The Jews in America Trilogy (34 page)

Perhaps it was because of the unusual surroundings in which Schiff issued his instructions that an oversight of considerable proportions took place. For some reason, Harriman was never advised of Schiff's advice to Heinsheimer, and Harriman spent the weekend confident that he owned a majority of both the preferred and the common stock. On Monday morning, Jim Keene, a famous stock manipulator of the era, hired by Hill and Morgan, moved into the stock market with his team of brokers and began buying up the 150,000 shares Hill had ordered—$15 million worth. The price of Northern Pacific began to climb. By noon, it had reached no … then 117 … then 127. By Tuesday it had jumped to 149¾, and it was then that Harriman learned, to his dismay, that his order had not been executed. At the stock's inflated price, he could no longer afford to buy.

Brokers still speculate why Schiff stopped Harriman's order. (In his characteristic way, Schiff himself never offered an explanation.) The most common reason given is that the pious Jacob would not handle the transaction because it was ordered on a Saturday, which is ridiculous. Others have said that Schiff prudently foresaw the panic that was coming, and decided to let Hill and Morgan charge on alone, wreck the economy, and take full blame for it. This is possible, but unlikely. The plain fact was that Schiff had believed Hill, and could not imagine that Hill would betray him a second time. Still—though, as it turned out, it would have made no difference—somebody should have told Harriman. On Wednesday morning the Northern Pacific hit 180, and Wall Street went wild. The stock was behaving similarly in London, and British bankers were cabling furiously for more shares. When the stock reached 200, many speculators sold, anticipating a break and hoping to buy in again at lower prices. They did not realize, however, that
neither Hill nor Harriman intended to sell and take profits. Harriman had locked up his shares, and Hill, having got as many more shares as possible, was also sitting tight Speculators had taken over.

By mid-week European bankers had become alarmed and reversed their previously liberal policies on American loans. The Bank of England warned the London joint-stock banks against New York. While American credit teetered, the two antagonists stood firm, refusing to move. At the height of things, sickly Ned Harriman was suddenly stricken with appendicitis and was rushed to a hospital. Coming out of the anesthetic, he demanded a telephone and attendants were astonished to hear him put in a call to James J. Hill. “Hill?” he said when he reached his party. “This is Harriman. I just wanted to tell you that the operation is over and I'm still alive.” He then collapsed on his hospital bed.

By Thursday Jacob Schiff was speaking of a “deplorable situation” that had developed. The Northern Pacific had hit 1000, and it was suddenly clear to Wall Street that the stock had been cornered. Millions of dollars' worth of shares had been sold which did not exist, and millions of dollars would be needed to settle the debts. It was, in the words of one financial historian, “finance run mad.” Suddenly, the Northern Pacific broke violently, and the market followed, with some of the soundest stocks declining by 50 percent or more. Cornered brokers scurried frantically—and futilely—to cover themselves, but Wall Street had become literally insolvent. Others placed pistols to their temples. It was the most ferocious financial panic in history.

Later, the Northern Pacific corner and the panic that followed became known as “the Battle of the Giants,” and the four main participants—Hill and Morgan, Harriman and Schiff—were depicted as ravenous gorgons, fattening themselves on the American public. Hill and Harriman and their respective bankers were portrayed as having deliberately and singlehandedly set out to smash the economy. Harriman, whose unpleasant nature and aspect had already made him thoroughly hated, gained no new popularity, and Jacob Schiff now shared Harriman's notoriety. Morgan, meanwhile, did not become more publicly beloved when he returned from Europe and, asked by a reporter whether he didn't owe the American public an explanation, made his famous and contemptuous reply, “I owe the public nothing.”
*

Who really was to blame? Hill, likening the panic quaintly to “an
Indian ghost dance—they whirl about until they are almost crazy,” blamed the public. “Perhaps they imagine that they have a motive,” he said, “in that they see two sets of powerful interests which may be said to be clashing. Then these outsiders, without rhyme or reason, rush in on one side or the other. They could not tell you why they made their choice, but in they go, and the result is such as has been seen here for the past few days.” Harriman tried to divorce himself from any responsibility whatever, pointing out that he had stopped buying Northern Pacific stock before it started on its upward spurt (though, of course, he had at first wanted to buy), and that during the whole so-called “battle” he had withdrawn from the battlefield. Morgan blamed Harriman, and Schiff blamed Hill. There is evidence, though, that all four principals in the affair were secretly ashamed of the havoc they had caused.

