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Old Money: Battle of Waterloo — making a killing

200 years might have passed since Napoleon was defeated at Waterloo. But some things in war — and finance — do not change, such as the absolute importance of being ahead of the game. Nathan Rothschild cleaned up on the Gilt market thanks to his rapid, reliable, and finely honed communications system that brought him news of Wellington's victory ahead of anyone else in Westminster and the City.

Old Money is written by Professor Richard Roberts of Kings College London, the official historian of HSBC and Schroders

The Battle of Waterloo on June 18, 1815 — 200 years ago this week — finally banished the spectre of Napoleon’s domination of Europe. No one was more delighted than the denizens of the London Stock Exchange, Nathan Rothschild especially, as Gilts soared on the good news.

For the preceding two decades of war since the French Revolution, bond prices had been buffeted by news from battlefields. A victory by Britain or its allies sent prices north since it reduced the risks of defeat, default and more government borrowing. A defeat sent prices south for opposite reasons.

These conditions provided plenty of opportunity for market manipulation through the manufacture of battlefield news given that information travelled at the speed of horses and sailing ships.

The most notorious scam occurred in February 1814. 

Napoleon was in trouble and his fall seemed likely. A bungling concert party of speculators built up huge positions in Gilts expecting prices to rise. The plan was to trade "within the account", meaning that they only had to put up a modest amount of margin. But then came news of French successes that left them facing large losses.

Two days before the end of the account, an officer dressed in the uniform of aide de camp to the British commander in France appeared in Dover in the middle of the night claiming to have just crossed the Channel with urgent news. 

Napoleon had been killed by Cossacks and the French monarchy restored. He sent word to the Dover Port Admiral evidently hoping that he would inform the government via the Admiralty’s system of semaphore relay stations resulting in an official announcement. But it was too foggy for the semaphore system to operate.

The next day around noon, an open carriage containing three men dressed as French Royalist officers crying “Vive Le Roi” drove around the City. 

Again, the story was that Napoleon was dead and the French monarchy restored. They then supposedly set off for Downing Street to tell the Prime Minister. The appearance of the "royalists" and their news was a tonic for Gilt prices that rose 20%. But they slumped again when Stock Exchange messengers to Whitehall returned without confirmation. 

The authorities were unamused by the pantomime hoax.

The Stock Exchange quickly identified sales by seven individuals that “stank to high Heaven”. 

Sensationally their number included Lord Cochrane MP, a naval hero (and real-life model for Horatio Hornblower RN). They were found guilty of fraud and jailed for a year. Cochrane went abroad and commanded the Chilean and Brazilian navies in their wars of independence, enjoying markedly greater success than in Gilt manipulation.


Nathan Rothschild, founder of the London firm, was supremely aware of the value of early and accurate information. His firm’s fortune was made by supplying the Duke of Wellington’s army in Spain and France with gold and silver coin to pay the troops. 

Rapid and reliable communications were crucial for his complex and risky payments and arbitrage operations. He set up a private courier system with shipping agents in Dover, Calais and Ostend with fast light vessels ready to sail at any time. There were relays of horses to speed messages from the Channel to London. And a farm on the coast at Hythe for courier pigeons.

As night descended at Waterloo on June 18 a Rothschild agent dashed to Dunkirk. Conveyed by a Rothschild ship and Rothschild steeds, Nathan received news of the victory on the night of Monday 19th — just 24 hours afterwards. Wellington’s official messenger didn’t arrive until Wednesday evening. 

In the meantime, Nathan called on the Prime Minister but was refused entry by a butler, because the PM was resting.

His duty done, he proceeded to the Stock Exchange where he was in sole possession of the momentous news. It is not known how much Rothschild made from Waterloo but it must have been a great deal. The collective assets of the five Rothschild brothers in spring 1815 came to £500,000 (at a time when the average wage was about £50 per year); in July 1816 it was £1 million.

The Iron Duke observed that Waterloo was: ‘A damn close-run thing — the nearest run thing you ever saw in your life." Maybe on the battlefield, but not on the Stock Exchange with Rothschild’s information system.

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