Five arrows make history

Europe Business Review, Oct-Dec, 1999 by John Shaw

Many European and Australian bankers have recently been adding a bulky volume to their carry-on luggage.

The 1,300-page, $75 book is about banking, but unlike a Treasury report or a High Court judgment, it is readable enough to help pass the time on a long flight.

"The World Banker" by Niall Ferguson (published by Weidenfeld & Nicholson, London) is a revealing history of the business and the family of The House of Rothschild, the legendary bank with the five arrows logo.

At its prime a century ago, the great European dynasty owned the world's biggest bank and was the world's richest family, richer comparatively than even Bill Gates today.

The Rothschilds remain rich and influential but in a world of global, merging mega-banks their network does not compete on size.

The status of the corporate crest of five arrows - one for each of the family business branches-carries all the weight they need. In Australia they trade as Rothschild Australia Asset Management Ltd.

Weighing in at 2.5 kilos, the history of the House can hardly be said to be hard to put down. And weighing as much as a couple of laptops the book is a hefty piece of hand luggage.

Nevertheless, a long journey - say the Sydney to London haul - is an ideal opportunity to start the marathon read, sometimes as gripping as Gresham and always fascinating about the world's most famous money movers and shakers.

The Rothschilds were Napoleon's bankers and almost two centuries later Margaret Thatcher's principal advisers in the multi-billion privatisations of British utilities in the 1980s.

The dynasty was begun in 1744 by Mayer Amschel Rothschild, a coin dealer in the grim ghetto of Frankfurt, the most anti-Semitic city in Europe.

In 1799 he sent the third of his five sons, Nathan, to Manchester to trade in cloth. He prospered there - sometimes smuggling cargoes between warring countries-for a decade, then moved into banking in London to found N.M. Rothschild & Sons, now celebrating the 200th anniversary of his arrival in Britain.

The rise and rise of generations of Rothschilds took them into the House of Lords and into the French establishment.

They acquired great art collections, classic vineyards (Mouton and Lafite), Derby winners-and their own mythology.

The extended family - diversifying in London, Paris, Vienna, Naples and Frankfurt - dominated finance in the 19th century. They loaned the British government the money to buy a share in the Suez Canal and financed railways and mining in Europe, America and Asia.

They shrewdly declined to underwrite the Titanic, claiming it seemed "too big to float."

Nathan and his brother James were in 1820-60 the richest men in the world. From 1815 to 1914 "Rothschild was easily the biggest bank in the world," as author Ferguson demonstrates.

The Rothschilds were the first finance multi-national. They were pioneers in bonds, bullion, merchant banking, venture capital, commodities and foreign exchange dealing and arbitrage. They also provided personal banking for crowned heads and the seriously rich.

In more recent times the new men at New Court, the London headquarters, bought early into such modern money-spinners as Club Med and British breakfast TV.

Historian Niall Ferguson, a star of both Oxford and Cambridge, was given the first full access to the multi-lingual Rothschild archives to write this monumental history.

His five years of work on 20,000 family documents in 20 collections take the saga up to 1915 in great detail. Then there are two short chapters, which give a "sketch" of Rothschild activities over the past 80 years.

Ferguson, perhaps exhausted by his archaeology in the archives, says he has left much detail of the dynasty and its dealings in this century to some future historian. Meanwhile, Ferguson has given that scholar a model that will be hard to match.

Soon there will be a different sort of book about banking - Nick Leeson's promised, post-prison account of his 1994 breaking of the Baring bank, a house as old as Rothschilds. The wreckage of Baring is now part of the Dutch bank ING.

Rothschilds prospers still - from London to Sydney-seemingly commercially immortal. Their recipe is here in detail sufficient to satisfy any due diligence test.