Jacob H. Schiff

A Study in American Jewish Leadership

Naomi W. Cohen

• Publisher: Brandeis University Press
• Year: 2020
• ISBN:
  9781684580590
• Topic: Scienze sociali
• Subtopic: Sociologia

The life of Jacob Schiff (1847 - 1920), banker, financier, and leader of the American Jewish community from 1880 to 1920, is in many ways the quintessential story of an immigrant's success in America. Born in Frankfurt in 1847, Schiff worked in several financial firms in Germany and the US before accepting a position at the New York banking firm of Kuhn, Loeb & Company in 1875 and settling for good in America. Part of a wealthy and powerful German Jewish circle that included the Warburgs and Rothschilds, Schiff played a central role in shaping American and European Jewish history. From his base on Wall Street, he was the foremost Jewish leader in what became known as the "Schiff era, " grappling with all major issues and problems of the day, including the plight of Russian Jews under the czar, American and international anti-Semitism, care of needy Jewish immigrants, and the rise of Zionism. Based on a broad range of primary sources, Naomi W. Cohen's study emphasizes the role Schiff played as the preeminent leader of American Jewry at the turn of the century.

1

The Making of a Leader

From Frankfurt’s “Judengasse” to Wall Street

On January 10, 1847, a second son and third child, Jacob Henry, was born to Moses and Clara Niederhofheim Schiff of Frankfurt-am-Main. A dealer in shawls who became a successful stockbroker, Moses Schiff was a stern father and pious Jew who demanded the same religious behavior from his five children. Jacob, a restless boy, did not conform willingly. He preferred playing to studying, and he especially resented parental insistence that he attend the synagogue three times daily for prayers. Although relations between father and son were strained, Jacob was closely attached to his mother, “an exceptional, well-educated woman.” He once remarked to a friend that whatever success he had attained and whatever good he had accomplished were due to his mother’s teaching and example.¹

Differences with his father reinforced Jacob’s desire to leave Frankfurt, but he remained loyal to both parents and to his siblings. The only one of the family to emigrate to America, he maintained close ties by frequent letters and visits to Germany; even as an adult he would kiss the photographs of his parents when he finished reciting his daily prayers. Jacob devotedly marked the anniversaries of his parents’ deaths, and he frequently made donations in their memory to institutions in Frankfurt as well as New York. Despite his mild rebellion against his father’s discipline, his values and behavioral traits were shaped significantly by what he had absorbed from his boyhood home. Punctuality, precision, attention to details, and especially a domineering role over his household suggest patterns of his father’s Orthodox mind-set.²

The Frankfurt in which Jacob grew up was a bustling commercial center where the number of Jews increased dramatically in the nineteenth century—from over five thousand in 1858 to more than ten thousand in 1871. Making its mark in finance and merchandising, the affluent Jewish community contributed generously to both civic causes and their own religious and charitable institutions. Within that community the prominent Schiff family had been rooted for several hundred years (dates for the first appearance of the family in Frankfurt range from 1370 to 1600). According to one source, almost every third Schiff was a rabbi, dayyan (religious judge), or parnas (lay head of the community). The most famous of Jacob’s ancestors were the seventeenth-century talmudic scholar Meir ben Jacob Schiff (the Maharam) and the eighteenth-century dayyan David Tevele Schiff, who became rabbi of the Great Synagogue in London. For many years the early Schiffs shared ownership of a two-family house with the Rothschilds. Located in the old Jewish quarter, the house was marked on the Schiff side by a ship and on the Rothschild side by a red shield, symbols from which the surnames of the two families had originally derived.³

While the revolution of 1848 hastened Jewish emancipation and the grant of full civic rights in 1864, liberalism was also challenging conservatism on the religious scene. Here the conflict for control of the Jewish community pitted the young Reform movement against entrenched Orthodoxy. After the Frankfurt synagogue fell to Reform, Orthodox forces countered by organizing a new congregation, the Israelitische Religionsgesellschaft (IRG; Jewish Religious Association). The group, whose founders included Moses Schiff, represented the oldest and wealthiest families in the city. With its eye on “the progressive demands of the times,” the IRG called for a traditional but modern synagogue, a school that taught secular as well as religious studies, and a rabbi who combined knowledge of Jewish tradition with a gymnasium and university education. An exemplar of modern Orthodoxy, Samson Raphael Hirsch was engaged by the IRG as its rabbi in 1851.⁴

