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N M Rothschild & Sons, 1836-1879

The death of Nathan

In July 1836, the City of London lost a financier whose name had become legendary in his own life-time, but Nathan's sudden death did not unduly affect the Rothschild partnership.  Its operations continued much as before with Nathan's eldest son, Lionel de Rothschild (1808-1879), at the helm of the London House. Lionel had been apprenticed in the family business in London, Paris and Frankfurt, before being admitted to the family partnership in 1836; Nathan's death just days later left Lionel as senior partner in the new firm N M Rothschild & Sons, which he formed with his three brothers under the close supervision of his uncle James (1792-1868) in Paris.

N M Rothschild & Sons

The business continued to specialise in foreign loan issues, bullion trading and the finance of public utility companies, notably foreign railways, while maintaining a certain volume of merchant trade in commodities such as quicksilver, tobacco, sugar, coffee, and cotton. The development of the Rothschild agency network ensured that the best local information was available and international business could be carried out more efficiently by offices with local knowledge. The firm operated through a worldwide network of agents, among them August Belmont (New York, est. 1837), Weisweiller & Bauer (Madrid, est. 1835), Lionel Davidson (Valparaiso, est. 1843), and S Bleichröder (Berlin, documented from 1850).

The Madrid agency had been established largely to manage the quicksilver business of the Almadén mines which Rothschilds had acquired as security against a Spanish government loan and which gave them an important monopoly of European quicksilver production.  The expansion of these agencies, as well as the opening of new ones in San Francisco and Melbourne after the discovery of gold in California and in Australia, was sustained by N.M. Rothschild & Sons' purchase of the lease of the Royal Mint Refinery.

The Royal Mint Refinery

In 1848 a Royal Commission charged with examining the efficiency of the British Royal Mint recommended the separation of the twin roles of refining and coin striking. A recommendation of the Commission was that a refinery be leased to an external agency of the Royal Mint. The opportunity to manage a refinery in England was enthusiastically seized by Anthony de Rothschild (1810-1876), the second son of Nathan. On 3 February 1852, the lease of the buildings and equipment was sanctioned by Her Majesty’s Treasury and the Royal Mint Refinery became part of the London business’s interests. The family retained the lease on the Royal Mint Refinery for well over a century. The Royal Mint Refinery took a leading part in refining the world's gold output, as well as gold and silver sent by the Master of the Mint, and bullion for governments, banks, gold producers and bullion brokers. Empowered to refine gold and silver and present their bars to the Mint and the Bank of England for acceptance at the official rate, Rothschilds became key players on the London bullion market, deriving consistent annual profits from the business of shipping, refining and selling bullion for the next hundred years.

Foreign loans business

Opportunities for foreign investment multiplied as an increasing number of newly independent and developing sovereign states gained access to world money supplies, swollen by the influx of new gold.  A long series of Rothschild public utility and railway loans to Brazil followed the appointment of the London House as bankers to the Brazilian government in 1855; and in the 1860s loans were made to the governments of the new Italy and Austria for major national rail routes.  At the same time, the bank's traditional mercantile trading continued at a reduced, but not insignificant, level, chiefly in the supply of American tobacco, Indian cotton and Chinese silk.  The famous personal loan of £4m to Disraeli's government by Lionel de Rothschild (1808-1879) for the purchase of a strategic share in the Suez canal demonstrated the bank's strength as a competitor for British government loan contracts of which they received the lion's share in the fourth quarter of the century.

'Rothschild' became synonymous with reliability, discretion, caution, and financial solidity, providing private banking facilities for a select clientele of foreign noblemen and dignitaries. The bank had long held the London account of Queen Victoria's uncle, Leopold of the Belgians, and its reputation was enhanced when Baron Lionel became a financial advisor to Prince Albert.  Access to political and financial news across the world, which the Rothschild network of agents and couriers continued to supply in advance of their competitors, was a benefit which Prince Albert's son, the Prince of Wales, was also to enjoy, later in the century. With regard to their more public activities, the London partners adopted a markedly French perspective for the period to 1848, as James in Paris steered his English nephews into a number of his own financial initiatives, notably French railway investment, and while the late 19th and early 20th centuries saw the rise of joint stock banks and other financial institutions which threatened the stronghold of traditional merchant bankers like Rothschilds, N M Rothschild & Sons thrived in new areas such as mining finance, and exported its expertise in railway development beyond Europe to Asia and America. By the 1860s, N M Rothschild & Sons was at the peak of its powers. In 1860, the Partners, led by Lionel agreed that it was time for a new building, reflecting the firm's position in the world. Between 1860-1865, the domestic feel of the old New Court building was swept aside in favour of something more imposing and business-like, in a style which echoed the palazzi of the great Italian banks.