Speaker 1: Imagine a family so wealthy, so intertwined with the machinery
of the world that they didn't just buy mansions or islands,
they bought the outcomes of wars. We are talking about
a dynasty that started in a place where they were
legally prohibited from owning property, from walking in public parks,
or even leaving their street at night. And yet you know,
within two generations they were bailing out the United States
government and financing the defeat of Napoleon.
Speaker 2: It honestly sounds like the plot of a very dense,
very improbable novel, but it is, and I don't think
this is an exaggeration. Arguably the most significant case study
in the history of finance. Right we aren't just talking
about rich people. We are talking about the architects of
the modern bond market. We are talking about a family
that effectively invented the concept of international finance, pioneered high
frequency trading a century before computers, and managed to stay
relevant for over two hundred years.
Speaker 1: Welcome back to thrilling threads. Today we are pulling on
perhaps the most goal and certainly one of the most
controversial threads in our entire stack of history. We're talking
about the House of Rothschild.
Speaker 2: From the ghetto to global finance. It's just a staggering trajectory,
and frankly, it's a story that often gets buried under
layers and layers of conspiracy theories and myths.
Speaker 1: Oh absolutely, I mean looking at the research we have
for today, this really detailed transcript analyzing the history of
the Rothschild and Morgan families, it's honestly overwhelming. You can
fall down a rabbit hole of internet myths in about
five seconds. But what I love about the source material
we're using today is that the actual business history, the
nuts and bolts of what they did, is wildly more
interesting than any of the fiction it is.
Speaker 2: And that's really our mission for this deep dive. We
want to strip away the myth and look at the mechanics.
We want to understand how how did they build this
fortune from absolute zero? More specifically, how do they invent
the financial machinery that still runs the world today, And
maybe most interestingly, how did they lose their absolute dominance
to the Americans, specifically the House of Morgan, and yet
somehow managed to survive when so many other dynasties just collapsed.
Speaker 1: We're going to get into all of it. The invention
of front running, which spoiler alert sounded incredibly sketchy to
me when I first read about it what it was,
and the carrier pigeons that supposedly beat Napoleon and the
time they literally saved the US dollar from collapsing. We
have to start at the bottom, and I mean the
absolute bottom.
Speaker 2: Frankfurt, Germany, the mid eighteenth century.
Speaker 1: Right Mayor Amssel Rothschild. I think when people hear the
name Rothschild today they think of, you know, vineyards in France, chateaus,
high society balls. But where mayor started it was not.
Speaker 2: A chateau, far far from it. We need to be
very specific about the Frankfurt ghetto or the Judentos, the
jews alley. This wasn't just a poor neighborhood or a
rough part of town. It was a legally enforced enclosure,
a single narrow street with gates that were locked at night.
Speaker 1: The details in the source material are just. It describes
it as incredibly crowded, dark, with heaps of secondhand clothes
and soiled household goods just spilling into the alleys. It
feels claustrophobic just reading about it.
Speaker 2: It was designed to be claustrophobic, and you have to
understand the legal environment to get the full picture. The
Jewish residents there were subject to these incredibly strict ordinances.
They were barred from farming.
Speaker 1: For instance, so you can't grow your own food, you.
Speaker 2: Can't own land outside the ghetto. You couldn't be a
part of the craft guilds, so you couldn't be a
carpenter or a blacksmith. They were even banned from dealing
in what were considered nobler goods.
Speaker 1: Nobler goods, what does that even mean? That sounds so archaic.
Speaker 2: It meant protected traits, things like weapons, silk, or fresh fruit.
Those were all reserved for the Christian golds. So if
you were Mayor Amshell born in seventeen forty four, your
career options were just severely limited by law. You can't
grow food, you can't make things with your hands, and
you can't sell the high end stuff.
Speaker 1: So you're forced into the margins. You're forced to find
the gaps in the system.
Speaker 2: Exactly you operate in the gaps. He started with textiles,
specifically dealing in secondhand cloth.
Speaker 1: Which just sounds miserable. The source says he grew discontented
with it, which I'm in guessing is a very polite
way of saying. The margins were terrible and dealing with
old rags is not a fun way to live.
