The Jews in America Trilogy (5 page)

In July, 1837, Joseph Seligman, seventeen years old, climbed on a horse-drawn wagon with eighteen other Baiersdorf boys. The trip to Bremen and the sea took them seventeen days. They camped along the roads at night. At Bremen Joseph bought passage on the schooner
Telegraph
, one of 142 steerage passengers. The price of a steerage ticket—forty dollars—included one meal a day, an unvarying diet of pork, beans, and a cup of water. Since Jewish law prohibited pork, Joseph Seligman was required to disregard his father's instructions from
the beginning. Steerage was cramped, dark, and filthy—years later Joseph used to say of his first crossing, “The less said about it the better”—and Joseph's bed was a wooden plank. Crossing the Atlantic took nine weeks.

Joseph, considerably slimmer, arrived in New York in September in the middle of the great Panic of 1837—hardly a cheerful omen for a future financier. But he did not intend to stay in New York long. Fanny had a cousin in Mauch Chunk, Pennsylvania, and had urged Joseph to go to this unprepossessing outpost. Still with the hundred dollars sewn in his trousers, he started off on foot, a hike of just under a hundred miles.

The leading citizen in Mauch Chunk in those days was a man named Asa Packer, a native of Connecticut, who had established a yard where he built canal boats to haul coal from the local mines. Soon after arriving, Joseph presented himself to Mr. Packer, and the young Connecticut Yankee and the younger Bavarian Jew hit it off immediately. Joseph explained that he was good with figures, and Packer hired him as a cashier-clerk at the salary of $400 a year.

Joseph's quick friendship with Packer displayed what was to become an enduring Seligman habit—the lucky habit of getting to know, and to be liked, by the right people. In 1837 Packer was no more than a prosperous small-town businessman. But this bearded, craggy-faced man was to become a multimillionaire, a United States Congressman (from 1853 to 1857), the founder—with a check for one million dollars—of Lehigh University, the president of the Lehigh Valley Railroad, and a very good friend for a banker to have.

3

“MOUNT BEAUTIFUL”

Young August Schönberg cannot have been called casual or “lucky” in his choice of friends; he chose them with too much care, not for their possible future helpfulness but for their present and specific use. Little is known about Schönberg's forebears for a simple reason. In later years he elaborately blurred, and eventually erased, his antecedents. It is known that he was born in 1816—three years before Joseph Seligman—in the Rhineland Palatinate in western Germany, not far from the French border, the son of Simon Schönberg, a poor merchant. (Later on he liked to create the impression that his parents were people of great wealth; all the evidence suggests the opposite.) He was not, as Joseph Seligman was, a dutiful son. He was a wild, unruly, often violent, undisciplined boy with a harsh tongue and cruel ways, who repeatedly flouted his father's authority—a cardinal sin in Jewish homes. Yet he had a razor-sharp mind and a biting wit.

A university, for an education or for polish, had no appeal for him whatever. He wanted to make money. At thirteen he went to Frankfurt—it is likely that he ran away from home—and went to work as an unpaid apprentice for the Rothschilds, the leading Jewish banking house in Europe. How he managed to get his toe in the Rothschild door is unclear.

There is evidence that the Rothschilds were appalled by Schönberg and yet fascinated by him. He was to exert this double effect on people throughout his life—aversion and, at the same time, attraction. He could be rough-spoken and abrupt, and he could be sweetly charming. One thing quickly became apparent to the Rothschilds—he was a financial genius. His first duties were sweeping floors, but he was soon admitted to discussions in the partners' room.

Yet as Schönberg's value grew, he became something of an embarrassment to the Frankfurt Rothschilds. He did not fit the aristocratic Rothschild “image,” and so, still in his teens, he was transferred to Naples, where he became very Neapolitan and handled financial negotiations with the Papal Court. At the age of twenty-one, he was reassigned to Havana, where the news of the New York Panic of 1837 reached him. A panic, to Schönberg, suggested a use for his money-making talents. He wound up his Havana business quickly and hurried to New York, arriving the same month as Joseph Seligman, traveling, of course, first class. With Rothschild money, he began buying in a splendidly depressed market.

