The Jews in America Trilogy (36 page)

Along came some Christian gentlemen who wanted a loan, and they applied to Shylock who must have been pretty good at thrift as he had plenty of ready money. One of these gentlemen proposed to borrow a large sum and Shylock drew a queer contract, but Antonio did not have to sign if he did not want to agree to it. Of course, Shylock could not have been entirely sane or he would not have exacted the cutting off of a pound of flesh. That certainly was not good business, as he would not have benefitted by it.

Later on in the play, Lewisohn pointed out,

Shylock was offered three or five times the amount of the loan and could have made a small fortune out of his contract. If he had done
this, there might have been some reason for making him out a bad character. But Shylock's sense of honor was stronger than his desire to gain. They had treated him cruelly, taking his daughter and through her had stolen his property. Considering what it meant to be a Jew at that time, to have his daughter marry outside his faith, Shylock's feeling of outrage and revenge was not unnatural.

Then Lewisohn added: “I think that history tells us that the Jews did not always act as impractically as Shylock did in the play.”

Adolph drew a business moral from Shylock's story: never to make a “queer contract,” and never to extract an excessive profit from a trade. In 1873 he was still an employee of his father and his older brothers, but he occasionally had a chance to buy and sell on his own. In the summer of that year he was sent back to Europe on a feathers-and-bristle-buying assignment. He had wanted to sail on the fancy new Hamburg-America liner
Schiller
, one of the most luxurious of its day. Reluctantly, however, he decided that “it looked better for business” if he took an older, less showy ship, and so he chose the
Hammonia
again. It was a lucky decision. The
Schiller
went down in mid-Atlantic with no surviving passengers. Another passenger aboard the
Hammonia
who had changed his booking from the
Schiller
was Senator Carl Schurz. Adolph used the booking coincidence as an excuse to introduce himself to Schurz (a former major general in the Union Army, later to become Secretary of the Interior under Hayes), and made a friend.

Adolph disembarked at Plymouth, went up to London to visit the bristle market, and made plans to continue on to Hamburg. But he was still an inexperienced traveler. After buying his rail and steamer tickets and paying his hotel bill, he found that he had no money left to pay for meals on his journey. On the train to Dover he struck up a conversation with “a Christian gentleman” who mentioned that he had meant to buy some chamois gloves while in London. Adolph replied that, as it so happened, he had bought several pairs, which he would be happy to sell. He sold them, and at a little profit “which seemed fair, since I was by then the exporter of the gloves from London, and the gentleman would have had to pay considerably more in Paris,” and the money was enough to feed him until he got to Hamburg. Like Shylock's, Adolph's “sense of honor was stronger than his desire to gain.”

Adolph Lewisohn was then twenty-four, and he had not seen his father in six years. When he arrived in Hamburg, it was a Saturday,
and when he entered his house, his father, in his long Sabbath robes, rose to meet him and cuffed him soundly on the ear. Adolph had been carrying his valises.

“Sometimes, in those days,” he wrote, “my dreams seemed a long way from coming true.”

28

THE POOR MAN'S METAL

Copper, “the ugly duckling of metals,” had long been considered the poor man's metal, despised for its very abundance. Because there was so much copper in the world, it was one of the world's least expensive and most neglected metals, used as the basis for the cheapest coins and utensils. There was copper all over the Western Hemisphere, from Alaska to Tierra del Fuego, and the thrifty Mormons ignored one of the largest copper lodes of all, just outside Salt Lake City; no one bothered to put money into the relatively expensive recovery process to turn crude into finished ore. The dawning age of electricity, however, was beginning to change all this.

Adolph Lewisohn first became interested in copper in the 1870's when, with a visiting cousin from Germany, he made a bristle-selling trip to Boston. While there he watched a demonstration by a young man named Thomas A. Edison. Edison claimed he could record human voices on little metal spools. Adolph spoke into Mr. Edison's contraption and, to his amazement, heard his voice played back. Edison then told Adolph that the day was not far off when voices would be transmitted across continents by wire—copper wire. Talk such as this began to make copper shares fluctuate wildly on the market.