The school established by Hirsch was ranked by the government as a model of its kind. Young Jacob attended classes there from 1853 to 1861 and came away with a thorough grounding in secular and religious subjects and a rare appreciation of the need to synthesize German and Jewish culture. According to his close friend and biographer, Cyrus Adler, Schiff knew Hebrew well and could freely quote the Hebrew Bible. Calling the Bible the book that had the greatest influence on him, he read biblical commentaries and kept up with developments in biblical studies. Jacob may have resisted Orthodox discipline, but Hirsch’s training, in tandem with his father’s influence, left him with an abiding love of Judaism and an interest in Jewish learning. Although his formal education ended when he was but fourteen years old, his serious reading and travel as an adult broadened his general knowledge. “Self-polish,” one journalist explained, accounted for Schiff’s familiarity with economics and history.⁵

Jacob shared the legendary pride of Frankfurt’s Jews in their city. He remembered his school fondly and contributed to its upkeep over many years. Recalling the religious factionalism that had rocked the Jewish community when he was a boy, he advised school officials to strive consciously for Jewish unity. In words often repeated to American Jews, he said: “Only if we are united among ourselves can we claim the respect of our fellow-citizens and successfully ward off the attacks which are made upon our race from so many quarters.”⁶

Thrust immediately into the business world, Jacob was first apprenticed to a large mercantile house. He then entered his brother-in-law’s banking firm where he worked until 1865. Meantime, his desire to go to America intensified. His father confessed to a distant cousin in St. Louis that, unlike his older siblings, Jacob at age seventeen was “quite a problem because he already feels that Frankfurt is too small for his ambition.” Worried about whether his son would be able to live an Orthodox Jewish life in the New World, Moses put that question to the cousin. The latter either failed to respond or answered in the negative, because the father withheld his consent to the idea of emigration. Instead he advised that Jacob himself write the cousin and ask his help in securing a position that did not require work on the Sabbath. Nothing came of that, but the son proceeded with his plans. Unwilling to risk a serious family rift, he refused to leave without his father’s blessing. The rest of the family supported him. They worked on the father, and his older brother gave Jacob the money for his trip. At the last moment, when the carriage was at the door, father and son were reconciled. Armed with $500, letters of recommendation, and a package of kosher meat for the journey, Jacob left Frankfurt and reached New York in August 1865.⁷

Sources for the story of Jacob’s emigration are admittedly scanty. No single push or combination of pushes, except a desire to escape his father’s rigidity, explained the young man’s motivation. Recent scholarship puts him in the second wave of German Jewish immigrants to the United States (1865–1914); unlike the first wave (1830–1865), the later arrivals as a group were not prompted to emigrate by either economic needs or dreams of political emancipation. Rather, many were pushed by a desire to escape military conscription or pulled to join relatives or close friends already established in America.⁸ None of these reasons is hinted at in the data on Schiff. The picture emerges of a highly ambitious, obstinate, hardworking, and self-confident young man from a comfortable, if not well-to-do, home—he never was the poor immigrant boy who rose from rags to riches—who, for reasons of his own, fixed on America. An independent eighteen-year-old, Jacob was younger than most of those German immigrants who would shortly constitute a Jewish banking elite in America.⁹

Jacob’s ship was met by a William Bonn, who had been told of Schiff’s arrival. Formerly of the Jewish high society in Frankfurt but unknown to Schiff, Bonn, a few years his senior, took the lonely newcomer to a small hotel and at Jacob’s request spent the entire night talking with him. Thus began a lifelong friendship between the Bonns and the Schiffs in spite of the later rivalry between Schiff’s firm (Kuhn, Loeb) and Bonn’s (Speyer & Company).¹⁰ After a few months of unemployment, Jacob was hired as a clerk in the brokerage firm of Frank & Gans. Gans was impressed by the volume of the clerk’s transactions and his ability to drum up trade, and he called Schiff “a born millionaire.” Shortly thereafter but still before his twentieth birthday, Jacob became a partner with Henry Budge and Leo Lehmann in the brokerage firm of Budge, Schiff & Company. Undeterred by the fact that Budge’s family firm in Frankfurt enjoyed a less than savory reputation, Schiff reportedly continued to do well. Nevertheless, the American firm was short-lived.¹¹