Speaker 2: It's a volume business with very very low profit. Yeah,
but Mayer was observant, he was smart, and he realized
that while he couldn't sell fresh fruit or new weapons,
there was a specific niche that was unregulated and crucially
high margin, which was rare coins and antiques.
Speaker 1: Okay, so he pivots from rags to riches literally old money.
But why coins? Was there some big market for old
failures in the ghetto.
Speaker 2: No, not in a ghetto. But you have to remember
the era. This is the age of Enlightenment Europe, the aristocracy,
the princes, they're all obsessed with history, with lineage, with culture.
Collecting rare coins was like the Gulf of the eighteenth century.
For German princes. It was how you showed you were
so f whisticated in worldwage.
Speaker 1: Okay, so he identifies the customer. The source points to
one in particular, Prince William of Hescastle, a man known.
Speaker 2: To be a fanatic collector. But here's the problem. How
does a Jewish man from the Frankfurt ghetto, who effectively
has no civil rights even get a meeting with a prince.
How do you get your foot in that door?
Speaker 1: This is where the hustle comes in. Right, The source
mentions he started by selling the coins at a bargain.
Speaker 2: That's the key. That is the entire key. He didn't
try to maximize profit on the first transaction. He created
these elaborate, beautifully written catalogs. It was like mail order
marketing before mail order was a thing. And he offered
these rare coins to the Prince at prices that were
almost too good to be tripped.
Speaker 1: So he was undercutting himself on purpose. He was losing
money on the deal.
Speaker 2: He was buying access. He realized that the profit wasn't
in the coin itself, the profit was in the relationship
with the prince. By selling the coins cheaply, he became
the Prince's go to guy. He became indispensable, and eventually
he gained the title of court factor or court agent.
Speaker 1: Okay, let's unpack this court factor thing, because once he
has this title, he starts doing something that our source
calls front running. Now, in modern finance, front running is
super illegal, Like people go to jail for this.
Speaker 2: In modern regulated markets, yes, it's highly illegal, but in
the eighteenth century it wasn't illegal. It was just financial innovation.
Speaker 1: So explain how Mayor did it. How did he make
money coming and going on these deals?
Speaker 2: Okay, So imagine Prince William wants to buy a specific
set of gold coins or say some government bonds. He
asks Mayor, his trusted court factor, to go and get
them for him. Right now, a normal broker would just
go find a seller, connect them to the Prince, and
take a small fee for making the introduction, a finder's
fee commission. Mayor didn't do that. Mayor would go out
use his own credit, borrowing money from others in the
Jewish community who trusted him, and he would buy the
asset himself. He would take ownership of the coins, so.
Speaker 1: He owns the asset first, he's the one taking the
risk exactly.
Speaker 2: Then he turns around and sells them to the Prince.
So first he makes a profit on the markup the
difference between what he bought it for and what he
sold it to the Prince for. But because he is
the agent, he also charged a commission fee, often around
eight percent, for the service of acquiring them for the prince.
Speaker 1: He's double dipping. He's acting as both the seller and
the broker. That's incredible.
Speaker 2: He is front running his own client. He buys the
inventory knowing he has a guaranteed buyer at a higher price.
It's essentially risk free arbitrage. And because he was dealing
with a prince who was one of the wealthiest men
in Europe, the volume was significant.
Speaker 1: But the source makes a really interesting point here that
I want to hone in on. It wasn't just about
the cash. It was about credit in the social sense.
Speaker 2: That is the crucial insight. Absolutely, by managing the Prince's investments,
Mayor gained legitimacy in a world where he was legally
a second class citizen. Having the official seal of Prince
William of Hescastle on his carriage was like a passport.
It opened doors that were otherwise bolted shut. It allowed
him to transition from a trader of goods to a
banker of capital. He wasn't just Mayor from the ghetto anymore.
He was the financial agent of his Highness, and.
Speaker 1: That transition is what sets up the entire dynasty. But
Mayor knew he couldn't live forever, and the source mentions
a dying decree that really fascinated me. It wasn't about
make more money or buy this asset. It was about family.
Speaker 2: Structure, family unity above all else. Yeah, that was the rule.