And who had really won? At best, the Battle of the Giants must be considered a draw. Hill and Morgan came out with a majority of the Northern Pacific's common stock. But Harriman and Schiff had a majority of the preferred and a majority of all the shares outstanding. One thing was certain. Morgan had finally met his match in Jacob Schiff. Never again would one man control the finances of the country. From that point on, there would be another to consider.

A few days after that terrible Black Thursday, Jim Hill appeared at the Kuhn, Loeb offices and asked to see his old friend Schiff. Felix Warburg came out to meet Hill and explained that his father-in-law was temporarily indisposed. “How is he?” Hill wanted to know. “Not very happy,” said Felix politely. “Is he still mad at me?” asked Hill. “Yes,” said Felix, “I would say so.” Hill, with another little wave of his hand, said, “Oh, Schiff takes these things too seriously.”

A week to the day after the collapse of the market, Jacob Schiff, gently glorying in his new position as Morgan's equal, wrote Morgan a long and masterly letter, full of delicate irony, in which, almost apologetically, he called Hill a double-crossing liar. He had, Schiff wrote, perhaps misconstrued Hill's words and intent; for this he would beg to be forgiven. The letter concluded on this note of almost fawning suavity:

I trust you will accept my assurance that nothing was further on the part of Union Pacific interests than to do aught meant to be antagonistic to you or your firm, and that, as far as my partners and I are concerned, we have at all times wished, as we continue to do, to be permitted to aid in maintaining your personal prestige, so well deserved. You will find Union Pacific interests, and certainly my firm
and myself, entirely ready to do anything in reason that you may ask or suggest, so that permanent conditions shall be created which shall be just to all interests and not bear within them the seed of future strife, discord, and possible disaster.

Trusting, then, dear Mr. Morgan, that you will understand the spirit in which this letter is written, and hoping that the rest of your stay abroad may be pleasant and not interrupted by any unsatisfactory events, I am, with assurances of esteem,

Yours most faithfully,

Jacob H. Schiff

Schiff was never a man to make an enemy when he could keep a friend, especially a friend who could be useful to him. And so it is not surprising to see him, a few weeks later, writing a similarly conciliatory letter to “My dear Hill,” saying:

It made me unhappier than I can tell you to find myself, for the first time in fifteen years, in a position where you and I could not go together arm in arm.… I believe that your own interests and those we represent can be knitted together so tightly and profitably that before long we shall all feel that what had to be gone through during the past few weeks was not for naught.

He was quite right, and Morgan agreed. Soon after the panic, Morgan formed the Northern Securities Holding Company to protect Hill's interests, and, in a gesture that Morgan must have made with great difficulty, he asked Harriman to sit on the board and have a vote in the new company. It was Harriman's first admission into the councils of J. P. Morgan, and, for a while at least, everyone was happy. Harriman and Hill, it turned out, never did have anything against each other personally. They greeted each other cheerfully with “Hullo, Ned!” and “Hullo, Jim!” Jim Hill showed how much he continued to admire Schiff by sending Schiff not one, but two portraits of himself, whereupon Jacob wrote back: “There are few men with whom I have come into contact during my business career for whom I feel as great and real attachment as I do for you.”

Schiff always seemed to have the last word. Long after the battling giants had shaken hands and made up, Schiff wrote to his friend Sir Ernest Cassel saying how “very much attached” he had become to “dear Morgan,” and how “very obliging and considerate towards me” Morgan had been, “especially since the Northern Pacific Affair. He understood very well that it was his interests that had brought us into conflict.” Schiff, who had proved himself a powerful fighter, was also an effective peacemaker.

During the Northern Pacific Affair Otto Kahn's name had been mentioned merely as one of Schiff's “lieutenants.” But while he may not have played a major role in the episode, he had been watching very carefully from the sidelines. Kahn always insisted that Jacob Schiff taught him everything he knew, and Kahn must have learned his lessons well. A few years after the panic, Kahn, in a brisk battle at Duveen's, was able to capture a Franz Hals painting from the next-highest bidder for $500,000. The man he had outbid was J. P. Morgan.