Schiff owed his achievements to the happy confluence of his personal ability and the post–Civil War demands of a booming economy. His path was eased considerably by informal contacts with other Germans, especially men like Bonn, Budge, and Lehmann, all of whom hailed from Frankfurt. In the absence of immediate family, those acquaintances became his primary support group. Although his training in a Frankfurt bank proved to be an asset, the lack of a higher formal education was of no account. On the basis of his own experience, Schiff once advised a young man that a sixteen- or seventeen-year-old who started early in business and gained experience from the bottom up had an advantage over a college graduate who entered the business world at the age of twenty or more. For his own son, however, he followed a different track, permitting Mortimer to have two years of college before entering the firm. He, the domineering father, chose Amherst despite his son’s preference for Harvard because it was smaller and less likely to snare the youth in “the many temptations a young man is subject to with so many students around.”¹²

Schiff found lodging in the West Fifties, then considered Manhattan’s uptown. Life in a rapidly growing city was doubtless overwhelming for a relatively sheltered young man who did not speak English. The center of America’s foreign trade, New York was fast becoming a major industrial city as well as the hub of the nation’s credit and banking system. Simultaneously, it was the magnet attracting tens of thousands of newcomers, both immigrants and rural Americans, who flocked to new economic frontiers. To ease the culture shock, most immigrants sought psychological if not economic reinforcement from fellow nationals. Schiff joined the company of German Jews, a group that was proud of its German heritage; its members held onto their native language in their homes, clubs, and temples for many years. (Schiff’s letters to his children were also in German.) Unlike those German immigrants who rose rung by rung on the economic ladder, Schiff, by virtue of his European banking experience and personal contacts, was able to move rapidly into established Jewish circles.¹³

In 1865 the number of Jews in New York was estimated at seventy-five thousand; in the 1870s the total rose to over one hundred thousand. New York’s Jews had numerous synagogues, philanthropic and social institutions, and even a hospital. Controlled mainly by German Jews who had arrived before the Civil War, those institutions failed, at least for Schiff personally, to fill a Jewish youth’s serious cultural needs. He recalled in 1900, at the dedication of a new building for the YMHA for which he was a major donor: “Thirty-five years ago, when I first sought my home in this metropolis, a young man, a stranger in a great city, I drastically became aware of its great temptations and at the same time I found how limited were the opportunities for those, possessed of greater aspirations than to satisfy alone bodily wants and desires.” Except for bicycling and hiking, he developed no interest in sports, and he had scant use for frivolity. The Y, he hoped, would promote Jewish life among the youth and aid in keeping young Jews loyal to their heritage.¹⁴

Budge, Schiff & Company was dissolved in 1873. In the meantime, Schiff had been naturalized in 1870 and had joined the New York Chamber of Commerce two years later. His plans to settle in the United States were interrupted, however, by his acceptance in 1873 of a tempting offer from the Warburg banking firm in Hamburg. He held that post for a few months, until his father’s death took him back to Frankfurt to be with his mother. There he met Abraham Kuhn, who offered him a position in the New York firm of Kuhn, Loeb. According to Schiff’s daughter, the offer was made by the other partner, Solomon Loeb, in recognition of Schiff’s knowledge of the foreign banking scene. Loeb intimated that the young man might soon be placed in a European branch that the firm planned to establish. With his mother’s blessing, Schiff returned to New York and joined Kuhn, Loeb on January 1,1875. Shortly thereafter the idea of a foreign branch was dropped. Jacob explained to his mother that “the opportunity is enormous here. . . . The coming expansion of the United States, in railroading and all that, is so large that I myself don’t feel there will be a foreign branch for some time to come.” As he concluded, “There is more than enough to keep us busy here.”

