Meyer Amschel Rothschild

Introduction

Mayer Amschel Rothschild (23 February 1744 – 19 September 1812) was a German banker. He was the founder of the Rothschild family international banking dynasty that became the most successful business family in history. In 2005, he was ranked 7th on the Forbes magazine list of "The Twenty Most Influential Businessmen Of All Time". The business magazine referred to him as a "founding father of international finance".Meyer Amschel Rothschild was born in 1744 in the ghetto (called "Judengasse" or Jew Alley) in Frankfurt am Main, Germany, one of eight children of Amschel Moses Rothschild and his wife Schönche Rothschild née Lechnich.

Mayer Amschel Rothschild

The Beginning

The father of Mayer Amschel had a business in the trade of goods and currency exchange. He was a personal supplier of coins to the Prince of Hesse. The family home above the shop had a front wall only 11 feet (3.4 m) wide, where more than 30 people lived at that time.

He was apprenticed to the banking firm of Jakob Wolf Oppenheim in Hamburg, returning to business in Frankfurt in 1763. He became a dealer in rare coins and won the patronage of Crown Prince Wilhelm of Hesse (who had also earlier patronised his father), gaining the title of "Court Factor" in 1769. Rothschild's coin business grew to include a number of princely patrons, and then expanded through the provision of banking services to Crown Prince Wilhelm, who became Wilhelm IX, Landgrave of Hesse-Kassel in 1785. Business expanded rapidly following the French Revolution when Rothschild handled payments from Britain for the hire of Hessian mercenaries.

By the early years of the 19th century, Mayer Amschel Rothschild had consolidated his position as principal international banker to Wilhelm IX and began to issue his own international loans, borrowing capital from the Landgrave.

In 1806, Napoleon invaded Hesse in response to Wilhelm's support for Prussia. The Landgrave went into exile in Schleswig-Holstein, but Rothschild was able to continue as his banker, investing funds in London. He also profited from importing goods in circumvention of Napoleon's continental blockade.

Personal Life

On August 29, 1770, Rothschild married Guttle Schnapper, the 17-year-old daughter of a bill broker, moneychanger and court factor to a small principality. The following year, she gave birth to Schonche, the first of their ten children. By 1792, the family had grown to include Amschel, Salomon, Nathan, Belche, Breinliche, Calmann, Julie, Henriette, and Jacob.

In 1800, the Emperor Franz II named Rothschild and Amschel his imperial crown-agents, which gave them the right to bear arms. In 1802, Rothschild changed the spelling of his first name from "Meyer" to "Mayer," perhaps to make it seem more German. A year later, Wilhelm appointed Rothschild chief court agent, the highest form of court Jew.

Rothschild helped found a modern school for the children of the Judengasse in 1803. Besides receiving a religious education, the pupils studied German, French, geography, natural history, and modern philosophy. Although the orthodox rabbis of the ghetto decried it, Mayer Rothschild and later his son Amschel supported the school.

Business Acumen

By 1807, Rothschild was doing almost all of the international banking for the Landgrave thanks to Buderus. The strategy he used to increase the volume of his business was to accept lower profits. His capital accumulated quickly, and his bank became one of the biggest in Frankfurt.

In addition to banking, Rothschild also traded in textiles, colonial goods, coins, antiquities, and wine. He prospered by selling the goods that Nathan shipped from England that included textiles, indigo, tea, dried fruit, sugar, and coffee. As his fortune increased, Rothschild began negotiating state loans for the Landgrave, who desired to lend money anonymously.

Mayer Amschel Rothschild died on 19 September 1812 in Frankfurt am Main. He was buried at the old Jewish cemetery in Frankfurt, located next to the Judengasse. His grave still exists. A park was named after him, also a street (Rothschildallee). In 1817 he was posthumously ennobled by the emperor Francis I of Austria.

