The Rise of the Rothschilds

Sometimes a post is clearly for the blogger’s own site, sometimes it’s clearly an OoL affair. Sometimes it needs to go on both as a reference archive.

This is a long piece, no doubt garnering few comments, if any but that’s no reason not to put it up – better to have a reference bloggers can use than hidden away in the minutes of some select committee.

Ken Craggs is mainly a tweeter and has been onto Common Purpose from the start, as well as other nefarious baddies. He’s one of those ferreters-out who’ll only ferret more deeply if subject to dissuasion.

Today’s is about the Rothschilds. If, say, you’re doing a post on that, here be information you might like to use. Just credit Ken please.

I’ve recently published the following online. Names to look out for in the following post are Abraham Mocatta, Moses Montefiore, Robert Morris, Alexander Hamilton, Sir William Johnstone Pulteney, Robert Herries, and Sir John Charles Herries.

The latter was a British government official who worked with Nathan Mayer Rothschild to supply gold to Wellington’s armies on the continent. Herries went on to become Chancellor of the Exchequer and Master of the Mint.

The post covers the beginnings of the rise of the Rothschild’s and straddles several continents. As you will see in later posts, the Rothschilds and their associates go from country to country, founding banks and stock exchanges.

Rothschilds, Royals, and Rogues. (Part One)

The Rothschild family claim to be a branch of the older Hahn family of Germany. The surname Hahn can be traced back to the founder of the Mecklenburg line, Eckhard Hahn, who is mentioned in chronicles as early as 1230 A.D.  In circa 1622, Katherine Hahn of Hinrichshagen (c1596-1632) married Ulrich Oldenburg, Prince of Denmark (1578-1624). The sister of Ulrich Oldenburg, Anne Oldenburg, married James VI and I of Great Britain. Mayer Amschel Rothschild was Court banker to William I, Elector of Hesse. (see pages 27; 28; 31; 42). William I, Elector of Hesse married Wilhelmina Caroline Oldenburg. The House of Oldenburg includes many European Royal families such as the House of Windsor.

A link to an infobank can be found here on the website of the Juedisch museum based at Rothschild Palais, Frankfurt am Main, Hesse, Germany. The links to the Juedisch museum, and infobank, can also be accessed at the Rothschild archive.

Issac Hahn  (1520-1585) from the Roter Hahn built the Rotes Schild c1563.  Information from the Rothschild archive states that “The Rothschild name can be traced back to a sixteenth-century ancestor of Mayer Amschel Rothschild, Isaak Elchanan who took the name Rothschild from a small house he occupied at the southern end of the Judengasse called zum Roten Schild (“House at the Red Shield”). When his grandson, Naftali Hirz left the “House at the Red Shield” in 1664 and moved to the Hinterpfann (a tenement in the back of a house at the northern end of the Judengasse), he took the name Rothschild with him. Naftali Herz’s son, grandson and great-grandson continued to use the name “Rothschild.”

In his book ‘The House of Rothschild:Money Prophets’, historian Niall Ferguson tells us “We know that Isak, son of Elchanan, built a house in the 1560s known as “zum roten Schild”. The Elchanan mentioned is Elchanan Roten Schild Hahn. The male ancestral line from ‘Elchanan Roten Schild Hahn’ through to ‘Mayer Amschel Rothschild’ looks like this: Elchanan Roten Schild Hahn > Isaak Elchanan > Moses Elchanan > Naphtali Herz > Kalmon Herz > Moses Rothschild > Amschel Moses Rothschild > Mayer Amschel Rothschild.

Most people living in the Judengasse were identified by the name of the house, usually quite colourful, in which they resided. This residential surname sometimes changed from one generation to the next, or even within a lifetime, as families moved into new quarters. Hence the reason that some members of the Rothschild family were also known by the surname ‘Bauer‘. The surnames of other families from the Judengasse include BacharachBonnCohenGoldschmidtHaasOppenheim(er)SchiffStern, and Wertheimer.

