Culture : Rothschild: A Dynasty Diversified : A museum exhibit shows the centuries-old banking family as prototype of European unity.

When 20-year-old Meyer Amschel Rothschild set up a coin exchange in this city’s Jewish ghetto in the 1760s, an enterprise that would launch a family dynasty and turn the Rothschild name into a symbol of wealth and power, Germany was still a century away from unity and Europe had many fratricidal wars ahead of it.

The Rothschild patriarch established the prototype of modern capitalism. Early on, he and the five sons he brought into his banking business grasped the need for rapid communications and good public relations, the value of diversified investments and vertical integration. Most important, they understood that their market was not just the hundreds of sovereign principalities surrounding Frankfurt but all of Europe and beyond.

Meyer Amschel fought for Jewish civil rights and never moved from Frankfurt’s Jews’ Lane, but he certainly saw the wisdom in doing so and sent his sons out to 19th-Century Europe’s commercial capitals--London, Paris, Vienna and Naples--to expand the family business.

Naysayers of European unity today might do well to visit “The Rothschilds,” an exhibit subtitled “A European Family” at Frankfurt’s Jewish Museum, to see just how little is new in the idea of European economic integration and how long it has been in place.

The Rothschild family business transcended national borders and was, as Munich’s Suddeutsche Zeitung concluded in a review of the exhibit, “the first European banking multinational.”

Even today, the Rothschilds are influential players in European financial circles, though not at the level of a century ago. The banks, investment companies and foundation that bear the family’s name are grouped under Swiss-based holding companies.

Primary operations, still in the hands of Rothschild descendants, are based in London and Paris, with the English branch under the command of Sir Evelyn de Rothschild, a staunch member of Britain’s patrician society, and his cousin Jacob, who is more business-oriented, struggling to modernize the Rothschild businesses.

The Rothschild Bank “really seems like a boutique merchant bank. Small, specialist, carries with it the weight of history. It is not as deal-driven as U.K. or American merchant banks,” said a London banker, speaking on condition of anonymity. “It has a reputation for having well-placed contacts in the government, but even that is somewhat historical.”

The history of Europe in the 19th Century cannot be told without mentioning the Rothschilds. The family’s story begins in the Jewish ghetto, where the Rothschild name comes from the sign on the family’s original home--a Rotes Schild, or Red Shield. When Meyer Amschel was born in the Judengasse 250 years ago, it was a walled neighborhood with gates that were locked at nights, on Sundays and Roman Catholic holidays to prevent Jews from leaving.

Meyer Amschel set up his coin business at home in about 1764, and five years later he acquired the title of court agent to the minor Court of Hesse-Hanau, which allowed him relatively free travel without all of the levies normally applied to Jews.

He diversified from the start, simultaneously selling antiques, buying bills of exchange and working as an agent procuring loans. With a penchant for innovation, Meyer Amschel set up what amounted to a mail-order business in valuable coins.

Wars generally offer capitalists opportunities for profit, and the conflicts of the late 18th Century were no exception for the Rothschilds. They financed troops of the Elector of Hanau, which fought with the British against the United States; Austria’s Imperial Army in its wars with the French; and, later, British troops in the Napoleonic Wars.

With their early war profits, the Rothschilds moved into the Jewish community’s highest tax bracket and expanded their business into English cloth and groceries and the new trade in state bonds.

By the turn of the 19th Century, Meyer Amschel had several court agent titles, but modern states were replacing principalities throughout Europe, and with them a modern banking sector was developing. The family saw that it too had to move forward.

In 1799, Meyer Amschel’s third son, Nathan, left Frankfurt for England, then the world’s center of industry and trade. Nathan first moved to Manchester to set up Rothschild Bros., a wholesale company that bought cloth, had it dyed and printed and shipped it to his father’s company and other customers on the Continent.

Nathan Rothschild made big profits in the beginning of the Napoleonic Wars, circumventing the Continental blockade against trade between Britain and states under French rule. But as the blockade tightened, he abandoned the cloth trade in favor of banking and stockbroking in London.

He founded the London bank N.M. Rothschild & Sons, and over the next decade, his brothers James, Salomon and Carl fanned across Europe to set up branches in Paris, Vienna and Naples, respectively. The eldest brother, Amschel, eventually took over Bankhaus M.A. Rothschild & Soehne from his father in Frankfurt.

Meyer Amschel believed that success lay in unity. In 1810, he formed a formal partnership with his five sons, called Mayer Amschel Rothschild & Soehne, that was meant to promote the family over its individual members and to keep its wealth together as long as possible.

The strict contract stipulated that the company could not be dissolved for 10 years, that each son was paid an allowance but otherwise all capital was to remain in the firm, and that no partner could make a deal without agreement from the others. It also excluded Meyer Amschel’s five daughters and all daughters-in-law from any interest in the family firm or fortune.

Meyer Amschel died two years later, leaving a family united in wealth and confidence, and on the threshold of becoming one of the most important in 19th-Century Europe.

“I never doubted that we would become Europe’s richest men,” James, who had changed his name from Jakob after leaving Frankfurt, once wrote from Paris.

The brothers maintained the family’s Jewish tradition but also understood that it was a political disadvantage to overcome. They built palaces that they decorated in the style of the French aristocracy, threw grand weddings that became media events and set lavish tables for Europe’s high society. Soon they petitioned the government of Austria to be made nobles--Austria being the only country at the time that would give titles to Jews--and in 1816, with a considerable family fortune, they became the von Rothschilds.

“They realized it was important for moving into the European upper crust of society,” said Annette Weber, curator of arts at the Jewish Museum.

But the family’s quick ascent from the Judengasse into Europe’s elite made the Rothschilds a continuous target of anti-Semitism, which they sought to counter with charitable works and their own public relations campaigns. A lithograph of the five sons with the family motto integritas, concordia, industria was mass-produced and hung in Rothschild banks, as well as distributed to clients.

Over the next five years, the Rothschild Bank outdistanced its competition to become the leading bank in Europe. It continued to profit in a highly competitive market for government bonds while doing business with most of Europe’s social elite.

Part of the family’s recipe for success was a fast and efficient family communication system--a prototype fax and computer system, one might say, made up of daily letters, a network of information agents throughout Britain and the Continent, and carrier pigeons.

Brother Salomon expanded the family business to railroads in Austria at a time when many people still feared that the arrival of trains would stop cows from giving milk. From there, he moved into ironworks, coal mining and locomotive production.

The family entered into insurance and oil exploration and financed Britain’s purchase of the Suez Canal. The Rothschilds increased their political contacts and involvement, with Nathan’s son, Lionel, becoming the first Jewish member of the British Parliament in 1858.

Frankfurt remained the family nucleus until Gulte Rothschild, mother of the five sons, died in 1849 at the age of 96, still residing in the Judengasse.

By the turn of the 20th Century, with no male heir in place, the family closed its Frankfurt bank and concentrated its interests in Britain and France, where today the family is headed, respectively, by Lord Jacob Rothschild and Baron Guy de Rothschild, who is nearly as renowned for wine as for banking.

Today, Rothschild banks have branches in 20 countries and, once again, in Frankfurt, where the Paris bank opened a branch in 1988.

The Nazis managed to wipe out most traces of the Rothschilds in Frankfurt, but at least one monument remains: the weekend villa of Mayer Carl Rothschild--grandson of patriarch Meyer Amschel--which now houses the city’s Jewish Museum and its latest exhibit on the Rothschilds.

“Frankfurt is just now starting to recognize the Rothschild family as one of our own,” Weber said.

But in fact, as her exhibit shows, the Rothschilds belonged to Europe.