Isaac’s first discovery was that, strategy or no strategy, the Seligmans would have no trouble at all getting government contracts for army uniforms. The reason was dismal and simple. Larger, older-established Northern clothing manufacturers wanted nothing to do with government contracts. At the outbreak of the war the United States Treasury was in greater shambles than Fort Sumter. Southern banks had been quietly withdrawing large amounts of funds on deposit in the North. When Lincoln took office, he found his Treasury almost empty. The Federal debt was increasing, and American credit abroad was disappearing. Conservative businessmen wanted no deals whatever with the government. They considered it far too risky.
But risk was a stimulant to Isaac. As Gitterman’s assistant, he was soon assisting Gitterman to assist the Seligmans. Their first army order came through—for 200 sergeant majors’ chevrons and 200 quartermaster sergeants’ chevrons, at thirty cents apiece, a total order of $120. It wasn’t much, but it was a toe in the door, and presently the Seligmans were asked to outfit New York’s 7th Regiment for active service—for a considerably larger figure.
Isaac busily got to know as many influential people in Washington as possible. Mr. Gitterman brought Isaac along to a large reception at the White House, where Isaac was introduced to a particularly important contact—President Lincoln. Isaac was surprised at the informality of White House receptions and was shocked to see “men appearing in their shirt sleeves! What would be thought of such an occurrence at a Court reception in London?” Gitterman was equally startled to hear young Isaac make this sartorial point to the President. The Seligmans, Isaac explained to Lincoln, were in the clothing business and could certainly outfit these improperly dressed gentlemen in nice-fitting suits and jackets. “We also make very nice uniforms, sir,” said Isaac. “The pride of any army!” Lincoln looked briefly confused, then smiled, and promised to make a note of this.
Sure enough, the size and number of the Seligmans’ uniform contracts speedily mounted. Their clothing mills were put on a seven-day-week basis. But soon the hazards that went with accepting these orders became painfully apparent. In a letter to Gitterman in Washington, eight months after the Seligmans’ first contract, Joseph wrote:
Your note just received, informing me that the appropriation for the clothing of the Army is exhausted, is startling and an alarming announcement to me, for the United States are indebted to my firm a million of dollars! Under the severe pressure of this burden we authorized you to make an arrangement for the payment of 400,000 of this sum in 3 year Treasury 7.30 Bonds.… I brought to Washington vouchers for this amount.… I had pledged to Banks in New York for 150,000 for which sum we gave our checks payable next week. If I am unable to realize this sum very promptly I see no alternative but the suspension of our house, which will drag down 20 other houses, and throw 400 operatives out of employ.
Do my dear sir, for God’s sake see if you cannot make some arrangement with the Secretary, by which this dreadful catastrophe may be avoided.
This is really a question of life and death with me and I beg your earnest and prompt attention to it.
Apparently, Joseph got his money, for the records show $1,437,483.61 paid to the Seligmans by the government in the twelve-month period following August 1, 1861. It is also clear that Joseph had to work for every penny of it. As part of his payment, he had been forced to accept, quite against his better judgment, hundreds of thousands of dollars’ worth of the “3 year Treasury 7.30 Bonds.” Joseph, in his passionate belief in—and, at that point, need for—liquidity, was then obliged to try to sell these bonds. But the Union armies had suffered serious losses, and public faith in the North’s ability to win the war was slipping. Pro-South and antidraft demonstrations were taking place in New York, and there were reports of “wealthy ladies in the North wearing Rebel cockades.” Union bonds were unsalable. In desperation, Joseph boarded a ship for Europe.
There he found that news of the Union’s finances had preceded him. The “7.30” bonds were designed to yield 7.3 percent interest, payable semiannually. In Europe such a high rate of interest was taken as a sign of panic in Washington—as indeed it was. Joseph was able to dispose of some of his bonds, but it was a slow and uphill process. Meanwhile, to pay for its uniforms, the Treasury was dumping more and more of its bonds into Joseph’s unwilling hands. Joseph found himself in the agonizing position of having to sell Union shares, so that the Union could be supplied with money, so that the Union could pay his own bills with more shares, etc., etc., into what must have seemed a whirlpool of unsupported credit.
In later years, Joseph Seligman’s bond-selling efforts in Europe during this period became one of the most highly debated points in the Seligmans’ career. According to Linton Wells, “In March, 1862, Joseph went to Washington and consulted President Lincoln and Secretary of the Treasury Chase regarding the placing of [Union] bonds in Frankfurt and Amsterdam.”* Then, says Mr. Wells, Joseph left for Europe with a clutch of Union bonds and “achieved success far beyond his dreams. Not only did he dispose of substantial quantities of government bonds and treasury notes, but he was able to arouse considerable sympathy for the Union cause … and did more than anyone else on record to establish and maintain its credit abroad.… He … placed enormous quantities of bonds in Frankfurt, Munich, Berlin, and Amsterdam … a small amount in Paris … a fair market for them in England.” Wells winds up saying that of the $510 million worth of bonds placed between February, 1862, and June, 1864, “more than $250,000,000 were placed abroad, and the Seligmans disposed of more than half this amount, contributing to the sale of a major portion of the other half by their incessant propaganda in favor of the Union cause.” This account has become further inflated by another historian, W. E. Dodd, who has called Joseph’s bond-selling “equal perhaps to the service of the general who stopped Lee at Gettysburg.”