But some strange sea change had taken place. He was no longer August Schönberg but August Belmont, the French equivalent of Schönberg (meaning “beautiful mountain”). As August Belmont, furthermore, he was no longer a Jew but a gentile, and no longer German but, as people in New York began to say, “Some sort of Frenchman—we think.”

New York City in 1837 seems in many ways to have been waiting for a man with August Belmont's talents and tastes to come along. Certainly it was an auspicious moment for a young man eager to make his fortune in banking to descend upon the city, and Belmont arrived with the tremendous influence and backing of the House of Rothschild behind him. The city's mood was up; it was the beginning of the so-called Golden Era, which would see New York change from a provincial port into a giant metropolis. The War of 1812 had given the country confidence in itself, had strengthened its credit abroad (up to then the Rothschilds had considered the United States too unprofitable an enterprise to merit an American agent), and the great age of railroads had begun. The railroads opened up outlying land and carried people there. Railroads carried products back to port cities like New York where, in turn, they were traded to pay for the European imports the newly opened country needed.

New York, by 1837, though it still resembled a steepled and gabled Dutch village sprouting from the Battery at the tip of Manhattan Island,
had become the chief financial center of the nation and its major port, through which passed commerce to be financed, goods to be auctioned, and the inland producers' bills of exchange, drawn on British merchant banks, which, to provide cash, had to be discounted. New York, until then, had stood a poor third to Boston and Philadelphia. It had remained under the influence of the Dutch, whose chief economic interests had been limited to up-Hudson furs and their own vast estates outside the city. New York had not developed the tightly knit commercial and financial power groups of the older Eastern cities. There were not, as there were in Boston, such family complexes as the Cabot-Lowell-Lawrence group, which controlled and financed textile companies, or the Lee-Higginson-Jackson alliance, which dominated the money market. New York had not assumed the rigidity of Philadelphia, with its position as the seat of the only national banks the country had ever known. New York, in other words, was ready for the private banker—Pennsylvania in 1814 had passed a law outlawing private banking—it was a city for the entrepreneur, a city flexing its muscles and feeling young and big and strong. All this August Belmont was quick to sense.

New York was a merchant's city. It had become the chief wheat and flour market of the nation, shipping over a billion sacks of flour a year to Europe, and dispatching the major share of the country's cotton. It was also a gambler's city, and the young arriving immigrants—immigration itself was one of the biggest gambles of the day—only heightened the feeling of risk and speculation that was in the air. In the modern age of consumer goods, it is hard to imagine New York as a place where, though there was a great deal of money about, there was really very little to buy. But such was the case. In the absence of goods and luxuries in shops, New Yorkers spent their money gambling—buying and selling mortgages, bonds, IOU's and promissory notes. In 1792 the New York Stock Exchange—older even than London's—was formed under the famous buttonwood tree at the corner of Wall Street, and in 1817 it had been formally incorporated with a set of rules which, by today's standards, were delightfully lax, but which did require a listing of companies whose shares were being offered for trading. All over the country, people who wanted to gamble were turning to Wall Street. By the time of August Belmont's arrival, this casual bazaar was doing a volume of hundreds of millions of dollars a year. Farmers in the new Western lands were selling mortgages to buy stocks and bonds. Small manufacturers were both investing and offering then own shares for sale. Banking, though it had never had much order or
logic or even rules, had had a certain predictability. Suddenly—almost overnight, it seemed—it became fast, frantic, and speculative.

The great pendulum pattern of boom followed by bust, which would dominate financial history for the next hundred years, had begun. The Panic of 1837, which would be followed by many more, was blamed on “the habit which all classes seem within the last few years to have contracted, of speculating beyond their means, of living beyond their income, of spending money before it was acquired, and of keeping up the appearance of men who had realized large fortunes while they were only in the act of accumulating them,” according to the
Herald
. Before the panic, a speculating American public had invested over a hundred million dollars in canal bonds alone. In this competitive, win-or-lose business, a new kind of bank—and a new kind of banker—was needed. August Belmont saw this. He noticed that the old names which had dominated the early note-issuing commercial banks—names such as Hamilton, Morris, and Willing—were not moving rapidly enough, or skillfully enough, into the new field.

