The Jews in America Trilogy (12 page)

On the morning of May 3, 1851, fire broke out. Within hours the business section of the city was in flames. Empty air spaces under the planked streets became great blowpipes to spread the fire from block to block. Jesse helped fight the fire in the center of the city until it was declared out of control, then hurried back to his store. Next door, he found Captain Jones and his staff of waiters, bellboys, croupiers, and “actresses” on the roof of the Tehama House stretching water-soaked blankets across the gables and standing by with buckets and brooms.

“You've got a frame building!” Jesse called up to the Captain. “What good do you think those wet blankets are going to do?”

“I'll take care of my building and you take care of yours,” said the Captain.

“But don't you see?” said Jesse. “The fire will reach my building first. If we can save my brick building, we can save yours as well.”

The Captain shouted, “By God, Seligman, I think you're right!” Immediately he dispatched all the bellboys, waiters, croupiers, and actresses, with their blankets and their buckets, to the roof of Jesse's store. Then Jesse diverted Howard Engine Company No. 3 to service in his block. Seldom was a job of Seligman salesmanship to prove so profitable. Of all the buildings in the area, only two were completely spared—Jesse's store and the Tehama House. After the fire Jesse found himself the proprietor of the only general store left standing in San Francisco. Frantically, he wrote home to Joseph for more merchandise.

In later years Jesse used to say proudly that, though he was certainly in a position to, he never took advantage of the disaster by raising any of his prices by so much as a penny in the months after the fire. But he didn't lower them, either. After all, Jesse's prices, by standards elsewhere in the country, were already outrageous. As San Francisco's only postfire merchant, he made what can only be described as a bundle. Soon profits from San Francisco were accounting for such a large share of the Seligmans' income that the Watertown store was closed and Henry hurried to San Francisco to help Jesse, who had been getting precious little help from Leopold. (Coincidentally, Grant's 4th Infantry was ordered out of Madison Barracks that same year and was dispatched to the Pacific Coast.)

The Seligmans' importing-retailing days were almost over. In New York their most profitable import had become gold from California. From New York, gold that was not traded on the market traveled on to Europe to purchase new supplies for the Seligman stores. The Seligmans still dealt in dry goods, cotton, hides, boots, shoes, pots, pans,
cigars, undershirts, and whiskey, but as buyers and sellers of bullion they found themselves, almost before they knew what had happened to them, in the banking business. By 1857 over $500 million worth of gold had made its way eastward from the California hills, a good deal of it passing through the hands of the Seligmans.

To become a banker in those naïve days was almost as simple a matter as saying, “I am a banker.” A National Banking Act did not exist until after the Civil War, and banks—particularly private banks—were organized with startling informality. Everybody in New York, it seemed, was involved in one way or another with the money trade, and it was said, in fact, that to be a banker all one needed was to dress like one. Joseph Seligman and his brothers had already learned many banking fundamentals. The Seligman stores had sold goods on credit, loaned money, bought and sold IOU's, and even carried deposit accounts. “Stay liquid,” Joseph was writing his brothers. “Never invest in property, or give a mortgage loan.” Joseph had made an important discovery. There was a considerable difference between buying and selling undershirts and buying and selling funds and credit. Undershirts could earn profits for the merchant only during the hours his store was open; otherwise it stood idle, a liability. But money stayed active around the clock. Credits were not subject to opening hours. When money was put to work, it worked twenty-four hours a day, seven days a week, three hundred and sixty-five days a year, and stopped for no holidays, Jewish or gentile. “Money,” said Joseph solemnly to his brothers, “earns money even while you sleep.”

By 1852 Joseph Seligman, trading his bullion from California on the gold market, was a familiar figure in the New York financial community. His name and his credit were known by the big commercial banks. He was making the logical, almost inevitable transition from merchant to banker. It was a progression that other immigrant merchants would soon make, but the Seligmans, of the German Jewish group, were making it first. (Later on, in Jewish society, there would be a point of social distinction between families such as the Seligmans who evolved from storekeeping into banking and such families as the Strauses of Macy's who had “stayed behind” in retailing.)

Through the early 1850's the American economy spun upward in a giddy spiral. Led by the flood of gold from California, stocks on the New York Stock Exchange climbed higher and higher. The boom was on in Western lands and railroads, and shares in these companies were used as collateral for loans, which were used to buy more shares,
which were used as collateral for loans—and on and on. The Bank of England was expanding, tariffs were rising, and New York's commercial banks kept easing credit and then easing it some more. The stock market seemed to know no top. Never before had New York women been so extravagantly dressed. Gambling at large private parties suddenly became a factor in New York social life, and everyone gossiped about this or that great fortune that had been lost, or won, at whist, poker, or roulette. Mansions marched up the side of Murray Hill, and newspapers fretted about parties of the newly rich which turned into “orgies of Pompeiian license.” The stock of a railroad company, meanwhile, that existed nowhere but in a promoter's mind climbed from twenty-five cents a share on Monday to $4,000 a share on Friday. These were busy days for the Seligmans.

One bright morning in 1857, however, Joseph, on his trading rounds, overheard the cashier of one of New York's commercial banks speak of a distressing shortage of cash. The bank was going to begin to call in loans. Joseph moved quickly. He ordered his brothers to “liquidate all but prime securities.” When the bubble burst, the Seligman silver and gold were packed in strongboxes and stuffed for safekeeping under Joseph's and Babet's bed. In the course of the Panic of 1857 every commercial bank in New York closed its doors but one. The Seligman brothers went through it unscathed, and that venerable Wall Street epithet, “the Midas touch,” which would be applied, rightly or wrongly, to so many financial figures in years to come, was now applied to them. The recovery from the Panic of 1857 was as spectacular as the panic itself. The bubble had no sooner burst than it began to reinflate. So much gold was pouring into New York from California that gold held in New York banks climbed from eight million dollars' worth in October to twenty-eight million two months later, and a ten-million-dollar loan from the Rothschilds made, via August Belmont, to bolster the credit of U.S. banks was repaid the same day. But in this new upsurge the Seligmans again had the advantage of a head start.

In 1857 Joseph established himself in his first Manhattan brown-stone—rented, of course, for he would not be tied down with real estate—on Murray Hill, the city's best address, and a year later he rented himself a summer place from A. A. Low, a wealthy merchant, on then fashionable Staten Island. A multiple-residence pattern for German Jewish society was thus indelibly established. Each year since their marriage Babet had borne him a child—already there were five—and the multiple-baby pattern for Seligmans was thus preserved. Joseph, a success as a provider, husband, and father, was beginning to
believe his own myth. He had begun to think it was time he had his portrait painted. (Two years later he did; in it he looks most dignified.) From a peddler Joseph Seligman was turning into a Personage.

He had begun to take careful notice of the behavior of August Belmont. “He is a Jew,” Joseph commented, “yet he goes everywhere, meets everyone, and ‘Society' swirls about him.” Joseph was a little uneasy about “swirling” with society, but he would not have minded doing business with same. He was not a toady, though, and would not fawn or flatter his way into gentile drawing rooms. If those in society wanted him, they would have to come to him.

Meanwhile, he had the satisfaction of suspecting that only August Belmont stood in the path of his ambition to become the most important Jewish banker in New York.

And as for social life he had his brothers and his sisters, who were becoming quite a crowd in themselves. By now, four more of Joseph's brothers were solidly married to solidly Jewish girls—party-loving William to Regine Wedeles, handsome James (his was considered the most auspicious marriage of all) to Rosa Content of the pre-Revolutionary family, Jesse to a girl from Germany named Henriette Hellman (Henriette claimed she could trace her ancestry back to King Solomon and the Queen of Sheba), and Henry to Regine Levi, who had two younger sisters whom two more Seligman boys, Leopold and Abraham, would soon marry, drawing the complex of family and money still tighter together. Family Sunday dinners at Joseph's house were now introduced. “Sunday evenings at the Seligmans,” in fact, would continue as an institution, as an almost classic fixture of German Jewish social life in New York, for nearly eighty years.

