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'Eurobond' to be Shown
By John E. Herzog, Bank Note Reporter
July 22, 2013

This article was originally printed in Bank Note Reporter.
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Nathan Rothschild was born in Frankfurt-am-Main, Germany, in 1777, the third of five sons. His father derived the family name Rothschild from his business sign, a red shield.

Nathan moved to England in 1800, first to Manchester, where he bought textiles for sale to family clients in Germany. He later went to London, where he developed a reputation on the London Stock Exchange as an astute speculator whose quick eye saw profits where others feared losses. His success was enhanced by the development of a packet service consisting of fast sailboats. He later used carrier pigeons to carry messages. Both methods gave him valuable information long before it reached others. A classic example of this occurred after Waterloo in 1815 when he knew that Napoleon had been defeated by Wellington while others sold in panic on stale news of earlier lost battles.

In Germany, the family had become a trusted friend of the Elector of Hesse Cassel, and in 1806, Nathan became responsible for hiding the Elector’s treasure during a perilous period. He increased the family prestige greatly by returning it in 1814 together with the accrued 5 percent interest. Thus, the family became interested in foreign government loans.

Rothschild had been excluded from the underwriting of the 1 billion franc 1817 French Indemnity Loan, against the advice of Francis Baring, the consortium’s head. The Rothschild group began buying bonds in the open market, and when prices reached 74, began selling, and continued until prices plummeted to 65, five points below the offering price. Faced with disaster, the government ministers who had invested heavily in the success of this loan, were compelled to admit the Rothschilds to the consortium, and they played a key role in the sale of the next three installments.

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Building on this success, Rothschild began to interest British investors in the purchase of foreign government loans. These securities were difficult to administer, as principal and interest were payable in the currency of the borrowing nation, and in a distant city, as well. Distance and fluctuations in currency exchange rates made these securities less attractive to investors. Rothschild brought dramatic innovation to this product by denominating the loans in pounds sterling, and arranging for payment of interest and principal in London. Rothschild made London the financial capital of the world through these concepts, far surpassing his competitors. The £3,500,000 Czarist Russian 5% Loan of 1822 denominated in both sterling and rubles was the first, and has been called the first Eurobond by some modern commentators.

The Rothschild role in the preeminence of London as the world’s principal financial center is widely acknowledged. Nathan (“NM”) had made his family almost a sovereign power in its own right. The family partnership had offices across Europe in London, Frankfort, Paris, Vienna, and Naples. At the London Stock Exchange, the famous “Rothschild Pillar” where NM stood each day is a reminder of the early days.

NM Rothschild is a rare financial autograph, almost never encountered with the exception of these bonds. A two-headed Russian eagle with crown is at the top of the front of each bond, with the French and English translations on the back, along with a band of geometric designs. Both sides have an embossed seal reading “RUSSIAN LOAN 1822 CONTRACTED BY N.M. ROTHSCHILD,” and the Rothschild autograph appears in the upper right margin on each bond. A superb piece of global investment banking history which has survived revolutions, world wars, and rough handling, and an extremely rare financial autograph of an immensely important individual whose family firm continues to prosper two centuries later.

This rare certificate and others recalling stories about commerce and its history of accomplishment will be on display with other financial collectibles at the Wall Street Coin, Currency and Collectibles Show in October 2013 at the Museum of American Finance, 48 Wall Street, New York City. For details about this event, visit or phone (203) 292-6819.

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