Nathan Mayer Rothschild - Legend

Legend

In the 19th century a legend began which accuses him of having used his early knowledge of victory at the Battle of Waterloo to speculate on the Stock Exchange and make a vast fortune.

Frederic Morton relates the story thus:

To the Rothschilds, chief financial agents, Waterloo brought a many million pound scoop.
... a Rothschild agent ... jumped into a boat at Ostend ... Nathan Rothschild ... let his eye fly over the lead paragraphs. A moment later he was on his way to London (beating Wellington's envoy by many hours) to tell the government that Napoleon had been crushed: but his news was not believed, because the government had just heard of the English defeat at Quatre Bras. Then he proceeded to the Stock Exchange.
Another man in his position would have sunk his work into consols (bank annuities), already weak because of Quatre Bras. But this was Nathan Rothschild. He leaned against "his" pillar. He did not invest. He sold. He dumped consols.
...Consols dropped still more. "Rothschild knows," the whisper rippled through the 'Change. "Waterloo is lost."
Nathan kept on selling ... consols plummeted—until, a split second before it was too late, Nathan suddenly bought a giant parcel for a song. Moments afterwards the great news broke, to send consols soaring.
We cannot guess the number of hopes and savings wiped out by this engineered panic.

Research by the Rothschild family and others has shown that this legend originated in an anti-Semitic French pamphlet in 1846, was embellished by John Reeves in 1887 in The Rothschilds: the Financial Rulers of Nations and then repeated in other later popular accounts, such as that of Morton. Many of the alleged facts stated are incorrect. For example, it has been shown that the size of the market in government bonds at the time would not have enabled a scenario producing a profit of anything near one million pounds.

Historian Niall Ferguson agrees that the Rothschilds' couriers did get to London first and alerted the family to Napoleon's defeat, but argues that since the family had been banking on a protracted military campaign, the losses arising from the disruption to their business more than offset any short-term gains in bonds after Waterloo. Rothschild capital did soar, but over a much longer period: Nathan's breakthrough had been prior to Waterloo, when he negotiated a deal to supply cash to Wellington's army. The family made huge profits over a number of years from this governmental financing by adopting a high-risk strategy involving exchange-rate transactions, bond-price speculations, and commissions.