New Elan in an Old Clan

(See Cover ) For seven generations, one European family has dominated an incredible part of all that money can buy. Its escutcheon--a profusion of noble coronets, intrepid lions and soaring eagles--is carved in stone amidst the proudest vineyards of Bordeaux. On the Continent's most prized race horses, its blue and yellow colors proclaim a devotion to the sport of kings that has produced profit as well as pleasure. From its London and Paris banks, the family's millions have been sent forth to back more than 100 business enterprises on six continents. Some of its stately dwellings are the kind of mansions that mere San Simeons hoped to imitate, and the family moves comfortably through international society and top-level business circles. This ancient and unusual banking dynasty shields itself from the curious eye of the public, but the map and history of Europe have been changed by its action and etched with its name: the House of Rothschild.

Rothschild gold has powered the ambitions of prime ministers, princes and popes. It has financed wars and reparations treaties, changed the course of politics and bailed out armies and na tions. The Rothschilds strung railroads across the Continent, gained control of the Suez Canal for Britain, supported oilfields in the Caucasus and the Sahara, carved diamond mines in the African veld. Seldom unimaginative in the use of their money, they paid for the expedition that exhumed the mummy of Egypt's long-lost King Tutankhamen, have supported countless hungering artists and endowed many hospitals. To be a Rothschild has usually meant the possession not only of money but of the ability to enjoy it fully; this has resulted in a family trait of diversity. From the fruitful Rothschild family tree, heavy with shrewd financiers, have come half a hundred outstanding legislators, scientists, sportsmen and war heroes--as well as a few playboys. But as many Rothschilds have lived out lives of luxurious ordinariness; the family shrewdness and sophistication has not been evenly distributed.

No modern family--neither the Krupps nor the Philipses nor the Thyssens--has been so important for so long in European business. Newer dynasties such as the Rockefellers and the Fords have made more millions, but modern standards of wealth do not really measure the Rothschilds. The fortune of the family's financiers totals anywhere from $500 million to $1 billion, but ledgers cannot reflect the Rothschild lands, their possessions and influence accumulated over the generations, their priceless collections of art. Though the Rothschilds' fortune has been subdivided more than 100 times over the years, it still seems inexhaustible. The family stands as elegant proof that to be truly rich in Europe is to be richer than anywhere else.

The Second Continuation. The Rothschilds are a legend--and in recent times seemed destined to become a dead one. Hurt by high taxes and soft living, their between-wars generation failed to keep pace with modern banking methods, and the Rothschilds began to slip as effective powers in European banking. Today, the legend is very much alive--and being added to. Demonstrating the remarkable resiliency and power of survival that have enabled them to survive on their own family talent for two centuries, the Rothschilds are striking out in many new directions behind a silver curtain of discretion.

To make their new thrust even more powerful, the family's two main branches--in Paris and London--are starting to fuse again in a series of ventures, after a separation of more than half a century. Together they have created firms to put up buildings on the Continent, to make industrial loans in the U.S. and to tap the mineral wealth of an area in Canada bigger than England and Wales combined. The two also recently formed a joint company--appropriately called Second Continuation Ltd.--to give the French house a stake in the British bank and enable them jointly to exploit new opportunities on the Continent if and when Britain joins the Common Market. The sums involved are large, but in the contemporary world of great industrial consortiums, Rothschild money is no longer indispensable and controlling; cabinets no longer fall at their whim.

The family's reunion is due partly to the disappearance of an older and stiffer generation, but largely to the smoothing influence of today's most influential member, France's Guy Edouard Alphonse Paul de Rothschild.* It was Guy (hard g as in geese) who, taking over the family's French bank during the disorder of war and defeat, changed its character from stewardship of the family fortune to expansive modern banking. Where the bank's previous aim in this century had been to pursue safe obscurity, under Guy it entered the mainstream of modern business.

