SPECIAL: The Rothschilds (Part 2)

yeah i feel like i could rule where i know i could be what i want to put at all in it like a days all on a goal less travel never looking back alright today we have a special episode it is the biography of the roth charles family which if you're not a history but that doesn't sound interesting throughout the bat but i'm gonna explain to you why we're doing this so ben who's our producer he has this podcast called how to take over the world and it is a historical podcast but talks about the biographies of people so we're talking history as in like alexander to the great but also recent folks like walt disney's is coming out soon then he has steve jobs that's out now and it's kinda like listening to a biography but over the course of two episodes it's amazing and all of the episodes are about basically business people or people on achieving great things so napoleon things like that you know people who are great leaders people who are great inventors like thomas edison it it's amazing you're gonna take this one's about the roth family i wasn't eager to listen to this when i first got into it and then i like got ten minutes to it i was oh my god i'm hooked and i could not stop listening to it basically we hear about the roth child now they're like some secret family that like controls the world's banks or some crazy conspiracy theory like that but they started in the eighteen hundreds in europe but they were eventually all over europe and they start a bank they were mostly honest people and it's just a crazy fascinating story so give us a listen this is ben from how to take it for the world this is a two episode podcast and we're dropping them both at the same time part one and part two check it out and if you want more let us know thus sam in twitter or sean vp on twitter and then look up ben wilson from how to take over the world and we show you how better damn how find now just my second to follow me hard i'd like to take this chance to apologize absolutely me nobody hello and welcome to how to take over the world this is ben wilson so let's just get right to it how did they do it how did the roth become the richest family in the world that's why i started studying this is what i wanna know so let's explain how they did it and let's say that you lived in el paso texas for my non american listeners el paso is a city that is right on the border with mexico i lived in el paso i guess that's why it's the border city that comes to mind honestly it's not as bad as you think in fact that should probably be their motto el paso not as bad as you think but let's say you lived in el paso and you knew that gold was selling for one hundred dollars ounce or a pounder i i don't i don't know how much gold costs i don't buy a lot of gold but let's say that it cost one hundred dollars ounce in the united states and it cost ninety dollars an ounce in mexico and this you know this is constant what would you do if you're even somewhat smart you would go to mexico buy a bunch of gold for ninety dollars an ounce and then come and sell it in the united states for a ten percent profit and you just keep going back and forth and doing this over and over again and this is called arbitrage okay arbitrage is when you take advantage of price differentials to turn a profit and that's what their hu trials did they they used arbitrage obviously it's a little more complicated than that and and we'll get into it a little bit more we'll get into some of the complexities but i wanted to start off talking about this idea of arbitrage because you have to understand it in order to understand how they were able to do what they did how they became the wealthiest family of of all time now before we get it let let's go back a little bit and recap what happened just for a minute last episode so we talked about mayor roth child who was the founder of the roth rochelle dynasty the guy who started it all as a brief refresher he was born in germany he's a jew a born in the city of frankfurt and he starts out as a small time lender in merchant of metals and rare coins but slowly makes his way up as he starts doing business on a larger and larger scale and eventually he's able to take over as the steward of the fortune of wilhelm land grave of he this happens because the french invade hess forcing wilhelm into hiding the french also import liberal ideas about religious tolerance and they man the jews for many of their previous oppression that they had suffered in frankfurt which allows the roth child to move more freely and conduct more business mayor puts wilhelm homes fortune to great use and starts to make real money for his family and he does this in part by sending his five sons out to establish new branches of the family business in london paris vienna and naples and one brother stays home with him in frankfurt together they make it pretty big mayor teaches his sons the three cardinal roth child virtue of concord integrity and harmony integrity and industry on his deathbed mayor tells his eldest son keep your brothers together and you will become the richest men in germany mayor never moved out of the jude gas the jewish ghetto and frankfurt and he was buried beneath a plain tombstone which brings us to this episode so the brothers are in these five offices they're running what is essentially an investment bank although it wasn't called that back then and the way they're making money at this point is for the most part by issuing government bonds government bonds were not a new invention they've been going on for a few hundred years but the roth child had radically transformed how they were issued they made them much easier to issue obtain and trade and so they basically turned it from a one