And you have to understand this wasn't just sentimental. This
is a calculated business strategy for survival. He knew that
for his bank to survive across borders in a very
volatile Europe, the partners had to trust each other implicitly.
Speaker 1: Because there were no contracts enforceable in the same way
we have today. Right, if you're sending money from Frankfort
to London, exactly.
Speaker 2: If you send an unrelated employee to London with a
million pounds in gold, what's to stop him from just disappearing.
Speaker 1: Taking a long vacation to the Caribbean.
Speaker 2: Right, But if you send your son, he's not just
an employee. He's building the family legacy. So Mayer instituted
this system that was effectively a decentralized multinational corporation before
such a thing even existed. The five arrows, the five arrows,
that's the family symbol. To this day, you'll see it
on their crest. He dispatched his five sons to the
five major financial capitals of Europe. Amshall stayed in Frankfort
to run the home base. Salmon went to Vienna, Carlton, Naples,
James de Paris, and the third son. He wanted the
crown Jewel London. And this brings us to Nathan Rothschild.
Speaker 1: The genius of the family, the real engine.
Speaker 2: And apparently a bit of a shark. The source describes
him as fiercely ambitious, competitive and quick to take offense.
Not a guy you wanted to cross.
Speaker 1: He was not a man to be trifled with.
Speaker 2: No.
Speaker 1: He arrives in London with twenty thousand pounds from his father.
Now that was a lot of money in the late
seventeen hundreds, but it wasn't rule the world money, not yet.
And he looks at the textile industry, remember the same
industry as father started in, and he just sees inefficiency everywhere.
I love this part because it shows exactly how his
brain worked. He doesn't just buy in soil cloth. He
realizes everyone is taking a cut along the way, the
guy selling the raw cotton, the guy who's dying it,
the manufacturer.
Speaker 2: It's vertical integration. It's a term we use now for
companies like Apple or Tesla, but Nathan was doing it
with fabric in eighteen hundred. He basically said, why am
I paying the dyer a profit. I'll buy the raw
material myself. I will pay the dyer a wage to
do the work, and then I will own the final
product and capture all the margin.
Speaker 1: There's a great quote in the source resays I found
there were three profits, so I got three profits instead
of one. It's so simple and so brilliant.
Speaker 2: And that turned his twenty thousand pounds into sixty thousand
pounds very very quickly. But Nathan, just like his father,
he realized that trade has physical limits. You have to
move goods, you have to store goods, you have to
deal with spoilage and logistics. Finance, on the other hand,
finance scales.
Speaker 1: Infinitely, So he pivots again from textiles to banking, but
not just a banking smuggling.
Speaker 2: Well, let's call it logistics in a hostile environment. The
line between merchant banking and smuggling during the Napoleonic Wars
was very thin. Britain is blockading, France's blockading Britain. If
you can move goods, gold, textiles, information, across those lines
you can charge a massive, massive premium.
Speaker 1: And the source says Nathan earned a reputation for superior
management and judgment, which sounds like a very nice way
of saying he was the best smuggler in Europe.
Speaker 2: He was the best legistation. He built the network.
Speaker 1: And that brings us to the defining moment of the
Rothschild legend, the Napoleonic Wars. This is where they go
from being just rich to being masters of the universe.
Speaker 2: This part feels like a spy movie. It's incredible. So
set the scene for us. You have the Duke of Wellington,
the British commander, fighting Napoleon in France and Spain. He
has an army, he has guns, but he has a huge,
huge problem.
Speaker 1: He has no money. Well, to be precise, the British
government has credit, but Wellington's soldiers in France need French coins.
You can't pay a French farmer for wheat with a
British pound note. They won't take it. They want gold
or silver. Louis d or So Wellington is sitting there
with an army he can't feed or pay because he
literally lacks the right kind of cash.
Speaker 2: Correct and The British government is in a full blown panic.
They have vaults of gold in London, but how do
you get it to Wellington on the front lines. If
you put it on a ship, the French Navy might
sink it. If you try to carry it overland through France,
it'll get stolen by bandits or confiscated. They literally did
not know how to get the physical metal to their
own army.
Speaker 1: Enter Nathan Rothschild.
Speaker 2: He steps up, He goes to the government. He buys
eight hundred thousand pounds worth of goal from the East
India Company, a staggering sum, and he tells the government,
don't worry, I can get it to Wellington.
Speaker 1: How I mean, how do you move nearly a million
pounds of gold through enemy territory? It seems impossible.
Speaker 2: Through that network of five Brothers, the five Arrows. This
is where Mayor's strategy pays off in the biggest way imaginable.
He had a brother in Paris, James.
Speaker 1: James is in Paris, the capital of the enemy. How's
he even operating there?
Speaker 2: Yes, And this is the brilliance of it. They use
financial instruments called bills of exchange. You can think of
them as old timey checks. So Nathan sends paper to
James in Paris. James then goes to French bankers who
need to move money to London, and he swaps Nathan's
paper for their physical gold in France.
Speaker 1: So they're basically clearing transactions for both sides.
Speaker 2: They're acting as a clearinghouse for international payments during a war,
and then for the physical gold they did have to move.
They used their smuggling routes, the source mentions. They disguise
gold coins in kegs of wine, in the false bottoms
of carriages. They dress couriers as women. They move the
gold right under the noses of the French police, piece.
Speaker 1: By piece, and Nathan famously called it the best business
I ever did.
Speaker 2: And it wasn't just because of the commission, which was substantial.
This cemented the Rothschilds as the de facto bankers of
the British government. But there's another layer to this war
financing that is even more important for modern listeners. It
wasn't just moving gold, it was moving information.
Speaker 1: The pigeons, Okay, we have to talk about the carrier pigeons.
Speaker 2: Yeah, the pigeons, the horses, the private boats across the channel.
The rock Childs understood before anyone else in finance that
information is a commodity. If you know the outcome of
a battle one day or even one hour before the
market does, you are rich.
Speaker 1: The source calls them the original high frequency traders, which
is such a great way to put it.
Speaker 2: It's a perfect analogy. Today, HFT firms spend millions of
dollars to shave nanoseconds off the time it takes data
to travel through fiber optic cables between New York and Chicago.
Nathan Rothschilds spent money on the best horses and trained
carrier pigeons to shave hours off the time it took
for news to cross the English Channel.
Speaker 1: So while everyone else in London is on the docks
waiting for the official government ship to arrive with news
of the war, Nathan's pigeon has already landed and he
knows the result precisely.
Speaker 2: And this leads to the most famous and most mythologized
incident in their history, Waterloo. Now there is a pervasive myth,
a false story that Nathan heard about Wellington's victory, went
to the stock exchange, pretended to look sad, and started
selling his British government bonds to make everyone think Britain lost.
Speaker 1: Right to create a panic so he could buy them
all back for cheap. That's the movie version.
Speaker 2: That is the anti Semitic pamphlet version that was created
many years later. The reality, according to our source, is
much simpler, but still absolutely genius. He got the news
first via his network that Britain had won. He knew
that meant peace was coming. And he knew that in
peacetime government spending stops, so the value of government bonds
the consoles would rise dramatically.
Speaker 1: So he didn't sell. He just bought.
Speaker 2: He just bought quietly and quickly. He bought as many
bonds as he could get his hands on before the
official news hit the street. He bet the house on the.
Speaker 1: Rally, and when the news officially arrived.
Speaker 2: The bonds skyrocketed. The source mentions that while the eight
percent commission on moving Wellington's goal was nice, this kind
of currency and bond speculation was the real wealth generator.
It multiplied their fortune exponentially in a single day.
Speaker 1: It's incredible. They literally monetize speed. They monetized the information gap.
Speaker 2: And when Nathan died in eighteen thirty six. At just
fifty eight years old, he was effectively the richest man
in the world. The Times of London wrote that his
death was one of the most important events for the
financial markets of Europe. That is how powerful he was.
He was more important than most kings.
Speaker 1: But he dies. And this is usually where these great
family dynasties crumble. Right, the charismatic founder is gone, the
kids start fighting, the money just vanishes in a generation
or two. But the Rothschilds had that decentralized structure that
mayor created.
Speaker 2: Right, the torch doesn't fall, it's passed. In this case,
it passes to Paris. The James Rothschild.
