War and Peace, the Rothschilds Version

Nathan Rothschild, he of the famous uber rich Rothschild family, got into the banking business only in 1811. And yet, when the British were fighting Napoleon in 1814, they turned to him for help. Why? Because the British needed a way for their war fighting money to reach the Continent. And by this time, the brothers had branches in most European cities. Plus, Rothschild had “acquired valuable experience as a smuggler of gold to the Continent”, writes Niall Ferguson in The Ascent of Money.

 

The British authorized him to collect up to ₤ 6,00,000 within 2 months, and ensure its availability at specified ports in Europe. It was an “immense operation” which the Rothschild brothers managed to pull off. And the rewards were in proportion to the risks – they got hefty commissions.

 

Napoleon lost, got exiled… and returned to power. As war seemed imminent again, the Rothschilds decided to proactively buy up as much gold as possible, in preparation for a long war, and a repeat in British need for their services:

“It was a near fatal miscalculation.”

 

The famous battle of Waterloo was fought and won very early:

“For Wellington, it was a glorious victory. Not so for the Rothschilds.”

Why was that?

“He and his brothers were sitting on a pile of cash that nobody needed – to pay for a war that was over.”

Was there a way out?

 

Remember, in those days, news travelled slowly. So Rothschild got the news of the British victory nearly 48 hours before others in England. It gave him just about enough time to take a desperate and bold gamble. He started selling off his gold and started buying British government bonds. His hope was that with the war over, the British government would be perceived as stable. They would reduce their army, in turn not needing to pay as much in soldiers’ salaries. All of these factors would mean that government issued bond prices would rise, and if Rothschild bought them early before others got to know of the British victory, he might make a lot of profit. He kept buying bonds, their prices rose as he had hoped, and he finally sold off 2 years later at a huge profit, approx. ₤ 600 million by today’s standards.

“It was one of the most audacious trades… one which snatched financial victory from the jaws of Napoleon’s military defeat.”

 

The Rothschilds kept building on this massive success, and were soon “in money and funds what Bonaparte was in war”. They went on to switch their investments and income streams to areas where peace and stability suited them, and war hurt their interests. The leopard had changed its spots.

 

When countries wanted to fight wars, they had to turn to the Rothschilds for the money to wage those wars. But since war wasn’t in their interest, they’d usually refuse to fund it! So strong was their control that one commentator asked:

“Does anyone believe that a great war could be undertaken by any European state… if the house of Rothschilds and its connexions set their face against it?”

 

This was obviously a good thing, but this preference led to other choices. For example, the Rothschilds were dead against attempts to unify Italy and Germany. Why? Well, if those countries were unified, they’d be strong, which meant there’d be yet more powerful countries in Europe ready to go to war. Similarly, during the American Civil War, the Rothschilds sat it out – unwilling to fund either side. If a war had already started, well, the Rothschilds would choke the funding to shorten its duration.

 

Their ends were selfish (business profits), no doubt, but if the means were serving a good purpose (reduced wars), should we really complain?