February 23: Founding the House of Rothschild

Mayer Amschel Rothschild (Bauer), whom Forbes magazine has called “a founding father of international finance,” was born in the Jewish ghetto of Frankfurt, Germany on this date in 1744. His father had a business trading goods and currency; the family home, above his shop “at the sign of the red shield” (zum roten Schild, from which the name Rothschild was derived) was 11 feet wide and housed some 30 people. Mayer developed his own coin business and provided banking services to German nobility, most notably Wilhelm IX of Hesse-Kassel, who had made a great fortune providing Hessian mercenaries to the British against the revolution in the American colonies. Rothschild himself especially profited by smuggling high-value goods during Napoleon’s continental blockade of German lands after 1806 and by caretaking Wilhelm IX’s fortune after Wilhelm was forced by Napoleon’s advance to flee to Denmark. Rothschild also helped to finance the British resistance to Napoleon’s conquests (and manipulated the British stock market after receiving advance news of Napoleon’s defeat at Waterloo). By then, the family business had grown into an international bank with offices headed by his sons in Frankfurt, Paris, Vienna, Naples, and London. “Rothschild helped invent modern banking by introducing concepts such as diversification, rapid communication, confidentiality and high volume,” according to Forbes. “[E]arlier than most, he understood that time and information meant money, and he pulled out all the stops to remain in constant contact with associates across Europe.” “Permit me to issue and control the money of a nation, and I care not who makes its laws.” —Mayer Rothschild