to one interaction you have someone who needs to borrow and someone who can lend they turned it into an international market and it it radically altered the way that governments borrowed and who could be involved in that who could be invested in it and so this is right after napoleon was defeated for the first time all these governments had just spent a ton of money to go to war with each other they've run up huge wartime deficits and they badly needed money so the roth child are issuing bonds to all the great powers by eighteen twenty five they had negotiated loans for britain prussia austria russia and france as well as many smaller states like denmark hess and others so why are all these states trusting the roth child to help them issue bonds there are a few answers but one of the most important ones is that the roth child could do it for the lowest price they had this brilliant strategy they would offer to help issue the bonds for much lower fees than anyone else if they could do that why just why wouldn't anyone else do that beat them on price well they could make up the difference and much more by speculating on the bonds in the secondary market and they could do this incredibly effectively they could they were better traders than anyone else because they had the five brothers in five locations and if you recall from last episode their father had established a male and forwarding business the best one in europe so they had five information centers and they can communicate faster and more reliably than anyone else in europe and now we come back to that word arbitrage this creates incredible arbitrage opportunities going back to that el paso example they know where gold is being sold for a hundred dollars and where it's being sold for ninety dollars and they can quickly buy up assets and move them and sell them to turn a profit but for the most part they're not buying and selling gold although to be clear they do do some of that they do some trading in in precious metals but for the most part what they're trading is government bonds so hey three percent bonds issued by the british government or selling for seventy eight bucks in vienna and eighty bucks in paris i know that doesn't seem like a big difference but if you can you know if they can just tell amc and vienna to buy up some british bonds really quick and they can tell james to sell them in paris then they can turn a really quick profit and again they're able to do this with many different kinds of bonds all these governments are borrowing at the time they can do them with precious metals they can do it with all sorts of assets and because this arbitrage advantage they're just making money hand over fist i mean you have to understand their information advantage really was leaps and bounds ahead of everyone for example when the british defeated napoleon at waterloo nathan and roth child in london knows about it before the british government even does mind you this is the british government they were the ones who were fighting right they are the ones who should know it's their soldiers their officers who are the ones who won the battle but nathan has messengers over in belgium who are watching the battle be fought and as soon as the outcome of the battles decided they take off and but i send the message through this courier service it gets back to nathan and he finds out in advance of the british government so he goes he takes the letter that he's received he goes to parliament and he says hey you you guys we we won the battle of waterloo napoleon defeated and they don't believe him they don't believe that he could find this out before they could and so as it turns out he's waiting around and another messenger comes from because he had a backup he wanted to make sure that he got this information as quickly as possible so his backup comes and tells him hey the british won the battle of waterloo napoleon's defeated he tells british parliament again they still don't believe him and they kinda learned their lesson because eventually you know i don't know how long it was a few hours or a day or something like that their messenger come hey we won the battle of waterloo and nathan kinda says i told you but that is how effective their messenger and courier your service was they knew information before anyone well before anyone they got information way faster than anyone else now i wanna go back to the arbitrage example in el paso like i said if you were smart you would take full advantage of that opportunity you would just plow your savings all the money you had if you knew that gold was gonna stay at one hundred dollars in the us and ninety dollars in mexico you would max out your credit cards just buying gold and and doing this transaction over and over and over again and that is essentially what is happening with the roth child family when they're first making all their tons of money they have such an incredibly huge arbitrage advantage over everyone that they are keeping like no cash on hand they are just dumping everything into assets over and over again in order to take advantage of these types of opportunities and so what's the consequence of that well in eighteen fifteen alone they are already the largest now we would call them investment bank they were largest investment bank in the world and they grow by one hundred percent in eighteen fifteen they double in size and can you imagine that today right something they're the equivalent of like goldman sachs or or jpmorgan chase or something like that they are this huge international institution and they double in size but of course this strategy does not come without its risks first is that they still they have more information better information they get it faster than