Mayer, the Merchant of Judengasse
Mayer A. Rothschild said, “It takes a great deal of boldness, mixed with a vast deal of caution to acquire a great fortune; and then it takes ten times as much wit to keep it after you have got it, as it took to make
it.”[22]
From the time of its founding, the Rothschild banking family has maintained strict privacy. The family sequesters itself in private splendor, away from all publicity. People assume, wrongly, that their power and influence has diminished and only the legend remains. That is exactly what they want people to think. They own banks in the world’s major cities and a huge network of industrial, mining, commercial and tourist corporations, and numerous charities – all unassociated with their name. They dispense their charities from a special department of the London bank. Their name does not appear on any of their business headquarters.[23]
In the mid-1700s, Germany was composed of more than a hundred states, each governed by sovereigns with citizens that spoke as many as twelve different dialects. The rich, typically the wholesale merchants, dominated each city. People found the ideas of nationhood and a concentration of state power inconceivable. Every principality, like Frankfurt, successfully coined its own money, creating the necessity for moneychangers. They did not allow Jews to farm or own land but they could own the houses upon the land. Most of Frankfurt’s Jews were pawnbrokers, moneychangers or they operated second-hand shops.[24]
Ashkenazi Jews of the Germanic states, not legal citizens, with surnames, adopted names associated with their houses or shops. People can trace the Rothschild name back to the ancestor, Izaak, son of Elchanan as noted on his tombstone.[25] He lived in the Frankfurt ghetto in a house at the more affluent end of Judengasse (Jews’ Alley), from which he had derived his name, zum roten Schild (at the sign of the red shield). The family retained the name when they relocated, years later, to another house, the Hinterpfann.[26] They shared the dark and dreary three-story, 900 square feet house with the Bauer family, along with their respective businesses.[27]
Mayer Amschel Rothschild was born in that dilapidated tenement on February 23, 1744 in the Jewish ghetto, home to about 2,500 Jews. He was the fourth of eight children of Schönche Lechnich and Amschel
Moses Rothschild, a moneychanger and traveling merchant who, later accompanied by the very astute Mayer, often sold beads and trinkets to the servants at the castle of the Landgrave (Landlord).[28] Amschel sent Mayer, his brightest child, to the Yeshiva at Fürth near Nürnberg to become a rabbi. Mayer’s father died on October 6, 1755 during a smallpox epidemic in the overcrowded ghetto. His mother died on June 29, 1756. In 1757, relatives helped Mayer secure an apprenticeship under Wolf Jacob Oppenheimer, at the Jewish banking house started by Simon Wolf Oppenheimer in Hannover, a city a little more tolerant of Jews.[29] Wolf Jacob and Simon Wolf Oppenheimer were descendants of Samuel Oppenheimer, the Court Jew to the Austrian Court.
Mayer A. Rothschild, now part of the privileged world of the Oppenheimers, expanded his inherent monetary skills. He gained useful experience in foreign trade, currency exchange and augmented his knowledge of rare coins through the bank’s rare coin collection. By the age of eighteen, his superiors and their customers considered him an expert in old coins. He assisted bank patrons, like General von Estorff, in their purchases of collectable coins. In 1763, he returned to the Judengasse, an area completely walled in from the rest of Frankfurt in order to facilitate the collection of taxes. Soldiers manacled the ghetto’s three gates at five o’clock every night.[30] They re-opened the gates every morning at seven o’clock. Officials paid the guards out of the taxes collected from the Jews.[31]