At that point most American copper was mined in the Lake Superior
region of Michigan, and in 1877 the American market found itself glutted with copper and a great deal of the metal was sold for export to Europe at a low price. Then, in 1878, there was a sudden copper shortage and the price of copper rose sharply, so high that American manufacturers were having to import cheaper copper from European mines. This unusual situation gave Adolph and his brothers an unusual idea.

All copper imported to the United States from Europe was subject to five cents per pound duty. But there was a loophole in the customs regulations, and American-mined copper—such as the hundreds of tons of the stuff that had been sold cheaply to Europe the year before—could be
re
imported without the payment of any duty at all. There were a few technicalities. In order to be reimported duty-free, American copper was to be shipped back to this country in the same casks in which it had been shipped out, as proof of its American origin. Also, the European seller of this copper was to provide a certificate saying that the reimported metal had, indeed, originated in America. In a fast-moving market, after a shipment had changed hands several times, certification was not easy to get.

The copper Adolph and his brothers ordered carried no such certification. Also, it was no longer in its original casks; it had been uncrated and repacked. But, even with the cost of shipping, it was cheaper per ton than copper available in the United States. The ingots, to be sure, were stamped with the names of the Michigan mines, and perhaps—the brothers hoped—this fact would be sufficient to satisfy customs. Rather like American tourists who have overspent their quota and pray that customs won't poke too deeply in their luggage, the Lewisohn boys waited for their copper to arrive praying that customs would not hew too closely to the regulations. It was a gamble, and it worked. The shipment passed customs untaxed, and the boys sold the copper quickly.

A year later, with their growing reputation as copper factors, the boys were offered a chance to buy their first mine in Butte, Montana. The price was low, and Adolph set out for Montana to look over the situation. There was plenty of copper in the hills around Butte, but much of the ore was of low grade and, furthermore, there was no way to get copper out of the area except by mule team, which was prohibitively expensive. Still, Butte was a wide-open town—Montana had not yet become a state—and was full of eager speculators. Adolph bought up a claim called the Colusa mine, and formed a company in Butte called the Montana Copper Company.

Now the Lewisohns were owners of a mine which produced a product they could not ship. They went to work. The first person they approached was Henry Villard, president of the Northern Pacific Railroad, whom they asked to build a line from Helena into Butte. Villard agreed, but there was a sizable string attached. If the Lewisohns wanted a line built into Butte, they would have to guarantee large freight shipments of ore out—guarantees the brothers were not at all sure they would be able to keep. Next, they approached Jacob Schiff's sometime friend, James J. Hill, head of the Great Northern, and asked him to build the Great Northern into Butte by way of Great Falls. Great Falls was important because there was water power there, which the Lewisohns figured they could use to set up a smelting and reduction works. Hill also agreed, but only after extracting additional guarantees. The Lewisohns now had $75,000 tied up in one mine which was yielding them no income. The brothers were, Adolph confessed, “very nervous.”

Their ability to persuade railroads to reroute their lines was only the beginning of a larger problem—how to meet those guarantees, which actually presented a double challenge: first, to find sufficient ore to make up the guaranteed tonnages and then, if possible, to ship even more. In their contracts with the two railroads, the Lewisohns had clauses to the effect that the more ore they shipped, the lower the freight rate would be. (Since then, shipping laws have been passed that give small manufacturers an even chance, but in those days the biggest shippers got the best breaks.)

While the railroad tracks were being laid, Adolph came up with one of his best ideas. He looked at all the low-grade ore dumped from the Colusa in giant slag heaps. Considered unsalable, it was being discarded as waste. But, Adolph calculated, if all those tons of waste were shipped by freight—somewhere, anywhere—they would give him his guaranteed tonnage and mean that his high-grade ore could be shipped much more cheaply. The notion reminded him of something he had done as a boy. When he made his first selling trip for his father, to Frankfurt, he had been embarrassed, checking into hotels, by the tiny store of personal effects he was carrying with him. He had bought a large suitcase and filled it with rocks.

