The Jews in America Trilogy (23 page)

From a distance of years, this lofty comment sounds like damning
with faint praise. But, apparently, coming from Belmont, it was enough to reassure the Kleinworts. The connection was established, and Goldman, Sachs & Company were almost deliriously grateful to Belmont “for so generously indorsing us”—an indication of the awe in which Belmont was held on Wall Street.
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When Joseph Seligman was readily acknowledged as the leading Jewish banker in New York, equaling, if not exceeding, Belmont's influence, Joseph made several suggestions to Belmont that “you introduce us” to the Rothschilds, suggestions which Belmont ignored. William Seligman tried to meet the Rothschilds in Paris, and Joseph, on his European journeys, tried in London. But the Rothschilds maintained their customary aloofness. Cultivating a Rothschild in Europe seemed every bit as difficult as cultivating a Sephardic Jew in New York.

In 1874 Joseph made a bid to Grant's new Secretary of the Treasury, Benjamin Bristow, to handle the sale of $25 million worth of U.S. bonds. This plum seemed about to fall into Joseph's lap when Bristow began to hedge. Bristow wanted, he said, “a stronger combination of bankers” behind the loan—a syndicate, in other words. He suggested “some strong European house,” and though he did not say so in so many words, his implication was clear—he wanted the Rothschilds. Politely Joseph questioned “the propriety of giving the Rothschilds a participation,” since they had given the Union such scant support during the Civil War. But the war had faded in everybody's memory, and Bristow stood firm.

Privately, Joseph was more specific about his misgivings. Writing to his brothers, he said: “Now the President and Mr. Bristow appear both anxious that we and the Rothschild group should work together, as they say no one could beat that great combination … [but] I fear that the haughty and proud Rothschilds would not let us come in as their peers, and I should not consent to join on any other terms.”

Joseph's fears were well founded. The Rothschilds were the greatest private bank in the world and were unaccustomed to enter any deal they could not dominate. Joseph would have to come off his high horse a bit. Bristow contacted the Rothschilds, who replied from their citadel that they would handle the bond issue only if they were given
a five-eighths share of it. The Seligmans, “or any other reliable house,” could have the “remainder.”

Joseph tried to bargain. This, he replied, was acceptable provided the Seligman name was included in all newspaper advertisements for the bonds in New York and “either in Paris or Frankfurt.” It was an important point. The position of a firm's name on the “tombstone,” as a financial-page advertisement is called, is an indication of status.

Oh, no, replied the Rothschilds. They had said nothing about advertising, but now that Seligman had brought it up, they would have to make it clear that the Seligman name was not to appear in the advertising at
all
. A little nervously, Joseph wrote to Isaac in London: “If by next week the Rothschilds have not acceded to such terms as you and Paris can honourably accept, I will make it hot for Rothschild, as I cannot conceive that Bristow will ignore us and give the loan to Rothschild, even if they outbid us, as we can be of use to the Administration, and Rothschild cannot.”

But Joseph was not able to make it quite hot enough. The Rothschilds grandly replied to Bristow that they “might consider” placing the Seligman name in the ads provided the Seligmans accepted an even smaller share of the issue than three-eighths. Two-eights, for instance, might do. Joseph weighed the situation. From the standpoint of prestige, his name linked with the Rothschilds would be of great value. But he still felt it prudent to haggle. Perhaps, he suggested, they could settle somewhere between two-eighths and three-eighths—two-and-a-half-eighths, say, or six-sixteenths, or 31.25 percent. The Rothschilds appeared to grow bored with the argument, and replied that Joseph could, if he wished, have 28 percent of the issue and his name in the ads—below the name Rothschild, of course.

A weary Joseph wrote to Isaac: “We have at last advanced so far as to be able to join in a bid with Rothschild, which is, after all, a feather in our cap, and although our participation of 28% is small, I am contented.” From wanting to go in as a Rothschild “peer,” he had backed down to the point of accepting a little more than a one-quarter peerdom.