anyone else but that still doesn't mean that they have perfect information these things still take days or weeks and it's days faster than anything anyone else gets the information but stuff changes and and so sometimes they make bets that don't pan out and they lose money the other problem is when you're doing the whole you know maxing out your credit cards in order to just keep buying more golden mexico thing well you are subject to liquidity crises right you you maxed out your credit cards what about when i need to go to the grocery store then it's tough right and in one of these actually happens to the roth child in the mid eighteen hundreds eight eight eighteen fourteen eighteen fifteen they didn't just have assets they they also had liabilities they had debts that they sometimes had to pay out on and they had one of these carl one of the suns is in naples and he has to make a payment he has to service some debt and he doesn't have any cash he doesn't have any money so he you know goes to solomon in vienna and says hey i need cash and solomon says well i don't have the money james must have the money over in paris so he writes james paris says hey i need the cash and james says i don't have any cash i think it must be nathan and they start running nathan nathan says no i have any money and all of a sudden it turns into the circular firing squad everyone says you have the money no you have so someone has to have the money where's the money believe it or not at this time the roth child had no accounting in place whatsoever it's like if imagine you're in one of these heist movies right and you are in a room stacked to the ceiling with bricks of cash and you've got a backpack and one minute to get as much out as you could you just be stuffing bricks of cash into the backpack as fast as possible and if i came thirty seconds in and said hey how much money do you have you would have no idea you haven't been counting the money you you've been stuffing in the backpack as fast as possible well the roth child they are stuffing money into the backpack as fast as possible and they literally just don't have accounting they have no idea how much money they were i said that their capital doubles in eighteen fifteen and now in retrospect we know that we can look and see that their assets in fact did double at the time they had no idea and so when they have this liquidity crisis and start looking around for the money they really not sure they think they might be broke they don't really know what's going on they're kind of thinking how come no one has any money in this family in fact here's the actual quote from solomon who writes to his brother i think this wants to nathan he says quote you must have all our money over there with you we hear stinking for we have an a penny to spare ams s has less than a million left and therefore the whole lot must be with you including what we owe work out where the family money is my good nathan i don't know where is our money it was just absurd god willing it will turn up when we do the spring cleaning so am is freaking out nathan tells him to chill and he responds to says i guess i'm rather like my eight year old son who asks to see our millions and think they must be piled up somewhere in the house in two thousand nineteen it's pretty hard to comprehend that this could happen with a major international investment bank obviously it was different times but anyway this crisis forces them to look at their balance sheet and figure some stuff out and start doing accounting which is a thing an investment bank should do and luckily when they do the accounting it turns out that yep they are in fact fabulous wealthy again by volume their biggest business is helping to issue big government loans and they are light years ahead of everyone else in their ability to do this to the point where at this time if you're a major power like austria and you're looking for a big loan it is difficult to do without the roth child i mean technically it's possible but it's gonna be very very difficult and it's gonna cost you dearly both in in time and money and that makes them very influential they've got a lot of influence they're wielding for example the roth were known to favor stable constitutional monarch keys and peaceful regimes wars introduced uncertainty into the market and so did radical governments whether those were radical left or radical right they didn't like either one they didn't like revolutionary republicans who were advocating for for these new angle democratic governments they also didn't like these absolute reactionary monarch use because governments to either extreme didn't tend to last long and they tended to be unstable so to give you an example of this kind of influence when the absolute kingdom of prussia badly needed alone during this time period the roth child are able to make it conditional on prussia adopting some very mild democratic reforms and this sort of influence is really unprecedented people are looking up saying someone who can make the king of prussia do something you know impose their will on the king of prussia and previously you know only the the holy roman emperor or the pope could do something like that and to understand why that is think back to this time period so if you were a noble man in the sixteen hundreds seventeen hundreds eighteen hundreds what did that mean well it used to mean that you were a knight and you were expected to mount up and and actually fight in times of war but you know by the eighteen hundreds this is no longer true and it used to mean that you have a certain number of soldiers who answered directly to you but once again in the eighteen hundreds especially in a place like england or france this is no longer the case so what it really meant at this time period to be noble is that you owned land and that was always the most important part of being nobility it meant that you were in the class of land ownership land was what made the whole thing work because land was the only form of durable investment that consistently generated a return and now was the power structure that everyone was used to sure there were bankers it would probably be more accurate to call them money lenders and there were merchants and there were people who who accumulated you know a a good deal of capital for a while but there was no such thing as a long term stable investment like being a noble an owning land that generated a solid three to five percent return year after year after year so besides their military power that was one of the reasons that the nobility had so much power they were the only ones with a solid investment portfolio well by creating this bond market the roth child are changing that they're creating financial instruments that can rival land and they're also making it possible to accumulate capital on an unprecedented scale and so in this way the roth rochelle change the world more than few people can claim it's really not just a matter of them having become the richest family of all time of nathan becoming the richest man of all time i mean you think about the time period that they lived in nobility was everything before then and afterwards the influence of bankers and people who made money increased so much it really and this is when democracies really start to come into the world and survive and hang on it really the roth child innovations and the the changes that happened in the larger financial world altered history totally changed the world in a way that had never been seen i really like the way it's described by behind who said quote i see in roth child one of the greatest revolutionaries who have founded modern democracy they signify the gradual annihilation of the old ari they are europe's most fearful level roth child came and destroyed the pre prominence of land by raising the system of state bonds to supreme power thereby mobilizing property and income and at the same time and dow money with the previous privileges of the land he thereby created a new ari it is true but this resting as it does on the most unreliable of elements on money can never play as enduring or aggressive role as the former ari which was rooted in the land in the earth itself for money is more fluid than water more elusive than the air and one can gladly forgive the imp of the new nobility in consideration of its ep in the twin of an eye it will dissolve and evaporate that's such an insightful quote i love that but then again i'm living in two thousand nineteen and many people at the time decidedly did not love that people were shocked and confused and amazed by these people with all this money who are fo democracy on the kingdom of prussia as you might imagine the roth rochelle generated a lot of controversy ben is now people wrote about them in the newspapers they were frequently character and lamp in political cartoons and they were the subject of rumors vi hatred and of course much of this very very anti semitic but in the midst of this i love solomon response to this kind of thing nathan the one in london complained about a particularly nasty cartoon that had been drawn about him and solomon responded quote i'm not going to cry about the fact that you have been character so are the kings and emperors may god grant that this is the worst thing that ever happens to us may our sons also be car please god as soon as they become well known in this world i wish that for our darling children and this is so interesting on its face that he would wish that right i hope that our our children are lamp and character it never feels good to have people say bad things about you but and this is what solomon knew that is the price of admission for greatness you cannot have everyone like you and accomplish anything worth doing you just can't that's not how it works and that's what's what solomon is alluding to here you know who doesn't have haters the assistant to the branch manager of your local paper company no one cares enough to be their hate so if you've got haters if you've got people who dislike you and dis of what you're doing listen to them i mean that's not always the best thing maybe they're on something and there's something that you can change but on its face that isn't necessarily a bad thing it can be a good thing the fact that you do have people who dis of you that means that they care enough it means that you are doing something that is important and you can't be ignored and the roth child for sure cannot be ignored they're taking advantage of these arbitrage advantages but also pretty quickly their sheer size and scale becomes a primary advantage they're the first banking institution of their size they're ten times bigger than their nearest competitor when the bank of england starts to go under an eighteen twenty five they turned to the roth child for a bailout that's how big they were they are bailing out the largest central bank in the world and one of the reasons that they are growing is that they plowed all of their profits back into the business something that none of their competitors did they were really focused on growing the business most of their competitors tried to keep their investment capital fixed and if they happen to get a better return well than that meant more income for them that year so they just spent more in any given year if they made more but they kept the investment capital the same and and the roth shelves are flipping that and conte couldn't believe why they would do this they