The Jews in America Trilogy (27 page)

Betty organized the four younger children into a piano and string quartet—Guta at the piano, Morris at the viola, James at the cello, and Nina at the violin—and there were Sunday morning concerts in the Loebs' Pompeiian music room. If Betty liked what the children played, she would say, with deep satisfaction, “
Das war Musik!
” If displeased with a performance, she would mutter, “
Hmph! Musik?
” and there would be extra hours of practice in the afternoon. To stimulate her children's talents, she populated her Sunday dinner tables with visiting conductors, singers, composers, dancers, and musicians. She even hired musical servants. Apologizing for a particularly inept young butler, she said, “He's very musical. I promised to give him violin lessons in the front basement.”

Her youngest daughter, Nina, had once told Betty that she wanted to be a ballet dancer. The ballet lessons were intensified accordingly. But Nina fell from a goat-drawn cart one summer at the family's country place on the Hudson, seriously crippling one leg. For several years the little girl wore a heavy weight on her injured leg which was intended to stretch it to the length of the other, but which did no good. Betty took her daughter to bone specialists all over the United States and Europe—and to a few quacks as well—trying to find someone who would help Nina walk normally again. One of the many doctors had said to Betty, “Don't worry. Your daughter will dance when she's eighteen.” On the morning of her eighteenth birthday, Betty said to Nina, “You're eighteen. Now you must dance.” And Nina rose from her wheelchair and, in terrible pain, with tears streaming down her face, danced, to please her mother.

Business consumed Solomon Loeb's life to the extent that the children consumed Betty's. Business absorbed him so much that, writing to one of his sons at school, he absent-mindedly signed the letter, “Your loving Kuhn, Loeb & Company.”

When Kuhn, Loeb first opened its Nassau Street doors, the president of the National Bank of Commerce had come to Solomon and told him that he was sure the new firm would be a success. Solomon asked him why, and the president replied, “Because you know how to say no.” This blossomed into a business rule of Solomon's: “Always say no, first. You can always change your mind and say yes. But once you have said yes you are committed.” He used to tell his sons, “I have become
a millionaire by saying no.” But he found it hard to say no to Betty. Whenever she wanted something, she approached him briskly and said, “Now, Solomon, first of all say no. Then let me tell you what I have in mind.”

One of the things she had in mind in 1873, when Jacob Schiff joined the firm, was the immediate future of Therese, who had just turned twenty. Jacob found himself a frequent guest at Betty's Sunday dinners and, more frequently than he may have realized, under the scrutinous gaze of the lady of the house. Jacob and Betty Loeb hit it off well; they discussed music, art, politics, but most particularly Jacob Schiff's future plans. Jacob's brief return to Germany worried Betty. Did that indicate a rootlessness on his part, an unwillingness to settle down? Betty had said her final farewells to the old country. She was committed to America now, and had no intention of seeing any of her children carried off to any other part of the world. But Jacob assured her that he would never move back to Germany. He did as she suggested, took out his American citizenship papers, and this convinced her.

In Jacob Schiff, Betty began to sense a kindred spirit, a will as strong as her own, and an ambition as huge as hers. Now that he was a citizen, Betty seated Jacob next to Therese, with the other young people “below the salt.” From her end of the polished table, above the salt, Betty watched as Jacob and Therese conversed. Therese was cameo-faced, blue-eyed, small, and dainty, and she blushed prettily when Jacob spoke to her. Whenever Betty saw Jacob speak to the lady on his left, Betty would exercise the hostess' prerogative and “turn the conversation,” so that Jacob was confronted with Therese again.

By some mysterious process, the more the two young people saw of each other, the greater were the responsibilities given to Jacob Schiff at the Kuhn, Loeb office. When Solomon Loeb came home at night and mentioned a problem at the office, Betty would inquire, “What does Mr. Schiff think? Have you asked Mr. Schiff? Why don't you let Mr. Schiff handle that?” To Therese, Betty said, “Mr. Schiff is very handsome, isn't he? And your father says he is a brilliant businessman. The girl who marries him will be very lucky.”