It took spunky Isaac in London to make the first face-to-face contact of a Seligman with a Rothschild. Isaac had had no qualms about confronting President Lincoln at a White House reception about Seligman coats, suits and uniforms. Now that the terms of the Rothschild-Seligman deal were set, Isaac marched off to Baron Lionel Rothschild's mansion in Piccadilly. This crusty Baron, when elected to the House of Commons, had for eight years refused to swear his oath of admission
unless the Old Testament was substituted for the Holy Bible, and the words “upon the true faith of a Christian” were omitted. When he finally won, he sat in Parliament for fifteen years without saying a word. At the Baron's house, Isaac was passed through footmen and butlers to the Baron's drawing room where the Baron sat. It was a Saturday, and the Baron rose stiffly from his chair and said, “I am a better Jew than you. You go to business on Saturdays. I do not. My office is closed.” It was a dismissal, and it was a snub, but Isaac looked quickly around the room and saw that the Baron's table was strewn with financial-looking documents. Said Isaac, “Baron, I think you do more business in this room on Saturdays than I do during the whole week in my office.” The Baron looked briefly flustered. Then his lips curved upward. That evening Isaac wrote home to Joseph: “Old Rothschild can be a jolly nice chap when he wishes.”

Now that Isaac had broken the Rothschild ice, Joseph wrote a three-page letter in elegant, almost obsequious praise of the Rothschilds, adding the instruction to Isaac, “Let the Baron read it.” The letter said: “Please say to the Baron that we feel highly honored in participating with his great house in negotiating the 5% U.S. Bonds; that we never concealed the fact from the President and the Secretary that the House of Rothschild (properly successful in all they undertake) would be certain to make a good market for the U.S. 5%'s.… We were quite satisfied in leaving the sole management in London to the Messrs. Rothschild.” Joseph continued his buttering up of the Rothschilds, name-dropping important American Seligman connections for several more lines, and concluded with a discreet sales pitch for future Rothschild business, saying he was sure that “the Baron will agree with us that our cooperation and joint management in New York will be of considerable advantage to the syndicate.” Through the whole letter ran this between-the-lines theme: How much nicer it will be, dear Baron, working with us in New York than with August Belmont, who is such a poor Jew.

But Joseph's true feelings were best expressed in a note to Isaac in which he said snippily: “I am aware of the difficulty in dealing with so purse-proud and haughty a people as the Rothschilds, and were it not for the fact that it is an honor for us to be published in connection with them I would not have anything to do with the loan.” And yet Joseph added: “Having broken the ice, I wish you to cultivate this connection.”

There were other compensations. Joseph was able to write, with
understandable pleasure: “Morgan—J. P. of Drexel, Morgan—is very bitter in his jealous expression about our getting the loan.”

Then, in the autumn of 1874, Baron Rothschild summoned Isaac Seligman to his office to give him a piece of news. Some $55 million worth of United States bonds were to be offered for sale, and, the Baron suggested, the issue might be backed by a combination of three houses—the House of Rothschild, the House of Morgan, and the House of Seligman. For the first time, August Belmont would act as agent for both the Rothschilds and J. & W. Seligman & Company. Needless to say, Isaac accepted. The Seligmans were now participating in the most powerful financial combination in the history of banking.

At last the Seligmans were able to consider themselves the Rothschilds' peers. The Seligman-Belmont-Morgan-Rothschild alliance, furthermore, was so successful that by the end of the decade there were complaints on Wall Street that “London- and Germany-based bankers” had a monopoly on the sale of United States bonds in Europe—which they virtually did. The Seligmans were now being called “the American Rothschilds,” and Joseph, beginning to believe his own splendid myth, went so far as to suggest that his brother Isaac should be knighted.
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In Paris party-loving, party-giving William Seligman, now weighing over 250 pounds, was a social success, and was meeting, as he wrote home to Joseph, “all the nobs.” Though Joseph had once disapproved of William's frivolous pursuits, he now applauded them. His earlier threats of defection were forgiven, and Joseph wrote to William assuring him of the importance of the contacts he was making, urging him to meet more nobs. Joseph wrote to Richard C. McCormick, U.S. Commissioner General, to ask: “In filling the offices for Commissioners in Paris, please do not omit to appoint Mr. William Seligman, of course as Honorary Commissioner, without pay, as brother William is at the head of a large American banking house in Paris and entertains all nice Americans.” Joseph began instructing his other brothers to cultivate a Rothschildian kind of elegance and grandeur.

It worked with some better than others. At a large reception in Frankfurt, Henry Seligman found himself standing on the opposite side of the room from Baron Wilhelm von Rothschild of the Frankfurt branch. A friend whispered to Henry, “That's Baron von Rothschild. Would you like to meet him?” “Certainly,” said Henry. “Bring him over.” The friend hurried across the room to the Baron and said, “Mr. Henry Seligman is here and would like to meet you.” “And I should
very much like to meet
him,
” replied the Baron. “Bring him over.” Neither would cross the room. They never met.

