One Per Cent

Jonathan Steinberg

  • The World’s Banker: The History of the House of Rothschild by Niall Ferguson
    Weidenfeld, 1309 pp, £30.00, October 1998, ISBN 0 297 81539 3

On 25 November 1882, Iolanthe; or, The Peer and the Peri was performed for the first time at the Savoy Theatre. In Act II, a restless Lord Chancellor, troubled by lovesickness rather than the expense of his furnishings, cannot sleep. As he wanders through his lodgings, he sings the famous ‘Nightmare Song’. One of the elements of the nightmare is what would now be called a venture capital scheme – to plant retailers as vegetables to get their goods to sprout:

The shares are a penny and ever so many are
                 taken by Rothschild and Baring;
And just as a few are allotted to you, you
          awake with a shudder despairing.

The Lord Chancellor expressed the feelings of many private investors, then and now, who have been victims of market makers, but he was wrong to equate the two banks. By 1882, Rothschild had been much larger than Barings for decades. As early as 1825, as Niall Ferguson shows, the combined assets of the five Rothschild houses were nine times greater than the capital of Baring Brothers. Indeed, for most of the 19th century, the House of Rothschild was the biggest bank in the world by a wide margin, and the fortune of Nathan Mayer Rothschild, founder of the English branch, can be compared with that of Bill Gates today. Nathan Mayer’s only competitor for the title of richest man in Europe was his youngest brother, James, founder of the Paris branch.

Last year was the bicentenary of the arrival of Nathan Mayer Rothschild in England and Sir Evelyn de Rothschild, chairman of N.M. Rothschild and Sons, proposed a history of the House to Ferguson as a fitting way to commemorate two centuries of banking and family history. The World’s Banker is an ‘authorised’ company history like the 1995 history of the Deutsche Bank. Such sponsored histories of large firms, and the historians who write them, have recently been attacked, and their authors charged with ‘selling the past’. Ferguson, facing this accusation at the outset, explains that, with the exception of those covering the last thirty years, he has had free access to all the files. He assures us that no censorship was imposed by the family or firm.

The degree of a historian’s independence must always be a matter of dispute. The selection of evidence itself can be a subtle form of self-censorship, but the sheer volume of new material he brings to light suggests that Ferguson was allowed to use anything and everything he found. The thirty chapters rest on a huge collection of archival material. I did a rough calculation for three chapters (1, 10 and 20) and reckoned that there were 480 footnotes for the 97 pages of text, of which 63 per cent were from primary, mostly Rothschild sources. If one added the citations from contemporary newspapers, journals and published correspondence, the percentage of primary material would be even higher. The sheer mass of new evidence would make this a remarkable achievement, even if Ferguson had simply published the 20,000 letters he used as a documentary collection. This is the first history of the House of Rothschild which rests on access to the private archive.

The Rothschild archive is no ordinary collection: it is the record of a very complex, highly technical business operation as well as the social history of literally hundreds of relatives and friends over two centuries in several different countries. The Rothschilds knew everybody who was anybody at the top of European society during this period. Their business interests came to encircle the globe and their investments stretched from the Cape to Copenhagen and from Brazil to Belgrade. They can only be understood when a full political, economic and social background has been drawn. In order to follow the golden thread of Rothschild activity in the texture of modern history, the historian has to weave a big tapestry.

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