after the five sons of Mayer Rothschild spread out across Europe.

Moving Into the 21st Century

The family wealth has been divided among descendants and heirs over the years. Today, Rothschild holdings span a number of industries, including financial services, real estate, mining, energy, and charitable work. The family also owns more than a dozen wineries throughout the world.

Traditionally, the Rothschild fortune is invested in closely held corporations. Today, Rothschild corporations have continued to see success. Most family members are employed by these corporations directly or are invested in operations that generate family wealth. The remarkable success of the family has largely been due to a strong interest in cooperation, being entrepreneurs, and the practice of smart business principles.

The estate of Nathan Rothschild was intimately tied to the other fortunes of the family and became part of the collective wealth each Rothschild passed to the next generation. Rothschild descendants continue to finance global business operations and contribute to scholarly, humanitarian, cultural, and business endeavors.

The family motto is Concordia, Integritas, Industria, which means harmony, integrity and industry.

Article Sources

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