couldn't believe how focused they were on making money they view this as like a sla devotion to banking you know you guys have the richest men in the world why do you work all day go live but the roth didn't see it this way nathan is quoted as saying my only pleasure is my business one time he had dinner guests over and one of them expressed the hope that quote that your children are not too fond of money in business to the exclusion of more important things i am sure you would not wish that and nathan just looks at her and says i am sure i would wish that all the roth shelves of this generation or somewhat this way just completely intent and focus on business but the only ones you really took it to this extreme are nathan in london and james and paris they were kind of the leaders and it was extreme there's another story about nathan a powerful ari crack came to see him in his office and nathan was head down he was working and without looking up he says take a chair and the man this is this very important ari aristocrats he's very offended he clears his throat and says excuse me you are speaking to the prince of t and texas to which nathan again without looking up says okay take two chairs then and if you read about nathan that's very true to his his personality it it's probably not true it's probably one of those one of those ap stories but it is a a very good story and honestly it wouldn't surprise me if it is true i mean he was very much like that nathan twenty four seven was about business now let's take a moment to talk about the relationship between the brothers because mayer last expectation was that his son stay together but guess what brother's fight and the roth child's brothers were no different in their letters you can find them various calling each other bullies idiots and asses and that's in their letters i can only imagine what they were actually saying to each other when they saw each other in person i have a brother so yeah i get it you know i'd shu to think and they didn't always fight in most of their letters they are civil and they're asking how are your kids and they're conducting business in a very effective and cordial manner but they do frequently disagree argue and fight and more than once throughout the years the brothers threaten to break up the partnership and leave one reason for this discord is that nathan the london based brother quickly rose to the top nathan was this extraordinary larger than life figure he wasn't the oldest he was actually the third brother but he became a solomon and put it the commanding general why well for one nathan was in london the financial capital of the world but more importantly he was just the best at what they did he was whip smart obsessively focused as i said extremely hardworking and possessed with an almost man appetite for risk in the years shortly after mayor death the firm basically operated with nathan coming up with the strategy and his brother executing it a full quote from solomon was actually quote my brother in london is the commanding general i am his field marshal another brother carl who was the least talented of the brothers used an even stark analogy saying that nathan was the wagon driver and he carl was merely a wheel he said quote i look upon myself in the sense of a machine only but this is not going to go over easy when you've got five brothers who are all extremely smart committed focused and ambitious yeah nathan was the smartest and the most ambitious but it's not like he was leaps and bounds ahead of everyone else except for carl i could do that every time so i guess they're now on just know that they're all smart but nathan the smartest james is next carl's kinda at the bottom so just imagine whenever i say the brothers i'm saying except carl but because of this dynamic you know they often chase under the pressure when nathan is really boss them around and they get upset and they protest but it wasn't just nathan that was the problem yet this is a a dynamic that makes it difficult but they fight with each other too and furthermore you know it's a little bit different dynamic when you're working with your family i have lots of coworkers workers and associates and i've never been able to tell any of them well hey guess what i remember when you used to pee the bed but that's exactly what is happening with the roth child but we only know this today now that we have access to the letters that they wrote to each other and we can see that they're calling each other fools and asses but at the time everyone thought they got along swimming everyone thought they got along like no brothers had ever gotten along before in the history of the human race and that's because they were totally unified in their investment strategy and in their representation to the outside world you know when you say man isn't my sister annoying and your friend says yeah she is and you suddenly go and now wait only i can say that they had that kind of attitude they fought quite a bit but it was healthy fighting not toxic fighting it all came from a place of trying to make the best decisions and they never took their grievances public they always kept it in the family which is why you have people saying things like the british prime minister benjamin israeli who said they had quote a unity of feeling which p prevented all branches of the family and again from a business perspective all that their opponents and business associates saw was them working in perfect concert and harmony here's a quote from a contemporary against who said quote with the greatest conscientious the brothers have obeyed their father's heartfelt death injunction to maintain un unity and cooperation in all business transactions each business proposition