In one instance, the family network enabled Nathan to receive in London the news of Wellingtons victory at the Battle of Waterloo a full day ahead of the governments official messengers.[16] Rothschilds 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.[16] It was then repeated in later popular accounts, such as that of Morton.[18][19] The basis for the Rothschilds 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.[17][18][19] 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 a 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.[17] Nathan Mayer Rothschild initially started his business in Manchester in 1806, and gradually moved it to London, where in 1809 he acquired the location at 2 New Court in St. Swithins Lane, City of London,[16] where it operates today; he established N M Rothschild & Sons in 1811. In 1818, he arranged a £5 million (equal to £320 million in 2013) 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.
Posted on: Sat, 15 Nov 2014 05:18:54 +0000
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