Over in Britain, the Royal Exchange had been founded by Thomas Gresham as a stock exchange. It was opened by Elizabeth I in 1571. The impetus for the founding of the Bank of England was the Glorious Revolution of 1689. Prior to this political event, the crown had supremacy over fiscal policy; following it, the Crown lost most of its fiscal independence, and public finances were placed under the control of parliament. In 1691, William Paterson was the chief proponent of the plan to establish the Bank of England which came into being in1694. The Bank of England was established as a private company or ‘corporation’ which parliament could dissolve upon one years notice after the Bank’s initial charter of 11-years had passed. At the end of the 11-year charter, parliament could exercise an ‘’option’’ to repay its loan and dissolve the charter or not repay the loan and renew the charter.

In 1694 an initial loan of £1,200,000 at eight percent interest was proposed to the British government. In return the individuals providing the loan would be incorporated as the‘Governor and Company of the Bank of England‘. This loan formed a model for subsequent loans which established the New East India Company in 1698 and the South Sea Company in 1711. The principle behind such loans was the ‘’incorporation of the public debt’’. Borrowing from corporations created permanent debts, meaning that subscribers would receive interest in perpetuity, but no repayment of capital. The Bank of Scotland was founded in 1695 with a charter for 21 years. After the charter expired, a new bank was founded by Royal charter, the Royal Bank of Scotland.

The first three charters of the Bank of England (1694, 1697, and 1708) established the initial contract: the government would use its authority to restrict competition in the banking and government debt markets to the advantage of the Bank in exchange for loans and other financial support from the Bank. In 1720s Abraham Mocatta was appointed by the Bank of England as their primary broker for buying foreign gold. In 1767 the Mocatta business changed its name to Mocatta & Keyser, and in 1779 the business name was changed to Mocatta & Goldsmid (now known as Scotia-Mocatta).

Brazil had been the major gold producer since 1700. Most of the gold came to london, where the Bank of England built the first real official gold reserves. Silver from Mexico also poured in, but was swiftly shipped by the East India Company to India which offered a higher price. The silver was marshalled through contracts with the East India Company broker Mocatta & Goldsmid which was also the exclusive broker in gold to the Bank of England. The Bank of England bullion office looked after the Bank’s gold reserve and was also the crossroad of gold and silver entering and leaving the Britain.

Herz Moses Bauer, also known as Amschel Moses Rothschild, was a German Jewish moneychanger and trader in silk cloth in the Frankfurt Judengasse. Amschel Moses Rothschild had eight children, only five of whom survived into adulthood. His son Mayer Amschel Rothschild is considered by the Rothschild family to be the founder of the Rothschild banking dynasty. Herz Moses Bauer died in 1755 and his wife died the following year. In 1756, at the age of twelve, Mayer Amschel was sent to Hanover to learn the rudiments of business in the firm of Wolf Jakob Oppenheim. This brought him into direct contact with the privileged world of the royal court agents. In 1763 Mayer Amschel returned to Frankfurt as he was obliged by residence laws to do at the end of his apprenticeship, and established his banking business.

In 1769, the earliest title acquired by the Rothschild family – Court Agent (Hoffaktor) of Hesse, was granted to Mayer Amschel Rothschild. (p.28). And in August 1770, at the age of twenty-six, “[Mayer Amschel] married Gutle , the sixteen-year-old daughter of Wolf Salomon Schnapper, court agent to the Prince of Saxe-Meiningen…It was to prove the first of a succession of carefully calculated Rothschild marriages.”

Mayer and Gutle had five sons and five daughters. The eldest was their daughter Schönge, born in 1771, and the youngest was their son James, born in 1792. The Rothschild archiveinforms us that, “in 1784, together with his wife Gutle and their first five children, [Mayer Amschel] was able to buy a larger house in the Judengasse. The property was known as the ‘House of the Green Shield’…It was in this house that Mayer and Gutle’s ten children grew up, their five sons to become the future bankers to European monarchs and governments.” At this time, Frederick II ruled Hesse and was married to Princess Mary of Great Britain. Frederick would be succeeded by his son William I, Elector of Hesse.

