00:43:50 (someone): It should be noted that his wealth was actually very little remarked upon in the Judengasse when he died. Instead, they all talked about his piety and his charity. And that's because Mayor Amschel Rothschild was like Santa Claus in the Judengasse. Seriously, he was always giving away money. Listen to these descriptions from his contemporaries. The first one is from a German writer, Ludwig Born. He said, quote, people crowded behind Rothschild in the streets like a court. Masses of poor people to whom he gave alms. If one saw a row of beggars in the street looking pleased and comforted, one knew that the old Rothschild had just passed through. When I was a little boy, I was passing with my father through the Judengasse, and we ran into the old Rothschild coming out of the synagogue. Rothschild spoke first to my father. He then addressed a few kind words to me and placed his hand on my head to bless me. Thanks to this blessing, and although I became a German writer, the cash in my pocket never completely ran out. Here's another description from another contemporary writer, quote, Rothschild believed that God best rewards those acts of charity for which the donor receives no thanks. He often walked at night through the Judengasse, pressed a few coins into the palms of all who seemed poor, and hurried on in the dark. And this type of behavior starts early on for him. It's not something he does only once he becomes fabulously wealthy.

00:42:35 (someone): They're paying British troops. They're smuggling money from London to Spain, and half the journey is being fully monitored, and in fact sanctioned, by the French government. And these are the kind of bold moves that end up making the Rothschilds the richest family in Europe. And, of course, we all know what happens next, right? All this funding, this prolonged continuing war in Spain, wears down Napoleon, he loses in Russia, comes back, is defeated, and is eventually exiled, first to Elba, and then to St. Helena. But sadly, Mayor Rothschild actually doesn't live to see this victory. He dies in 1812. Now we're talking about, you know, who's the richest man in the world. And it was never mayor Amschel Rothschild. Uh, but on his deathbed, he said to his oldest son, Amschel quote, Amschel, keep your brothers together and you will become the richest men in Germany. Well, they did. They became not only the richest men in Germany, but in the world. He also begged his sons to be charitable and remain faithful to the faith of their fathers. He ordered his funeral to avoid all ostentation, which it did, but that didn't stop the entire Judengassa from showing up for it. There were no speeches, and he was buried beneath a very plain, simple tombstone. It should be noted that his wealth was actually very little remarked upon in the Judengasse when he died. Instead, they all talked about his piety and his charity.

00:15:13 (someone): The entourage ended up giving out so much gold and spending so much in the markets that the value of gold in Cairo crashed by 20%. And it wasn't just Cairo, they accidentally devastated economies all along their path. Some estimate that this led to approximately a billion and a half dollars in economic losses throughout the Middle East. And it took a decade to fully recover from this massive depreciation in the price of gold. Musa made such an impact on the Egyptians that 12 years later, when Syrian historian and writer al-Umari visited Cairo, he noted that people were still raving about him and his extravagant visit. And so you see why people call him the richest person of all time. You know, he's spending so much money that it's devastating economies, and it's still not putting a dent in what he has. Rudolph Butch Ware, a West African history professor at UC Santa Barbara, put it this way. He said, quote, contemporary accounts of Moose's wealth are so breathless that it's almost impossible to get a sense of just how wealthy and powerful he truly was. Ware said, imagine as much gold as you think a human being could possess and double it. That's what all the accounts are trying to communicate. But Musa didn't just inspire others by his vast displays of wealth, he was in turn inspired by what he saw on his journey. He was impressed by the universities and the architecture and the schools, the libraries that he saw in Cairo, and devoted much of his reign to making his empire a robust center of scholarship. He picked up several poets, scholars, artists, and architects from all around the Middle East and brought them back to the empire's prized jewel, the city of Timbuktu.

00:39:07 (someone): We can see it all with satellite photos, and the estimated cost to construct it was a billion dollars. So Putin must have at least a billion dollars if he built himself a billion dollar home, right? Well, no. Technically, he didn't build it, and technically he doesn't own it. It's owned by an oligarch, a billionaire who is very close to Putin and depends on him for his fortune. Some of the construction was funded with government funds, and yet by all accounts, it is Putin's private residence, one of 20 that he owns. But he doesn't need to technically own it on paper in order for it to be his. I think it's likely that Putin's official net worth, if you were able to see it, might be quite low. It's possibly less than a billion dollars. But he doesn't need the money. He basically owns the Russian government. And he's surrounded by billionaire oligarchs who have to do his bidding or risk having their fortunes seized from them, and worse. Because of his power, Putin basically has as much money as he wants. Ironically, there's some truth to what Putin said when someone asked him if the reports about his wealth are true. He said, quote, I am the wealthiest man, not just in Europe, but in the whole world. I collect emotions. I am wealthy in that the people of Russia have twice entrusted me with the leadership of a great nation, such as Russia. I believe that is my greatest wealth. To which you can only respond. Uh, yeah, sure.