Speaker 1: James Nathan's youngest brother. The source says he was intellectually
Nathan's equal, but less submissive. Sounds like he had a
bit of an ego.
Speaker 2: James was a fascinating character. He was in Paris, which
was the ultro and social capital of the nineteenth century.
He wasn't just a banker. He was socialite, a patron
of the arts, a friend of the composer Rassini in
the novel Spolzac. But in business he was just as
ruthless as Nathan, and he saw the next big wave coming.
Speaker 1: If Nathan's big wave was war financing, what was James's wave?
Speaker 2: The Industrial revolution? Specifically railroads.
Speaker 1: Everyone loves a train, everyone.
Speaker 2: Loves a train, but James loved the idea of financing
and infrastructure monopoly. He helped fund and build the first
major railway system in France. But here is the really
clever part. He did it using syndicates.
Speaker 1: Okay, what's a syndicate in this context? Can you explain that? Like,
I'm five sure?
Speaker 2: So building a railroad is insanely expensive and very risky.
If James uses all of his own money and the
train company fails, he loses everything. So a syndicate is
basically a group investment. He goes to a bunch of
other rich investors and says, we're all going to put
money into this pot to fund the railroad.
Speaker 1: So he spreads the risk around. He's not putting all
his eggs in one basket exactly.
Speaker 2: He uses other people's money oz PM. But the Rothschild
Bank manages the syndicate, so they take a fee for
organizing the deal, of fee for managing the money, and
they still get a piece of the profits, but with
much less of their own capital. At risk. It was
the early version of private equity or investment banking.
Speaker 1: It's the classic banker move, isn't it heads eye win, tails,
you lose, or at least tails. We all lose a
little bit, but I still get my fees.
Speaker 2: That's the model. But it wasn't all smooth sailing. The
source details a massive crisis for them in the eighteen forties.
France has a revolution, as France tended to do in
the nineteenth century. It's a national pastime, it is, and
the French government debt crashes. The value of all these
assets plummets. The Paris Bank, James's bank is on the
brink of insolvency, and this is.
Speaker 1: The ultimate test of Mayor's family unity decree. James is
in trouble, he needs cash.
Speaker 2: Fast, and who steps in Lionel rothschild Nathan Son, sitting
in the London branch. He sends a massive shipment of
gold and credit to bail out his uncle James in Paris.
Speaker 1: Wow, the London branch saving the Paris branch.
Speaker 2: It proved the system worked. If they had been separate,
competing banks, the Paris branch would have failed. But because
they were one family, the capital flowed to where it
was needed most. It made them anti fragile. It was
their superpower.
Speaker 1: Speaking of Lionel, he wasn't just writing checks. He was
busy climbing the social ladder in England. The source mentions
his long struggle to get into the House of Commons.
This feels like a really significant shift from the ghetto
to parliament in two generations.
Speaker 2: It's the ultimate assimilation story. They didn't just want money anymore.
They wanted acceptance and political power. Lionel gets elected to
Parliament by the City of London, a huge honor, but
he refuses to swear the oath of office because.
Speaker 1: The oath was on the true faith of a Christian
right and he was Jewish.
Speaker 2: Correct and Lionel basically said, I will swear on the
Old Testament or I will not swear at all. He
was elected, he refused the oath and his election was voided.
He was re elected by the voters, refused again, kicked
out again. This went on for years.
Speaker 1: That takes some serious backbone to just keep at it.
Speaker 2: It does. He was making a point about civil rights. Finally,
after more than a decade, the law was changed to
allow non Christians to take a modified oath. He finally
took his seat. It was this massive symbolic victory. They
had risen from the Frankfurt ghetto, where they couldn't own
weapons or walk in a park at night, to a
seat in the government of the world's reigning superpower.
Speaker 1: It really feels like they are untouchable at this point
in the mid nineteenth century. They control Europe's money, they're
in government, they're building the industrial world. But then the
source introduces a plot twist. A new character enters the chat,
the house of Morgan, Junius Morgan, an American in London.
Speaker 2: And Junius Morgan is such a stark contrast to the Rothschilds.