By the mid 1700’s, the debt of the British government was £140 million. Britain had fought several wars in Europe since the creation of the privately owned Bank of England. To finance those wars, the British Parliament, rather than issuing its own debt-free currency, had borrowed heavily from the Bank of England. In an effort to help pay back the debt, the British began to increase taxes on the American colonies. At this time there were not enough gold and silver coins in the colonies to support desired commerce because the British government had forbidden the establishment of a colonial mint. As a result, most of the coinage in the Unted States originated from Spain’s colonial empire in the Western Hemisphere. The early colonists, therefore, began to issue their own paper money known as Colonial Scrip, which was not backed by gold or silver and charged low rates of interest.

Realising that Colonial Scrip was cutting into their profits, the Bank of England demanded an end to the practice and lobbied the British government to pass the Currency Act of1764 which prohibited the American colonies from issuing paper currency as legal tender. The following year, 1765, the Britain government passed the Stamp Act which obligedAmerican colonies to pay a tax on legal documents. The tax was payable in gold and silver only and not in paper money. The significance of the Stamp act was that for the first time a tax was installed not to regulate commerce and trade, but to directly squeeze money out of colonists. Moreover the tax was introduced by a direct order from England without approval of the colonial legislature.

George Johnstone was a British MP who opposed American independence. He was also the first Governor of West Florida, a director of the East India Company, and the brother of Sir William Johnstone Pulteney MP. Here are the transcrpts of two letter from George Johnstone regarding allegations of misconduct against him, and the burden that the Stamp Act had placed on the infant colony. George Johnstone was accused of attempting to corrupt and bribe members of Congress and resigned from the Carlisle Commission as a result of the accusations.

“In 1774 [the] first American customer of [Barings Bank] was the leading Philadelphia merchant, Willing, Morris & Co.; its influential partners included Robert Morris, a future financial architect of American independence from Britain, and Thomas Willing, a future president of the Bank of the United States.” Robert Morris was born in Liverpool, England. At the age of 13, he emigrated to Maryland, U.S. to join his father, an agent for Foster, Cunliffe and Sons of Liverpool, for whom he purchased and shipped baled leaf tobacco to England. As a youth,Robert Morris obtained employment with the shipping firm of Charles and Thomas Willing.

The origins of the American War of Independence (1775-1783) are outlined here in “The Necessity for Self-Defence”, a declaration by the representatives of the United Colonies of North America setting forth the causes and necessity of their taking up arms. Frederick II of Hesse-Kassel and other German princes hired out some of their regular army units to Great Britain for use to fight against the North American rebels. About 30,000 of these men served in America. They were called Hessians, because the largest group (12,992 of the total 30,067 men) came from Hesse-Kassel.

Some well known names emerged from the American War of Independence: George WashingtonJohn AdamsThomas JeffersonJames Madison, and James Monroe to name just a few. The loss of the thirteen colonies brought to an end what is referred to as the ‘First British Empire‘. The United States of America, a name the new country had adopted under the Articles of Confederation, was beset with problems. The new nation’s leaders had their work cut out re-establishing commerce and industry, repaying war debt, restoring the value of the currency, and lowering inflation. One prominent architect of the fledgling country — Alexander Hamilton, the first Secretary of the U.S. Treasury —had ideas about how to solve some of those problems. England’s use of public debt interested Hamilton. This type of funding, he believed, had helped to build England’s military might and pay for its wars, and accounted, at least in part, for England’s prosperity. Hamilton reasoned that an economic structure that incorporated public debt could deliver much-needed capital to speed growth of the U.S. financial system. Hamilton used the charter of the Bank of England as the basis for his proposed Bank of the United states. (p.1-2). Thomas Jefferson felt that a Bank of the United States was unconstitutional and would create a financial monopoly that would undermine state chartered banks.