Adolph's rock idea, applied to mining, was simple enough, but nobody had thought of it before. Mining engineers had studied the problem, but it took a boy from Hamburg, whose only experience with digging had been in his window-ledge herbarium, to come up with a solution.

His idea of shipping supposedly worthless low-grade ore turned out to have even more value than its worth as a decoy, since there
was
a market for low-grade copper ore in England. Here again, the cost of shipping had always been considered too high. Still thinking of his valise full of rocks, Adolph expanded upon the idea. Suppose, when the railroad was built, the low-grade ore were to be shipped to a West Coast port—San Francisco, Portland, or Seattle. Suppose, from there, it could be loaded on a ship for little or no cost—as ballast. Suppose, from there, it traveled around Cape Horn to New York and suppose, at last, from there it could be loaded on another ship—as ballast again—for England. When the Northern Pacific tracks reached Butte, this was exactly what the Lewisohn brothers did.

The boys were on their way.

29

FURTHER ADVENTURES UNDERGROUND

To a large number of the crowd, they were simply—and rather sniffily—known as “The Googs.” “Are they asking the Googs?” people would ask if someone was having a party. The Seligmans acted as though they were coming down in the world when James's daughter, Florette, married a Goog. (After all, another of James's daughters had married a
Nathan.)
The Guggenheims, in fact, never seemed quite to “fit in” with the crowd, no matter what they did. They always seemed just a bit outside of things. There are several possible reasons for this. For one thing, the Guggenheims were Swiss, not German. For another, they were quite opposed, in their financial philosophy, to men like the Seligmans (though they were closer in their thinking to Jacob Schiff). But the best reason for their special position, perhaps, is that the Guggenheims as a family group managed to make more money—in barely twenty years' time—than any other individual in the United States, if not the world, with the possible exception of John D. Rockefeller. (It is very likely that the Guggenheims made more money than
Rockefeller. But when one deals with hundred-million-dollar fortunes, accurate figures become very hard to get.)

Meyer Guggenheim was well past fifty before such spectacular prospects began to present themselves to him, though the family's lace and embroidery business in Philadelphia had not done at all badly. By the 1880's he and his sons ran several small companies, including their own lace-making factories in Switzerland and their own importing and distributing company. Meyer was rich. But he had still not reached his goal, “One million dollars for each boy”—and there were seven of these—when a friend named Charles H. Graham came to talk to him about mining shares. The curious thing about that visit is that, for all its profound effect on the Guggenheim lives and fortunes, no one today is sure what transpired.
*
Graham, a Quaker, operated a grocery store in Philadelphia and had been speculating in Western mining lands. Perhaps he went to see Meyer to sell him some mining shares. More likely, Graham owed Meyer some money and persuaded Meyer to accept mining shares in lieu of cash. In any case, in return for a consideration of either $5,000 or $25,000 (there are two conflicting reports), Meyer, who had never been west of Pittsburgh, became a one-third owner of two lead-and-silver mines called the “A.Y.” and the “Minnie” outside Leadville, Colorado.

Since he was always more interested in finance than in management, Joseph Seligman had been content to leave his mining interests in the hands of custodians who, as in the case of Mr. Bohm, often turned out to be untrustworthy. Perhaps Meyer Guggenheim had learned what not to do from Joseph. In any case, he immediately set off for Leadville to inspect his new holdings. He cannot have expected to find much because he brought with him, as insurance, a large stock of Guggenheim laces and embroidery. When a Leadville merchant bought some of his goods, Meyer muttered, “That's about all I'll get out of Leadville.” And, sure enough, both the A.Y. and the Minnie, though they descended from a mountainside ten thousand feet above sea level, were flooded with seepage from the Arkansas River which raced nearby. (Meyer determined this by dropping a stone down the shaft of each mine and waiting for the splash, an experiment so simple that it would not have occurred to a Seligman.) To find out what was in them, they would have to be pumped out or, as Meyer put it, “un-watered.” He installed pumping equipment.