That same year Schiff married Loeb’s daughter, Therese, and the young couple moved into a house on East Fifty-third Street purchased for them by her father. Although they were unlike in temperament—he aggressive and forceful, she gentle and submissive—theirs was a loving and happy union, one that over the years earned the sincere admiration of friends. After the children were born—a daughter, Frieda, in 1876 and a son, Mortimer, in 1877—the Schiffs moved to a larger house on West Fifty-seventh Street.¹⁵

The firm of Kuhn, Loeb grew from modest beginnings. Abraham Kuhn had come to America in 1839 and, like many other German Jews, had started out as a peddler. Ten years later, when he was the senior partner in the wholesale clothing store of Kuhn and Netter in Lafayette, Indiana, he invited Solomon Loeb, a distant cousin and poor new immigrant, to join him. Loeb’s position in the business was strengthened by his marriage to Kuhn’s sister, and he soon became a partner. The business moved to Cincinnati, where it turned to general merchandising. The partners prospered; during the Civil War a boom in the clothing trade and the Union’s demand for army blankets caused profits to soar. While the firm gained a name for soundness, the partners grew more knowledgeable about business credits. They returned to New York and in 1867 established Kuhn, Loeb & Company, a banking firm that dealt primarily and successfully in government bonds and later in railroad securities. Kuhn’s early retirement and the refusal of Loeb’s sons to make the business their career (James Loeb worked in the firm but only for a few years) would be more than offset by the arrival of Jacob Schiff in 1875.

Marriage to his employer’s daughter and a partnership in Kuhn, Loeb assured Schiff of high social status. Banking then was considered by many to be the top rung of the American Jewish socioeconomic ladder, and Schiff adapted his lifestyle to that of his established peers. Like them but soon outstripping most in wealth, he lived at the correct address (in 1887 the Schiffs had a new house built for them at 932 Fifth Avenue), affiliated with prestigious Reform temples (Beth-El and Emanu-El), and sent his children to appropriate schools (Frieda to Brearley and Mortimer to Dr. Sachs’s School). For recreation and for business he and his circle frequently traveled to Europe and renewed their ties to Germany.¹⁶

Jewish investment bankers in Schiff’s day formed a cohesive group whose members worked together, socialized together, and worshiped together. Bound by blood or marriage, they created a kinship network whose importance in the business history of American Jews has been an accepted fact ever since Barry Supple published his seminal essay on German Jewish financiers. Supple demonstrated how the individual firms were built on family ties and how family ties united the separate banking houses in an “interlocking structure.” Identification of family with the firm intensified “regard for the business and a continuity of entrepreneurial skill,” and it strengthened the firm’s unity in building a reputation for confidence and trust. Creating opportunities for Jews who, because of their Jewishness, were barred from Gentile firms, the closely tied group of banking houses collectively provided a base for cooperation in new investments. For example, Schiff’s friendship with the Guggenheims, with whom he shared religious and communal interests, eased Kuhn, Loeb’s investment in Guggenheim mining interests. In sum, Supple concluded, the German Jewish bankers owed much of their success to the bonds of kinship.¹⁷

Kuhn, Loeb had been a good example of the workings of kinship ever since the first Loeb married Kuhn’s sister. Schiff was Loeb’s son-in-law, and Abraham Wolff, his contemporary, was Loeb’s cousin. New partners in the 1890s were Felix Warburg, Schiff’s son-in-law; Louis Heinsheimer, a nephew of Loeb; and Otto Kahn, Wolff’s son-in-law. Schiff did not take to Kahn, but because of his affection for Wolff and in recognition of the importance of family, he agreed to the appointment.¹⁸ Nor was there any doubt that Schiff would groom his own son for partnership and eventual direction of Kuhn, Loeb. Mortimer’s training was tailored by his father. Before he entered the firm, the young man received a grounding in American railroad work and served a stint in Europe under the tutelage of Ernest Cassel. In 1900 he became a full partner. Except for his son and son-in-law the partner closest to Schiff was Abraham Wolff, a man with whom Schiff worked for twenty-six years before Wolff’s untimely death.

In 1902, Paul Warburg, later of Federal Reserve Board fame, married Therese’s sister and became a Kuhn, Loeb partner. Not until 1912 was there a partner (Jerome Hanauer) in the firm who was not related to Loeb, Schiff, or Wolff, and not until the post–World War I era were there partners who were not Jewish.¹⁹

Supple’s emphasis on the distinctive traits of the Jewish banking houses has since been modified. First, as Vincent Carosso showed, non-Jewish firms also benefited from family ties. Second, the success of a firm, whether Jewish or non-Jewish, was determined more by its “creative leadership” and its reputation for integrity. Nevertheless, despite Carosso’s insistence that the differences between Jewish and Gentile bankers we...