From Battlefield to Bond Market - Rothschild’s Rise and the Birth of Modern Finance

What if the most decisive moment of the Napoleonic Wars didn’t happen on the battlefield — but on the bond desk?

In this episode of The Timeless Investor Show, Arie van Gemeren unpacks one of the most legendary (and controversial) financial trades in history: Nathan Rothschild’s alleged bond market coup during the Battle of Waterloo.

We explore:

• How the Rothschild network outpaced governments with faster intelligence

• Why market psychology is the ultimate weapon in financial warfare

• How this moment marked the shift from military to monetary dominance

• And what this all reveals about the financialization of empires — from the 1800s to today

This is more than a story about the past. It’s a blueprint for how modern power works.

This story is often repeated in financial lore — sometimes exaggerated or apocryphal — and should be understood in the context of broader shifts in capital, not ethnicity or identity.

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👉 https://lombardequities.substack.com

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Transcript

SPEAKER_00: 0:01

Welcome back to the Timeless Investor Show. I'm Ari Van Gemeren, real estate fund manager, avid student of history, and your host today. And today we're going to dive into one of the most audacious financial plays in history and what it reveals about the birth of modern finance. This week, we're really going to be focused on the thematic of the financialization of society. We've talked about it a lot in previous episodes. articles and discussions, this idea that societies over time start to hollow out as intellect and capabilities start to gravitate towards industries that make money from moving money around, right? So you think sort of non-productive industries, really, like making money on investing money. And there's an argument you can make that it is still productive because the flow of capital is is important to society to finance big projects people want to take on. But it also destroys or moves expertise away from mainline industries. And when societies start to lose their mainline industries, some problems start to emerge. We're going to release a long-form article this Wednesday on Substack on this exact topic, the financialization of the British Empire at its peak. So make sure you subscribe to the Timeless Investor newsletter if you haven't already. The link is in the show notes. And look forward to seeing you guys there. But for today, we're going to talk about the story of Nathan Rothschild, the Battle of Waterloo, and how capital replaced conquest as the dominant force in global power. So let me take you back. It's the June of 1815. The fields of Belgium are soaked with blood. And on one side, you have Napoleon Bonaparte, recently returned from exile, desperate to reassert his control. Napoleon, by the way, is a fascinating character study, one I'm sure we'll dig into at a later point. It's really hard, I think, for modern listeners to really understand this, but he was terrifying to the powers of the time. First of all, he was an absolute wizard on the battlefield. He won a massive victory at Austerlitz and everywhere else, Huge wins that shattered conventional thinking on military strategy and speed. He was capable of moving his armies in incredible speeds to confront the many nations that were allied against him. He had consumed most of Europe during his reign. He had conquered immense parts of Europe. And of course, he failed in Russia, as some of you may know, which, you know, great historic trope, never invade Russia during a winter. And Napoleon learned this to his regret as well. But most importantly, he was a huge and deep ideological threat to the monarchies of his time. He was a product of the French Revolution, which was a complete upending of the way of life in Europe. You know, think about the beheading of You know, the king, right? The overthrow of the Catholic Church, the rise of the cults of reason and the floors of Notre Dame rather than, you know, the traditional way that Europe ran at the time. So everything about Napoleon was terrifying. So when he returned from exile in Elba– All of the allies were horrified. It was a moment of reckoning. They had to defeat him. It was an ideological deep threat, sort of like communism to Western democracy in our more recent history. It was that level of terrifying for them. His nemesis was the Duke of Wellington, leading the Anglo-Allied forces, trying to hold the line. And that's what was happening on the battlefield. But what I really want to talk about today is something different, because somebody else was watching this from a very different battlefield, and it was a banker. Nathan Meyer Rothschild, the London-based financier of the most powerful family in Europe, was watching this, but he wasn't just interested in who would win. He was interested in how to capitalize on it. So at this point, the Rothschild network spanned five cities, London, Paris, Frankfurt, Naples, and Vienna. And it was a financial intelligence system unlike anything the world had ever seen. Couriers on horseback, carrier pigeons, secret informants, code books, smuggling rings, All of this stuff had been built to parlay information into the flow of capital and generate huge rewards for the financial families backing it, the Rothschild family in this case. But there were many, many financial families in Europe. And part of this is the rise of the major banking families in Europe. So on June 18th, 1815, all