Mayer Amschel Rothschild
Opportunity Case
Mayer's ancestors had long been small merchants in the town ghetto. As a youth he had been sent to a Yeshiva near Nuremberg to become the family pride---a rabbi. When both of his parents died and the tuition money ran out, some relatives secured for him an apprenticeship in the Jewish banking house of Oppenheimer at Hannover. He did well and could have stayed in the city where Jews were tolerated, but instead he returned home to Frankfurt in 1764, at the age of twenty.

Mayer's last name had been assigned to the family many years before when they lived in a more prosperous house with a red shield (Rothschild). Now they lived in a much more humble dwelling, the House of the Saucepan. Mayer labored for several years in the ghetto as the local Prince William of Hesse-Hanau built a financial empire that would need expert financial direction. As Mayer worked in the junk and antique business he seemed terribly distant from the noble prince. He did however find an interest in secondhand coins and as he accumulated them he would analyze, annotate, interpret, explain, and describe them. He could not sell them, at least to the local shoppers, but there may be an interest in the courts of the nobles.

DECISION POINT: What should Mayer do?

He went to where the wealthy were and expounded on the value of his treasure. They listened with interest, were fascinated by the well presented tokens and accompanying curlicue-embellished catalogue, and then they bought. Mayer sent his catalogue to princes and nobles all around. One day he was ushered into the presence of William himself. Mayer sold the prince some of his rarest medals and coins. This was the first transaction between a Rothschild and a chief of state.

With a little success and ambition to grow his business, Mayer opened a Wechselstube, a rudimentary bank, where foreign currencies could be exchanged into German. The fairs held periodically in Frankfurt brought all kinds of ducats, florins, carolins and what-nots to town and from this trade Mayer began to prosper. With success came increased social standing.

He used his exchange profits to buy out some needy coin collectors and placed more effort into his rare coin business. He attracted the attention of a few nobles and sold sparsely but consistently. He worked endlessly on his catalogues to make them an effective sales vehicle and wrote: "It has been my particular high and good fortune, to serve your lofty princely Serenity at various times and to your most gracious satisfaction. I stand ready to exert all my energies and my entire fortune to serve your lofty princely Serenity whenever in future it shall please you to command me. An especially powerful incentive to this end would be given me if your lofty princely Serenity were to distinguish me with an appointment as one of your Highness' Court Factors. I am making bold to beg for this with the more confidence in the assurance that by so doing I am not giving any trouble; while for my part such a distinction would lift up my commercial standing and be of help to me in so many other ways that I feel certain thereby to make my way and fortune here in the city of Frankfurt."

Prince William was well connected by blood to many of the great monarchs in Europe and used this connections to enhance his bank account. He would train Hessian soldiers and sell them to various crown as peace keeping forces in their colonies. When one of them would be killed William would receive extra compensation. He profited well at the business and loaned out the proceeds with shrewd lack of prejudice to just the right people with high credit ratings. William became the richest ruler in Europe.

Mayer learned well from his mentor, the Rothschild clientele consisted, to a calculated degree, not of other bourgeoisie but of some of the noblest personages in Germany--and never mind if their high positions exacted low profits. Rothschild courted the Landgrave with low prices (thus faithfully imitating William's own tactics with the imperial palace in Vienna).

FOLLOW-UP CASE

As soon as Mayer's sons were trained and old enough they fanned out from Frankfurt to the major capitals of Europe. Nathan Rothschild moved to London. The boys started sending each other industriously, endlessly, items of commercial or general interest. Soon a private news service developed. Rothschild coaches careered down highways; Rothschild boats set sail across the Channel; Rothschild messengers were swift shadows along the streets. They carried cash, securities, letters, and news. latest, exclusive news to be vigorously processed at stock market and commodity bourse. And there was no news more precious than the outcome of Waterloo. For days the London exChange had strained its ears. If Napoleon won, England consols were bound to drop. If he lost, the enemy empire would shatter and consols rise.

For thirty hours the fate of Europe hung veiled in cannon smoke. On June 19, 1815, late in the afternoon a Rothschild agent named Rothworth jumped into a boat at Ostend. In his hand he held a Dutch gazette still damp from the printer. By the dawn light of June 20, Nathan Rothschild stood at Folkstone harbor and let his eye fly over the lead paragraphs. A moment later he was on his way to London (beating Wellington's envoy by many hours) to tell the government that Napoleon had been crushed. Then he proceeded to the stock exchange.

DECISION POINT: What should Nathan do?

Another man in his position would have sunk his worth into consols. But this was Nathan Rothschild. He leaned against "his" pillar. He did not invest. He sold. He dumped consols. His name was already such that a single substantial move on his part sufficed to bear or bull as issue. Consols fell. Nathan leaned and leaned, and sold and sold. Consols dropped still more. "Rothschild knows," the whisper rippled through the ?Change. ?Waterloo is lost.?

Nathan kept on selling, his round face motionless and stern, his pudgy fingers depressing the market by tens of thousands of pounds with each sell signal. Consols dived, consols plummeted---until, a split second before it was too late, Nathan suddenly bought a giant parcel for a song. Moments afterwards the great news broke, to send consols soaring.

"The Rothschilds - A Family Portrait," Frederic Morton, Atheneum, New York, 1962, pp 28-29, 48-50