In London Isaac understood the simple rule of Rothschild protocol. It was he who must always go to the Rothschild offices in New Court. The Baron would never deign to visit him, and Isaac would not have had the impertinence to ask him to.

But in New York the Seligman-Rothschild alliance did little to further the Seligmans' progress toward assimilation. As the decade drew to a close, there were more dark mutterings of an “international conspiracy” of Jewish bankers to take over the world's money. These were still rumbling undercurrents, but it would take no more than a single curious and sad episode, an episode that might have been no more than a tempest in a teapot, to make these feelings erupt into the public consciousness.

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The Kleinworts of London were held in almost equal awe. Walter Sachs recalls how, as a boy of fifteen, he was groomed for weeks by his parents on how to behave at a Kleinwort dinner in Denmark Hill, and remembers the “terrible humiliation” at a gaffe he made there. On the evening of the dinner, he was so nervous that, when the Kleinworts' front door opened, he bowed and then shook hands with the chief butler.

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Isaac never was, but his son became Sir Charles Seligman several years later.

18

THE SELIGMAN-HILTON AFFAIR

Mr. Alexander T. Stewart was no stranger to Joseph Seligman. Stewart operated A. T. Stewart & Company, in Ninth Street, the largest retail store in New York. With its wholesale operation in Chicago, Stewart's was the biggest store in the country.

When the New York Railway Company was organized in 1871, with its plans for building the city's first elevated railroad, Joseph and Stewart were on the board of directors, along with Levi P. Morton, James Lanier, Charles L. Tiffany, August Belmont, and John Jacob Astor. The president of the line was a New York politician, Judge Henry Hilton. Judge Hilton's chief distinction was that he happened to be a friend and political crony of Mr. Stewart's, and a member of the Tweed Ring.

Despite their directorial connection, relations between Joseph and Mr. Stewart were not cozy. Stewart was also a friend of President Grant's, and when Grant had offered the Treasury post to Joseph Seligman, and had been turned down, he had offered it to Stewart, who said yes. Stewart's friendship with Judge Hilton and the Tweed Ring,
however, had made him a number of powerful political enemies, and his appointment was not confirmed by the Senate. This was a bitter disappointment to Stewart, who had wanted a Cabinet post as the capstone of his career. The Scotsman bristled whenever he thought of Joseph Seligman, who had refused the appointment without even bothering to see whether the Senate would approve him or not. Joseph had also been asked to run on the Republican ticket for Mayor of New York, but had replied, “The bank needs me, and my brothers beg me to leave politics and public office to others.” It was no secret that Alexander Stewart wanted to be Mayor. When he heard of Joseph's refusal, Stewart said, “Who does Seligman think he is? He seems to think politics is only for tradespeople.”

The uneasy situation was not helped when Joseph was appointed to the “Committee of Seventy”—a group of prominent New Yorkers whose purpose was to eradicate the Tweed Ring, and one of whose chief targets was Stewart's friend, Judge Hilton. Up to this point, A. T. Stewart & Company had been purchasing its bills of exchange from J. & W. Seligman & Company. When Joseph's membership on the committee was announced, this relationship suddenly terminated.

In 1876 Alexander Stewart died, leaving a fortune which turned out to be the largest ever recorded in America. Part of his estate was a two-million-dollar investment in the Grand Union Hotel in Saratoga. Stewart's executor was Judge Hilton.

Nobody in New York had paid much attention to Henry Hilton until he became the manager of Stewart's millions. Now he revealed to a society journalist that he was one of “a handful” of New York's most important men. Perhaps, but when Grant left the White House and Joseph and Jesse held a formal dinner at Delmonico's for the former President and “forty or fifty guests,” Judge Hilton was not among those invited. Meanwhile, Joseph was going on to even greater triumphs. Wall Street jockeyed feverishly for position with the new President, Rutherford B. Hayes, and Hayes's Secretary of the Treasury Sherman. Early in 1877 Sherman summoned a representative group of New York bankers, including Joseph Seligman and August Belmont, to Washington, and sent each into a separate room “to work out a plan for refunding the balance of the Government war debt.” Each man submitted his recommendations, and a week later Sherman sent for Joseph and told him that his plan was “by all odds the clearest and most practical,” and would be adopted. (The plan called for building up a gold reserve of approximately 40 percent of the outstanding
greenbacks through the sale of bonds for coin—something Joseph was good at.)
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