Economic history contains few narratives as dramatic as the ascent of the Rothschilds, who rose from humble origins to occupy a dominant position in nineteenth-century European finance. Yet much of the family's storied success appears to have derived from a simple insight, well known to modern credit card issuers: the most profitable loans will always be to borrowers possessed of both high earnings and financial ineptitude.

The Rothschilds' favored customers of this type were not spendthrift yuppies, but the nation-states of industrializing Europe. Miguel López-Morell's monograph, covering the history of the family's operations in Spain, provides a richly detailed case in point. For nineteenth-century Spain, earning potential was provided by a generous endowment of mineral resources and by the productivity gains from industrialization. Financial ineptitude was contributed by a succession of unstable governments, more concerned with surviving frequent civil conflicts than with maintaining their reputations in foreign financial markets. This combination of circumstances often led to an unsustainable debt load and in turn, to two massive restructurings of national finances, in 1851 and 1882. The first of these “credit events” was sufficiently stringent as to be viewed as a bankruptcy.

In modern times, a country with this degree of fiscal problems might apply to entities such as the IMF for assistance. Lacking access to such institutions, nineteenth-century Spain turned to the Rothschilds. Figures presented indicate that while the Rothschilds' support of Spanish finances was not as extensive as some authors have supposed (the House purchased approximately 10 percent of government debt issued between 1850 and 1913), the family's support was nonetheless critical during unsettled periods such as the Sexenio (1868–1874) and the first decade of the subsequent Bourbon Restoration.

López-Morell ‘s narrative makes clear that the very size of the House of Rothschild carried with it certain advantages, allowing it to lend to Spanish governments in circumstances where others could not. Most obviously, sufficient wealth meant that the Rothschilds could stand to bear the risk. Second, the House's unequalled status in the London and Paris financial districts allowed it to cheaply fund its investments. And finally, size facilitated the extension of credit through a de facto secured lending arrangement. Beginning in 1830 the Rothschilds negotiated a sequence of agreements whereby credit was extended in return for exclusive control of Spanish mercury production. Such contracts were of particular value to the Rothschilds, who, through their presence in the London commodities markets, became the near-monopoly world supplier of this scarce metal until the discovery of new deposits in California in 1847.

The last decades of the nineteenth century saw increased political and fiscal stability, and lessened the demand for the Rothschilds' services as government financiers. The focus of the family's operations in Spain then shifted to investment in railroads and a variety of extractive industries (lead, coal, pyrites, oil, and copper). Their investments continued to have a somewhat opportunistic character, the most famous of these being the Rio Tinto Corporation, a producer of copper and pyrites. Rio Tinto was acquired by the Rothschilds almost by accident, from the 1888 collapse of a scheme to corner the world copper market. Once in control, the family was able to undertake the necessary strategies—involving large-scale technological investments and market control—to fully realize the Rio Tinto's earning potential. Ultimately, López-Morell's calculations show, Rio Tinto became the most profitable of all the Rothschilds' Spanish investments, contributing the bulk of their earnings from the 1890s until the family's exit from the country in the turbulence of the 1930s.

The first ten chapters of this monograph recount these and many other details of the Rothschilds' history in Spain, drawing on a broad range of primary and secondary sources. General readers may however be most attracted to the last two chapters of the book, which provide a quantitative overview of this history. The figures presented leave little doubt that the Rothschilds played a significant role in the country's development, both in terms of public finance and in terms of private investment, where the family provided over half of the foreign capital inflow during certain periods.

The book concludes with a discussion of a controversial question, which is whether the Rothschilds' investments in Spain, their undeniable magnitude aside, were of net benefit to the country. Some writers have suggested they were not, pointing to a “quasi-colonial” pattern of opportunistic interventions and to the monopoly profits earned from the family's railroad and extractive industry operations.

While this issue remains far from settled, the evidence presented here goes against these arguments, at least as far as private investment is concerned. The Rothschilds invested in Spain on a scale that few others could have matched at the time, and it is unlikely that these investments would have occurred without the enticement of monopoly rents. The profits earned were large but not outsized given the risks involved. López-Morell's assessment is less favorable in the realm of public finance, where he argues that the Rothschilds' interventions only served to postpone badly needed fiscal reforms. This last conclusion is perhaps not surprising: as most yuppies know, credit cards do have a dark side.