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N M Rothschild & Sons and the Royal Mint Refinery, London

Michele Blagg


For centuries both the refining of gold and the minting of coins were the responsibility of the Master of the Mint, an office created in the 16th century. From the late 13th century until the early 19th century the Mint was located in the Tower of London, until the demands of the steam press machinery necessitated a move into new premises at Tower Hill. An observer wrote that the new mint:

A refinery was incorporated at the rear of the new premises.2 It did little business for some years, but in 1829 a new melter, Gilbert F Matthieson, adopting French technology, inaugurated a sophisticated plant using sulphuric acid, rather than nitric acid.3 As John Craig, in his history of the Mint, wrote of the new practices:

Matthieson was left to run the business on his personal account, for private and public works. Concerns and criticisms were frequently raised over the expense and lack of accountability of the old style control system operated at the Royal Mint. These objections led to a number of public enquiries. In 1848 a Royal Commission was established to look into the 'Constitution, Management and Expense of the Royal Mint' that had changed little since the Middle Ages. The Commission reported that the master of the Mint had usually taken little part in its management; the deputy master was the real executive head; apart from him there was no single authority with control over all activities. The average annual expenditure of the Mint was 52,260, made up of: standing salaries and wages 13,393; payments to Melter and Moneyers 22,051; solicitors' charges 8,662; incidentals 6,552; extraordinary items 1,602.5

When brought to task the melter refused to disclose the out-turn of his private refining work; although he did admit that the profits of his official Mint business had averaged 2,482 a year over 20 years and 4,184 over the last 10. How much more he made from the refinery remained his secret.6 The moneyers, responsible for the manufacture of coin and who took over after the melters had refined the gold, were uncooperative. They withheld all accounts and documents on the internal affairs, costs and profits of the Company. Commissioners were forced to estimate any profits to be over 10,500 for 30 years and over the last 7 years just over 17,500.

Following publication of the report the organisation of the mint completely changed. Acting on the recommendations of the Commission it was decided at the Exchequer that the Mint should be placed wholly in the charge of a single permanent officer and all personnel should be paid by salary and all contracting and private business, such as that of the melters and moneyers, should cease. In a bid to reduce costs it was agreed that coinage would remain under the control of the Mint but a lease for the refinery should be put up for tender. Matthieson was given the option to tender for the new contract, which he indignantly refused, however, he was given a handsome pension of 1,200 a year. Rothschild, the successful bidder for the contract, purchased all the tools and equipment Matthieson left behind and paid him just over 1,000 for them. The melting house, together with the men working there, was taken over and brought back under the direct control of the Mint.


The Rothschild family and the refinery

The prospect of taking on a refinery business appealed to the Rothschild family in London. The responsibility for the negotiations fell to Anthony de Rothschild, one of the sons and business heirs of N M Rothschild, who secured the lease in January 1852.

An element of the negotiations related to the lease of premises and equipment housed adjacent to the existing Royal Mint at 19 Royal Mint Street. The decision to add the word 'refinery' to the previous title of the Royal Mint was a fortuitous one, affording an element of anonymity for Rothschild, while they gained what would today be described as a world recognizable 'brand'. Under the terms of the contract the newly established Royal Mint Refinery (RMR) was required to receive 100 pounds of precious metal consigned by the Master of the Mint and to return the correct quantity of refined metal within 14 days.

The English Rothschild family was able to draw on the expertise of their French relations. Their uncle, Baron James, already had experience of operating a number of gold refineries across France with a business partner Michael Poisat. Lionel de Rothschiwld, Anthony's elder brother, negotiated with James that Poisat would come to London and set up the new RMR. Although a cautionary note was exchanged between Paris and London:

[Poisat] is a cunning old fox and much more interested than formerly... he has got plenty of money and likes adding to it. Nevertheless he is a clever man and understands his business amazingly well. In a word, I think you had better come to terms with him, let him have half and keep the other for yourselves, but don't make your contract more than three years. At the expiration of that period the affair will be so well organized that you will not want our friend Poisat and will be able to manage it yourselves.7


The advice was heeded. Poisat served as the first manager of RMR from 1852 until 1854.