Frankfurt (Frankfurt am Main), a major trade center, was located on the trade routes leading from England, the Netherlands, Russia, Venice and France to the hanseatic towns of the north. Frankfurt, on the banks of the Main River, allowed ready access to the Rhine, Europe’s key waterway and, at the time, the cheapest, most efficient, downriver transport.[32] Mayer worked with his two brothers, Moses and Kalmann, in their secondhand shop. Gradually, he developed a new section where he traded in lucrative rare coins, medals and other curios, quaint jewels, engravings and antiques. General von Estorff, the ardent coin collector, was now attached to the court of Prince Wilhelm of the Principality of Hanau, near Frankfurt.[33] Rothschild persuaded Estorff to entice Prince Wilhelm to purchase a small quantity of his most precious coins and medals at a very special discount price. Discount pricing was/is a very shrewd Rothschild tactic. Even Prince Wilhelm could not withstand the temptation of a good deal.[34]
Mayer soon added a Wechselstube, a rudimentary currency exchange, which began to produce steady profits. Merchants often served as bankers – thus the designation of a merchant banker. Merchant banking practices actually originated in Genoa, Venice and Florence and by the fourteenth century, were highly developed. The Medici and Fugger families were early merchant bankers. Subsequently, merchant bankers began engaging in business in other areas of Europe. The Barings established a London branch in 1763. These people were merchants before they engaged in banking, a result of their lengthy trading in a huge assortment of merchandise throughout the world. Their merchandising practices slowly evolved into “the more specialized field of financing the trading.” Initially, the early merchant bankers transacted all of their business themselves until they discovered they could make more profit by hiring agents and factors to handle many of their trades through the bills of exchange. Merchant bankers financed the Napoleonic Wars. They established an “espionage system throughout Europe” and frequently knew more about the circumstances in a county than the king and his advisors.[35]
Mayer Rothschild traveled to German cities within a half-day’s ride, in order to return by five o’clock before the guards locked the ghetto gates. He participated in Frankfurt’s huge spring and autumn fairs whichattractedcoincollectorsfromalloverEurope.[36] Heregularlypurchasedpreciouscoinsfromneedy coin collectors and sought to acquire the entire inventories of his rivals when they realized that they could not compete with Rothschild and his phenomenal bargaining skills. Therefore, he not only acquired his competitor’s stock but also built an influential clientele.[37] Author Frederic Morton wrote, “The premise of the family’s conquest lay in the very unobtrusiveness of their crouch and the silence of their leap.”[38] By
1771, Rothschild had a beautifully scripted catalog describing his precious coins and gold medals that he sent to prospective clients all over Europe.[39] His brothers remarked that he was, in creating his catalog, like a dedicated Talmudist writing a book.[40]
On September 21, 1769, he exploited his small transaction with the prince who appointed Rothschild as a Hoffaktor (Court Factor).[41] Rothschild posted a sign on his house, “M. A. Rothschild, By Appointment Court Factor to His Serene Highness, Prince Wilhelm of Hanau.” Although honorary factorships were common, it impressed the neighbors and even the ghetto officials, which simplified his regular travels out of the ghetto. Moreover, it apparently impressed Gütle Schnapper’s father, Wolf Salomon Schnapper, also a Court Factor, who then arranged for the couple to marry on August 29, 1770. She came from a relatively well-to-do family who provided a handsome dowry of 2,400 gulden.[42]
They soon had children – five sons and five daughters. Their sons would ultimately alter the world, Amschel Mayer (1773-1855), Salomon Mayer (1774-1855), James Mayer (1792-1868), Kalmann (Karl) Mayer (1788-1855) and Nathan Mayer (1777-1836). They had daughters, (Schönche) Jeannette (1771) married January 28, 1795 to Benedikt Moses Worms; (Belche) Isabella Rothschild (1781) married in 1802 to Bernard J. Sichel; Brienliche (Babette) (1784) who married, in 1808, to Sigmund L. Beyfus; Julie (1790) who married, on August 28, 1811, to Mayer Levin Beyfus; Henrietta (Jette) (1791) who married Abraham Montefiore.[43]
On Saturday evenings, after prayers at the synagogue, the rabbi often visited at Mayer Rothschild’s house. While sipping wine, they contended about numerous issues, frequently late into the night. Mayer regularly recited “Hebrew singsong” to his family from the Talmud.[44] The Rothschild family, at that time, and perhaps to this day, was deeply entrenched in Talmudic teachings.