The Articles of Confederation gave Congress the authority to make war and conduct foreign affairs. However, under the articles, Congress could not impose taxes or enforce laws. (p.13). The articles gave Congress no power to incorporate, but Congress, in the stress of war and problems of financing war, incorporated the Bank of North America in early 1781, promoted primarily by Robert Morris and Alexander Hamilton. Robert Morris was Superintendent of Finance and the United States second most powerful figure. Robert Morris was also one of the “nations richest men” and “saw nothing wrong with using privileged government information to shape his personal investment strategy.” In 1784 Alexander Hamilton foundedthe Bank of New York.

Early in 1785 the French Farmers General entered into a sole source supply contract with Robert Morris. All American tobacco had to go to France through Morris. A letter from James Currie to Thomas Jefferson tells us that “Sir R. Herries’s contract with the Farmers General of France made its appearance in Our publick papers t’other day with what degree of policy, delicacy or Prudence I leave you to judge.” The letter goes on to tell us that “the publication…[about the contract with Sir Robert Herries] was extracted.” Sir Robert Herries, nonetheless, became the sole supplier of tobacco to the French Farmers General. (pp27 & 28). Sir Robert Herries had received his knighthood in 1774. (p45). The Rothschild family would also become involved in tobacco trading. (p16-21).

There is no explicit power to incorporate banks or any enterprises in the 1787 Constitution of the United States of America. The act that set up the ‘First Bank of the United States‘ in 1791 was unconstitutional. On page 82 of this document it is stated that “[d]uring the Federal Convention in which the Constitution was drafted, a power to incorporate to be vested in the Legislature was considered in two separate clauses. One read “To grant charters of incorporation in cases where the public good may require them, and the authority of a single State may be incompetent.” The other read “To grant charters of incorporation.” Neither of these made it into the final draft of the Constitution. This is further evidence that the framers [of the constitution] intended that the federal government have no power to grant incorporations.”

The first Bank of the United States opened its subscription books and sold all stock within two hours. Among the purchasers were Colonel William S. Smith, son-in-law and Secretary of John Adams, backed by the Pulteney interests. “In the course of business, the First Bank would accumulate the notes of the state banks and hold them in its vault. When it wanted to slow the growth of money and credit, it would present the notes for collection in gold or silver, thereby reducing the state charteresd banks’ reserves and putting the brakes on state banks’ ability to circulate new banknotes and make more loans.” (p17).

Colonel William S. Smith brokered a deal in 1792 with Sir William Johnstone PulteneyWilliam Hornby (former Governor of Bombay), and Patrick Colquhoun, to purchase a one-million-acre tract of New York land from Robert MorrisCharles Williamson was the American agent who acted on behalf of the Pulteney Associates due to it being illegal for non-US citizens to buy land in the United States. The land had originally belonged to the native North American Indians. Morris was looking to sell another 4.1 million acres of land that rightfully belonged to native North American Indians. “Perhaps,” [Thomas] Jefferson added, “a sale may be made in Europe to purchasers ignorant of the Indian right.” Begining in 1792, Morris also sold the rights to about 3.6 million acres of Iriqouis Indian land to six Dutch banking firms that would later become part of the Holland Land Company.

The U.S. financial system suffered its first crash in March 1792. In a matter of weeks, U.S. government securities comprising the national debt lost a quarter of their value. Shares of the Bank of the United States fell 30 percent. Bank of New York shares, declined just under 20 percent. Defaults and bankruptcies were numerous. The crash was precipitated by the expansion of credit by the Bank of the United States as well as by rampant speculation on the part of William DuerAlexander Macomb and other prominent bankers. Duer, Macomb and their associates attempted to drive up prices of US debt securities and bank stocks, but when they defaulted on loans, prices fell causing a bank run.

It became apparent that the U.S. financial marketplace needed a central location so that dealings could be better controlled and better records kept. In May 1792, brokers and dealers entered the Buttonwood Agreement. Meeting under a buttonwood tree, today the location of 68 Wall Street, the traders agreed to establish a formal exchange for the buying and selling of shares and loans. The Bank of North America along with the First Bank of The United States and the Bank of New York obtained the first shares in the New York Stock Exchange.

