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British Banking History Society


There is a story, probably true, that in 1875 when Disraeli wished to buy the Suez Canal for Britain, he sent his private secretary round to Nathan Rothschild to borrow the necessary 4 million.

The banker asked the Prime Minister's emissary was his security was. "The British Government", the secretary replied. Rothschild toyed with a musical grape and said: "You shall have it".

The Rothschild dynasty has bailed out the British Government on more than one occasion. The bank's founder, Nathan Rothschild, is credited with winning the Battle of Waterloo and making a hefty profit in the process.

According to legend, Nathan rode alongside Wellington in the battlefield, and at the first sign of victory, dashed for the Channel, made a storming night-crossing to Dover, and sped to the city to buy a huge quantity of British Government stock before anyone else knew of Napoleon's defeat.

The story is debunked by the family themselves but it is true that the Rothschilds were the Government's principal financial agents, raising large sums through the sale of Treasury bonds to keep Wellington's warchest well topped up with specie. The bank's profits are now thought to have been nearer 1 million than the 135 million of banking myth.

Although no longer the dominant force in British and contintental banking that is was as its Victorian height, the Rothschilds have found themselves in demand from more recent British governments.

Edward Heath and the Bank of England called them in to prevent a secondary banking crisis when Slater Walker collapsed, and the then Prime Minister thought so well of the then chairman, Victor Rothschild, that he made him the head of his Downing Street think-tank.

Victor worked for MI5 during the war. In his Cambridge days he had mixed with Guy Burgess and Anthony Blunt but the suggestion that he was the "fifth man" in the Soviet spy ring was false.

The dynasty sprang from the Frankfurt ghetto in the late eighteenth century. Mayer Amschel Rothschild had ten children, the fourth of whom, Nathan, emigrated to England, worked as a merchant in Manchester, began trading in bonds, and in 1810 set up the bank that was to finance Waterloo.

Other descendants set up banks all over Europe and even today the group headquarters resides in Zurich. The business has traditionally kept top positions within the family. Mayer Amschel always recommended to his children "fraternal concord as a source of divine blessing".

By the mid-nineteenth century the Rothschilds were the richest family of the age, owning a European rail network and a mining empire. They built stately mansions, amassed art collections and patronised artists from Rossini to Balzac.

The family has put its name to more than money and the fine wines from its French vineyards. Through the generations has run the strand of the gentleman scientist, with the emphasis on zoology and botany. The fascinating zoological museum at Tring in Hertfordshire, given by the family to the town, is testimony to their passion for scientific inquiry. The family mansion nearby was long ago turned into a health farm.

Today, N M Rothschild, the merchant bank that forms the group's British arm, is one of very few independent banks remaining in the City of London. Compared with its rivals, most of whom have been swallowed up into international conglomerates, N M Rothschild is a tiddler in City terms, its Victorian might a distant glory. Sir Evelyn, the seventh generation of the family, has so far rebuffed all merger proposals.

He is little fonder of senior executives from outside the family, nor does he like deserters: he was said to be furious when his cousin, Jacob, left and set up his own business.

Sir Evelyn's problem is to find a successor: he is 66 and unlikely to stay at the helm of the London operation or of the Swiss holding company forever. None of his children appears to be the natural successor. The favoured candidate was once said to be his second cousin, Amschel Rothschild. The scheme went awry when Amschel was found hanged in a Paris hotel in 1996.

The title of heir apparent seems to have passed to another cousin, David de Rothschild, head of the family's French banking business.

Alan Hamilton writing in The Times, 2000

Copyright 2010 BBHS