Rothschild banking family of France

Arms of the Rothschild family

The Rothschild banking family of France is a French banking dynasty founded in 1812 in Paris by James Mayer de Rothschild (1792–1868). James was sent there from his home in Frankfurt, Germany, by his father, Mayer Amschel Rothschild (1744–1812). Wanting his sons to succeed on their own and to expand the family business across Europe, Mayer Amschel Rothschild had his eldest son remain in Frankfurt, while his four other sons were sent to different European cities to establish a financial institution to invest in business and provide banking services. Endogamy within the family was an essential part of the Rothschild strategy in order to ensure control of their wealth remained in family hands.

Involvement in finance and industry

Through their collaborative efforts, the Rothschilds rose to prominence in a variety of banking endeavors including loans, government bonds and trading in bullion. Their financing afforded investment opportunities and during the 19th century, they became major stakeholders in large-scale mining and rail transport ventures that were fundamental to the rapidly expanding industrial economies of Europe. In partnership with N M Rothschild & Sons of England, they owned Chemin de Fer du Nord railway in France that ran from their Gare du Nord station in Paris to the English Channel. In addition, the Rothschilds in France became leaders in the wine growing industry. By the later part of the 19th century, oil was fast becoming an important commodity and the French bank was heavily involved in oil exploration in the Baku area of present-day Azerbaijan through their company, the Caspian and Black Sea Oil Industry and Trade Society established in 1883. Their investment proved to be a lucrative one and by the turn of the century, the various oil companies in Azerbaijan were producing more oil than any other country in the world. In 1898, the Rothschilds established the Mazut Transportation Society that developed a fleet of oil tankers operating in the Caspian Sea. In 1911, the Royal Dutch Shell company purchased the Azerbaijan oil fields from the Rothschild family.

The French Revolution in 1789 brought positive changes for French Jews, resulting in their full emancipation in 1791. In 1806, Napoleon I ordered the convening of a "Grand Sanhedrin" in Paris and in 1808 he organized the "Consistoire central des Israélites de France", the administrative agency for all French Jews. The consistorial system made Judaism a recognized religion and placed it under government control. This Consistoire has been a functioning body ever since, except under the Nazi occupation of France during World War II. By tradition, the Central Consistoire has had a member of the Rothschild family as its President.

Jacob Mayer Rothschild, the youngest son, settled in Paris in 1812 where his name Jacob was translated to James. In 1817, he formally created the bank, de Rothschild Frères whose partners were brothers Amschel of Germany, James of France, Carl of Naples, Nathan of England and Salomon of Austria. Highly successful as lenders and investors, the Paris operation also became bankers for Leopold I of Belgium. In 1822 the influential James and his four brothers were awarded the hereditary title of "Baron" by Emperor Francis I of Austria.

Following the July Revolution of 1830 that saw Louis-Philippe come to power in France, James de Rothschild put together the loan package to stabilize the finances of the new government and a second loan in 1834. In recognition of his services to the nation, King Louis-Philippe elevated James to a Grand Officer of the Legion of Honor. In his book, The House of Rothschild (vol. 2) : The World's Banker: 1849-1999, Niall Ferguson wrote that according to the records, in 1815 the capital of the Paris banking house James Mayer de Rothschild founded amounted to £55,000; by 1852 the figure was £3,541,700 (£326 million in 2012 terms), and just ten years after his death, £16,914,000. There is a theory that before Louis-Phillipe came to power the Rothschilds were fronting for the House of Orleans. A major portion of the business has consisted of selling French government bonds to French investors through London to protect their anonymity. There was a general perception on the part of the French that otherwise their government might unilaterally reset terms. No French fortune was more likely to face the problem than the younger branch of the royal family. The theory follows that when the Orleanists came to power they became less provident but by then the Rothschilds had numerous other clients.

The de Rothschild Frères banking business was passed down to ensuing generations. Run by his sons Gustave and Alphonse, during the Franco-Prussian War the bank put together a syndicate that raised the five billion francs the country was obliged to pay Prussia under the terms of the 1871 armistice. James Mayer de Rothschild had stipulated "that the three branches of the family descended from him always be represented." For the next two generations that was the case but in 1939, Edouard Alphonse de Rothschild and cousin Robert-Philippe-Gustave de Rothschild, incompatible with their other cousin Maurice de Rothschild, bought out his share. Maurice went on to be enormously successful and, having inherited a fortune from the childless Adolph Carl von Rothschild of the Naples branch of the family, he moved to Geneva, Switzerland and perpetuated the new Swiss branch of the family.

In 1873 de Rothschild Frères in France and N M Rothschild & Sons of London joined with other investors to acquire the Spanish government's money-losing Rio Tinto copper mines. The new owners restructured the company and turned it into a profitable business. By 1905, the Rothschild interest in Rio Tinto amounted to more than 30 percent. In 1887, the French and English Rothschild banking houses lent money to, and invested in, the De Beers diamond mines in South Africa, becoming its largest shareholders.

