A Classification of American Wealth
History and genealogy of the wealthy families of America - Sponsors


 Part 1 : Colonial and Mercantile America  Part 2 : America in the Gilded Age
 Part 3 : America in the Twentieth Century  Encyclopedia of American Wealth

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  Part II-Chapter 10 : Bankers of the Gilded Age  >   Introduction and Index :   Previous  1 2 - 3 - 45   Next

 

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 :   Previous  1 2 - 3 - 45   Next

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