A slim, handsome man with heavily lidded blue eyes, Guy, at 54, is every inch a Rothschild. He personifies much of what the family name stands for: a flair for business, a love of sport, a taste for wine, art and conversation. Dressed in the British-style clothes that he prefers (he also speaks perfect English), Guy blends well against many backdrops: he is a friend and confidant of some of France's ranking politicians, raises championship horses, is a good skier and a devoted golfer. With his handsome wife, he is ready to try the latest dances, from the twist to the hully gully. Most of all, he is dedicated to enlarging the fortunes of his bank, de Rothschild Freres (which is known to competitors as La Grande Dame des Banques Privees), and to forging the two family branches closer together. Says Guy: "Our relations are confident, cooperative and affectionate. There are going to be more things to do together."

Nepotism, Inc. Guy heads a versatile clan of 75 modern-day Rothschilds who are spreading their talents into finance, industry, arts, science--or are being primed for the future. The job of expanding the family fortunes centers on eight of them. Four--Guy and three of his second cousins--are in the athletic, artistic and imaginative French branch. Four others--generally quieter and younger than their French relatives --are partners in the important but less wealthy British branch. Though separated by the Channel, the two branches keep in close touch through Telex communications, meet each other at board meetings of companies in which both have substantial interests. The leaders:

> Alain de Rothschild, 53, a 25% owner of the French bank, is a yachtsman, a conservative pillar of Right Bank society and president of the Paris Jewish Community. He also is the most active of the family in philanthropies.

> Elie de Rothschild, 46, also a 25% partner, directs the French bank's ventures in tourism, supervises the money-making Chateau Lafite vineyards (which Guy and his three French cousins own) and is the family's foremost man-about-town--a polo player and earthy wit in four languages.

> Edmond de Rothschild, 37, probably the richest French Rothschild, does not work in the bank but invests his fortune separately. From his late father Maurice, who had an eye for women as well as comely investments, he inherited a sum estimated at from $50 million to $500 million. Edmond, a gay blade himself, is married to sometime Cinema Starlet Nadine Tallier.

> Edmund de Rothschild, 47, the plump and mustached senior partner in the London bank, is also one of Europe's most accomplished gardeners, invests his weekends tending his rare orchids and rhododendrons in 30 hothouses at his Exbury estate near Southampton.

> Leopold de Rothschild, 36, Edmund's brother and partner, is an expert pianist and made a flurry in the tabloids in the late 1940s, when he spent two years in the British service as the "wealthiest able seaman in the navy."

> Evelyn de Rothschild, 32, Edmund's lively cousin and another British partner, plays polo against Prince Philip, and is one of Britain's most eligible bachelors.

> Jacob Rothschild, also a partner and Edmund's cousin, is, at 27, the youngest Rothschild banker and a highly regarded forerunner of an up-and-coming generation.

The Rothschilds' heritage of drive and power traces back 200 years to the Frankfurt ghetto. Merchant Meyer Amschel Rothschild, a small man with a large dream hidden behind his beard and caftan, built up such a lively trade in cloth, commodities and old coins that he was able to branch into the more promising pastime of moneychanging. As he prospered, Meyer moved to the ghetto's five-story "House with the Green Shield" (he had been born in the humbler "Red Shield House" that gave the family its name--Rot Schild) and sent his bumptious sons off to the financial strongholds of Europe to try their hands at business. Nathan settled in London, Jakob in Paris, Salomon in Vienna, Kalmann in Naples, and Amschel stayed home to help Father. The turning point in Meyer's career came when he ingratiated himself with Prince William of Hesse by selling him rare coins at a bargain. The prince reciprocated by giving Meyer the job of investing his vast cash reserves.