Changes in the heads of government, war, and other such events affected the family's fortunes both for their benefit and to their detriment. However, the interests of all Rothschild banking families across Europe were adversely impacted in a very major way by three historical events: 1) the Revolutions of 1848, 2) the Great Depression of the 1930s and 3) Nazism of the late 30s through World War II. For the French branch, the 1981 nationalization by the newly elected socialist government of François Mitterrand was an equally significant disaster.^[1][2]

In 1953, future President of France, Georges Pompidou, joined de Rothschild Frères and from 1956-1962 he served as general manager. In 1962, the Rothschild's created Imétal (now named Imerys), an umbrella company for their considerable mining ventures. Headed by Guy de Rothschild, Imétal looked outward, investing in Great Britain and the United States, a move that put him on the December 20, 1963 cover of Time. In the 1960s, government reform of banking regulations ended the legal distinction between banques d'affaires and deposit banks and in 1967 de Rothschild Frères became Banque Rothschild, a limited-liability company.

A part of the success of the bank that James Rothschild built was through the funding of loans to European governments. This sector of banking began to decline during the latter part of the 19th century following the introduction of new methods for government financing. By 1980, the Paris business employed about 2,000 people and had an annual turnover of 26 billion francs ($5 billion in the currency rates of 1980).^[3] But then the Paris business suffered a near death blow in 1981 when the Socialist government of François Mitterrand nationalized and renamed it Compagnie Européenne de Banque. In 1987 a successor company called Rothschild & Cie Banque was created by David René de Rothschild who was joined by his half-brother Edouard de Rothschild and cousin Eric de Rothschild.^[4] Capitalized at only $1 million and starting with just three employees, they soon built their tiny investment bank into a major competitor in France and continental Europe. In 2003, following the retirement of Sir Evelyn de Rothschild as head of N M Rothschild & Sons of London, the English and French firms merged into the Group Rothschild under the leadership of David René de Rothschild. In 2006, the French banking division expanded into Brussels, Belgium.

Decline and rise of economic power

By the end of the 19th century, the introduction of national taxation systems had ended the Rothschild's policy of operating with a single set of commercial account records resulting in the various houses gradually going their own separate ways. The system of the five brothers and their successor sons had all but disappeared by World War I.^[5] However, the estate tax relative to the bank and corporate assets was far more detrimental long-term because it restricted growth at a time when publicly owned banks were expanding rapidly with huge resources raised on capital markets. In the 1930s, their vast railroad holdings were nationalized and in 1940 the Nazis seized their bank. Then, after having the bank restored to them at the end of the war, in 1981 the bank Rothschild Freres was nationalized by the French socialist government of President François Mitterrand.^[6] The New York Times wrote that the Rothschilds "grossly misjudged the opportunities directly across the Atlantic" and quoted Evelyn Robert de Rothschild as saying that while the family had been in business for 200 years "we never seized the initiative in America and that was one of the mistakes my family made."^[7]

The Rothschilds today

Both the British and the French branches emerged from the Second World War with new generations of the family at the helm. Historic partnership ties between the two branches were revitalized, leading to a complete merger in 2003.

An enduring entrepreneurial spirit saw business survive nationalization in France and the development of an international network of branch offices.

The Rothschilds created their first hedge funds in 1969, and, in the 1980s, strengthened its position as a world leader in investment banking. Today, Rothschild has over 4000 private clients in 90 countries and is a global private bank.^[8] Rothschild provides a comprehensive range of services to individuals, governments and corporations worldwide.^[9]

Involvement in wine growing

The second French branch was founded by Nathaniel de Rothschild (1812–1870). Born in London, he was the fourth child of the founder of the British branch of the family, Nathan Mayer Rothschild (1777–1836). In 1842, he married Charlotte de Rothschild (1825–1899), daughter of James Mayer de Rothschild and in 1850, they moved to Paris, where he was to work for his father-in-law's bank. However, in 1853 Nathaniel acquired Château Brane Mouton, a vineyard in Pauillac in the Gironde département. Nathaniel Rothschild renamed the estate Château Mouton Rothschild: it would become one of the best-known wine labels in the world.

In 1868, Nathaniel's uncle/father-in-law, James Mayer de Rothschild, acquired the prestigious neighboring vineyard, Château Lafite.

Philanthropy

The French Rothschilds and members of the other branches in Europe were all major contributors to causes in aid of the Jewish people. However, many of their philanthropic efforts extended far beyond Jewish ethnic or religious communities. They built hospitals and shelters for the needy, supported cultural institutions and were patrons of individual artists. Their donation of works of art to various galleries has been the largest of any family in history. At present, a research project is underway by The Rothschild Archive^[10] in London to document the family's philanthropic involvements.

Family members

Notable Rothschild family members in France include:

Rothschild properties

All branches of the Rothschild banking family are famous for their art collections and a number for their palatial estates. Among the Rothschild properties in France were:

See also

• Rothschild banking family of Austria
• Rothschild banking family of England
• Rothschild banking family of Naples

References

Further reading

External links

• Website for groupe LCF Rothschild (English language)
• Website for Rothschild & Cie Banque (French language)
• French government Archives for de Rothschild Frères (French language)
• The Rothschild Archive - an international centre in London for research into the history of the Rothschild family. (English language)
• The Musical Associations of the Rothschild Family by Charlotte Henriette de Rothschild