is the subject of their joint deliberations every operation of even modern importance is carried out according to an agreed plan with and with coordinated efforts and all the brothers have an equal share in the results here's another contemporary who said quote these five brothers together formed in ind lengths and true to their principal never to undertake anything individually and to agree all operations precisely among themselves always followed the same system and pursued the same goal i wanna read from the house of roth child by nile ferguson a quote that i think illustrates a really interesting point he compares the roth child to other banking families other their time he says in a quote relations between the hope brothers and the bearing brothers were less turbulent than the roth gil but they failed to transcend their personal differences in the name of f internal unity okay so in other words and we'll use the bearings as the counter example the bearings were another extremely successful banking family and they were much more independent they realized that what the roth rochelle also realized if you're living under the same roof if you're splitting profits from the same pot then you tend to have disagreements so the bearings each went their own way there's less fighting that way and more peace in the family but they missed out on the exponential value that comes with working together by eighteen twenty five the roth child bank was more than nine times bigger than be brothers despite coming from more obscure origins more recently and by the way it's not like the bearing brothers were blowing it we're making some big strategic mistake they were the second biggest investment bank in the world they were only behind the roth child and that's the way more common way of doing things and this is something i see a lot people saying oh i would never work with my spouse because i know we would fight or i would never live in the same street as my sister because i know we would fight well yeah i'm sure you would fight but guess what your relationship would get stronger and would be closer fighting is actually a sign that your relationship is alive and growing it means you're doing things together that matter when the roth family eventually breaks up eighty to ninety years later it's not because they fought too much in the end they weren't fighting at all they didn't care what was happening with other branches of the family if you want to have a strong relationship whether fam familiar romantic friendly or professional it's probably going to take working through some differences and some conflict and if you're no longer doing that then your relationship with that person probably isn't growing okay tangent over now in eighteen thirty six nathan dies of course before nathan dies he does exactly what his father did he encourages the whole family to maintain unity and so shortly after he dies a new agreement assigned that once again ties the branches of the family together in a profit sharing structure at the time of his death nathan was by far and away the richest man in the world his fortune if you use an inflation calculator was something like ten to fifteen billion dollars and that doesn't sound that impressive it's not as much as bill gates or jeff bezos but you have to understand that the world was just a less rich place back then and no one had anything like that kind of wealth one interesting way to measure wealth is to look at share of global gdp so rather than using an inflation calculator and trying to say okay if you just scale it up how much was nathan money worth today you basically say okay well how much money was there in the world and what percentage of that did he own and if you look at that nathan is by far the wealthiest person of all time now again this is kind of the early to mid eighteen hundreds so it's a little sketchy to try to get a firm grasp on what exactly his assets were but i've seen some estimates that he had something like a half a percentage point of global gdp which is insane using that calculator percentage of gdp metric his wealth has never been matched and it's not particularly close now how does that compare to someone like cra from the roman empire monte or monte musa well i don't know i mean how do you compare them we don't have anything resembling accurate global gdp numbers for those time periods it's impossible to calculate inflation accurately when they were just buying completely different goods from us and we also don't have great numbers around how much money they actually owned and nathan did live in the time when you you calculate those things he was buying and building homes that still stand today in two thousand nineteen so i think nathan you really can compare to other people going to the present day and by that percentage of gdp measure which i think is the one that makes the most sense he was the richest person to ever have lived so yeah i mean i buy that argument that nathan roth child was the richest man of all time when nathan dies james becomes the new d facto head of the roth child family he's the youngest brother but he's the most like nathan energetic intelligent dom he takes the family business in a slightly different direction and invest heavily in railroads which we're just starting to come into existence james leaves the family very ab and nathan sons are able to take over the london branch in a very capable way especially his oldest a man by the name of lionel roth child the world financial market is very volatile in the mid eighteen hundreds as is the political situation in europe there are constant revolutions as well as constant booms and busts and obviously those two things are in large part related one of the great