The Darwinian principles of survival had the Galápagos Islands as their testing laboratory; those of financial survival (what in contemporary parlance we term wealth management) had as theirs Paris’ rue Lafitte, where for 150 years the Banque Rothschild resided. Here, behind a classically styled limestone facade, the wealth of Europe’s nations flowed, whole industries and infrastructures were invented, the destinies of countries decided. While Europe’s capitals waged war with one another, the watchful and often wise scions of rue Lafitte retained as clients (with justifiable exceptions) the rulers and rogues of Italy, Russia, Spain, Germany, Austria, and Great Britain.
This dexterous diplomacy would earn the Rothschild family an unscrupulous reputation—one that was not unfounded. When a struggle over the succession to the Spanish throne erupted between France and England on the one hand and Austria on the other, the family executed the astounding coup de maître of obtaining a valuable mining concession from the faction supported by the French and British governments. At the same time, the Rothschilds were able to preserve their strongest tie—to Prince Klemens von Metternich of Austria, who had ennobled brothers James and Salomon for their fiscal services in 1816. The family’s motives, however, were not so dubious as some suspected. From the close of the 18th century, when Mayer Amschel, a coin dealer, sent his five sons across Europe to establish offices, the Rothschilds exercised their power to ensure political and economic stability, adhering to the doctrine that peace was good for business.
The basis of their power was certainly, in part, a facility for handling money. Yet the Rothschilds distinguished themselves in their recognition that discretion, trust, service, and a good name were as valuable as any assets enriching the continent’s treasuries. In the 19th century, the physical movement of money from one state to another was a dangerous proposition. This international family could readily transport funds around the continent with a simple letter of exchange. This ability to move money (and goods) across national boundaries, even in times of war, made the Rothschilds the confidants of heads of state as well as leaders of industry. Not only was the family consulted on diplomatic matters, but the banking group’s extensive courier system quickly evolved into the channel of choice for confidential international communications. The French and Austrian foreign ministries, in fact, preferred the Rothschild couriers to their own, compelling their agents to disguise themselves on arrival in Europe’s capitals to prevent rumor from rattling local markets to their foundations.
This philosophy of service—predicated on the notion that transactions are secondary to relationships—has defined our modern concept of private banking. The Rothschild legend derives as much from possessing the wisdom and understanding of human affairs to earn the respect of prime ministers and kings, as from having the resources to finance armies (they underwrote the costs of the Battle of Waterloo). Then, as now, any private bank could provide its elite clientele with essential services; knowledge, however, and the skill to apply it to achieve a client’s objectives proved invaluable differentiators.
This singular perspicacity worked to the Rothschilds’ salvation as well, when, in 1981, the government of François Mitterand voted to nationalize Banque Rothschild. Having survived the centuries, Napoléon, the vicissitudes of the Vichy regime, and invasion by the Nazis, the most extraordinary banking institution on earth, it appeared, would be swept forever into the bureaucratic gristmill of an unfortunate social experiment. The family members quietly departed their quarters at rue Lafitte, but the building’s symbolism remained profound. The Rothschilds would not return to this historic seat, but the commitment to discreet service and the spirit of uncompromising ingenuity born there would live on in the family’s newest concern, Rothschild Continuation Holdings (RCH). Although private banking remains a substantial component of the Rothschilds’ operations, the family’s strength has shifted to mergers and acquisitions, a field in which it has surpassed its longtime competitor, Lazard Frères. Thus, more than 250 years after founding the bank, the Rothschilds, stripped of all other banking assets, may be said to have kept their most valuable one: their name.