British banker and tobacco trader Sir Robert Herries was the brother of William Herries. The latter was the brother-in-law of Fulwar Skipwith who was U.S. consul to the Islands of Martinique, Cayenne, Saint Lucia, and Tobago from 1790-1794. Fulwar Skipwith then became secretary to American Minister James Monroe in Paris who elevated Skipwith to the office of Consul-General. (p44).

Thomas Willing was the first President of the Bank of North America (p.5) which was the first private commercial bank in the U.S. Thomas Willing went on to also become the first President of the first Bank of the United States. (pp13 & 465; also see pp 463-471 for accusations of corruption against Thomas Willing and others at the first Bank of the United States). The daughter of Thomas Willing, Anne Wiiling, married William Bingham who was a Director at the first Bank of the United States and a Senator of the United States. The daughter of William Bingham, Anne Louise Bingham, married Alexander Baring (of the Baring banking family) in 1798. Alexander Baring (p1pp113-123) was elected to the Bank of England Court of Directors. William Bingham’s other daughter, Maria Bingham, married Henry Baring.

On the website of the Federal Reserve Bank of St. Louis can be found a document entitled ‘Documentary History of the Bank of the United States including the original Bank of North America’. The document informs us that the first Bank of the United States opened for business in Philadelphia on December 12, 1791, with a 20-year charter. The Federal government had a twenty percent stake in the first Bank of the United States, that is, $2,000,000 equal to 5,000 shares. The Federal government sold 2,780 of its shares in 1796-97, and the remaining 2,220 shares were sold in 1802 to Mr. Baring. (pp.152; 425; 461; 465). The document states that the 1802 sale of shares “was sanctioned by a vote of the House of Representatives, although it was to a foreigner, an Englishman, Mr. Baring”.

By the mid 1790’s when the first U.S. government shares were sold, Barings bank had greatly expanded its resources, both through the efforts of Francis Baring based in London and by association with leading Amsterdam bankers Hope & Co. of which Alexander Baring was a partner. Information in the U.S. government archives regarding “Baring and Company of London and Hope and Company of Amsterdam” states that “Alexander Baring of Baring and Company was given powers of attorney by both companies for entering into negotiations with France and the United States” that resulted in the Louisiana purchaseFulwar Skipwith in Paris was instumental in securing the Purchase. France had controlled this vast area from 1699 until 1762, the year it gave the territory to its ally Spain. Under Napoleon Bonaparte, France took back the territory in 1800 and it was sold to the U.S. in 1803. “The proceeds were paid to France so that the French emperor, Napoleon Bonaparte, had more money to wage his wars in Europe.” (p.46).

Getting back to the Rothschild’s, the most successful branch was that established by Nathan, who in 1798, had left Frankfurt and entered the London firm of L.B. Cohen and Levy Salomons for a few months before he settled in Manchester in 1799 to set up as a textile and general merchant. The Rothschild archive tells us that “Britain had been at war with Revolutionary France for about five years, and in the very year of 1798 Napoleon threatened to cross the channel.” During the Napoleonic wars, the region of Hesse was divided into Hessen-Kassel and Hessen-Darmstadt. Under Napoleon’s patronage Hessen-Darmstadt was elevated to a Grand Duchy. However, Hessen-Kassel. ruled by Elector William I, was dissolved and incorporated into the Kingdom of Westphalia ruled by Jerome Bonaparte.

In the City of London the London Stock Exchange, which was founded almost four decades earlier, supposedly became regulated in 1801. Nathan left Manchester in 1804 and returned to London (p.111), while his clerk, Joseph Barber, stayed on in Manchester running the firm Rothschild Brothers. The table on page 29 of this document from the Rothschild archive shows Nathan as having founded a Merchant bank in London by 1805. N.M. Rothschild & Sons. By late 1805 Nathan had extended his business considerably in close co-operation with the Dutch members of the Warburg family, Fermin de Tastet of London, and Levi Barent Cohen his future father-in-law who was a leading international diamond trader. L.B. Cohen consigned his diamonds to Hope & Co for sale through their vast network of clients in Europe and Russia. Nathan married Hannah Cohen in 1806. Hannah’s sister Judith Cohen married MosesMontefiore son of Rachel de Mattos Mocatta.

