Carrier pigeons helped create the world’s most famous banking fortune

Carrier pigeons helped create the world’s most famous banking fortune

Whether in business, war, or affairs of the heart, knowledge, the more the merrier, is often the most important element in determining the outcome of events. The ability to know what the competition’s strategy is for a business deal is potentially a game changer. The general, after learning the details of the opponent’s battle plan, gains enormous advantages in planning a counter-strategy. Knowledge is often not quantifiable, but it is priceless.

One of the most famous and consistent uses of real-time knowledge occurred in Europe in 1815. In the early 19th century, information received through communication channels about distant events arrived extremely slowly. The roads were rough, unfinished, really little more than cart paths. There was no wire transmission or fast organized courier services to deliver messages over vast distances. The news of the result of a battle, a treaty, or an important political affair, may take weeks or months to reach where the result has been most patiently awaited.

The Battle of Waterloo is perhaps the most famous military engagement in history. The site of the battle, the small, remote Belgian village of Waterloo, is today synonymous with one’s “last act.” Waterloo became the denouement of Napoleon Bonaparte. His inglorious defeat by British forces commanded by the Duke of Wellington precipitated his exile on the tiny island of Elba and France’s decline as a military power for nearly a century.

Prussian, Austrian and Russian armies allied to fight with the British against Napoleon. All these great armies moving across vast swaths of European terrain required extensive supply, armament and logistical support to sustain the troops as they awaited the great battle. It was an incredibly expensive undertaking. Huge funding was needed to support the campaign.

The Rothschild banking family was already known throughout most of Europe for providing a secure source of funding for national governments. The Rothschilds created five branches of their enterprise. The largest, most important were based in Paris and London. The last Napoleonic war was largely financed by Nathan Rothschild of the London branch of the family. This house has provided large sums to both the British and the French. The Rothschild family is known for its indifference to rulers and governments. Nathan Rothschild once remarked, “The man who controls the British money supply controls the British, and I control the British money supply.” His goal was to win no matter who was in power or won a war.

Nathan Rothschild knew that early knowledge of the winner at Waterloo, the details of the battle, the severity of the loser’s defeat, would be invaluable in financially manipulating the markets to profit from the outcome. The family has invested heavily over the decades in field agents who forward tips and messages, fast parcel ships and carrier pigeons trained to deliver notes quickly.

The arrival of carrier pigeons in London with specific results of the Battle of Waterloo provided Rothschild with the information he needed to begin spreading rumours. At first he spread the word that the British had lost. Investors began to adjust their positions in bonds and securities in response to this negative news. Rothschild took opposing positions and then strategically released the real news that Wellington had defeated Napoleon. This allowed the family to profit from both sides of the trade. It is estimated that the Rothschild family extrapolated an increase in wealth of 20 times their pre-war capital.

The prediction to train a winged air force from carrier pigeons turned out to be fortuitous and extremely profitable for the Rothschild banking house. The advantage they enjoyed in getting real-time information and the incredible profit from knowledge became legendary and only added to the sense that they were a family of financial Merlins. Their power and wealth multiplied exponentially over the past 200 years and have persisted to this day.

In modern business and finance, the ability to gather information about competitors’ plans, information that will influence asset valuation and marketing strategies, is invaluable. Governments spend billions of dollars trying to steal state and trade secrets. Private detectives are used every day to check the fidelity and affairs of married spouses. Information is power.

Entrepreneurs can learn an important lesson from this chronicle of the Rothschilds’ use of carrier pigeons. If your project has real commercial value, it should be protected. You have to accept that there are people working at the same time on a similar opportunity. Time is not your friend.

Whether you can reveal a competitor’s plan or the adversary learns the details of your project, the first owner of knowledge will maximize profit. Coming second in this process is a sure path to losing the decisive first-to-market advantage. The Rothschilds made great fortunes simply by learning the outcome of a battle before their competitors. In order for entrepreneurs to successfully capitalize on their efforts, they must gather every bit of relevant and available knowledge as quickly as possible.

Knowledge is priceless, but it must be secured and used with diligence and the necessary speed.

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