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Abraham
Kuhn and Solomon Loeb were dry-goods merchants in Cincinnati until
the end of Civil War, when they moved to New York and founded what
would be the most powerful Jewish investment banking house in
America. It was Loeb's son-in-law, Jacob Henry Schiff, who engaged
the firm into railroad financing and notably through his association
with Edward Henry Harriman, made it one of the richest and most
influential in Wall Street. By his wealth, business acumen and
influence, Jacob Henry Schiff was second only to John Pierpont
Morgan in the Wall Street community. Kuhn, Loeb & Company was able
to extend its reign, notably through its association with the
Warburgs, of whom two scions married into the Schiff and Loeb
families and joined the firm in New York. Abraham Wolff and his
son-in-law, Otto Herman Kahn were also prominent partners of Kuhn
Loeb & Company.
Joseph
Seligman and his brothers Jesse and William were dry-goods peddlers
and cloth merchants in Alabama and New York before founding the
banking house of J & W Seligman & Co in 1862. Like, Jay Cooke, the
Seligmans sold large quantities of US bonds during Civil War, but
they marketed them in Europe, through their subsidiaries in
Frankfurt, Paris and London, rather than to the American people.
After the war J. & W. Seligman & Company engaged in railroad
finance, became financial agents of the US government for foreign
fund transfers during the Grant administration and prospered,
through its network of family operated branches, which now also
covered San Francisco and New Orleans. Joseph Seligman built his
banking empire on the model of the Rothschild family's, placing his
brothers, cousins and nephews, in as many locations as he deemed
necessary or profitable.
The
Lehman brothers, Henry, Emanuel and Mayer, were cotton traders in
Alabama. Henry Lehman died in 1856, but his brothers embraced the
Confederate cause during Civil War, albeit only in their role as
merchants and financiers. The Lehmans were among the largest cotton
brokers at the time in Alabama, with connections to Liverpool and
Germany. Lacking the credit and financial power of the Northern
States, the Confederation of Southern States heavily relied on
cotton, and cotton based securities, such as the Erlanger bonds, to
raise money for the war effort. Redemption of Erlanger bonds
essentially meant breaking the Northern blockade with cotton loaded
ships and was a risky but very lucrative business. After the war
Emanuel and Mayer Lehman resettled in New York and established their
later famous brokerage and investment banking firm. Aside from its
cotton brokerage activities, Lehman Brothers specialized in Southern
reconstruction, notably in the reorganization of Southern railroads.
It prospered and made the Lehman brothers very rich. They were among
America's sixty wealthiest families, as compiled by Ferdinand
Lundberg in 1924.
The
reason why J.P. Morgan & Co, Kuhn, Loeb & Co and several other
prestigious private houses dominated investment banking and security
placements in America during the Gilded Age, was essentially due to
the National Banking Act of 1863, which forbid commercial banks to
engage in such activities. But the national banking act also created
the legal framework, which allowed a number of commercial banks to
prosper and rise to national prominence. Because of the prohibition
of operating branches, the largest national banks were invariably
those established in New York City, the financial capital of the
USA.
Bankers of the Gilded Age
>
Introduction and Index
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