The Rothschilds: Maintaining 200-year-old legacy of Family Business
| Case Code: FBM004 Case Length: 14 Pages Period: 1970-2015 Pub Date: 2015 Teaching Note: Available |
Price: Rs.600 Organization: Rothschild Group Industry: Banking Countries: United Kingdom, Germany, France, Italy Themes: Family-managed Business |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
Between March 01 and June 21, 2015, the Museum of Fine Arts (MFA), Boston, hosted an exhibition which displayed 186 objects originally owned by the Baron and Baroness Alphonse and Clarice Rothschild of Vienna. The art collections were seized by the Nazis in 1938 and then returned to Baroness de Rothschild in 1947. After nearly 70 years, the heirs of the family decided to donate the collections to MFA Boston. The exhibition was titled "Restoring a Legacy: Rothschild Family Treasures".
The Rothschild family was counted among the greatest business dynasties of the world for maintaining ownership of the business for more than 200 years. They were credited with laying the foundations of international finance. The family’s origins could be traced back to the Jewish ghettos in Frankfurt, Germany, home to the largest community of Jews in the country. Mayer Amschel Rothschild (Mayer), born in 1744 in a Jewish ghetto in Frankfurt was the founder of the Rothschild banking dynasty. The family rose from these ghettos to make a mark in European business and finance and also on global banking and finance. During this time, they were involved in several activities ranging from financing wars and railway networks, to influencing major events in the world like the formation of Israel. Banking services, making wine, and mining minerals were some of the businesses in which they were involved.
In the 19th century, the governments had huge budget deficits owing to the rising costs of wars. Financing wars had become a daunting task as raising public money was not easy owing to undeveloped financial markets. The governments avoided resorting to options like sale of royal assets, debasing currency, and raising new taxes to avoid public outrage. Investment in the management of states was one of the decisions that turned Mayer from a coin trader into a banker. According to experts, one of the main reasons for the success of the Rothschild family was Mayer's idea of sending his five sons to five different strategically important business centers of Europe. At the end of the 19 th century, the family had presence in five major business capitals of Europe. Amschel Mayer Rothschild, the eldest son of Mayer, looked after the businesses in Frankfurt; Salomon Mayer Rothschild in Vienna; Nathan Mayer Rothschild in London; Carl Mayer Rothschild in Naples; and James Mayer Rothschild in Paris....
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