Fleeing Napoleon in 1806, Elector William I “entrusted part of his fortune to Mayer Amschel Rothschild. Mayer turned to his son, Nathan, in London.” Nathan “invested £550,000 of the Elector’s funds in British government securities and bullion. These investments proved extremely lucrative and, by the time the Elector returned from exile, had accrued considerable interest.” The Rothschild archive mentions “twin paintings showing the Elector of Hesse entrusting his valuables to the Rothschilds and receiving them back at the end of the Napoleonic Wars.” (p.27). By 1807 the British government’s management of the public debt was spiralling out of control. The amount of money the public now owed to the Bank of England had risen to more than £550,000,000.

James Rothschild joined Nathan in London in 1809. Nathan’s brothers (partners) on the continent were aiding Napoleon, although the Rothschilds’ claim it was unwillingly. (p48). The value of Nathan’s continental agencies was recognised in 1809 by the British government. John Charles Herries at the time was Controller of army accounts. Nathan became the arbiterof the Royal exchange in 1810, and Mayer Amschel Rothschild founded the Frankfurt business Mayer Amschel Rothschild & Söhne the same year. By signed agreement, Mayer Amschel Rothschild bound his male descendants into one Rothschild firm that would renew the agreement periodically and divide the combined profits of the firm.

In 1811, John Charles Herries became British commissary-in-chief and was responsible for the regular supply of the British armies in Spain and France. It was Nathan Rothschild’soverseas bullion and specie operations (more precisely, his illegal smuggling operations) that prompted John Charles Herries to work with Nathan. Under instructions from J.C. Herries, Nathan began “supplying Spanish and Portuguese gold coin across the blockade to the allied troops fighting the Peninsular War.” (see Portuguese Government). James Rothschild had moved to Paris in 1811. Information in the Rothschild archive (p.51) mentions documents for Rothschild Frères in Paris from 1811. (p.14). The Rothschild archive (p.13) also informs us that the earliest letters between the Rothschild brothers date from 1811 and are written in Judendeutsch (essentially, German words written in Hebrew script). The additional security of private code names ensured that the letters could be forthright.

The Memoir of the public life of the Right Hon. John Charles Herries… informs us that it was at the behest of Lord Castlereagh, the Secretary of State for War and the Colonies, that J.C. Herries began collecting and supplying specie (coins made of gold or silver) to British armies on the continent. Lord Castlereagh was a friend of Lachlan Macquarie. As Secretary of State for War and the Colonies,  Lord Castlereagh  proposed the appointment of Macquarie as fifth governor of New South Wales (NSW), Australia.  Macquarie became Governor of NSWin 1810, which at that time also included New Zealand. During a tour of the Hawkesbury-Nepean region of Australia, Macquarie named the township of Castlereagh in honour of his patron. During his tenure as Governor, Macquarie founded the Mint, introduced coinage for the colony, and established Australia’s first bank, the Bank of New South Wales in Sydney, at which colonial revenues were deposited. Lord Bathurst would write to Macquarie stating that “So long as the bank is conducted on sound principles it will of course derive from the Government a due degree of support; but you will carefully avoid incurring any responsibility on account of it, or in any degree implicating the faith of the Colonial Government in its pecuniary transactions.” (pp160-165).

J.C. Herries and Nathan Rothschild would come to know each other well. The Rothschild archive (p.25) informs us that “they could reasonably be described as having been unofficial business partners.” In subsequent years, J.C. Herries would become Financial Secretary to the Treasury; Chancellor of the Exchequer; and Master of the mint.

The charter of the first Bank of the United States ended in 1811 and was not renewed.  A year later came the War of 1812 between the U.S. and Great Britain. The U.S. encountered a host of problems in financing the war. (p22). Mayer Amschel Rothschild died in 1812.  Amschel took over his father’s business at Frankfurt, while his brothers Salomon and Carl, travelled from court to court making connections and negotiating contracts. The House of Rothschild took a lead in the business of government bonds.