In 1874 Jacob Schiff wrote to his mother in Frankfurt, saying: “I know you haven't any clear conception of what an American girl is like. You may think she is rather uncultured and even a feminist—but don't imagine that of the girl I've selected. She might have been brought up in the best of German families.”

Clara Schiff replied, urging her son to be gentle with this girl,
cautioning him to curb his famous temper because “A word spoken hastily in anger would leave lifelong scars.”

A few months later, Jacob wrote:

Beloved Mother,

I feel impelled to write to you by this mail, so that if I have calculated well, this letter will reach you on my wedding day.

My feelings for you and my thoughts, now that I approach this important time of my life, I cannot express in words. You have not only borne me, you have also guided me, so that, after some youthful indiscretions, I can now say to myself that I have become a good and moral man, and I may take the wife that I have chosen for life to the altar.

You, my dear Mother, I have to thank for all this guidance, for every good advice, every moral stems from you, and you gave me these precepts in such a way that they made a lasting impression on me.

And now on my festive day, you cannot be with me but I will be thinking of you. I know that in spirit you will be with us and bless us. More I cannot say to you today. Therese and I will always be your devoted children, and, God willing, I will be very happy with my girl.

Millions of kisses to you and my sister and brothers.

Your Jacob

As usual, he had not only “calculated well”; he had calculated perfectly. Jacob Schiff and Therese Loeb were married in New York on May 6, 1875, and Jacob's letter to his mother arrived in Frankfurt in that morning's mail. The young couple moved into a large brownstone at Fifty-third Street and Park Avenue, their wedding present from Solomon and Betty Loeb.

A loving Kuhn, Loeb & Company gave Jacob another present—a full partnership in the firm. He was on his way to becoming the most renowned of all the Schiffs, to eclipsing all the others except, perhaps, his ancestor King Solomon. And, already, in the Kuhn, Loeb offices, when a decision was to be made, men had begun to whisper—out of Solomon Loeb's earshot, “Why don't we see what Mr. Schiff says?”

Solomon Loeb had made a business asset out of saying no. His son-in-law, to any money-making proposition, usually had the opposite reply.

21

THE EMERGING GIANTS

Jacob's Seligman-watching was teaching him several things. Joseph Seligman, by nature and by instinct, had been a moneylender who operated best out of his hip pocket. When it came to selling stocks and bonds at their best possible markets, he was brilliant. He was a manipulator. But Joseph Seligman had had a blind spot. He understood figures, but not the physical products or properties the figures represented. When it came to railroads, Joseph did not even use them much, and there is evidence that he considered them an essentially unsafe means of transportation. When he and his brothers helped finance New York's first elevated railway, Joseph ruled that no two Seligmans could ride the “el” at the same time lest, in case of accident, the bank suffered a wholesale loss of partners. He had made short trips in his private car between New York and Saratoga but, with the exception of his one trip to California, made few rail journeys of any length. He had, at one point, invited a group of fifteen tycoons for a two weeks' trip in private cars to promote shares in one of his lines, but the junket was a fiasco and most of the guests left the train before the trip was over. (One story has it that the men had expected Joseph to provide them with “female companionship” during the journey, and were furious to
find that the entertainment planned for the whole two weeks was nothing but “cards, chess, and crokinole.”)

The rationale of railroads, which Joseph never seemed to grasp, was that railroads opened up lands which could be sold to settlers who, in turn, would provide a traffic of goods and people which would make the railroads pay. In one of his more dismal railroad ventures, however, Joseph demonstrated that he had only a rudimentary knowledge of the kind of land which settlers liked to settle. This was his famous “Aztec Land” deal where, having failed to interest investors in a large stretch of Arizona—part of his Atlantic & Pacific Railroad holdings—Joseph suggested forming the Aztec Land and Cattle Company to use the land for cattle-raising. The only trouble was that the land, a vast stretch of unirrigated desert, was no more habitable for cattle than it was for people.