things about the their roth family structure is that you have these five branches who are all linked but their markets are not so basically at one point or another every single one of the branches near bankruptcy and has to be bailed out by the other branches but that's okay because if you're the french roth child bank and there's such a big financial collapse that you only survived by getting bailed out from your brothers or cousins in vienna on london guess what happened to all your other major competitors in paris so you may have only survived by the skin your teeth but you're in a much better competitive position than you were the recession has essentially wiped the chess for you and that's what basically happens in eighteen forty eight the french roth channels are heavily invested in railroad lines there's a huge financial collapse throughout europe especially france and it is especially effects railroads but guess who is basically unscathed by all this england and so the british roth child come to the rescue of the other banks now the roth child have had this enormous impact on the world that is sort of hard to grasp hard to understand up until world war one they're like the forest gum of global events no matter what happens the roth clouds are involved in some way they prevent a breakout of war in eighteen thirty and eighteen forty eight they help under undercut the creation of multiple states including belgium greece in brazil when the american civil war breaks out they're being petition for money by the confederacy and figuring out what to do with their tobacco and cotton investments when the franco prussian war breaks out they're the diplomatic go between trying to broker her deal and preserve peace their influence is incredibly far reaching but something starts to happen remember all five of mayor sons were very capable bankers except carl i mean even carl poor mali aligned carl was a pretty solid banker but in the third generation it starts to get checkered it's basically half and half there are two gifted bankers in london two in paris one in vienna and the rest are kinda of dud so there are five gifted bankers five guys who were not so when james dies in eighteen sixty eight you're basically back to five partners with five hanger honors who show up and collect paycheck and this isn't good because they really need to be expanding to new markets and one market in particular you can probably imagine what it is but it's the united states and specifically new york individual roth channels did end up moving to the united states but it really wasn't until the latter half of the twentieth century they were never able to establish a solid presence in the united states and that was probably their single biggest tactical mistake their other big mistake is they violate the roth child cardinal virtue they get dis united they come un glued the second generation were all brothers when they fought they had tons of shared experience they could lean on when one of the brothers was getting mad at carl for something he had done carl carl carl karl put things in perspective by saying was anything more promise to us when we slept together in one attic room in the frank jude and ga which i mean that's obviously very touching and amazing go google roth child mansions go to images and just start clicking around the roth child's has built some of the most opulent palaces of all time which they proceeded to decorate with some of the greatest art collections of all time i mean they are the richest people ever and yet these brothers all slept in the same bed in a ding attic bedroom in a ghetto when they were young so you could see how those brothers would stay united no matter what for the next generation the third generation there was a way of doing things that also helped keep them united you started working with your father as soon as you were able you know when you were a teenager or fifteen or something like that then when you got a little bit older you were sent to a apprentice with one of your uncles for a few years then after that you were given a solo assignment abroad for a little while where you could really show your metal and then you came home and helped run one of the main branches and with this system you spent a lot of time in the office with your cousins who were also practicing and then you went and you met your uncles and and you gotta see the rest of the family in a different part of europe and it's this whole big family dynamic where everyone is inter with each other when they're young and get to know each other really really well they spend a lot of quality time together but for the fourth generation things start to come undone this change a little bit and partially i think it's just the normal things that you come to expect with rich families these guys are two generations removed from the struggle they have never known a bad financial day in their life and neither have their parents and i think there's also just something that comes with bad luck for whatever reason this fourth generation just happens to be a bad cohort for the roth child they're not too bright but there is one other thing an unlikely element that starts to pull the family apart college with the fourth generation the roth child make the decision that these people need formal education so they're no longer getting their education by doing an apprenticeship with you know uncle uncle am and vienna they're are going to college to get their education and so suddenly they're not spending their formative years thinking about banking with their cousins they're spending time thinking about girls booze and maybe some classes when they have some time to fit in with their fellow countrymen in germany austria