family business

NYTimes | They might have been the Hinterpfanns. Apart from the ancient priestly names of Cohen and Levin, Jews in Europe were called by patronymics (as ''Isaac ben Elchanan'' -- ''Isaac, son of Elchanan'') until little more than 200 years ago, when they began to acquire, often at the caprice of officials, what we think of as ''Jewish names'' like Bernstein or Rosenthal. But in the Judengasse, the squalid Frankfurt ghetto, the downtrodden inhabitants were known by their addresses. One family had lived in a house with a red shield hanging outside, ''zum roten Schild,'' before moving to another, ''zur Hinterpfann'' (''the warming pan'').

The red shield name stuck nonetheless, and Mayer Amschel Rothschild, born probably in 1744, was the first member of his family known by what would become one of the most famous names in Europe. By his death in 1812, he had risen from obscure coin dealer to international financier, establishing his sons in London, Paris, Vienna and Naples, as well as in Frankfurt. And his tightknit family firm grew into what Niall Ferguson calls ''for most of the century between 1815 and 1914 . . . easily the biggest bank in the world.''

Their enthralling story has often been told before, but never in such authoritative detail. Ferguson is a young Oxford don of remarkable energy and prolificity, who has previously written a learned book on German financial history and has just published in England a long book on World War I, as well as this Rothschild history in its 1,300-page entirety. The American publishers have taken pity on their readers' wrists and split it into two volumes: ''The House of Rothschild: Money's Prophets, 1798-1848'' will be followed in the fall of 1999 by ''The House of Rothschild: The World's Banker, 1848-1997.'' The study marks the bicentenary of Nathan Rothschild's arrival in London, where N. M. Rothschild & Sons of New Court was to become the most famous of all the branches of the great cousinage and whose archives were opened to the author.

Why the explosive Jewish success in finance during the 19th century? The simplest explanation is that, as the Jews began to emerge from the heaviest restrictions of the ancien regime, money-dealing was at first the only avenue open to them. The Rothschilds' particular rise to greatness is a complex story, but the outlines are clear enough: the coincidence of the opening of the ghetto doors, the French Revolution, the ensuing two decades of war across Europe and the burgeoning Industrial Revolution in England. Thus the family progressed rapidly from coin dealing and money-changing to trading in Lancashire textiles and transmitting the funds for the Duke of Wellington's armies.

There were eminent Victorians, notably the great English financial writer Walter Bagehot, who argued that the House of Rothschild wasn't really a bank at all, in the sense of a place where one could deposit and withdraw money. The crucial Rothschild role in high finance wasn't through deposit banking but through the development of an international market for transferable, interest-paying government bonds.

The career of Mayer Amschel Rothschild saw an intimate partnership with Landgrave William IX of Hesse-Kassel, a libidinous and avaricious prince whose begetting 12 illegitimate children still left him time for speculating with a large inheritance (partly acquired a generation earlier when the Hessian Army was hired out to the highest bidder, which was to say the King of England fighting his war in America). In this relationship, Rothschild remained in some ways the junior partner, the ''Hofjude'' or court Jew of tradition.

Soon the Rothschilds were floating government bonds on a much larger scale -- and then speculating in them. They shrewdly got out of British consols in 1817, but England was the nation where the family flourished above all. They acquired opulent houses in London and the country, and in 1850 Lionel Rothschild was finally accepted as an M.P. when the parliamentary oath ''on the faith of a true Christian'' was dropped.

The family moved from Tory to Whig, but they were never democratic egalitarians, and their story isn't necessarily evidence for the comforting notion that capitalism is the midwife of freedom. There was nevertheless a political reason for their affinity with England: a constitutional country with responsible government was quite simply a better bet. Whatever else the British Government did, it was not going to repudiate its debts in the manner of Continental autocrats. And so, as Ferguson shows, from Nathan's time ''relations with the Bank of England were close and mutually beneficial.''

In this period, England was also a better bet than the United States. The Rothschilds never became big American players. They liked to lend to the government of a country before they did commercial business there, but this was difficult when the United States was a genuinely loose federation, some of whose states were ''among the least reliable'' of all borrowers in the 19th century, and especially when Andrew Jackson was conducting his war against the Bank of the United States.