The Rothschild Family

His descendants furthered the family fortune across Europe — the "five arrows" of banking. Eldest son Amschel Mayer took over the Frankfurt bank and Salomon moved to Vienna. Nathan turned the London branch into one of Europe's most powerful banking institutions (N. M. Rothschild & Sons), Calmann (gentrified to "Carl") set up a branch in Naples and Jacob ("James") became a giant of finance in Paris.

In 1798, third son Nathan Mayer Rothschild was sent to England to further the family interests in textile importing with £20,000 capital — the first foreign branch. Nathan became a naturalized citizen in 1804 and established a bank in the City of London. In 1810, Mayer entered into a formal partnership agreement with his three eldest sons. The youngest son Jacob was sent to Paris in 1811, enhancing the family's ability to operate across Europe. This enabled them to profit from the opportunity of financing Wellington's armies in Portugal, requiring the sourcing of large quantities of gold on behalf of the British government.

Modern times

Since the late-19th century, the family has taken a low-key public profile, donating many famous estates, as well as vast quantities of art, to charity, and generally eschewing conspicuous displays of wealth. Today, Rothschild businesses are on a smaller scale than they were throughout the 19th century, although they encompass a diverse range of fields, including: banking, asset management, financial advice, wine, and charities.

Since 2003, a group of Rothschild banks have been controlled by Rothschild Continuation Holdings, a Swiss-registered holding company (under the chairmanship of Baron David René de Rothschild). Rothschild Continuation Holdings is in turn controlled by Concordia BV, a Dutch-registered master holding company. Concordia BV is managed by Paris Orléans S.A., a French-registered holding company. Paris Orléans S.A. is ultimately controlled by Rothschild Concordia SAS, a Rothschild's family holding company. Rothschild & Cie Banque controls Rothschild banking businesses in France and continental Europe, while Rothschilds Continuation Holdings AG controls a number of Rothschild banks elsewhere, including N M Rothschild & Sons in London. Twenty percent of Rothschild Continuation Holdings AG was sold in 2005 to Jardine Strategic, which is a subsidiary of Jardine, Matheson & Co. of Hong Kong.

In November 2008, Rabobank Group, the leading investment and commercial bank in the Netherlands, acquired 7.5% of Rothschild Continuation Holdings AG, and Rabobank and Rothschild entered into a co-operation agreement in the fields of Mergers and Acquisitions (M&A) advisory and Equity Capital Markets advisory in the food and agribusiness sectors. It was believed that the move was intended to help Rothschild Continuation Holdings AG gain access to a wider capital pool, enlarging its presence in East Asian markets.

Paris Orléans S.A. is a financial holding company listed on Euronext Paris and controlled by the French and English branch of the Rothschild family. Paris Orléans is the flagship of the Rothschild banking Group and controls the Rothschild Group's banking activities including N M Rothschild & Sons and Rothschild & Cie Banque. It has over 2000 employees. Directors of the company include Eric de Rothschild, Robert de Rothschild, and Count Philippe de Nicolay. N M Rothschild & Sons, English investment bank does most of its business as a mergers and acquisitions advisor.

In 2004, the investment bank withdrew from the gold market, a commodity the Rothschild bankers had traded in for two centuries. In 2006, it ranked second in UK M&A with deals totalling $104.9 billion. In 2006, it publicly recorded a pre-tax annual profit of £83.2 million with assets of £5.5 billion.

Today, the price of gold is still fixed, twice a day at 10.30 am and 3.00 pm at the premises of N M Rothschild by the world's main Bullion Houses - Deutsche Bank, HSBC, ScotiaMocatta and Societe Generale. Informally, the gold fixing provides a recognized rate that is used as a benchmark for pricing the majority of gold products and derivatives throughout the world's markets. Every day at 10.30 and 15.00 local time, five representatives of investment banks meet in a small room at Rothschild's London headquarters on St Swithin's Lane. In the centre is the chairperson, who is by tradition appointed by the Rothschild bank, although the bank itself has largely withdrawn from the trading.