00:04:39 (someone): The Rothschilds are still a wealthy family to this day, which is pretty remarkable. It's been a couple hundred years since that all started. And the Rothschild Bank, amazingly, is still a functioning firm that does pretty well for itself. But they are far from the richest people in the world these days. There's only one Rothschild billionaire and he's worth just over a billion dollars. Again, pretty impressive. I would love to have a billion dollars, but by comparison, Jeff Bezos is worth well over $100 billion. So, you know, this guy is not deciding the fate of the world and controlling all the world's governments. So if you do extra research and read some of the conspiracy stuff, don't buy it. Don't believe it. I should note my sources. I mainly relied on two excellent books for this episode. The first is a biography called Founder by Amos Elon. And the second is an economic history of the family and its financial firm. It's called The House of Rothschild, Volume 1, Money's Profits. And that was written by Niall Ferguson. I should also note the help of my new research assistant, Jack Tingey, who did some excellent work doing extra research on this. So thank you very much, Jack. Okay, so let's get into it. This episode is going to focus on the man who started it all, a man by the name of Mayer Amschel Rothschild. I'm going to cover the rest of the family in later episodes.

00:28:26 (someone): And if you look at that, Nathan is by far the wealthiest person of all time. Now again, this is kind of the early to mid 1800s, so it's a little sketchy to try to get a firm grasp on what exactly his assets were, but I've seen some estimates that he had something like a half a percentage point of global GDP, which is insane. Using that calculator percentage of GDP metric, his wealth has never been matched, and it's not particularly close. Now, how does that compare to someone like Crassus from the Roman Empire or Montezuma or Monsa Musa? Well, I don't know. I mean, how do you compare them? We don't have anything resembling accurate global GDP numbers for those time periods. It's impossible to calculate inflation accurately when they were just buying completely different goods from us. And we also don't have great numbers around how much money they actually owned. And Nathan did live in a time when you could calculate those things. He was buying and building homes that still stand today in 2019. So I think, Nathan, you really can compare to other people going to the present day. And by that percentage of GDP measure, which I think is the one that makes the most sense, he was the richest person to ever have lived. So yeah, I mean, I buy that argument that Nathan Rothschild was the richest man of all time. When Nathan dies, James becomes the new de facto head of the Rothschild family. He's the youngest brother, but he's the most like Nathan, energetic, intelligent, domineering.

00:00:01 (someone): I'm going to show you how great I am. This was our fighting power. I just want to say from the bottom of my heart, I'd like to take this chance to apologize to absolutely nobody.

00:00:22 (someone): Hello and welcome to How to Take Over the World. This is Ben Wilson. If you Google who is the richest man of all time, Mansa Musa's name is likely to pop up. He's remarkable for many reasons, but I think the most interesting reason is that he's the only person that I know of, at least through history, who had what I would describe as limitless amounts of money. If you've ever wondered what it'd be like to just be able to conjure money out of thin air, Monsa Moussa is kind of the guy that can answer the question for you. You think about the other extremely rich people of all time. You think about someone like Jeff Bezos today, $170 billion is what he's worth. Last time I checked. And, um, you know, it would be extremely difficult for, for Jeff Bezos to spend all his money, even if he tried. But you can't say it's limitless because that's not using very much imagination. I mean, think if, if he tried to exert anything like the kind of political or military control that men of his wealth did in the past. You know, Jeff Bezos would probably have a tough time spending down all his money if he were trying to buy cars and planes and houses. But if he were trying to buy kingdoms and land and the things that Julius Caesar or Charlemagne was buying with his money, he would find himself out of money pretty quick. But not Mansa Musa.