The establishment of RMR coincided with the acceleration in world gold production levels. Between 1800 and 1850 levels of newly mined gold were recorded at around 38 million ounces [Troy, ozt].8 From 1851 levels soared to over 334 million fine [syn Troy] ounces following the new gold discoveries in California from 1848, Australia from 1851 and South Africa from 1884. The growing production of gold was matched by scientific advances in the smelting, refining and assaying of precious metals. In 1850 Browne & Wingrove could produce only four or five 200 ozt bars of gold a day. By 1856 the combined refining capabilities of the leading London refineries, Rothschild, Johnson Matthey and Raphael produced a staggering 120 gold bars a day.9

The flood of gold altered the composition of the London bullion market. Tim Green noted that the discoveries and subsequent shipment to London opened up 'what had previously been a small club of broker, refiner and assayers working in the shadow of the Bank of England's bullion Office' to incorporate a new cast of brokers, refiners and assayers. The gold rushes created the modern market. The cast Mocatta & Goldsmid, Sharps Pixley, Rothschild, Montagu and Johnson Matthey changed little over the next 100 years.10

Rothschild invested significant amounts of capital in the venture. For the first 50 years of the operation there was little competition and it appeared to be a successful prestigious enterprise. In 1905 Charles Rothschild boasted that 'my refinery is forging along nicely'.11 Later that year, following the adoption of treatment methods developed at the Perth Refinery, he wrote again as he was 'glad to say that I really think I have improved our bullion business both as regards process and the volume of the stuff treated'.12 He considered the bars now produced at the refinery to be 'works of art'.13


In the case of the Royal Mint Refinery it was mainly a bulk refinery, handling large quantities of bullion for Governments, banks, gold producers and bullion brokers. It also handled the refining of silver and other precious metals. Gold arrived at the refinery in many shapes and forms, leaving it mainly as 400 ozt fine gold bar or in the form of granulated gold for trade purposes. So far as the refining was concerned, on arrival owners would arrange for the rough gold to be delivered to the Royal Mint Refinery. A sample of each bar was obtained and sent to an independent assayer. The refining process would then proceed. The weight, assay and the price of gold were the only factors required to arrive at the value of the bar. Within a few hours the gold was refined and sold, and the original seller received the value of the consignment, less, the cost of refining.

The photographs reproduced here were taken on the evening of one day and on the following morning the gold was transformed. It was part of a consignment of gold that totalled about 1,000,000 (value linked to the 1933 gold price).

The position of the refinery was reinforced by the unrivalled position of London as the world's most important gold market. In addition to the increased levels of gold production, competition for refining business in London evaporated when Rothschild, Raphael and their closest competitor, Johnson Matthey, entered into a series of price fixing agreements for treating gold, carving out an agreement to split the work equally between themselves.

This excellent position slowly declined when, on the outbreak of war in 1914, most countries suspended gold payments, except for urgent settlements, and the volume of raw gold sent to London for treatment significantly reduced. The wartime August Agreement between the Bank of England, producers and bankers, that effectively commandeered the total output of South African gold for the duration of the conflict at a fixed rate of 3 17s 9d, severely damaged post-war relations between the Cape and London. Although, as Russell Ally suggested, the agreement also saved the South African economy from certain ruin when it became too dangerous to ship gold to London due to U-boat attack.14


During the conflict world gold production levels fluctuated, a consequence of shortage of manpower following the diversion of workers into the armed forces and the production of munitions.

As the war ended, a crucial step was to restore London as the marketplace for gold. The Bank of England struck an agreement with South African mining finance houses for them to ship their gold to London for refining, after which it would be sold through N M Rothschild 'at best price obtainable'. This gave the London market, and the bullion brokers an opportunity to bid. In 1919 the July Agreement was struck and on 12 September 1919 and for the first time the daily 'Gold fixing' in London took place, at an inaugural price of 4 18s 9d. The daily pricing mechanism set the world benchmark for the price of gold that lasted until the end of 2014.15

The RMR emerged from the conflict in a strong position. The turning point came after 1919 with the return of shipments of stockpiled gold that flowed to London requiring treatment. Raphael's was one casualty of the war and the small void left by its departure was filled by the Sheffield Smelting Company.16 However the renaissance was short-lived as the London market faced a new challenge. In 1918 plans had been revealed that a native refinery in South Africa would be established. The Chamber of Mines, founded in 1889, whose function was to provide a platform for greater co-operation between producers and promote the development of the industry, was behind the plans.