In 1776, the Landgrave Frederick II of Hesse-Kassel, father to Wilhelm, sold a contingent of about 30,000 Hessians to his English cousin, George III, to fight in the American Revolution for several million in English bills. Rothschild brokered this profitable venture and apparently recognized that war was highly profitable – for both the House of Hesse and the moneychangers.[45] Rothschild purportedly made a profit of $3 million, received from George III of England, because he helped supply those mercenary troops at £8 each. The King sent these troops to the Colonies where they slaughtered the colonists during the American Revolution. The Earl of Chatham and his son William Pitt opposed the policy of the international Money-Barons. King George III appointed Pitt as the Prime Minister because Pitt convinced the King that the bankers were orchestrating wars throughout Europe “to serve their own selfish purposes.” The Rothschilds have always used warfare as a revenue source.[46]
Prince Wilhelm’s treasurer, Carl Buderus, managed his massive wealth, obtained by trafficking in human flesh, as his father had before him, through an entity ironically called Serenity. Wilhelm conscripted his male subjects and trained them as soldiers. Then he sold or rented them for “peacekeeping” services to Europe’s royal families. Britain used his Hessians to maintain control in the colonies. His customers paid in foreign currency and the prince used several discounters to cash the foreign bills of exchange. Buderus allowed Rothschild, who charged lower discount prices, to cash a few of Serenity’s London drafts.[47]
The Rothschilds, just one of fifteen Judengasse families who traded in English textiles, developed important trading connections with Amsterdam, London’s rival in printed textiles and international finance. By the mid-1700s, Jewish merchants were settling in London, including the Goldsmids, Salomans, Levys, Mocattas, Raphaels and the Cohens. They built and attended the Bevis Marks Synagogue and intermarried, a practice designed to avoid assimilation. By 1760, Goldschmidt, a surname common in Frankfurt, and Lehmann Isaak Hanau were the primary Jewish textile merchants in that city. They were Imperial court agents, had a warehouse in Amsterdam, and traded in cottons, silks and drugs, a very profitable venture. In 1795, Mayer would arrange for his son Amschel Mayer to marry Eva Hanau,
daughter of Lehmann Isaak Hanau and Täubche Goldschmidt.[48]
Rothschild collaborated with Prince Karl Anselm of the House of Thurn and Taxis, headquartered in Frankfurt, and headed by the Prince who was the hereditary postmaster of the Holy Roman Empire as early as 1290. By 1516, Maximilian I commissioned this Milanese family to develop the Thurn and Taxis postal system between Vienna and Brussels which eventually encompassed all of Central Europe.[49] Author Terry Melanson, in his excellent book, Perfectibilists, wrote, “The Thurn und Taxis family had the advantage of foreknowledge about politics and business that no other ruling house had ever been privy to.”[50] By 1780, Rothschild was one of Anselm’s preferred bankers due to his discounts and short-term loans. He used his association with Anselm to enhance his relationship with Wilhelm.[51]
Adam Weishaupt probably also benefited from the postmaster’s unique position as he had told his cohorts to exploit those charged with supervising correspondence.[52] Prince Karl Anselm, the “hereditary postmaster” (1773-1805), routinely extracted information from private communications, which he gave to the Emperor Francis II, the last Holy Roman Emperor (1792-1806). Rothschild, realizing the importance of “early and accurate information,” in exchange for vital information, continued to provide Anselm with profitable opportunities. Ultimately, using his association with Anselm, he persuaded the emperor to appoint his family as the “crown agent.” Francis II consented and issued a patent, dated January 29, 1800. This would function as a veritable “passport” throughout Germany.[53]
Rothschild added a transport and forwarding agency (early-day Western Union) expanding his business into a wholesale commodities trading company. His two oldest sons Salomon and Amschel worked in the business.[54] Mayer’s wife and girls also worked in the shop and Mayer tutored the boys in the Wechselstube. Though they remained on Judengasse, Mayer, like other merchants, rented offices and a large four-roomed warehouse outside of the ghetto in Fahrgasse.[55] The family worked from morning until late at night and Mayer became a major wholesaler with large stocks of English woolens, cottons, and coffee, sugar, flour and rabbit skins. He deliberately cloaked his wealth behind a modest lifestyle.[56] In 1782, he hired an assistant and began granting letters of credit, extending small loans and handling capital transfers and commodities exchanges. He reinvested the profits to enlarge his business.[57] One of his London agents was Saloman Salomans, a rich broker. When Mayer sent Nathan to London in 1798, he stayed with Levi Salomans.[58]
In 1783, Carl Buderus influenced the Frankfurt officials to give Mayer a gate pass which allowed him to leave the ghetto at night, on Sundays and other normally restricted times.[59] On October 31, 1785, Prince Wilhelm’s father died and the prince’s finances dramatically increased when he became heir to his father’s huge fortune. Now he was Wilhelm IX, the Landgrave (Landlord) of Hesse-Kassel. He moved his entire entourage into the great palace of Wilhelmshöhe at Kassel.