During this period, the Lehmans of Montgomery, Alabama, had become very Southern—slaveowning, Southern-accented, and devotees of Southern cooking, even of the pork. Cotton, still king, was doing for the Lehmans approximately what gold was doing for the Seligmans, and the living was easy. The three brothers were still cotton brokers, and their customers were buyers and manufacturers in the American North and in England. Payments for cotton took the form of four-month drafts on New York banks and sixty-day sterling bills on London banks, and these bills of exchange—promissory notes representing goods in transit—were negotiable. In the South they were one of the most popular forms of currency, and in New York these cotton bills could be sold for cash, at a discount. New York, then, was the true center of the South's cotton economy, and frequent trips to New York
were necessary. Emanuel Lehman was usually assigned to the New York money run, while Henry and Mayer carried on in Montgomery.

In the fall of 1855 Montgomery had another of its periodic yellow fever epidemics. Henry Lehman had always feared the disease, and the new epidemic was savage. At his brothers' urging, Henry traveled to New Orleans, which was considered safer. There, the founder of Lehman Brothers came down with yellow fever, and died at the age of thirty-three. The surviving brothers, twenty-nine and twenty-six respectively, were left to carry on.

By 1858 it had become mandatory that the Lehmans have a permanent New York office, and so Emanuel, who had had the money-market experience, headed North to establish himself at 119 Liberty Street, hard by the Seligmans. While Joseph Seligman was observing the habits of August Belmont, Emanuel Lehman began observing the habits of Joseph Seligman. That same year Emanuel married a New York girl named Pauline Sondheim, and the Lehmans rented a Murray Hill brownstone—also hard by the Seligmans. Mayer, who got along well with the planters and farmers, remained in Montgomery and married a New Orleans girl, herself an immigrant from Würzburg, named Babette Newgass.
*

From a tactical standpoint, this deployment of cotton-trading Lehmans was brilliant. But thus deployed on opposite sides of the Mason-Dixon Line, the Civil War—the war the whole South had been talking about but that the Lehmans had never believed could actually happen—found them and disunited them. In April, 1861, President Lincoln imposed the blockade. Mayer, in Montgomery, was cut off from his Northern manufacturers and his Northern money. Emanuel, in the North, was cut off from his Southern supply of cotton. It was a staggering blow. “
Alles is beendet!
” Emanuel scrawled despairingly on a pad in his New York office.

If buildings in the financial district had been tall enough to make a suicidal leap productive, Emanuel might have leaped—thereby depriving New York of what is now the largest investment banking house in Wall Street.

*
There are very nearly as many Babettes and Babets in the trees of German Jewish families as there are Mayers and Meyers. From a business standpoint Mayer Lehman's marriage to Miss Newgass seemed particularly prudent. Her sister was married to Isaias Hellman, one of the San Francisco Hellmans, and founder of the first bank in Los Angeles; he later became president of the Wells Fargo—Nevada Bank in San Francisco. Babette also had a brother, Benjamin Newgass, who lived in England and served as the Lehmans' representative in the manufacturing British Midlands.

10

“THIS UNHOLY REBELLION”

William Seligman liked to say that he had predicted the Civil War, and implied that the nice position the Seligmans found themselves in as a result of the war was largely his doing. William exaggerated. On the other hand, William, already expanding in girth from seven-course dinners with nine wines (
two
sherries with the soup, no less!), did make a business move just before the war's outbreak. It turned out to be such a lucky one that Joseph rewarded William with his very own initial—next to Joseph's—in the ultimate firm name, J. & W. Seligman & Company. William had parted company with his brother-in-law, Max Stettheimer, in St. Louis (the Stettheimer-Seligman alliance was increasingly uneasy) and had come to New York to join Joseph. There, in 1860, William decided, since the Seligmans stores sold such items as undershirts and pants, to buy a factory that made undershirts and pants. It was not so imaginative a move as Guggenheim's stove polish, but it was most fortuitous.

The cannon that exploded over Fort Sumter had barely ceased to echo when William and Joseph had devised a strategy by which to woo government uniform contracts out of Washington for the new factory—which, it turned out, was the fourteenth-largest clothing house in those of the United States which had not seceded.