A gilded brand

The World's Banker: The History of the House of Rothschild

Niall Ferguson <em>Weidenfeld & Nicolso

Superlatives attach themselves to the Rothschild family like burrs. They are the greatest, richest, most enduringly successful banking dynasty the world has ever seen. From their five European power bases, the family was able to influence world politics, during the 19th century in particular, to a degree unrivalled since David was king of the Jews. Their palaces, gardens, art and antique collections, vineyards and stud farms are the stuff of legends. And the family name, gilded with as much mythology as history, is one of the most alluring brands around. It is only fitting, then, that the first authorised history of the Rothschilds, written by Niall Ferguson, a prolific and indefatigable young Oxford don, should be superlatively weighty.

With the co-operation of most leading members of the family today, Ferguson has been granted unprecedented access to all Rothschild archives predating 1915 (more recent files remain closed to preserve client confidentiality). And, with the help of a small army of research assistants, archivists and staff at the banks, he has trawled through a mountain of ledgers and statistics, as well as an astonishing 20,000 letters, many of which were written in a crude code or dialect of Hebrew, to produce a book that aims to be all things to all readers.

The World's Banker is an extremely detailed economic history for those who are interested in the role that financiers played in developing the industrial economies of the 19th century. It is a financial history revealing how deals were constructed in the emerging international bond and bullion markets, and how banking adapted to the needs of the industrial age. It is a diplomatic history demonstrating how the extraordinarily well-connected Rothschilds were able to operate as an informal channel of communication between world leaders in times of crisis as well as peace. It is a formidable work of scholarship, with 200 pages of footnotes and a 30-page bibliography. But it is also a family biography aimed at the general reader. Timed to coincide with the bicentenary of the founding of the London branch of the Rothschild bank, the book is undoubtedly a seminal work. But even a Rothschild, one suspects, will have difficulty getting to the end of it.

The family as we know it began with Mayer Amschel, a trader in antiques who lived in Frankfurt's squalid Jewish ghetto in the second half of the 18th century. Mayer was a man of Old Testament vigour. He coined the family name, most probably from a red shield that hung above his front door, and went on to construct the pillars of a business that would sustain the house of Rothschild over two centuries. Starting with almost nothing, it was Mayer's ability to buy and sell rare old coins that brought him into the orbit of the immeasurably wealthy Prince William of Hesse-Kassel, an enthusiastic collector. Extending credit to his clients was a natural extension of trading and soon Mayer was an embryonic banker. He did well and any profits made, including his young wife's substantial dowry, were ploughed back into the business. When he died, aged almost 70, he had fathered 19 children, although only 10 survived. He left his five sons a substantial fortune, but their greatest inheritance was his way of doing business.

On his death bed in 1812, Mayer urged his sons to abide by the principles of family unity and always work together. Only male members of the family were to be allowed into the business; female Rothschilds and their spouses could have no part of it. All Rothschilds were to remain true to the principles of the Jewish faith and be diligent and honourable. And the importance of disseminating reliable information quickly within the family while maintaining secrecy outside it was stressed. "Keep your brothers together," Mayer exhorted his eldest son, Anselm, "and you will become the richest people in Germany." In fact, the five Rothschild boys of the second generation were to become collectively the richest men in the world.

Ferguson demonstrates how the key to the success of the family was the geographical range they were able to cover. This enabled them to profit vastly from international business where they had almost no competition, and to weather political storms in different regions of their empire. Each of the boys had their own territorial base in Frankfurt, Vienna, Paris, Naples and London. And just as this wide geographical spread was the key to their 19th-century success, so the failure to establish a proper presence in the United States before the turn of the century was the reason for the weakness of the house in the first half of the 20th century.

Through their networks of government loans, the family established the international bond market. Their system of helping their fraternal branches to absorb losses during times of crisis foreshadowed the way that central banks this century would co-operate. The Rothschilds were quick to understand the potential of the railways. They pioneered investments into mining metals, gems and fuel. And this century they swiftly recognised the possibilities offered by European economic integration.

Although the Rothschilds have made a point of marrying within the Jewish community, and as often as not within the family, they have tended to be assimilationists rather than Zionists. They have done much to break down the social barriers erected against Jews. They struggled throughout the 19th century for Jewish emancipation, buying the freedom of the entire Frankfurt community in 1811 and lobbying to remove discriminatory legislation from the statute books. Rothschilds were the first Jews to be ennobled both on the Continent and in Britain. The family battered at the gates of parliaments, universities and innumerable offices which had formerly been closed to Jews.

If Ferguson's sober and balanced history seems a little thin on characterisation and anecdote, you can turn to Frederic Morton's recently reissued Portrait of a Dynasty, which updates his best-seller of the 1960s. Morton was initially seduced by the glamour of the family as he queued in an opulent Rothschild palace in Vienna for the exit visa that would take his Jewish family away from Nazi Germany. Subsequent proximity to the family has only brightened their lustre in his eyes.

In a book that is more fable than facts, Morton races the reader through his erratic but readable version of the Rothschild history. Breathless in style, liberally dashed with foreign words and generalisations, he treats the family like the cast of a romantic novel. Yet it is here, rather than in Ferguson's book, that the reader discovers - in the news about the suicide in 1996 of Amschel - that along with the money and privileges of being a Rothschild come expectations which are sometimes more than a Rothschild can bear.

The author is a former literary editor of the "Moscow Times"