The source describes him as solemn, business like, a prematurely
middle aged young man. He wasn't flashy, didn't at the
palaces or the art collections, but he was He was learning,
and he was looking for his own war.
Speaker 1: It sounds so morbid when you put it that way,
looking for his own war to finance.
Speaker 2: But that was the business. War was the biggest expenditure
of any government. If you wanted to play in the
big leagues, to be a top tier international banker, you
had to finance a war, and in eighteen seventy the
opportunity arrives the Franco Prussian War, Germany led by Prussia
versus France.
Speaker 1: Okay, so here is the showdown. You have the Rothschilds,
the reigning champs of war finance, and you have Junius Morgan,
the hungry challenger. How did they bet on this conflict?
Speaker 2: The Wrothchilds, with all their incredible information networks and generations
of experience, analyzed the situation. They looked at the Prussian
army led by the iron Chancellor Otto von Bismarck, and
they came to a very logical conclusion France is going.
Speaker 1: To lose, which was the correct call militarily.
Speaker 2: He was factually correct. Yes, So the wroth Childs refused
to lend money to France. They thought it was a
bad bet. They were thinking, like old world bankers, if
the king loses the war or the new government won't
pay the old king's debts, they were being risked averse.
They were protecting their vast fortune.
Speaker 1: Entered Genius Morgan.
Speaker 2: Morgan looks at the very same war. He also probably
thinks France might lose on the battlefield, but he has
a different insight a deeper, more modern insight. He doesn't
look at the army. He looks at the French economy.
He sees that it's diversified. He sees that France has
a very efficient tax collection system.
Speaker 1: So he's not betting on the army. He's betting on
the tax collector.
Speaker 2: Exactly. He had this brilliant realization, it doesn't matter if
France loses the war on the battlefield. The French nation
is rich enough and organized enough to pay back its
debts even if they lose. He was betting on the
underlying strength of the state, not the fate of the
current regime.
Speaker 1: That is a wild gamble, basically telling your investors, hey,
let's loan a fortune to the country that's about to
lose a war.
Speaker 2: It was the opportunity of a lifetime. According to the source,
Morgan puts together a massive syndicate and lends France the money,
and sure enough, France loses the war. Everyone holds their breath,
and what happens. France pays. In fact, they.
Speaker 1: Prepay the loan and Morgan clears what was it, one
point five million in.
Speaker 2: Eighteen seventies money. It was a colossal fortune. But more importantly,
It signaled a seismic shift in the world of finance.
The Rothchilds had been too conservative. They played not to lose,
Morgan played to win. The House of Morgan was now
officially a true rival.
Speaker 1: And this leads us directly to what the source calls
the Rothschild's biggest blind spot, America.
Speaker 2: The land of Madmen, as one of them supposedly called it.
Speaker 1: They called it that they did.
Speaker 2: They looked at the United States in the mid to
late nineteenth century, and they just saw chaos, financial panics,
bubbles bursts, wild expansion of brutal civil war. To their
old world sensibilities, it was just too unstable. They missed
the boat on the early American industrial boom. They missed
Vanderbilt's railroads, Carnegie Steel, Rockefellers oil. The Rothschilds were too
busy being comfortable in Europe.
Speaker 1: Meanwhile, the House of Morgan is literally building America. But
there's this one moment in eighteen ninety three that I
found absolutely fascinating, a moment where the old Guard and
the new Guard had to team up to save the day.
Speaker 2: The Panic of eighteen ninety three. This is a story
that really isn't taught enough in schools, but it was
a crisis on a global scale. The US economy completely collapsed,
a railroad bubble burst, banks failed, and the US government
was rapidly running out of gold.
Speaker 1: It's so hard to imagine today the US government just
running out of money. We just print more.
Speaker 2: But back then you couldn't. We were on the gold standard.
The value of the US dollar was tied to a
physical amount of gold held in the US Treasury. If
you ran out of gold reserves, the dollar would become worthless,
the government would default. The US Treasury was days away
from total collapse.
Speaker 1: So what happens.
Speaker 2: President Grover Cleveland is desperate. In a last stitch effort,
he calls the one man who might be able to
fix it, JP Morgan, Junius's son, the one with the
big nose in the piercing.