The wars provoked by revolutionary France and Napoleon prompted Great Britain and other powers in Europe to form coalitions to defend themselves. This took enormous amounts of money. Prussia, Russia, and Austria were supplied with substantial subsidies in materiel, cash, and credit. (pp99 – 143.). The European Association for Banking and Financial History (EABH) informs us (p.14) that the Rothschild’s “profited handsomely from debts run up by the countries engaged in [the Napoleonic] wars.”

At the end of 1813, the Rothschild brothers, in conjunction with J.C. Herries, continued to be involved in collecting, minting, and supplying coin for the use of Wellington’s army on the continent. The Rothschild archive tells us that “Nathan and his brothers were commissioned by J. C. Herries to co-ordinate the supply of coin to pay Wellington’s troops on campaign.” Samuel & Phillips in Brazil supplied Nathan with much of the gold needed for British armies on the continent. Denis Samuel “cultivated close contacts with government officials at Rio, particularly those of the Treasury, keeping open house for them and quietly providing them with a share of the profits.” (p.39). Samuel Moses Samuel was Nathan’s brother-in-law.

By 1814, Nathan was allowing [his brother-in-law] Moses Montefiore to become even more closely involved in his affairs. In addition to their direct involvement in Britain’s subsidies to her continental allies, the Rothschilds sought to profit indirectly by speculating on the fluctuations in bond prices…Nathan sent Montefiore to Paris in March 1814 to stay with his brothers James and Salomon. (p18).

Spread out across Europe, the Rothschild brothers and their associates developed a network of secret routes and fast couriers. It was this same information network that brought Nathan Rothschild in London first news of Wellington’s victory at Waterloo, news which Nathan received more than 24 hours before the British government. In his book ‘The House of Rothschild:Money Prophets, Niall Ferguson claims that the Rothschild brothers did not use the information to speculate on the stock market and make a fortune. Ferguson tells us that “Rothschilds’ couriers did alert them first to Napoleon’s defeat, but since they had bet big on a protracted military campaign, any quick gains in bonds after Waterloo were too small to offset the disruption to their business.” More information from Niall Ferguson about the Rothschilds’ can be found at the Rothschild archive. (p9-15).

Acting on Herries’ advice in 1816, Nathan invested almost all of his firm’s capital in 3% consols – a form of perpetual government bond – which enabled Nathan to make an initial profit of £250,000. (p.18). J.C. Herries was the nephew of Robert Herries, the latter was the eldest son of John Herries of Halldykes. Robert Herries had worked for Hope & Co. and was later recruited by Coutts & Co. where he was appointed head of their London-based commission and exchange business. The Coutts brothers severed all connexion with the firm in Coutts & Co in 1771, leaving Robert Herries and his partners Sir William Forbes and James Hunter Blair in control.

Robert Herries (now Sir Robert Herries since 1774) in association with some of his relations and Sir William Johnstone Pulteney, founded the London Exchange Banking Company which eventually became Herries, Farquhar & Co. in 1797. Sir Robert Herries brothers Charles and William worked at the bank. Charles was the father of J.C. Herries. Sir Walter Farquhar andSir Thomas Harvey Farquhar were partners in Herries, Farquhar & Co. (p75). Sir Robert Townsend Farquhar served as a colonial governor.

The Whitehouse website informs us that the Second Bank of the United States, founded in 1816 with a 20 year charter, was “a private corporation” in which the U.S. Government had a twenty percent stake, making the bank a “Government-sponsored monolpoly.” The Bank served customers ranging from individuals holding a few shares of stock to large business firms, held deposits of government money, issued notes, and interacted with other banks, both domestic and foreign, including merchant banks N.M. Rothschild & Sons and Baring Brothers & Co., both in London. (p4).

