Rothschild Family - The Napoleonic Wars

The Napoleonic Wars

The Rothschilds already possessed a very significant fortune before the start of Napoleonic Wars (1803–1815), and the family had gained preeminence in the bullion trade by this time. From London in 1813 to 1815, Nathan Mayer Rothschild was instrumental in almost single-handedly financing the British war effort, organizing the shipment of bullion to the Duke of Wellington's armies across Europe, as well as arranging the payment of British financial subsidies to their continental allies. In 1815 alone, the Rothschilds provided £9.8 million (in 1815 currency, about £566 million today when using the retail price index, and £6.58 billion when using average earnings) in subsidy loans to Britain's continental allies.

The brothers helped coordinate Rothschild activities across the continent, and the family developed a network of agents, shippers, and couriers to transport gold across war-torn Europe. The family network was also to provide Nathan Rothschild time and again with political and financial information ahead of his peers, giving him an advantage in the markets and rendering the house of Rothschild still more invaluable to the British government.

In one instance, the family network enabled Nathan to receive in London the news of Wellington's victory at the Battle of Waterloo a full day ahead of the government's official messengers. Rothschild's first concern on this occasion was to the potential financial advantage on the market which the knowledge would have given him; he and his courier did not immediately take the news to the government. It was then repeated in later popular accounts, such as that of Morton. The basis for the Rothschild's most famously profitable move was made after the news of British victory had been made public. Nathan Rothschild calculated that the future reduction in government borrowing brought about by the peace would create a bounce in British government bonds after a two year stabilisation, which would finalise the post-war restructuring of the domestic economy. In what has been described as one of the most audacious moves in financial history, Nathan immediately bought up the government bond market, for what at the time seemed an excessively high price, before waiting two years, then selling the bonds on the crest of short bounce in the market in 1817 for a 40% profit. Given the sheer power of leverage the Rothschild family had at their disposal, this profit was an enormous sum.

Nathan Mayer Rothschild initially started his business in Manchester England in 1806, and gradually moved it to London, where in 1809 he acquired the location at 2 New Court in St. Swithin's Lane, City of London, where it operates today; he established N. M. Rothschild and Sons in 1811. In 1818, he arranged a £5 million loan to the Prussian government, and the issuing of bonds for government loans formed a mainstay of his bank’s business. He gained a position of such power in the City of London that by 1825–6 he was able to supply enough coin to the Bank of England to enable it to avert a market liquidity crisis.