“The Battle of the Giants” was watched by Kuhn, Loeb's founder, old Solomon Loeb, from a distance and with stunned amazement. He had never trusted railroads, and the scope of what his son-in-law was doing was beyond him. It had been two years since he had been inside the Kuhn, Loeb offices. He had developed a sad cast to his blue eyes, and had become increasingly preoccupied with his health. Whenever a disease was mentioned in his presence, he would nod and say miserably, “
Ja
, I have also had that one.” (Once, after the family doctor had treated Betty for a complaint, the doctor went downstairs to inform Solomon of his wife's condition. As he was about to utter his familiar statement, the doctor raised his hand and said, “Mr. Loeb, I assure you that this is something you have
not
had.”) Solomon loved to have Betty fuss over him, and was jealous of every moment she failed to spend with him. She played the piano for him in the afternoons; but he was even jealous of her absorption in the music and would interrupt the playing to say, “Betty, I don't know why, but I have the strangest pain here.” And she would break off playing to tend to him.

At their camp in the Adirondacks, his sensitive skin suffered from prickly heat, and she would lay him down and, at the age of seventy, powder him like a baby. She also consoled him with enormous meals; they became two plump little old people who worried over each other endlessly. Betty had developed diabetes in her fifties, and was told that she must not fast on Yom Kippur. Still, she thought she
ought
to, and so developed a tactic which, she felt, satisfied three things: doctor's orders, her son-in-law Jacob's orthodox views, and her appetite. On Yom Kippur she would not go to the dining table but had a series of little meals brought to her on the porch of the house—this way feeling that she was not fasting and not really eating either.

One summer Solomon saw Betty reach for another serving of Nesselrode pie which her diabetic diet forbade her to have, and cried, “Betty, don't!” But the indomitable Betty, whose will was a match for her
husband's any day, said, “I don't care if it costs me ten years of my life. I'll take a second helping of this excellent dessert.” With a little smile, she did and within a few hours she was dead. After her death Solomon was a husk of a man. He died a little more than a year later, in 1903.

*
Which had given Jacob Schiff his first contact in New York.

*
In those days the New York Stock Exchange was open on Saturdays.

*
It was an era when it was fashionable for the rich and mighty to disparage the public. In 1883 William H. Vanderbilt had uttered his famous “The public be damned!”

27

“
DER REICHE LEWISOHN
”

Adolph Lewisohn's father had a curious theory. He told his son that the Passover matzoths, or
Afikomen
, had, when properly blessed, a special virtue: if a bit of this unleavened bread was tossed into the sea, it would calm the water. Adolph's father said he knew that this was true because he had tried it once, and it had worked. When Adolph was eighteen in 1867, crossing the Atlantic to America, he had carried one of these blessed matzoths with him. The ship hit a storm, and young Adolph struggled to the rail and cast his
Afikomen
on the water. Nothing happened. It was one of his last attempts to conform to his father's orthodoxy. It was symbolic of his break with the past.

Adolph had been born in Hamburg, the youngest of seven children of Sam and Julie Lewisohn. He was a plump, silent, introverted child, devoted to his mother. One afternoon when he was six years old he was sitting with her when she suddenly said that she felt a little dizzy. Within a few minutes she was dead. Soon afterward his father remarried and started a second family. There were soon four more sons. Adolph, the outcast, had in the meantime been ordered by his father to visit the synagogue every day for a full year to say his
Kaddish
, the orphan's prayer.

The senior Lewisohn operated a business that had been in the
family since 1740, dealing in wool, bristles, horsehair, ostrich and other ornamental feathers, and, eventually, in metals. Sam Lewisohn was proud of his reputation as a businessman and of the fact that he was known locally as “
der reiche Lewisohn”—the rich
Lewisohn. He was also proud of the Lewisohn pedigree, which he traced back to 1609 when the Lewisohns came to Germany from Holland. Sam's mother had been Fanny Haarbleicher, the daughter, Sam pointed out, “of a very good English Jewish family.” And
her
mother's father was Solomon Goldschmidt, a London financier.