Jacob Schiff, on the other hand, saw that it was not enough to be merely a financier when dealing with railroads. One had to be an organizer as well. Before backing a railroad, he insisted on going over every mile of track. He interviewed shippers and line officials, poked about in warehouses, peered into cabs of locomotives, and talked to engineers, brakemen, and conductors. He inspected freight cars and signal mechanisms, and whenever he found anything out of order he made a note of it. Schiff's memoranda to the management of his lines pointed out such details as a mile of weed-grown track that left “a poor impression” on travelers; a passenger car whose windows needed washing; a tipsy conductor; a station that needed a fresh coat of paint; a “bumpy stretch” of track. No wonder he never backed a railroad—as Joseph Seligman had—that had no place to go, or no means of crossing the Colorado River.

The Morgan group had, for good reason, been leery of dealing with the Seligmans when it came to railroads. Morgan admired Jacob Schiff's approach. Morgan, too, was an organizer who dealt not only with the financial but also with the
physical
properties of industries, and who saw to it—by direct management and through the men he put on their boards—that they were
run
, once he had an interest in them, exactly as he wanted them to be. Soon after Joseph Seligman's death, Jacob Schiff was the only German Jewish banker whom Morgan—at least occasionally, and always begrudgingly—treated as a peer.

Schiff had studied the Union Pacific Railroad and its problems for four years before embarking on a project which everyone else in Wall Street considered hopeless. The Union Pacific, having joined the Central Pacific with Leland Stanford's golden spike, had been having
trouble ever since. An early engraving shows the crew of the little line shooting their way across the plain against a herd of belligerent buffaloes. Soon the Union Pacific's human adversaries were even more ferocious, and the
coup de grâce
was delivered by the Seligmans' old client, Jay Gould. By the time Schiff became interested in the line, Gould had bled it dry and abandoned it, and the company had collapsed into bankruptcy. Among the larger of the Union Pacific's debts were $45 million owed to the United States Government, plus 6 percent interest on government bond loans which it had used as collateral to raise another million from the public. Unpaid interest had accumulated for thirty years. The line's mileage had been reduced from 8,167 to 4,469, and its subsidiary companies were in a desperate tangle of debts. There was nothing left to show for the line but what Morgan, who had repeatedly refused to help bail it out, referred to as “two streaks of rust across the plains.”

It was a bad moment for railroads. Two other lines, the Santa Fe and the Northern Pacific, had collapsed within a year of each other. J. P. Morgan, meanwhile, had become the one-man ruler of American finance. All other bankers, in endeavors of any size, had to defer to him. But Morgan was actually relieved when Jacob Schiff came to see him and asked, deferentially, whether Morgan would have “any objection” if Kuhn, Loeb “had a try” at reorganizing the Union Pacific. Morgan replied cheerfully, “Go ahead!” He said that he was “through with the Union Pacific,” and added, “I don't even want a financial participation.” This, as it turned out, was the greatest tactical error of Morgan's career.

For several months Schiff and Kuhn, Loeb busied themselves with the task of buying up Union Pacific bonds. But Schiff began to encounter a curious and invisible wall of opposition to his plans. There were strange and unexplained delays in Congress. For no reason Schiff could fathom, a portion of the press suddenly became hostile to him. European bondholders, on various mysterious pretexts, held off from signing definite agreements. As Schiff considered the situation, he decided that there was only one financial power in America strong enough to provide this subtle kind of antagonism. He returned to Mr. Morgan's office and, with a little smile, asked whether Morgan had changed his mind. Morgan said, “I give you my word. I am not responsible. But I will find out who is.” A few days later, Morgan sent for Schiff and reported, “It is that little two-bit broker, Harriman, who is interfering. Watch out for him. He's a sharper.”

“Ned” Harriman was more than that. He was one of the most disagreeable
men of his period, and one of the most disliked. He was small and skinny and stooped, with watery eyes behind thick-lensed glasses. He had a prison pallor, a frightful cough, foul breath, and a nose that dripped. He was perennially ailing of one disease or another, and he spoke in a voice so low that it was rarely audible. When it could be heard, it had nothing pleasant to say. Harriman was incapable of tact. He never smiled. James Stillman of the National City Bank had called him “not a safe man to do business with.” Yet Harriman's relatively small railroad line, the Illinois Central, was one of the best-run and most profitable in the country.