The House of Rothschild: Money's Prophets 1798-1848 [Paperback]

I have just finished reading the second volume of this extensive history of the Rothschild family. The author was given access to private writings of the family members, who were avid correspondents with one another. As a result, he is able to bring insight and additional historical information into the narrative of this famous financial house -- or rather houses -- as there were five established during the period of the family's greatest fame and influence. The author makes a strong case that financial constraints definitely limited the actions of nations as they sought to finance their wars and reparations when they lost.

While the two volume work has great sweep, it lacks depth. One senses that since the Rothschild heirs gave the author access to previously unseen source materials, he was reluctant to level serious criticism against the family. Remember, in many cases the financing they provided governments was the necessary, but not sufficient, ingredient for great human suffering -- the very point of these volumes. It is not all a dark picture for the family's activities, far from it, but a blind eye has been turned. More importantly, one turns away from the effort of reading these volumes feeling unfulfilled. Of all that he has written, what was the significance of this great family's prodigious financial activity? Were they a force for good or evil? On balance, has humanity benefitted or been ill served by them? These questions linger as the second volume concludes, and they remain unanswered, or at least, without an answer from this obviously talented and hard working author.

An essential, if unsatisfying, work.

Those who already know Niall Ferguson do not need any praise for the books he writes: a few years ago I chanced to read his excellent "The Cash Nexus" and this led me to "The Pity of War" and finally to "The House of Rothschild".

Ferguson is a scholar who loves challenges: not just challenging arguments, but also challenges in the sheer volume of sources and research, and finally challenges to the reader in presenting controversial theses (I think specially of those advanced brilliantly, and contentiously, in "The Pity of War" - see my review if interested).

This last effort is mainly an attempt to unveil the Rothschild mythology, restoring an historically accurate perspective both of the family saga and of the banking and financial European history from 1798 to 1848.

The book is a masterpiece for many reasons: not just story of a family (circumscribed to the male members), not just story of a great banking institution in the past two centuries, but also comprehensive financial history of the first half of XIX century... "a rich and nuanced portrait" as the book leaflet reads - that reveals and hides, but also creates an appealing and fascinated image of those turbulent years.

So, it can appeal the history buff, and all those readers interested in financial history (and speculative bubbles) as well as those interested in biography and cultural history.

The essay definitely has also - obviously maybe - a literary dimension: because in describing the five brothers Ferguson uses those same "colors" used by contemporaries, a literary dimension that cannot but appeal and enrich the more serious economic investigation: for Nathan the "meteoric" larger than life Napoleon-like image (passion for risk, high stakes on the table and the ruthlessness of a general), for James that richly colored literary portrait (full of mid-tones) we have been used by writers like Balzac, Zola and Stendhal (the mix of secretiveness and candid frankness, detachment and savoir vivre), for the others three brothers the age-old mythologies of Midas and the wandering Jew (specially in the portrait of the German and Austrian branch: they seem consciously prisoners of the Jewish stereotype in their inability to enjoy life and relax).

Every reader interested in the story of the House of Rothschild want to know the why and how a middle class Jewish family confined in the Frankfurt ghetto was able in just one generation to become the richest family in the world.

Ferguson's study is very good in the pars destruens, that is in taking down and unveiling the old mythologies (like the Waterloo myth, or the Hesse Kassel myth), less good in the pars construens that is substituting a coherent explanation. The surviving accounts are of course too tiny to cast light, and the accounting techniques used by the family in the early days too backward to be critically useful.

So the impression is that of an unending race over speed limits, a sheer willingness to accept often uncalculated risks and to play for the highest stakes and at the same time an impressive luck (or God's favor) that stuck contemporaries (always expecting the meteoric rise of Nathan to end like the parallel story of Napoleon).

So was their preeminence produced only by chance?

Yes and no. Chance - according to Ferguson - played a striking role in the early stages - the building up, but consolidation and enlargement were due to specific attitudes of the family: solidarity between brothers, their informative network, their ability in cultivating diplomacy and - not least - to the fact that the family systematically reinvested in the business about 96percent of the net income produced (unlike - say - the Barings brothers, that in 1816 had almost the same size)

The book will be also hugely helpful to readers interested in European history, casting a different - unusual to most readers - light in the inner mechanism of the early XIX century European politics.

As for the nature of the Restoration, often liquidated by historians as a narrow and backward attempt to turn back the clock to pre-revolutionary times, Ferguson shows how different in reality was this period from the Ancien Regime and how the seeds of modernity were well present and working: the sheer preference of the banking institution for financing representative-backed monarchies, the consolidation in Jewish emancipation all over Europe, but also the frailty of arch-conservative governments (not just the case of Spain, but also of the Holy Alliance) compared to more pragmatic approaches.

A rather under-developed theme is the rise of modern anti-Semitism: Ferguson - unlike most scholars - indicates the first traces in France well before the Affaire Dreyfus and hints how the irresistible rise of the Rothschild family (with their devotion to Judaism) was very instrumental in consolidating anti-Jewish mythologies (out of a sense of envy but also perceived in France especially as a alien "evil" power).

As a reader interested also in financial themes, I was truly fascinated by those chapters dedicated to the bond and stock markets, particularly those regarding the default of Spanish and Portuguese consols.

The Rothschild were the first bankers to export the financial facilities, long enjoyed in Great Britain, to Continental Europe and were decisive in creating a retail market for bonds and stocks.

But the most interesting part is the one dealing with financial speculation, bubbles and defaults. Most remarkable is the feeling of a déjà vue: if you substitute Spain and Portugal with Argentina, you will observe striking similarities both in price, negotiations and very likely in the final outcome. Nihil sub sole novi, or at least it seems so.

This is a book I greatly enjoyed.

I cannot but recommend it to every reader interested in serious history.

That is not to say that it is perfect: I was - as many other reviewers - incensed by the lack of bibliography (shame on Penguin), but on the average it is an outstanding achievement.

Likewise, if you happen to be interested in the argument, you may be interested in other works I chanced to read about the same themes:

- Muhlstein, Anhka - "James de Rothschild", this is a book I read long time ago, but it was more a biography in the classical way and as far as I remember, I found it rather inconsequential

- Chancellor, Edward - "The Devil Takes the Hindmost" - a colorful and well-informed essay focusing specially on the XIX century. There are chapters dedicated to defaulting bonds in the XIX century as well as to the railway stocks bubble in the United Kingdom.

- Conor Cruise O'Brien - "The Siege: The Saga of Israel and Zionism". I have many works dedicated to Sionism and Judaism, but this is the most concise and clear exposition of the birth of anti-Semitism in Western Europe in late XIX century.

You are most welcome if you can suggest other readings or just share ideas and comments!

Thanks for reading.

I have to start out by saying overall I enjoyed the book but I would only rate it as an average book. It is a little too detailed and didn't keep my interest from one chapter to the next. It would have been better if it left out 150 pages or so. I found myself doing a lot of skiming over what I would say was boring filler in the book. You can learn a lot about the type of business that that Rothschilds were in but not a lot of how they went about doing it.

After reading this it seems that the Rothschilds were in the business of making large loans to governments and then packaging these loans as bonds and selling them to the public. They were as much bond and commodity traders as they were bankers, which I found interesting. There are numerous quotes from letters written back and forth between family members that will give you a sense of their personalities. The family history is very detailed so if this is the kind of thing you are interested in then you will probably enjoy the book more then I did.