In the Panic of 1837 Belmont was able to perform a service which he would repeat in subsequent panics, and which helped make him a friend to bankers and to the United States Government. By negotiating large loans from the Rothschilds, he was able to shore up United States debtor banks. In other words, he was able, thanks to the hugeness of the Rothschild reservoir of capital, to start out in America operating his own Federal Reserve System.

Socially, New York was not at all the city in 1837 that Boston, Philadelphia, or Charleston was, and here again August Belmont found a niche waiting to be filled. New York society, according to members of the Morris family, consisted only of the Morrises, of Morrisania, their enormous estate north of the city in what is now one of the dreariest sections of the East Bronx. Colonel Lewis Morris once wrote of his city: “As New England, excepting some Families, was ye scum of ye old, so the greatest part of the English in the Province [New York] is ye scum of ye New.” The Morrises were, in fact, the only New York family not “in trade.” As for the other prosperous families of the city, they were all required to work for a living. The Roosevelts, Bayards, Van Cortlandts, and Rhinelanders were in the sugar-refining business. The Rhinelanders also sold crockery, and the Schuylers were importers. The Verplancks were traders, and Clarksons and Beekmans and Van Zandts were in the retail dry-goods business. Brevoorts and Goelets were ironmongers, and the Schermerhorns were ship chandlers.

Small, wistful newspaper advertisements of the period reveal how
humbly the founding fathers of the great old New York families urged the public to buy their wares: Peter Goelet, from his shop in Hanover Street, begs customers to buy his saddles and pewter spoons and announces that he has received “a consignment of playing cards.” Jacob Astor—before he became John Jacob—offers “guitars, fifes and pianofortes” from his shop in Queen Street, while Isaac Roosevelt extols the virtues of his “loaf, lump, and strained sugar and sugar-house treacle.”

Such social life as existed among these folk depended largely on the weather, and when it was balmy and fair, New York society sat outside their front doors on wooden benches and nodded and chatted with their neighbors across the way. Picnics in the wooded hills of mid-town Manhattan were also popular, as were boating jaunts to Brooklyn. There were hunting and fishing parties for well-connected young men on the banks of the Harlem River and, in winter, frequent skating parties for both sexes on a Hudson which, in those naïve days before pollutants, often froze from Manhattan to the New Jersey shore. When society entertained, it did so with seriousness. As Washington Irving humorously commented, “These fashionable parties were generally confined to the higher classes, or noblesse, that is to say, such as kept their own cows, and drove their own wagons. The company commonly assembled at three o'clock, and went away about six, unless it was in winter time, when the fashionable hours were a little earlier, that the ladies might get home before dark.” Social life certainly seems to have been a barren and bleak affair. As Frederika Bremer wrote, “Here, where almost every person works for a living, one cannot properly speak of a working class, but quite correctly of people of small means and somewhat limited environment and circumstances—
a class which has not yet worked itself up.
”

To the people living in New York, it was something else again. Many New Yorkers actually considered themselves quite racy. In fusty Boston and austere Charleston, for instance, society never dined in public. But in New York society had discovered the restaurant, and the fashionable gathered at Niblo's and Delmonico's for dinners and even floor shows. The daring drank wine, and the less daring mixed a little wine with their milk.

In upstate New York such old patroon families as the Van Rensselaers—Stephen Van Rensselaer in 1838 was said to have an income of a million dollars a year—made periodic excursions to their city houses, leaving their stamp on social life. The Van Rensselaers, said James Silk Buckingham, “give a great gravity and decorum to the general tone of society here. There is less of show in houses, carriages, and horses; less
of ceremony and etiquette in visiting; very early hours for meals; seven for breakfast, two for dinner, and six for tea; plainer and more simple fare.” The plainness and the decorum, however, did not delight an English visitor of the period, Margaret Hunter, who wrote home after a dinner party at Mrs. Van Rensselaer's that she found all the guests “exceedingly commonplace,” and was “amused with the motley company we meet here, Senators, lawyers, actors, editors of newspapers, one of them a Jew, all placed indiscriminately at table and all joining equally in the conversation.” Still, such as it was, it was New York society, and August Belmont determined to join it and to help it “work itself up.”