Whether in business, war, or matters of the heart, knowledge, the more the merrier, is often the most crucial element in determining the outcomes of events. The ability to know the strategy of the competition for a trade agreement can be a game changer. A general, by knowing the details of a rival’s battle plan, gains immense advantages in devising a counterstrategy. Knowledge is often not quantifiable, but it is invaluable.
One of the most famous and consistent uses of real-time knowledge occurred in Europe in 1815. At the beginning of the 19th century, information that could be obtained through communication channels about remote events took a long time to arrive. The roads were rough, unfinished, really little more than wagon trails. There was no cable transmission or fast organized courier services to deliver messages over long distances. News of the outcome of a battle, treaty, or major political issue could take weeks or months to get to where the outcome was most eagerly awaited.
The Battle of Waterloo is possibly the most famous military confrontation in history. The site of the battle, the small and remote Belgian town of Waterloo, is today synonymous with one’s “final act”. Waterloo became the denouement of Napoleon Bonaparte. His ignominious defeat to British forces, under the command of the Duke of Wellington, accelerated his exile to the small island of Elba and the decline of France as a military power for nearly a century.
The Prussian, Austrian and Russian armies had allied to fight with the British against Napoleon. All of these great armies, moving across vast swaths of Europe’s terrain, needed extensive logistical, armed, and provisioning support to sustain the troops as they prepared for the great battle. This was an incredibly expensive undertaking. Massive funding was required to support the campaign.
The Rothschild banking family was already famous throughout most of Europe for providing a secure source of finance for national governments. The Rothschilds had established five branches of their company. The largest and most important were based in Paris and London. The final Napoleonic war was financed largely by Nathan Rothschild of the family branch in London. This house had provided large sums to both the British and the French. The Rothschilds were famous for their indifference towards rulers and governments. Nathan Rothschild once commented, “The man who controls the British money supply controls the British, and I control the British money supply.” Their goal was to make a profit 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, and the severity of the loser’s defeat would be invaluable in financially manipulating the markets to profit from the outcome. The family had invested heavily over decades in field agents who sent advice and messages, sent quick packages, and trained homing pigeons to deliver notes quickly.
The arrival of the carrier pigeons in London with specific battle results from Waterloo provided Rothschild with the information he needed to start planting rumors. He initially spread the word that the British had lost. Investors began adjusting their positions in bonds and stocks in reaction to this negative news. Rothschild took opposite positions, and then strategically released the true and truthful news that Wellington had defeated Napoleon. This allowed the family to benefit 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 prospect of training a winged carrier pigeon air force proved fortuitous and extremely profitable for the Rothschild banking house. The advantage they enjoyed in receiving real-time information and dramatically benefiting from the knowledge became legendary and only increased the perception that they were a financial Merlin family. Their power and wealth has multiplied exponentially in the last 200 years and has persisted to this day.
In modern business and finance, the ability to gather information on competitor plans, information that will affect asset valuations, and marketing strategies is invaluable. Governments spend billions of dollars trying to steal trade and state secrets. Private investigators are used every day to analyze the fidelity and affairs of married spouses. Information is power.
Entrepreneurs can learn an important lesson from this chronicle about the use of homing pigeons by the Rothschilds. If your project has true commercial value, it must be protected. You must assume that there are people working on a similar opportunity at the same time. Time is not your friend.
Whether you can discover a competitor’s plan or an adversary learns the details of your project, the first owner of the knowledge is there to maximize profits. Placing second in this process is a sure way to lose the crucial edge of market products. The Rothschilds obtained fabulous wealth simply by learning the outcome of a battle against competitors. For entrepreneurs to successfully benefit from their efforts, they must collect all relevant and available knowledge as quickly as possible.
Knowledge is invaluable, but it must be obtained and used with diligence and haste.