The remarkable story of the building of a bank in an 18th-century ghetto
A new book*, a portrait of the first Rothschild, by Amos Elon, makes the family's story even more remarkable than I already believed it to be. It also provides a picture of a repulsive Frankfurt, the most anti-Semitic city in 18th-century Germany.

It was only a few years after Rothschild's death that Byron wrote his celebrated lines about the power of finance:

Who keep the world, both old

and new, in pain

Or pleasure? Who make politics

run glibber all?

the shade of Buonaparte's

double daring?

Jew Rothschild and his fellow-

Christian Baring!

Unlike the Barings, the Rothschilds continue to push on with their banking business; they announced the other day a closer integration of their European operations. Until now most attention has been paid to the founder's five brilliant sons - the five arrows on the bank's crest - who, leaving behind one of their number in Frankfurt, established businesses in London, Paris, Vienna and Naples, of which those in London and Paris still survive. But the founder, Meyer Amschel Rothschild, born in 1744 in a dilapidated tenement in the Jewish ghetto of Frankfurt, was arguably the greatest Rothschild of all.

No improvement in the circumstances of the Jewish community in Frankfurt, the largest in Germany, had taken place since medieval times. It was confined to a closed, over-crowded, insanitary compound, shut off by high walls and heavy gates, which were locked at night, all day on Sundays and other Christian holidays, and from Good Friday until after Easter. The freedom of movement of Jews and the jobs they could do were severely restricted; they had to swear a loyalty oath in which they were referred to as members of an "accursed" race; their numbers were limited to 500 families, so only 12 Jewish weddings could be authorised each year. They were often molested in the street. At the cry "Jud mach mores" - "Jew pay your due" - they would have to take off their hats, step aside and bow. Jews could venture outside the ghetto only for business, and never more than two abreast. This city of Goethe, a contemporary of Rothschild, maintained an obscene painted relief, known as the Judensau (Jews' sow) at one of its entrances. When the old ramparts were turned into promenades, a sign outside one of them said "No Jew or pig can enter here."

Frankfurt's non-Jewish residents were viciously hostile because they were determined to keep to themselves all the advantages of their city's favourable trading position, standing as it did at the junction of five international land routes - linking England and the Netherlands with Russia, and Venice and France with the Hanseatic towns to the north. Frankfurt's anti-Semitism was in its origin one-quarter religious hate, three-quarters commercial fear. That Rothschild built up a business which endures to this day, albeit no longer in Frankfurt, in the face of the city's vile regulations, makes his achievement all the greater.

Rothschild took the only available escape route: he became a Court Jew. The rulers of numerous German kingdoms and principalities always needed men of business and bankers to handle their financial affairs. Christian bankers weren't terribly interested in the opportunity - princes were apt to renege on contracts; they made their own laws.

After many years of slow progress, punctuated by setbacks, Rothschild gradually began to do more and more business for the ruler of neighbouring Hessel-Kassel. Its prince was both exceptionally rich and an obsessive money-maker: he supplied mercenaries and loans to his fellow rulers and invested in rare coins and British government stocks. In today's terms, Rothschild had become the chief broker to the largest and most active institution in the market. Nonetheless, Rothschild's daily life continued to be marked by the humiliations visited upon Jews. One day, in the 1780s, the Frankfurt magistrates decided that Jews should be forbidden to carry walking sticks. The Frankfurt post office withheld letters addressed to Jews until the afternoon, so that they could be censored. However, as the recipients were allowed to see their envelopes earlier, Rothschild had his correspondence colour coded. A blue envelope told him that the pound was rising, red that it was falling.

By the beginning of the 19th century Jewish emancipation could no longer be resisted. Nonetheless the city fathers, Lutherans every one, demanded their pound of flesh. They insisted that the Jews buy their civil rights. Rothschild conducted the negotiations in 1811. The city claimed that it should be compensated for losing the proceeds of the special tax on Jews, levied since medieval times. The price agreed was equivalent, in today's money, to pounds 4,000 per Jewish family. A year later Rothschild died. He had lived his entire life in the ghetto and had visited the synagogue almost every day.

Mr Elon quotes an affecting description of "old Rothschild": "during the meal the old Rothschild, who has business deals with my father-in- law (a Christian banker), was announced ... his eyes mirrored intellect and good will. He possessed both qualities. Greeting us warmly he entered. The servant brought him a chair. He did not sit down. `Please sit down,' said my father-in-law. `No, sir,' Rothschild responded, `I know what is becoming for me.' `If you do not sit down,' said my father-in-law, `I'll also stand up.' At this, Rothschild placed himself at the edge of the chair; we feared he might fall off. This was the man who through industry founded a world power of finance."

*`Founder: a portrait of the first Rothschild and his time' by Amos Elon (Harper Collins, pounds 20).