In addition, the London refiners also had to contend with the Bank of England's own plans to open a refinery, St Luke's, in direct competition with them. It was hoped that the new London refinery, which the Bank was prepared to operate at cost, would entice gold producers to continue forwarding their parcels of gold to the London market. St Luke's was constructed with help of the refiner Ralph Pearson, seconded from the Ottawa Mint. Pearson had worked in Australia before relocating to Ottawa in 1917 to assist with establishing a hastily constructed wartime refinery in Canada. Subsequently, when his contract in London was up in 1921, he moved to Pretoria to establish the new Mint there.17 Once the Rand Refinery was fully operational the future outlook for all the London refineries was bleak. St Luke's closed, Johnson Matthey mothballed its gold refining operation and concentrated its efforts on platinum and Rothschild diverted into treating silver and the occasional gold parcels that found their way to London.

In 1925, Britain's return to the gold standard had a significant impact on the business at the Royal Mint Refinery. The fixed gold price selected rendered an immediate and significant drop in the profit margins for gold producers, which ultimately affected both the levels of gold received in London for treatment and for sale. Branded by Churchill as an 'unwarrantable extravagance', gold was effectively removed from everyday life as the Bank of England was no longer obliged to sell gold in quantities of less than 400 troy ounce bars. The lure of high profits meant producers sought more profitable markets around the world.


By 1929 gold treated at the RMR was at an all time low. A slight recovery came in the response to the Wall Street Crash (crises are always good for refiners!). London became a safe haven for gold and shipments became more frequent. By the time Britain abandoned the gold standard in September 1931 business at Rothschild was brisk. During 1932, fondly referred to as the Gold Rush of 1932, RMR treated 12,500,000 ounces.18 The workforce worked around the clock treating newly mined and pre-owned gold sold as scrap, which consisted of second-hand jewellery and gold coin.19

In 1934, in response to the depression of the 1930s, President Roosevelt duly re-valued the price of gold from $20.67 to $35 an ounce causing a flight of gold from London and Paris to New York. The London brokers took advantage of the premium on offer through arbitrage business. One result of the large scale movement of bullion bars was the creation of the London good delivery list, which listed 20 approved refineries and mints in eight countries together with specifications of universally acceptable bars, produced after discussions between representatives of the Bank of England and London gold market. Green noted that 'the agreement was an achievement for London, clearly establishing the market, offering a unique brand for high-quality bar gold. This list was a landmark in the market's evolution.'20


In 1937 business at the RMR remained brisk. Funded from the recent profits of the Gold Rush, a series of improvements to buildings was carried out and equipment was upgraded. The range of products offered was extended and treatment times reduced. From 1938 attention at the Refinery turned to the production of munitions. The refinery introduced anodising, a process for protecting aluminium and its alloys from oxidising by electrolytic treatment in the chromic acid bath. Also, die-casting was introduced and gold and silver coated wires. Increased insurance rates because of war risk premiums being applied to shipments of gold meant that it became increasingly expensive to transport gold to London. When war finally broke out it paralysed production and transportation links. Under the Defence (finance) Regulations 1939, the London gold market was closed, all private transactions banned and gold dealings had to be made through official channels only. Simultaneously, various banking regulations came into force, and the Bank of England took control of fixing the price of gold.

As a precaution against invasion, all gold was spirited away from the vaults of the Bank of England from Britain to either Canada or New York. Within the first year of war gold estimated at 700 million had been moved via warships across the Atlantic.21 Business in the City had virtually dried up and in almost all the merchant banks it was 'care and maintenance' that occupied Partners.

At the Royal Mint Refinery, in addition to the production of munitions at the London site, a shadow factory was established near the family's estate at Tring in an abandoned factory owned by Rothschild. A handful of men were left to man the refinery in London and part of their duties included fire-watching on the roof!