In 1786, Mayer purchased a four-story, fourteen-foot wide, thirty-eight feet long frame house, built in 1615, for 11,000 gulden, referred to as the Grünes Schild (Green Shield). It had a much bigger first-floor shop, a water pump in the kitchen, faced the street and was closer to the synagogue. The house had an underground passage leading from a secret cellar in their house to the cellar in the house next door. The “Green Shield” was the left half of the building and the Schiff family, probably headed by Joseph Moses Schiff (1740), owned the other half, composed of two little apartments.[60] His son, Jacob Hirsch Schiff (1762) had Moses Schiff (1810) who was the father of Jacob Henry Schiff, all of whom worked with and for the Rothschild family.[61] They converted the Grünes Schild, into a counting house, the first major Rothschild bank. There was a large iron chest, a decoy that served as a trapdoor leading into a hidden cellar, which led to a second cavern. This allegedly served as the temporary repository for Wilhelm’s documents, contracts, deeds, gold, packets of securities and important papers.[62]
On October 22, 1792, French troops entered Frankfurt, received a hostile reception from the Jews, and
the Prussian military forced them out. Wilhelm, who the French detested, had been wavering on whether to remain neutral in the battle between France and the Grand Coalition of England, Prussia and Austria. He offered to join the coalition if England would pay him a subsidy of £100,000, which would provide additional business for the moneychangers.[63] In July 1796, Napoleon’s troops bombarded Frankfurt and inadvertently set fire to the northern part of the Judengasse and destroyed more than half of the ghetto, leaving at least 2,000 people homeless. The fire missed Mayer’s house and many of the people never rebuilt their homes.[64] The allied bombing of Frankfurt during World War II ultimately destroyed Mayer’s house.
The Austrian Commissary-in-chief, General von Wimmer, established his headquarters in Frankfurt. His supervisors charged him with providing provisions for the Austrian troops, which presented profitable prospects for local entrepreneurs. Rothschild, now a military contractor, soon supplied the large Austrian army with wheat, uniforms, horses, and equipment, an undertaking requiring the use of sub-contractors and additional assistants to manage the paperwork. He also managed the payroll distribution to the soldiers. Given this opportunity and his huge commissions, he accumulated a hefty amount of cash.[65] If he effectively handled this military contract, he could position himself alongside some of the Frankfurt banks. The military contract probably involved large transfers of capital, possibly millions of gulden. He had already earned a good reputation for his business shrewdness.[66]
Mayer’s status as a banker increased and soon the House of Rothschild was equal to the Bethmann Brothers, Ruppel & Harnier, and Preye & Jordis, the three most powerful Frankfurt banks.[67] He was more aggressive than his competitors were and offered better terms with his policy of maximizing volume by minimizing profits. He previously handled Wilhelm’s funds in partnership with other banks but he quickly assumed full responsibility, probably due to Buderus’ intercession. Soon, he squeezed out other competitors vying for Wilhelm’s business and by 1807, he had a monopoly.[68]
On October 6, 1806, Mayer buried Prince Wilhelm’s minutes of his Privy Council, entrusted to him, in the secret cellar. He also hid Wilhelm’s hoard of jewels which were later found but they were minor compared to the debts that were due Wilhelm from all over Europe. Carl Buderus, who secretly collaborated with Mayer, chose Mayer to manage Wilhelm’s vast and complex resources. Under the most adverse circumstances, the Rothschilds were consummate survivors, typically overlooked as unimportant, who juggled ledgers in the most challenging circumstances as if driven by a “demonic drive.”[69] His management of these new funds allowed him to begin negotiating lucrative state loans.[70]
In 1809, Mayer’s three oldest sons purchased a piece of property on Judengasse in order to build a new four-story house, offices, and store rooms. Mayer then focused all of his efforts on banking.[71] On September 16, 1812, the Day of Atonement, Mayer prayed at the Frankfurt Synagogue the entire day. A surgical wound broke open the next morning. However, even in his weakness, he addressed the issues that were most important to him – his will. He put his business interests in the hands of his sons. “...my daughters, sons-in-law and their heirs having no part whatsoever in the existing firm M. A. Rothschild und Söhne...nor the right to examine the said business, its books, papers, inventory etc....I shall never forgive my children if they should against my paternal will take it upon themselves to disturb my sons in the peaceful possession of their business.”[72] He died on September 19, 1812 and they buried him next to his ancestor Izaak, son of Elchanan in the ancient cemetery at the bottom of Judengasse.[73] Jean Drault, the French writer, claimed that Mayer used to tell his customers, regarding the red shield that hung over his door, “One day this flag will rule the world.”[74]
Nathan Rothschild, Relocation to the Banking Capital
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