france and england and so the family unity starts to fade a little bit the austrian roth child become more austrian the british roth child to become more british the french roth child become more french this really starts to come into full effect after james dies in eighteen sixty eight but it reaches its na deer in in the early nineteen hundreds when the firm's actually separate and the british french and austrians all decide to remove the profit sharing and go their own way during this time period the roth child partners are generally working about three to four hours per day they roll in around eleven take a lunch at twelve thirty and then leave by three thirty and stark contrast with nathan and james they hardly get involved with the day to day operations and generally they act more like royalty than bankers now the firm can survive for a while on sheer inertia they're huge the largest investment bank in the world they're completely lacking an innovation hard work but they can survive on just being cautious and taking the business that finds them and so that's what they do for fifty years in fact their stories about ambitious young associates seeing that some country is looking to issue a bond and telling a partner hey you know maybe we should call them up and the partner basically says why they wanna do business with roth child they know how to reach us but after world war one this no longer becomes ten it is during this time period they are surpassed they're no longer the largest in the world and during world war two this becomes even worse their decline is of course accelerated by nazis the german and austrian and roth child have all their assets seized and two are even killed in the holocaust the french roth child have many of their assets seized when germany invades france and although unlike their german cousins they are able to recover many of them after the war it's still a major setback by the nineteen fifties the roth child are a little more than the name many of them still have tens and hundreds of millions of dollars in personal wealth but the roth child banks have faded into obscurity and no longer really matter in terms of global financial markets but sometime in the nineteen sixties this long slow decline starts to turn around in nineteen sixty two they reestablish links between all their institutions which at this point are mostly in england france and switzerland and they also start to modernize a little bit for the first time they allow a non family member to become a partner in the firm and so they start to make a comeback back but they also start to frankly become a little bit more normal they start to resemble a lot of their competitors sometime during the nineteen seventies there's a rift with one of the french roth child's jacob he wants to go all the way fully modernize and open up roth child to outside investment ownership this causes a big rift and he has a contentious departure from the family he takes his share of the inheritance and opens a firm called r it r it actually does really well and while there are still many roth child jacob now has the distinction of being the only roth child billionaire on planet earth since the roth child firm reunited in the sixties they made something of a comeback they're no longer the biggest investment bank in the world not even close but they are a large successful financial advisory group and they're relevant again the roth child are no longer what they once were and frankly they never will be but to me it's heart to see them make something of a cut and why is it heart why why do i care why am i feeling that why am i rooting for these multimillion millionaires who've never had to work a day in their life to make a comeback well i mean one of the reasons that i wanted to do this episode that i wanted to study this family is i'm interested in legacy i wanted to see how a man who started a banking dynasty over two hundred years ago nearly two hundred and fifty years ago could leave a legacy that lasts to this day to have an advisory firm still named after him i mean that's cool to me and so when i read and research more into the story and saw that they had really faded into obscurity for a while there and and kinda had to be reestablish in the sixties and seventies i mean that was disheartening it kinda made me contend with my own mortality i mean i had known that i'm going to die everyone dies but it's just kinda of brought home that not only will i die and will you die but everything that we build will also die organizations don't last forever nothing that we build does countries don't last forever but mayor roth shall clearly articulated the principles that he believed in most just three words concord in integrity though some of his descendants would turn away from those ideas by articulating them so clearly and instill them in his children he planted the seeds for the roth child's rebirth we will not survive forever nor will the things that we build in our lifetimes but our ideas and the virtue that we esp can have lives whose ends we cannot see so there you go thanks for listening i know this is a slightly different episode than we usually do talking about a whole family rather than an individual let me know what you thought of it and speaking of different episodes we're gonna be having some different episodes coming up things are about to start changing a little bit you should be hearing from me a little bit more often but i'll be talking a little bit more about what those new episodes are gonna sound like how they're gonna be slightly different from what you're used to hearing but look forward to an announcement coming on this feed sometime in the next couple weeks until then thank you very much for listening