As the end of war approached in 1945 the RMR faced an uncertain future. Rothschild had to decide if it would continue to operate from both London and Tring. Much of the machinery at Tring had been purchased with the help of the wartime scheme operated by the Ministry of Munitions where the purchase of machinery had been heavily subsidised. RMR Engineering, as the Tring operation became known, was keen to take advantage of the opportunity that presented itself at the end of the war to buy out the Ministry and purchase machinery at discounted prices. Rothschild selected growth target areas it could compete in. These, amongst other things, included the production of lipstick cases, capturing the growing cosmetic trade. The operation at Tring continued until its eventual sale in 1971.

As for the London refinery, its post-war recovery was hampered by the continuing closure of the London gold market. When government restrictions were lifted in 1954, and the market reopened, the RMR resumed its treatment of bullion. The renaissance was brief; the operation became a victim of decolonisation and the independence of African states that took place during the 1950s and 1960s. Following the independence of Ghana in 1957, which had become RMR's largest customer, and the opening of the new state refinery in 1966 the decision to sell the London refinery was taken. Other factors also came into the equation and included Britain's planned decimalisation in 1971 and the move of the Royal Mint, another of RMR's largest customers, to Llantrisant; increasing overheads and lower profits for refining; the changed nature of the London gold market; issues over security and the carriage of bullion; the need to implement the Clean Air Act that came into effect 1956 and lack of space to expand the operation; a formal review of the business strategy and direction by Rothschild partners.

Following the sale of RMR, while Rothschild no longer handled the raw commodity, its association with gold was protected as it continued to chair the daily Gold Fixing a role that continued to take place at New Court, its London headquarters, until 2004.

The author

Dr Michele Blagg is a Visiting Research Associate at the Institute of Contemporary British History, King's College London where she completed her PhD in 2013. Her areas of interest are in financial and business history with special regard for the actors and networks located in the London market. She is an independent historical research consultant and serves as an Executive to the Business Archives Council which promotes the use of business history and archives. Contact:

Notes and references

1. Royal Mint Museum, (accessed 9 Nov 2014)

2. Ministry of Town and County Planning (1944-1947) 'Plan No 7 Existing Bankside Power Works', Bankside generating station: miscellaneous plans and photographs, The National Archives [TNA], HLG 79/920.

3. Matthieson adopted the French methods of refining. Equipment was upgraded and new methods adopted to cope with treating 'brittle gold', mainly from Brazil

4. Craig, J, 1953, The Mint, Cambridge: University Press, p. 305

5. Ibid. p.315

6. Ibid.

7. For further details: Blagg, M, 2013, 'The Royal Mint Refinery, a business adapting to change 18521968', PhD Thesis, King's College London

8. Ibid

9. Green, T, 2010, The London Good delivery list, 17502010 (London, LBMA, 2010)

10. Ibid.

11. The Rothschild Archive, London, 000/1323, Letter book N Charles Rothschild to Hugh Birrel, 18 Mar 1899 to 19 Apr 1908

12. Ibid., 15 Oct 1905

13. Ibid., 27 Nov 1905

14. See: Ally, R, 1994, Gold and Empire, The Bank of England and South Africa's Gold Producers 18861926, Johannesburg: Witwatersrand University Press

15. The Rothschild Archive, London, 111/152, 'Refinery in South Africa Proposed establishment', 23 Jun 1919

16. In 1919 Raphael's switched from the treatment of gold to the production of car components. The attempt to diversify failed and the Bank closed down this area of its operation in 1926. See Chapman,S D, 1987, Raphael Bicentenary, 17871987 London: Raphael Zorn

17. Bank of England Archive, C40/305, 'Gold St Luke's Refinery.'

18. The Rothschild Archive, London, 148/24/3, 'Treatment of Silver and Gold, 19051948'

19. See for example, McDonald, D, 1974, The history of Johnson Matthey, vol 2, London: Private publication

20. Green, T, London Good Delivery List. Op cit.

21. See: Alfred Draper, 1979, Operation Fish, the Race to Save Europe's Wealth 193945. London: Cassell

© GLIAS, 2017