of this paid off. So some of you probably know, the Duke of Wellington and the Allied forces defeated Napoleon at Waterloo. Waterloo is a cultural trope as well, right? Your Waterloo, your personal Waterloo. It was Napoleon's Waterloo that ultimately saw him fully defeated. And obviously the news about what happened on the battlefield is critically important. What's fascinating here is that Rothschild's agents actually reached London a full 24 to 48 hours before the British government had official confirmation. So what is... Rothschild do with this edge? What did Nathan do? He walked into the London Stock Exchange and he started selling British government bonds. But why? Because he knew everyone was watching him. They all assumed he had superior information, which, you know, he did. And so their thinking was, if Rothschild was selling, the British must have lost the battle. And that was disastrous for British government bonds. So panic follows, the market tanks. And Everything is tanking. Everybody is selling. Everybody is trying to get out of this thing. So once prices have completely plummeted, Rothschild's agents started buying back those same exact bonds at a massive discount. So what happens? The news breaks that Napoleon has lost and Wellington has won, and the market rebounds. But the Rothschilds were already in. They're already rich. This wasn't just a profitable trade. It was a defining moment because for the first time, it showed that information, not armies, could decide the fate of a nation's wealth. The Battle of Waterloo was the end of Napoleon and his overarching massive threat to the European way of life, really to monarchies, if you really want to think about it. But in many ways, it was actually the beginning of something else as well. It was the beginning of the financialization of empire because before this, power came through land, bloodlines, and brute strength. But the Rothschilds ushered in a new paradigm, one where capital markets could be weaponized more effectively than any army. Their family would go on to dominate European finance for the next century. They bankrolled wars, stabilized monarchies, and helped industrialize entire regions. And they did it without ever firing a musket themselves. So here's the bigger takeaway. At Waterloo, the battle wasn't just Belgium. It was in the bond market. And the winner wasn't just Wellington. It was Nathan Rothschild. And that's when the world changed. That's when the levers of history began to shift from throne rooms to trading desks. So let's fast forward. By the late 1800s, the British Empire wasn't just a colonial power. It was a financial power. British capital financed railroads in Argentina, mines in South Africa, plantations in Southeast Asia. London... became the center of global trading and lending, and sterling-denominated bonds became a tool of diplomacy, dominance, and control. And this wasn't an accident. It was a natural evolution of the financial model that the Rothschild banking family helped set up by pushing financialization, by pushing big banking, which had some benefits for society as well. So the West stopped, at this point, conquering by the sword. and started conquering via spreadsheet instead, started conquering via lending, started conquering via financial means rather than just using force of arms. And so here we are today in a world where hedge funds can move more money in a day than most nations spend in a year and where central bank statements can cause way more chaos than a military strike. A lot of empires today are built on margin and leverage, not necessarily mortar and steel anymore. And that's the story I really think we should take away from this. Finance didn't just follow empire. Finance changed. became empire. So there's a lesson for us here as modern day investors. Information is power. The timing of that information is leverage. And here's the thing. I don't know. There's a lot you can take from this story, right? And I think there's a healthy dose here of what some might say is unhealthy amounts of insider information leading to profits, right? But I think the key thing here is that the rise of major banking families in Europe really spurred the growth of empire. It spurred the growth of the British Empire. We're going to talk about that again on Wednesday. But this story, potentially apocryphal, by the way, no one knows for sure that it happened like this, but it's a story that gets repeated quite often. And I myself came across it in The Creature from Jekyll Island, which is a great and highly conspiratorial read. Nonetheless, I recommend it to my listeners. It's a great, great read. There's a deep story to this. There's a deep story to the rise of finance as a weapon, the rise of finance as something that drives empire, drives conquest, drives war. We've talked about that before. We've talked about how central banking sort of leads to more warfare because bankers ultimately need to fund things, and war is a good thing to fund. There's a lot of need for capital. There's a lot of need to print currency and create money to help fund this. We wrote a piece, again, you can check it out on the Timeless Investor Newsletter, about the period before World War I and the rise of the gold standard in this period. We're going to do a separate podcast on this because I think it's so fascinating. You basically had a global convergence to a gold standard in the period before World War I, which meant that inflation was low if non-existent. You might have even had deflation during this period. But there was stability of currency and wars were won relatively quickly because at the time, even in this period that we're talking about, governments couldn't finance endless war. They just couldn't do it because they were on the gold standard and they couldn't print money because they were tied to gold. Everything changed with World War I, right? I mean, everything changed because all of the major powers in World War I abandoned the gold standard very quickly upon entering World War I because what they needed was they needed money to fund the war and they couldn't do it by taxing their citizens. So they all abandoned the gold standard en masse and started printing money, right? So this thematic of, for centuries... Warfare was constrained by the amount of money that governments could collect. Sort of going out the window when we made this move to fiat currency is a fascinating dynamic. And something, honestly, that in this day and age, we don't even think about because we're so used to central banking and fiat currency as the way we think about money. But a lot of this can be traced back to the rise of big finance in Europe, right? And this story is a great example of how This information network that Rothschild's built is fascinating. It makes a ton of sense. It's very smart. It's a very good way to build a business. It's a good way to run ahead of capital flows and build something great. But it's important to understand. I think another huge takeaway here for all modern investors is market psychology can be weaponized. Nathan Rothschild weaponized the fact that people believed that he had insider information, which he did, by the way, and he used that against them in an absolute coup to make a killing in the British bond market. Absolute killing. And I think the other thing to keep in mind here is the real game isn't just about making money. It's understanding how systems of power evolve, right? So you think about that as a real estate guy today, or gal, as you're investing. Understand how the levers of power in your city work. How do things flow? It's interesting to me. I know a lot of developers, and a lot of developers are very political. Not political in the sense of like, you know, I'm a Republican and I donate to Republican causes. I mean, there's that too, right? But what I noticed with developers is they know everybody in city hall. They know everybody that has the levers of power because understanding who's pulling the levers of power can help your deal work or not work, right? It's a little bit less relevant in the business I pursue, which is value add and opportunistic acquisition of existing buildings, but it's still relevant. Like you still need to understand, you know, we're going right now, There were rent control discussions in Washington. And a lot of the ownership community is heavily involved in those conversations and lobbying one way or the other to drive it, to try to drive that conversation in a way that is ultimately beneficial for the ownership community. And there's obviously power on the other side, too, that's pushing a different agenda. So if you want to be timeless investors, which we all do, you need to understand the forces shaping our world. Without question... The big banking forces, the forces of central finance, central banking is like one of the biggest forces controlling modern day finance. And like we, even like very educated investors are often not fully aware of how deep rooted this is and how much control this has. You know, like an example, a quick example. Inflation spiked in 2023, okay? And I was in the transitory camp at the time. I was wrong, right? But I was very much in the transitory camp at the time because my view was, well, supply chains are really messed up because of COVID. And that's causing inflation because all these factories are trying to come back online, which is all true, by the way. The supply chain thing is well-researched and well-documented and is a real issue. But what I don't think people truly grasp is that during COVID, the government injected billions and billions of dollars into the economy for good reason, right? I mean, nobody was allowed to work. The entire economy shut down. But where did that money come from? And the quick answer is the Fed printed it. So it logically follows that inflation will follow that. So if you understand the flow of power and the flow of capital, you can start to sort of foresee these things coming about. And You could have potentially, hindsight's 20-20, we'll admit that, but you could have potentially foreseen that a massive injection of money into society would cause inflation, would cause rates to rise, would cause the rate cycle to turn, which has been really difficult for real estate investors and something really hard to deal with. And I think if people had a deeper understanding of the timeless principles behind inflation, capital flows, banking interest, central banking, understand the genesis of big banking families and how these things came about, you're better equipped and stronger for dealing with what's happening today. So look at history, look at flows of capital, and understand the revolutions that are happening on trading floors. Until next time, and thank you for joining us, act well, think wisely, build something timeless. And I just want to end with a Subscribe to and leave a review for our podcast on whatever your services that you use. It's very helpful to help the podcast grow as we continue to delve into these deep historic stories that I think are incredibly timeless and relevant today. Thank you and see you next time.