Speaker 1: Eyes, the monopoly man himself.
Speaker 2: Basically, Morgan goes to the White House and says, mister President,
I can save the country, but he needs gold, a
massive amount of physical gold, and he needs it now.
And who has the most gold.
Speaker 1: In the world, the rothchilds.
Speaker 2: So you have this incredible scene where the American upstart
JP Morgan has to broker a deal using Roth's Child
gold to bail out the entire United States of America.
Speaker 1: It's a crossover episode the Avengers of nineteenth century finance.
Speaker 2: It is Morgan puts together a syndicate that raises bonds
to buy three point five million ounces of gold from
the Rothschilds. It plugs the hole in the treasury and
saves the US economy, but it also highlighted a changing
of the guard. The roths Childs were the suppliers of
the Capitol, but Morgan was the architect of the deal.
Power was shifting from London to Wall Street.
Speaker 1: And then the twentieth century hits. And if the nineteenth
century was the Rothschild century, the twentieth was just rough.
Speaker 2: Rough is a massive understatement. The world wars were just
devastating for the family, both personally and financially.
Speaker 1: Let's start with World War One? Why was it so
bad for them? I mean, they made their first massive
fortune on the Napoleonic Wars. Why not this one?
Speaker 2: Two reasons? Scale and division. First, the scale of WWI
was unlike anything anyone had ever seen, trench warfare, millions dead,
entire national economies totally mobilized for years. But the real
problem for the Rosschilds was their own structure. Remember the
five arrows right.
Speaker 1: London, Paris, Frankfurt, Vienna, Naples.
Speaker 2: Well, by nineteen fourteen you have Austrian and German Rothschild
branches and you have French and British Rothschild branches.
Speaker 1: Oh no, they were at war with themselves.
Speaker 2: Literally, family members were on opposite sides of the trenches.
It completely paralyzed their ability to act as a unified
supranational entity, which had always been their strength. They couldn't
move money or information between branches because it would be treason. Meanwhile,
the House of Morgan, which was firmly Anglo American, could
go all in on financing the Allied side. Morgan became
the banker for the war. The ross Childs were just
trying to survive it.
Speaker 1: And then comes World War Two. It wasn't just about
business anymore. This was existential.
Speaker 2: It absolutely was the rise of Hitler. The Nazis targeted
the Rothschild specifically in their propaganda. They were the poster
children for the vile Jewish banking conspiracy myths. When Hitler
annexed Austria, the first thing he did was seized the
Rothschild Bank in Vienna. When he took France, the Paris
Rothschilds had to flee for their lives.
Speaker 1: The source mentions they lost everything, properties, priceless art assets seized.
Speaker 2: The financial devastation was immense. Palaces were confiscated, their legendary
art collections were stolen by Hermann Goring. The Vienna branch
was destroyed forever. The family had to run to New
York and London as refugees. By the end of nineteen
forty five of the richest family in history was still wealthy, yes,
but compared to their peak, they were a shadow of
their former selves. The world they had built was gone, and.
Speaker 1: Yet they didn't disappear. That's the thrilling thread here, isn't it.
They rebuilt, but they changed right. They went quiet.
Speaker 2: They pivoted into the shadows, and a Rothschild in London
under new leadership after the war, decided to focus on
what they were good at, government connections and above all, discretion.
They became a private club. They weren't trying to be
the biggest bank in the world anymore. It just wanted
to be the most exclusive and trusted.
Speaker 1: But even in the shadows, you can step on a rake.
The source brings up the Robert Maxwell scandal in the
nineteen nineties. I remember the headline about him falling off
his yacht, but Phyllison on the rothschild connection.
Speaker 2: So Robert Maxwell medium mogul, larger than life, a bit
of a bully in the eighties. He was looking for
credibility and money to build his empire. He went to
the Rothschilds. They helped take his company's public They advised
him on deals. It gave him this stamp of a lead.
Speaker 1: Approval, and then he fell off his yacht.
Speaker 2: Under very mysterious circumstances. Yes, and after he died it
was discovered that he had secretly looted hundreds of millions
of pounds from his own employees' pension funds. It was
one of the biggest frauds in British history.
