Rothschilds in the Pacific

The legendary Rothschilds have quite a knack for multiplying their money by backing the right people in the right places. Rothschild gold bought supplies for the Duke of Wellington before Waterloo, financed Disraeli's purchase of the Suez Canal and bankrolled 19th century railroaders as well as modern industrial pioneers in Newfoundland. Soon the Rothschilds will be striking out in still another direction: the lands around the broad Pacific basin, especially Japan.

A new international-investment fund for the Pacific is being formed by N. M. Rothschild & Sons, the London branch of the 200-year-old banking family. As partners, the Rothschilds will have the biggest brokerage houses in the U.S. and Japan, Merrill Lynch and Nomura Securities Co. Other partners may join the syndicate. The fund will begin operation early in 1969, if, as expected, the government approves. It will be run by the Rothschilds in the pattern of other syndicates that they have formed in Europe. They will buy stock in promising companies in Australia and other Pacific countries but chiefly in Japan, whose economy in 1968 had a real growth of 12%, the highest of any developed nation. Then the syndicate will sell its shares to the public, mainly in Europe, but not in the U.S. or Canada. In those countries, the partners figure, it would not be worth struggling through a maze of taxes, notably the U.S.'s interest-equalization tax, which obliges Americans to pay an 18 3/4 premium for foreign securities.

No Myths. With other partners in other places, the British Rothschilds are quietly working up half a dozen similar syndicates. The London-based family had long been under the shadow of its wealthier cousins, the Paris Rothschilds, and of more imaginative British merchant bankers. Now the firm is catching up, as Rothschilds always seem to do. Edmund de Rothschild, 52, remains the senior partner, but the man who is taking an increasingly vocal role is his first cousin, Evelyn de Rothschild, 37. Unlike Edmund, who is active in a largely ceremonial way, Evelyn is pursuing a more aggressive family stewardship. "We aren't just a myth," he insists.

Evelyn argued that the British House of Rothschild should not necessarily become a home, stipulating that "no Rothschild can come into the bank who does not reach the required standards." The firm has both strengthened its ties with the French relatives and become more open to Christians and other outsiders. Last January, Evelyn took a partnership in the Paris bank and welcomed its head, Baron Guy de Rothschild (TIME cover, Dec. 20, 1963), to a reciprocal partnership at N. M. Rothschild. At the same time, the bank also added three non-Rothschild partners, putting the family in a minority (now 5 to 8) for the first time.

Help for Hungary. The new boys have added vitality to the still overly inbred firm. Headquartered in London's City, the British Rothschilds retain their prestigious positions as gold broker to the Bank of England and substantial dealers in foreign exchange. Since 1966, they have entered industrial ventures with Britain's National Provincial Bank and with four Continental firms, including Baron Guy's Paris bank and Cousin Edmond's* Banque Privee in Geneva. In May, the firm assembled a syndicate that lent $15 million to Hungary, the first direct credit by Western lenders to an East bloc country. Three months ago, its U.S. affiliate bought the Georg Jensen chain of New York-area specialty shops. And next week the Rothschilds will join as a junior partner with the U.S.'s Manufacturers Hanover Trust in opening a new merchant bank in London, thus completing a typical round-the-world circle.

* Rothschilds often have the same or similar first names. Edmund is English; his third cousin Edmond is French.

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