Count Stadion founded the Austrian Central Bank in 1816. The banks’ website tells us that “to maintain price stability, the central bank had to be independent of government“. Rothschildarchive tells us that the Rothschild brothers “first became involved with Austrian finance through the handling of English subsidy payments to her allies during and directly after the Napoleonic wars. Prince Metternich, Austrian Minister for Foreign Affairs, and Count Stadion, Austrian Minister of Finance were impressed with the recommendation of the house of Rothschild from Baron von Limburger (the German plenipotentary of the English Commissary-in-Chief, Herries)…Count von Stadion recommended the Rothschilds for an elevation to the Austrian nobility. The Rothschild family received the title ‘von‘ by Imperial Austrian decree in 1817.” James in Paris replaced the title ‘von’ with ‘de’. And Nathan chose not to use the title, preferring to be know as ‘Mr. Rothschild‘.

In 1818 Nathan arranges a £5 million loan to the Prussian government. In 1819 Nathan Mayer Rothschild (Mr. Rothschild), Alexander BaringSir John Gladstone, and others gave evidence to the Parliamentary ‘Committee of Secrecy’ on the expediency of the Bank of England resuming cash payments.

America’s first great depression was apparently in 1819. “With a monetary contraction under way, the continued retirement of fed eral debt, much of it to foreigners…the United States economy was headed for disaster…Attempts by European countries to return to a specie standard in the years after 1815 further exac erbated the monetary problems in the U.S. These efforts meant nations were all trying to build up gold and silver reserves at the same time, thus placing intense pressure on the world’s specie supply.” (p21).

Nathan was appointed Austrian Consul General in London in 1820. During that year 12 loans were issued to foreign governments in Europe and South America, making Rothschild’s the largest contractor of such loans. (p4). In 1821 Carl Mayer Rothschild opened a bank in Naples, initially to arrange a loan for the Neapolitan government. (p4). The Rothschild’s now had banks in the major financial centres of Europe. James Mayer Rothschild in 1821 was appointed Austrian Consul General in Paris. (p7). The Rothschild archive tells us that “[t]he first established links between N. M. Rothschild and the United States date back to 1821…” And that by 1821 “the Rothschilds had established a global network of Banking Houses. It was crucial to their expansion plans for the family to have a representative in each of the places where they were doing business, reporting on markets and prospects and acting on their behalf.” (p15).

The five Rothschild Brothers are made Barons in 1822. (p27). Nathan, in London, prefers to be called ‘Mr. Rothschild’. There are Twenty letters from James in St Petersburg relating to the 1822 Russian Loan. A Rothschild loan was also issued to the Neapolitan government in 1822. Accounts in the Rothschild archive for 1822-1823 include those of Prince Esterhazy, and the Russian Treasury.

Nathan Mayer Rothschild is mentioned in the minutes of the Bank of England’s Committee of Treasury in 1823. (p81). In 1824 the Alliance Assurance Company (AAC) was formed by Nathan Mayer Rothschild. There were five presidents: Moses Montefiore, Nathan Rothschild, Samuel Gurney, Francis Baring, and John Irving M.P. The company’s counsel was Lancelot Shadwell, the last Vice-Chancellor of England. (p25). The AAC consists of ‘British and Foreign Life Assurance and Fire Assurance’ (p4), and ‘Marine Assurance’. The Australian Agricultural Company (AACo) was founded in 1824. The first Chairman of AACo was John Abel Smith MP who would later help to get Lionel de Rothschild into the House of Commons as an MP.

In this record from HansardJoseph Hume MP highlights many of the problems regarding the activities of the Bank of England and Joint Stock Banks. With regard to the years 1824-1825, Joseph Hume states that “Mr. Rothschild and Mr. Alexander Baring had undertaken by a loan to the French government to assist to carry the plan into effect, and that the former gentleman had made an agreement with the Bank of England, that it should make him advances of two millions on stock. He had heard this from good authority, and it was most fortunate that the bill was thrown out of the French Parliament…”

According to the Rothschild archive, “[t]he position of Nathan Rothschild as the leading City merchant banker was consolidated in 1826, when the firm stepped in, with an instant injection of gold, to save the Bank of England.”

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