Speaker 1: Were the Rothschilds involved in the fraud itself.
Speaker 2: No, there was never any evidence of that. They were
duped like many others, but they were his bankers. The
name was all over his companies. It was deeply embarrassing.
It violated that core rule of reputation. Above all, it
showed that perhaps their famous judgment wasn't what it used
to be. It was a major bruise on the brand.
Speaker 1: And this leads us into the modern era and what
the source calls the civil war inside the family, the
battle between Jacob and Evelyn Rothschild. This feels like a
plot line straight from that HBO show Succession.
Speaker 2: It is pure succession. In the nineteen eighties, you had
a major split in the British branch. On one side,
you had Sir evelynd De Rothschild the chairman. He wanted
to keep the bank small, family owned, conservative or traditional
boutique advisory firm okay. On the other side you had
his cousin, Jacob Rothschild. And Jacob looked at Wall Street.
He saw the rise of the megabanks, the trading floors,
the aggression of the eighties, and he wanted to expand.
He wanted to get bigger.
Speaker 1: He wanted to pull a Nathan go for Broke exactly.
Speaker 2: He wanted to merge with other banks, get into new
lines of business, modernize, and basically said no. He believed
that family control is more important than growth.
Speaker 1: So who won.
Speaker 2: Evelyn won, He held a chairmanship, Jacob left or was
pushed out, depending on who you ask and started his
own very successful investment fund called rit Capital. But the
main Rothschild Bank and M Rothschild and Sons remained on
that conservative path. And this decision is the key to
understanding where they are.
Speaker 1: Today, because if you look at a list of the
biggest banks in the world today JP, Morgan, Chase, Goldman,
Sachs City, the name Rothschild isn't on that list.
Speaker 2: It's not oh and that is by design. They made
a conscious choice. They chose longevity over dominance. If they
had gone public, if they had merged and expanded like
Jacob wanted, they might be a trillion dollar bank today,
but they wouldn't be the Rothschilds. They would just be
another global corporation owned by faceless shareholders.
Speaker 1: So today, in twenty twenty six, what is the House
of Rothschild? What do they do?
Speaker 2: They're a diversified empire of wealth management, private equity, and philanthropy.
They are they are the people you call when you
want to sell a multi billion dollar company quietly. They
are the people government's call when they need discrete financial advice.
They were still incredibly wealthy and influential, but they are
as the title of one book suggests an empire of shadows.
Speaker 1: It's just a fascinating arc. We started with Mayor in
the ghetto, desperate to break out. We saw Nathan conquer
the world with speed and aggression. We saw them miss
the American boom, and now they've settled into this comfortable, quiet,
enduring power.
Speaker 2: They survived at the end of the day. That is
the ultimate metric. The Habsburgs are gone, the Romanovs are gone,
the Ottoman Empire is gone. Lehman Brothers is gone. The
Rothschilds are still here.
Speaker 1: Which brings us to the big question for all of
you listening today. We talked about how the Rothschilds, especially
in the twentieth century, prioritized family unity and legacy over
maximizing every single profit opportunity. They missed the tech boom,
they largely missed the American century, all to keep control
within the family.
Speaker 2: Right and in today's economy, the mantra is move fast
and break things, grow at all costs, become a unicorn
or bust.
Speaker 1: So here is the question for you. Is that kind
of multi generational patience a lost art or is it
the only way to truly survive for centuries? If you
had to choose absolute global dominance for fifty years, like
the Rothschild's had in the nineteenth century, or steady quiet
influence for two hundred and fifty years. Which one do
you pick.
Speaker 2: It's the difference between being a firework and being a star.
A firework is amazing, everyone looks at it, but it's
gone in seconds. A star just keeps burning.
Speaker 1: Oh I like that. A firework and a star. That's
a great way to put it. Listeners, we really want
to know what you think. Head over to the comments
and let us know your pick dominance or longevity.
Speaker 2: And tell us if you think anyone today, maybe a Musk,
maybe a Bezos, is building a dynasty that you think
will actually last two hundred years or will they all
just fizzle out?
Speaker 1: Great question. Thanks so much for joining us on these
thrilling threads. We'll see you next time.
Speaker 2: Goodbye everyone,