I am reading the House of Rothshchild since December – picking it up and putting it down. It’s a boring dull record of all the monies they make and the varied deals and negotiations they had.

Two things struck me. One, it appears impossible to have a well run anyway without some conflict in the running of it. While the father and brothers had this super tight agreement not to split up the business – instead they created their own branches and cross held  shares, there is still conflict in the day to day deal making.

Their willingness to take on risk for the deal. Risk like smuggling, running capital flows during wars. They did not hunker down and avoided risk. They aggressively continued business, taking on larger and larger risk until they were, combined, bigger than any other banking houses. They were never shut down because countries at war were begging for the shipment of gold to fund wars and they were the only merchant banking house willing to do so.

This appears to be the same sort of basis why certain illegal busineses such as drugs growing, manufacturing and  trafficking remain hard to kill off.  (I’ve read elsewhere). Generals with huge resources were able to fund and provide armies for wars in their country. As a thanks, they were undisturbed in their businesses.

Rothschild “assisted” many countries. In addition to having  insider news from politicians, they were largely undisturbed in their deals. They had cultivated many political relationships with bribes. 

Look at their growth

1797: 9,900 GBP 

1807 : 50,600 GBP (10 years)

1810: 72,700 GBP (3 years)

1815: 336,000 GBP (5 years)

1818: 1,772,00 GBP (3 years)

By 1825, they hit GBP4.08m and 1844 it was GBP7.78m.

It made me wonder if the Boglehead theory of 2 or 3 fund for the simple minded investor was really a marketing tool. It was easy to sell and it meant Vanguard could set these funds up easily, earning a small mark up for their troubles (the smallest all the proponents will tell you).  Now with this huge fund invested in the market, globally with big amounts, now wouldn’t that make a guy feel a bit swell? He could influence the companies without owning anything at all. He has an army at his bidding and calling ready for world domination. What would the next step be?