Prepared for just such an opening, the Rothschilds had created a communications system of fast coaches and a Yiddish-German cipher to link the family diaspora. Meyer sent Prince William's Hessian thalers to London, where Son Nathan's speculations multiplied them and won the family a small fortune and big reputation. When the British asked Nathan to smuggle gold to Wellington's troops trapped in Portugal during the Napoleonic wars, he shipped the gold straight to France, where Brother Jakob slipped it through the Pyrenees. Nathan found out about Napoleon's defeat at Waterloo before anyone else in Britain, thanks to a courier who sped a Dutch newspaper to him. He used the news to make a killing on the London stock market, where he customarily leaned in stoic solitude against a post that became known as "the Rothschild pillar."

With these triumphs, the Rothschilds earned wide acclaim for shrewdness, reliability and profitability, quickly became lenders to the great. Jakob's loans helped France conquer Algeria. From Vienna, Brother Salomon raised millions for the Habsburgs, who--after some hard prompting at a highly anti-Semitic court--in 1822 rewarded the Rothschilds and all their descendants with the title of baron and their noble coat of arms. From Naples, Brother Kalmann floated huge loans for the Papal States and the King of Naples by placing them with the other Rothschilds.

Supported by his indebted friend Metternich, Salomon won the right to sell lottery bonds to the public in order to build the Austrian Empire's first important railway. Brother Jakob, who had a lease on both the Bourbons and Napoleon III, laid down France's first railways (on which he made a great profit by artificially running up prices of the shares). The British Rothschilds ignored the country's industrial boom, but propped the young government of the U.S. with loans and, in combination with de Rothschild Freres, made loans to Brazil. "Money is the God of our times, and Rothschild is his prophet," sang Heinrich Heine, who marveled at seeing a French borrower tip his hat to the chamber pot of Baron Jakob.

Pride & Principle. For the Rothschilds, who still retained some of their Yiddish accents and ghetto ways, money also bought culture, fame and a degree of acceptance. They were celebrated in the writings of Byron and Thackeray; artists such as Ingres painted their women; Balzac and Browning sought out their sumptuous but always kosher tables; Rossini composed music for their parties; Bismarck and British royalty attended them. From Buckinghamshire to Bohemia, the Rothschilds put up marble palaces, acquired vineyards and stables. Breathed Lady Eastlake: "The Medicis were never lodged so in the height of their glory."

For all their wealth and power, the prideful Rothschilds never forgot--or were allowed long to forget--their origins. After King Louis XVIII refused to receive Jakob's wife at court because she was not Christian, Jakob withdrew his support of the Bourbons; he was lucky to get out just before the revolution of 1830 toppled them. Because of Russia's pogroms, the Rothschilds refused to grant loans to the czars. In many ways governments began to feel respect for, or fear of, the Rothschilds. Amschel became treasurer of the German Confederation, and Jakob the Austrian consul in Paris. Nathan's son Lionel was elected to the British House of Commons four times, but four times Parliament refused to seat him because he would not swear a Christian oath. Parliament finally gave in, and Lionel sat from 1858 to 1874.

When the khedive of Egypt in 1875 put his Suez Canal shares on the market, Britain needed $19 million to outbid other countries. Lionel de Rothschild, sucking on a grape, casually agreed to get the money for his friend Dizzy (Disraeli)--at only 3% interest. The Rothschilds helped to bankroll the empire-building exploits of Cecil Rhodes, and took home a large bundle of stock in the De Beers diamond and gold trust.

The Sterile Years. World War I, and the era of nervous money and raging nationalism that followed, brought the end to an expansive time for the Rothschilds. Stringent national tax systems ended their practice of keeping a single set of books, and the various branches drifted apart. Death duties sucked millions from their British fortune, and publicly owned banks grew up everywhere to sap their power. In France, the Rothschilds' railroads were taken over by the government. The German and Italian branches of the family had already died out for lack of male heirs. The tired old Rothschilds conspicuously failed to exploit opportunities in the U.S., and thereby missed the greatest industrial expansion in history.

One day in 1938, while Nazi troops stood over him with guns, Vienna's Baron Louis de Rothschild calmly finished his lunch, dabbed his fingers in a finger bowl, smoked a cigarette, approved the next day's menu--and then was marched off to prison. A year later, after Heinrich Himmler visited his cell, his freedom was bought in return for all the assets of the Austrian branch in Austria and abroad, and Louis found refuge in Vermont; the Austrian house never revived./- After Paris was occupied, the Rothschilds were forced to sell most of their French stocks on an already depressed market, and the Nazis carted off trainloads of priceless Rothschild objets. By 1940, when all the other French banking Rothschilds had fled or been captured, only the eldest son was left to salvage what he could. Says Guy de Rothschild: "From that date, I took over the bank."

Fresh Face. European historians reason that every Rothschild at birth is already 150 years old, and worth several millions. From his earliest years, Guy was imbued with a sense of family loyalty and duty, heard his mother lecture: "Don't flaunt your wealth." Four of Guy's great grandparents were Rothschilds, a result of the fact that half of the family's 59 weddings in the 19th century twined Rothschild men (and money) with Rothschild women. Guy entered the bank after studying law, then got called off to war. He was one of only three out of 26 officers in his mechanized cavalry unit who survived to be evacuated from Dunkirk; he went right back to France, was captured by the Germans but later escaped.

Under Vichy's puppets, Guy moved with the bank's offices to the south of France, where a small staff kept it going, then fled to the U.S., where he reassembled some more of the family assets. In 1943 Guy set out for England. His ship was torpedoed in mid-Atlantic, and he was rescued after sloshing around on a raft for seven hours. In England he joined the Free French as a captain.

With peace, Guy and Cousins Alain and Elie set out to put a fresh face on the aged Grande Dame of Paris banks. To keep the books, the young trio brought in machines to replace the old men with scratch pens. They sought out new banking customers as their more conservative fathers never would have done, and launched new companies to share in Europe's postwar boom. When Guy & Co. formed a consortium to explore for oil in the Sahara, the Rothschild name added glamour to the venture, and the entire stock issue was snapped up within hours.

With help from the World Bank, de Rothschild Freres created another consortium that has put up $166 million to exhume a rich iron lode in Mauritania. Among other companies that the Rothschilds control, Pefiarroya in Chile mines 7% of the free world's lead, and Le Nickel in New Caledonia produces 10% of the world's nickel. Under Guy, the Rothschilds have also built France's biggest private uranium mining company, which supplies some of the raw material for De Gaulle's force de frappe. And it was de Rothschild Freres that drafted the plan for financing the Channel tunnel that will connect France with Britain.

Allying with fun-loving Cousin Edmond, the banking Rothschilds have also got into the tourist boom. They hold the largest single share in a new company that is erecting ski resorts in the Alps, building bungalow villages in Majorca, investigating sites for motels near the new Mont Blanc tunnel. From the U.S.'s Restaurant Associates, Cousin Elie recently bought an interest in France's largest casino, at Divonne-les-Bains. Cousin Edmond himself has poured $5,000,000 into France's plushest Alpine resort at Megeve, has large shares in a European travel club (100,000 members and 17 vacation villages), and has helped finance hotels for Pan Am's Intercontinental Hotels Corp. Besides his controlling or significant interests in two dozen other enterprises--the biggest machine-tool company in Brazil, supermarkets and mutual funds in Europe, a pipeline from the Red Sea to the Mediterranean--Edmond is a partner with the British Rothschilds in building both economy and luxury (up to $90 per day for a couple) resorts in Israel.

Most Secretive. In London, N. M. Rothschild & Sons is constructing a new, six-story headquarters in the City to symbolize its revival. It continues to be Britain's most secretive bank, but it is getting a little less so. To lure fresh talent and provide for its expanding services, the bank has admitted three non-Rothschilds as partners (the family still controls with four partners). The British Rothschilds, who still are the world's most important bullion dealers, have started a factoring company, an investment advisory service and two mutual funds, are participating in a consortium to underwrite pay TV and in a group of Europe's gilt-edge banks called Euro-syndicat, which was organized to seize opportunities in the Common Market.

In their most ambitious project, the British Rothschilds put together a consortium to tap the timber, minerals and hydro power of a 53,000-sq.-mi. area in Newfoundland. Next spring the British Newfoundland Corp., with both the British and the French Rothschilds represented, will begin a $1 billion, seven-year job to dam Hamilton Falls and harness its 6,000,000 h.p. It will be the world's biggest hydroelectric development, and Sir Winston Churchill has called the whole project "a grand imperial concept."

World Network. Rather than run companies by themselves, the Rothschilds often prefer to start or join syndicates, placing their men on boards to exert maximum influence with minimum investment risk. The partners regularly hop across continents to keep an eye on managements (Edmund visits Canada half a dozen times yearly), and a far spreading network of agents, who seldom even admit that they are employed by the Rothschilds, report constantly on fresh opportunities. Rarely does this discreet family exercise its powers to reorganize companies or juggle managements. Says Guy: "The French don't like violent reshufflings, outside of politics that is. It's not good form."

Beyond the companies that they dominate or influence, the Rothschilds have holdings in more than 100 blue chips, including Royal Dutch/Shell, De Beers, Michelin, Rio Tinto, IBM. The French branch's string-tied bundles of stock fill an ancient five-story bank vault whose keyholes are hidden behind brass lionheads. In the buff sandstone building at 21 Rue Laffitte that has been home to de Rothschild Freres since 1817, muttonchop-whiskered family ancients line the walls in oil and marble, and ushers wearing black swallow-tailed coats attend the customers, while 300 employees quietly work. Guy de Rothschild occupies a small, white-painted office, which has on display a pastel of Grandfather Alphonse and the signatures of Meyer's five sons.

Writer & Angel. Many Rothschilds have flashed their wings outside these venerable surroundings. Versatile Philippe de Rothschild, 61, another of Guy's cousins, is a vintner, writer, and angel to assorted arts, leading a life as carefully modulated as a string quartet. He is the official French translator of British Playwright Christopher (The Lady's Not for Burning) Fry, and with his wife Pauline is translating into French the Elizabethan poems of Herbert, Herrick, Wyatt, Drayton and Sir Philip Sidney. His daughter Philippine, 28, is an actress on the French stage, and his niece Nicole, 39, produces films. In Israel, Guy's sister Bethsabee, 49, has set up a crafts industry for refu gees, is the prime financial force behind the Martha Graham dance troupe.

Large and jolly Victor Lord Roth schild, 53, the titular head of the Brit ish family, is a Cambridge don who has made a mark as philanthropist, scien tist and Labor peer, is also chairman of Shell Research. An expert on fertili zation, he once astonished BBC-TV viewers by bringing before the cameras an enormous model of a human sperm. (His daughter Emma, 15, this year be came the youngest woman ever admitted to Cambridge.) Like many Roth schild men and women who have made a tradition of volunteering for hazardous duty in wars from 1870 onward, he has several medals from his wartime post as a colonel in countersabotage.

Almost every French Rothschild lives surrounded by a museumlike collection of priceless paintings, period furniture, irreplaceable tapestries. Drawing only from Rothschild collections, Sotheby's or Parke-Bernet could hold an auction every week for a year-- and each sale would make news. Curators of the Louvre and the Met can only drool at the accumulations of Egyptian sculpture, Louis XV and XVI furniture, Sevres porcelain, 16th century enamelware, and wall upon wall of Goyas, Rubenses, Watteaus and Fragonards. When Philippe and Pauline have tea, their dog Bicouille is sometimes served a snack off an aluminum dish placed upon a napkin spread over their expensive rugs. Says Pauline: "We are fortunate, of course, in that we can take ten or twelve servants when we travel, and thus can have things done the way we like them wherever we are."

Inside a Magnum. Guy was raised in a mansion that once was Talleyrand's and later became European headquarters for the Marshall Plan. Today, in an 18th century town house that once belonged to a niece of Napoleon, he lives with his auburn-haired second wife Marie Helene, 32. (When he left his first wife for Catholic Marie Helene seven years ago, Guy became the first head of a Rothschild house ever to marry a Christian, had to resign the presidency of France's Jewish Community in the ensuing scandale.) The walls of their house are lined with paintings by Rembrandt, Gainsborough, Ingres and Boucher, some displayed in a strawberry-red salon that gives a visitor the impression of being inside a magnum of Chateau Lafite.

On weekends Guy and Marie Helene drive in the Mercedes or the Bentley to their 9,000-acre estate at Ferrieres, 19 miles east of Paris, where high, sculptured ceilings brood over a splendor of blue marble columns, blackamoor statuary, yellow silk furniture, and sepia photographs of ancestors. Every other weekend there is a golf match or a shoot in woods that have recently been restocked with pheasant. The parties at Ferrieres, which once awed Kaiser Wilhelm, now hum to brittle conversation and shine with the high fashion of an international society that mixes people of achievement with outsiders of the jet set. Guests have included French Premier Georges Pompidou (who was director general of de Rothschild Freres under his good friend Guy until 1962), former Premier Michel Debre, Prince Sadruddin Khan, Artur Rubinstein, the Charles Wrightsmans of Palm Beach and Porfirio Rubirosa.

Friendly Rivals. On the great marshy peninsula of Medoc, the celebrated vines that grow over 200 chalky acres of Chateau Lafite-Rothschild produce a grand cru that is the pride of Guy, Elie, Alain and Edmond. Next door, at his Chateau Mouton Rothschild, Philippe wages a battle for oenological equality with his fond cousins and competitors, trying to persuade the French government's wine agency to revise its official 1855 wine classification, which listed Mouton slightly below Lafite. Philippe has commissioned, among others, Cocteau, Braque, Dali and Lippold to design labels for his Mouton Rothschild.

Another after-hours Rothschild passion is raising and racing horses. Britain's Evelyn and France's Edmond both breed horses on their estates. So famous are Guy's stables at Chantilly and his Deauville stud farms that during the war the Nazis delighted in crossing seized Rothschild mares with German stallions. Now Guy directs all the breeding: "I enjoy making up my mind for the matings, and then seeing the babies." His most successful match produced Exbury, winner of all five races he was entered in this year, including the world's richest cup, the Prix de 1'Arc ($197,000). Figuring that Exbury could not top that record, Guy retired him, and the horse henceforth will earn $240,000 a year at stud--accommodating up to 40 mares a year at $6,000 per service.

The Constant Thread. Horses, wines and mansions all illumine the Rothschild tapestry, but the golden thread that holds it together is the family's fierce spirit of continuity. Partly a matter of finely sharpened instinct, this spirit is passed to the young Rothschilds through years of competition on the playing fields, in the best ecoles and in the family banks, and through tales of their ancestors' exploits. (So large and complex is the family story that French Historian Bertrand Gille has been working on one version of it for ten years, estimates that he has five more years of work ahead.) Today the thread continues through a dozen Rothschild boys and young men, including Baron Guy's sons Edouard, 6, and David, 21. Handsome, athletic and a serious law student, David plans to enter the family bank.

The Rothschilds live in an era that does not allow them to wield the power that they once did. But at least they now once again live with their tinies. And to face the future, they have one advantage from the past, the Rothschild legend--in itself a very bankable asset.

*The French branch of the family pronounces it de Rot-shield; the English branch, de Roth's child.

/- Louis died in 1955. Three Rothschilds now reside in the U.S. Guy's sister Jacqueline, 52, lives in Los Angeles and is the wife of Cellist Gregor Piatigorsky. A sister of Lord Roth schild, jazz-loving Nica de Koenigswarter, 50, lives in New Jersey, and the last surviving member of the Austrian branch, Eugene de Rothschild, 79, divides his time between estates on Long Island and in Europe.

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