00:15:31 (someone): Well, by creating this bond market, the Rothschilds are changing that. They're creating financial instruments that can rival land. And they're also making it possible to accumulate capital on an unprecedented scale. And so in this way, the Rothschilds changed the world more than few people can claim. It's really not just a matter of them having become the richest family of all time, of Nathan becoming the richest man of all time. I mean, you think about the time period that they lived in, nobility was everything before then. And afterwards, the influence of bankers and people who made money increased so much. And this is when democracies really start to come into the world and survive and hang on. Really, the Rothschild's innovations and the changes that happened in the larger financial world altered history, totally changed the world in a way that had never been seen. I really like the way it's described by Hine, who said, quote, I see in Rothschild one of the greatest revolutionaries who have founded modern democracy. They signify the gradual annihilation of the old aristocracy. They are Europe's most fearful levelers. Rothschild came and destroyed the predominance of land by raising the system of state bonds to supreme power, thereby mobilizing property and income, and at the same time endowing money with the previous privileges of the land. He thereby created a new aristocracy, it is true, but this, resting as it does on the most unreliable of elements, on money, can never play as enduringly or aggressive a role as the former aristocracy, which was rooted in the land in the earth itself.

00:45:00 (someone): And this type of behavior starts early on for him. It's not something he does only once he becomes fabulously wealthy. He was a friend of the destitute and homeless from the time he was a young man. It should also be noted that he prayed often and was, quote, very orthodox in his religious observance, but was tolerant of those who were not. He never moved into a mansion and always wore plain, simple clothing. Now, this is important both as just a model for how you should live your life, but also because I think this whole mindset and philosophy was what allowed his sons to be so successful. Usually, if you're rich and you have five boys, at least one of them is going off the deep end. But the fact that he never dressed fancy, never moved out of their modest Judengasse home, and never displayed their vast wealth, except to pay the poor with it, probably helped his sons to be hardworking and well-adjusted. He also technically only left them the minimum required inheritance. Now, in reality, all his wealth went to his sons, but not as an inheritance. They became partners in the firm once they had earned it, and then were given a proportional share of the company. but they weren't just given money for the fact that they were his sons. They were given money for the fact that they worked in the firm and earned money as members of the firm. He wasn't a particularly harsh father. If anything, he was rather doting and kind, but he also had high expectations for his sons and gave them very little for free. Okay, so let's do an analysis.

00:03:28 (someone): And so I want to discover the secrets of that wealth, how you do that. And secondly, because they were able to turn that wealth into real power. And as I read the story of the Rothschild family, it became very clear that the strategies to becoming extremely wealthy haven't changed a whole lot over the last 200 years. And the strategies for turning that wealth into power have not changed either. You can see a lot of similarities between them and the great financiers and great wealth generators of our day. And I'll point out those similarities as we go, but suffice it to say, if you're looking to be the world's first trillionaire, this is a pretty good story to learn from. Now, before we start, one disclaimer. The Rothschilds were powerful, so powerful that they have sparked the imagination of conspiracy theorists all over the world then. And now some conspiracy theorists claim that today in 2019, the Rothschilds secretly run a one world government and they use their Illuminati pawns to control all the world's governments and all that kind of stuff. People claim they are the puppet masters who really control the strings. They're, they're, you know, the ones who decide what really goes on. And a lot of these conspiracies are pretty anti-semitic. It's the scary Jews with their Jew gold that are hypnotizing the world and making world leaders do their bidding. And that is not the case. The Rothschilds are still a wealthy family to this day, which is pretty remarkable. It's been a couple hundred years since that all started.

00:01:40 (someone): Okay. Arbitrage is when you take advantage of price differentials to turn a profit. And that's what the Rothschilds did. They, uh, they used arbitrage. Obviously it's a little more complicated than that and we'll get into it a little bit more. We'll get into some of the complexities, but I wanted to start off talking about this idea of arbitrage because you have to understand it in order to understand how they were able to do what they did, how they became the wealthiest family of all time. Now, before we get into it, let's go back a little bit and recap what happened just for a minute last episode. So we talked about Meyer Rothschild, who was the founder of the Rothschild dynasty, the guy who started it all. As a brief refresher, he was born in Germany. He's a Jew, born in the city of Frankfurt, and he starts out as a small-time lender and merchant of metals and rare coins, but slowly makes his way up as he starts doing business on a larger and larger scale. and eventually he's able to take over as the steward of the fortune of Wilhelm, landgrave of Hesse. This happens because the French invade Hesse, forcing Wilhelm into hiding. The French also import liberal ideas about religious tolerance, and they emancipate the Jews from many of their previous oppressions that they had suffered in Frankfurt, which allows the Rothschilds to move more freely and conduct more business. Mayer puts Wilhelm's fortune to great use and starts to make real money for his family.

