About this episode
What I learned from reading Founder: A Portrait of the First Rothschild by Amos Elon. ---- Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work. Get access to Founders Notes here . ---- Riches cover a multitude of woes. Only a few crumbling bricks are left today of the dark, foul-smelling alley in Frankfurt where, in the second half of the eighteenth century, a disenfranchised Jew named Meyer Rothschild founded a European banking dynasty. Rothschild was a man of seemingly inexhaustible energy and ingenuity. He raised five famously gifted sons, veritable money-making machines, to carry on his work after him. Their names overshadowed his own and became synonymous with colossal wealth, extravagant living and hidden political power. A century after his death they would still ask, in all seriousness, if a great war was still possible in Europe if the House of Rothschild set their face against it. Rothschild's origins were certainly modest. There was little reason to foresee his destiny. The personal circumstances of his life were difficult throughout. They suggest a saga not only political and financial but also human and dramatic – more dramatic, perhaps, than that of his flamboyant sons. The sons were not persecuted human beings, legally confined to the squalor of a congested ghetto. The old ghetto where Rothschild lived his entire life was a narrow lane, more slum-like and overcrowded than any other tenements in Frankfurt. A closed compound, it was shut off from the rest of the city by high walls and three heavy gates. The gates were guarded by soldiers and were locked at night, and all day on Sundays. In it lived the largest Jewish community in Germany in conditions of almost total isolation, and apartheid. How they managed to survive under these circumstances and at times even to prosper was a mark of human enterprise and ingenuity. Every petty principality minted its own currency. The only coins from outside the city that were accepted as payment were those which had the same silver content as the Frankfurt gulden. All others had to be exchanged before a purchase could be made. Constant variations in the exchange rates offered knowledgeable moneychangers ample opportunity to profit. The spirit of the place was workaday and businesslike. A city ruled "by the God of this world – Money". At home, from an early age, he was apprenticed in the family business. Everybody in the family, boys and girs, were expected to help. As a thirteen-year-old orphan, with a few coins in his pocket, the future tycoon launched out alone into the world. Besides learning the rudiments of the financial business, Rothschild broadened his knowledge of rare and antique Jews were disencoins and historic medals. Coins had fascinated him since early childhood. He was acquiring a certain amount of historical knowledge without which he might not have been able to find his way. Coins and medals attracted collectors who often bought them as an investment. By the time he was eighteen, he had become something of an expert. He read every other book or paper he could find on the subject. Selling a few old coins could not possibly make him rich., But it was a means to establish contacts with persons of wealth, power and importance. Such a person was the young Crown-Prince Wilhelm, who would play a decisive role in Rothschild's future career. Wilhelm was the presumptive heir to his father's vast fortune. His pedigree was one of the finest in Europe. Rothschild threw himself into his business with determination and zest. He ran something like a mail-order business. In 1771 he published the first of several printed coin catalogues which he sent out during the next twenty years at regular intervals to potential customers all over Germany. He brought to his work a certain natural flair, a knowledge of human nature and a capacity to generate trust. As a rule, he preferred to minimize profits in the hope of increasing turnover and consequently his prices were often lower that those of other dealers. He was ready to lower them even more, at times even at a small loss, in the hope of more profitable business in the future. Thrifty Guttle Rothschild spent only a fraction of this annual income on her household; a large part was pumped back into the business. There was little, if any, visible wealth. The family's modest lifestyle did not reflect the true extent of Rothschild's accumulated riches, which he continued to channel back into the business. Rothschild had an inborn compulsion to hide his wealth. Long after his death one of his sons quoted him as saying: "Something three people know about is no more a secret". He shunned all conspicuous displays of wealth. He practised his old policy of maximizing volume by minimizing profits. His competitors, who for decades had handled the affairs of the landgraves of Hesse, were gradually squeezed out. By 1807 Rothschild enjoyed a near monopoly. No one in the family was idle. Yet as a critical and strict father, he also anguished over Nathan's casualness and disorganized work habits. A lack of order would make a beggar out of a millionaire. While other bankers mostly awaited orders to reach them, Rothschild went out to solicit them. It paid homage to their father's "proven industry, good business sense and experience, who through his tireless activity from youth to advanced age, was the sole cause for the present flourishing state of the business and the worldly happiness of his children". They reflected an overriding desire to perpetuate unity among the brothers, prevent the dispersion of capital and retain, as far as possible, the compact, disciplined, well co-ordinated character of the family firm. His astonishing concentration on business continued as before. His main concern in his last hours was to secure the continued happiness and prosperity of his sons. He knew that riches came and went. He had seen in his lifetime fortunes dissipate through waste, vanity or infighting among heirs. Fortunes, he warned Amschel: do not keep longer than two generations.For two reasons: one, because house-keeping and other expenses are not considered; two, because of stupidity. He urged his "dear children to relate to one another with mutual love and friendship". He knew his sons were strong-willed, difficult, impulsive men. He was afraid of their tempers. On his deathbed he urged them once more to remain united at all cost. It had become an obsession with him. He said on his deathbed: Amschel, keep your brothers together and you will become the richest men in Germany. ---- Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work. Get access to Founders Notes here . ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast