What's the most ridiculously simple idea that made someone rich?

Christopher Chong, studied at London Business School

Arguably the richest family in the world are the Rothschilds. Their exact wealth is unknown but some have speculated that it could be as much as $2 trillion (unlikely but it is likely to be a large number). The founder of the Rothschild wealth was Mayer Rothschild (1744–1812), an orphan at 12 but brought up in an extended family living in what was then the Free Imperial City of Frankfurt. To understand what Mayer did that was so simple and so brilliant, one needs to understand the history of banking.

The idea of taking gold or money (deposits) and then re-lending them to another party is ancient. In Europe, it was already well established by the Medici (1397) and others (eg Bardi & Peruzzi families). Banking is what we called an intermediation exercise. The bank is the intermediary taking the money and then lending it out. So and regardless of how the lending goes, the depositor can always go after the bank.

Mayer had two ideas - why could his bank not have other branches or banks in other countries and why could he not invest directly the money instead of lending it (disintermediation). Mayer lived in a time of turmoil and change. But he also had luck. In 1769 he became the Court Factor (the modern day equivalent would be the head of the Federal Reserve and the CEO of JP Morgan rolled into one) and later confidante of Crown Prince Wilhelm (became Wilhelm IX, Landgraf of Hesse-Kassel, 1785), the richest man in Europe. Levering on this, and the fact that he had 5 sons and 5 daughters, he sent his sons to various cities (Naples, Vienna, Paris and London) to establish branches of the family bank. By doing so he created the first bank to transcend borders - the first international bank. The Rothschild’s used what was then the most extensive network of carrier pigeons to communicate with each other. As a result, the Rothschild’s benefited very significantly from the French revolution, a pan-continental social explosion, as they were the only bank that could lend and supply armies in several countries. As a result, the largest army in Europe at that time - the Austrian army - gave the Rothschilds the exclusive right to supply the whole army.

Mayer only tinkered with his second idea and it took his son, Nathan (1777-1836), to really develop it. Nathan invited depositors to back him into industrial ventures and by doing so crystallized his father’s idea into what we now know as private equity investing. His timing was impeccable as it was the start of the industrial revolution. It is no understatement to say that the Rothchild’s financed that revolution. But Nathan also did far more ambitious things. He helped fund the newly created Kingdom of Belgium (1830) in return for the Almadén mines in Spain. This gave him a monopoly in mercury, which was then used to refine gold and silver. This, in turn, resulted in NM Rothschild & Sons producing gold and silver for the Bank of England.

Two simple but, in their time, radical ideas that were so very right for that rapidly changing period of history.

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财富：有什么非常简单的点子使得人变得富有