00:15:10 (someone): He needs money and he needs connections, and he figures out a way that he can do both at the same time. He starts to specialize in dealing in rare coins and medals. At the time, the nobility of Europe loved to collect that kind of stuff, and Meyer develops a really smart business model. He basically creates a mail-order business before there was such a thing. He created beautiful catalogs. People remarked on them at the time. They were incredible. Remember, he's selling to the nobility, and really only the nobility that is in Central Europe, pretty close to Frankfurt. So this is a limited customer base, and he doesn't have to mass print these catalogs. So they're bound books with gold embossed lettering on the front, and they're really beautifully crafted. Uncommonly for this day and age, these noblemen could look through the catalogs and then choose the metals and coins they were interested in based on the descriptions provided, and Rothschild would send them the metals and coins for free. They could look them over, choose which ones to keep, send back the rest again, free of shipping. And only then was payment required from them. You can see the similarities to these internet direct to consumer businesses that do so well today. Mayor's business is almost like a Warby Parker or Casper mattresses or something like that. And this is one of the most fascinating parts of Ross child's career to me, because it is so relatable to our current day. He understood his customers. Well, he knew what they wanted and he provided value and made it easy for them to purchase.

00:47:30 (someone): Capital allocation is competitive. You don't make real money by being smart or hardworking or even by being lucky. You make real money by being smarter or harder working or luckier than anyone else. Rothschild created a lasting advantage for himself by having more information and faster communication. So you have to think about what your advantages are, and information is one of the biggest ones. This is why it's no secret that Michael Bloomberg, the guy who started Bloomberg News and is the key of financial news, is worth more than $50 billion. If you want to make money, learn something that no one else knows. Number four, start early, go steady. Whether it's Warren Buffett or Mayor Rothschild or John D. Rockefeller, the great wealth builders start making money as soon as they can. Compound interest really is the most powerful force in the universe, as the saying goes. And these great investors and moneymakers, they're not up and down. They slowly build their wealth over time, and over a period of decades, it becomes enormous, as it did in the case of Mayor Rothschild. And the last thing I'll end with is the real lesson from Mayor Rothschild's life. He told us exactly what he wanted us to remember, and it's the motto that was adopted on the Rothschild coat of arms. Concordia, Integritas, Industria. In that order. Concordia, Harmony. Mayor Rothschild always put his family first. He made his family his business, and he made his business his family.

00:02:44 (someone): The French also import liberal ideas about religious tolerance, and they emancipate the Jews from many of their previous oppressions that they had suffered in Frankfurt, which allows the Rothschilds to move more freely and conduct more business. Mayer puts Wilhelm's fortune to great use and starts to make real money for his family. He does this in part by sending his five sons out to establish new branches of the family business in London, Paris, Vienna, and Naples, and one brother stays home with him in Frankfurt. Together, they make it pretty big. Mayer teaches his sons the three cardinal Rothschild virtues of Concordia, Integritas, and Industria. harmony, integrity, and industry. On his deathbed, Mayer tells his eldest son, Amschel, keep your brothers together and you will become the richest men in Germany. Mayer never moved out of the Judengasse, the Jewish ghetto in Frankfurt, and he was buried beneath a plain tombstone. Which brings us to this episode. So the brothers are in these five offices. They're running what is essentially an investment bank, although it wasn't called that back then. And the way they're making money at this point is, for the most part, by issuing government bonds. Government bonds were not a new invention. They'd been going on for a few hundred years. But the Rothschilds had radically transformed how they were issued. They made them much easier to issue, obtain, and trade. And so they basically turned it from a one-to-one interaction. You have someone who needs to borrow and someone who can lend.

00:21:57 (someone): They're all really patient, and they let their wealth slowly build over time. But then everything changes for mayor Rothschild. This is when everything really starts to go from, you know, he's a moderately successful Jewish banker, a merchant, to moving him towards becoming one of the richest people in the world. This is kind of when it all starts, when he's 40 years old. And why? What do you think happens? Think about this. What could take someone from being a very successful businessman, but not anything special, to being one of the richest people in the planet? What would make that difference? And it's something kind of surprising. I'm sure it's not what you're thinking. But let me introduce it this way. Just this weekend, I was reading an article called How to Be Successful, which is obviously right up my alley, by a guy named Sam Altman. And Sam is the president of Y Combinator, which is a seed accelerator. It's kind of like an early stage venture capital firm that invests in companies that are just barely starting, even earlier than venture capital. And they have helped launch companies like Dropbox, Airbnb, Reddit, Stripe. Their companies are worth more than $80 billion in total. So this guy knows something about, you know, how to be successful and what it takes to found one of the most successful businesses in the world. And in his article, how to be successful, he lays out 13 things you have to do to be exceptionally successful.