Linton Wells has also written that Joseph Seligman, during a visit with President Lincoln, “persuaded” Lincoln to put Grant in charge of the Union forces, which Lincoln of course did.
These constitute sizable claims, and subsequent Seligman generations have cooperated with Messrs. Wells and Dodd in carrying on the legend that Joseph Seligman won the Civil War by paying for it. Unfortunately, no records exist which quite bear out these claims. Treasury records for the Civil War period are incomplete, and Seligman records on this score are now lost. Joseph did visit Lincoln and Chase in 1862, but the subject and outcome of their conversation were not recorded. (Joseph may very well have gone to beg them to stop paying him with Union bonds.) Joseph was in Europe during the months following, but if he was achieving success “beyond his dreams,” his letters home don’t show it. He hardly mentions Union bonds at all. He seems much more interested in an idea that had been growing in his mind—to set up an international Seligman banking house, a house designed along the lines of the House of Rothschild, a house whose style was represented in America only by August Belmont. But first Joseph would have to wait out the war. In January, 1864, he wrote: “Should we conclude to go into Banking, my presence in Europe during this summer and winter may be necessary to put things into train for the Banking business. The fact that I have done little or nothing up to this time is no proof of my inability to effect something, but arose out of our cautiousness not to enter into anything during war time.” (“Up to this time,” of course, includes the time Joseph supposedly had sold Union bonds in the hundreds of millions’ worth, yet Joseph seems apologetic, almost defensive, about having done “little or nothing.”)
For a great propagandist of the Union cause, Joseph’s letters during the early war years are oddly gloomy and pessimistic about the Union’s chances of winning. In 1863 he confided to his friend Wolf Goodhart that he didn’t much care which side won the war; he simply wanted it to be over, so he could set up his banking house. As a booster of American credit abroad, he took this stand in a letter to his brother William: “As I have so often said, the wealth of the country is being decimated and people a
re rich in imagination only. Calif. is the only exception up to this time. Query, how long will it last even there?” (To bolster his sagging morale, William Seligman wrote hurriedly back: “The Cal. capital has swelled to $900,000.”)
At one optimistic point, Joseph bought some Union bonds for his own portfolio, then quickly became discouraged about their prospects and wrote: “I am almost tempted to resell the U.S. Stock which I bought and keep my hands clear of the present degenerated American race.” His brother James was more hopeful and wrote suggesting that the brothers buy $100,000 worth of Union securities for their own accounts. Joseph turned him down. “Do not be afraid,” he answered, “that the Government will want no more money after the 1 June—even if the South should have been whipped so badly as to offer to make peace, the Gov’t will need hundreds if not thousands of millions yet, to pay for claims of all description and for the purpose of emancipating the Negro.”
From money, Joseph’s Civil War letters turn to homely family matters: “Hope Bro. Wm’s Ida has entirely recovered from her indisposition.… Hope Bro. Abrm has safely reached N.Y. and if he finds no suitable match I will go with him on a Brautschau in Germany. I have so far not found the proper article yet.”
Of Grant he makes almost no mention. True, Grant was Jesse’s and Henry’s friend more than he was Joseph’s. And Joseph was significantly silent on one piece of news that must have reached him from America—Grant’s famous Order No. 11, which expelled Jews from behind the Union lines, an action that has never been satisfactorily explained. In 1863, however, when some Republicans were opposing Lincoln’s re-election and were offering Grant as a substitute, Joseph commented angrily: “I see the d—d Herald nominates Grant. This is probably done to cause a split between Lincoln and Grant.”
This much, however, of Joseph’s Union bond-selling is known. Early in Lincoln’s second administration, in 1865, William Fessenden, who succeeded Chase as Secretary of the Treasury, announced a $400 million issue of new government notes. Joseph Seligman headed a group of German bankers in New York who wished to underwrite $50 million worth of these notes, but the Secretary would not accept the terms of the syndicate. Thereupon, the Seligman brothers took an active part in selling these Federal securities themselves, and it is recorded that they sold over $60 million worth.
But this, of course, was in another part of the Civil War forest: the tide of the war had already turned against the South; the Union’s financial climate had brightened both in the North and in Europe; and it was a different bond issue.
For Mayer, the Montgomery-based Lehman, the war meant that his cotton business would have to be modified if it was to survive. Some cotton could still be shipped North. Chinks in the blockade appeared periodically, and small shipments could be sneaked through. Cotton could also be sent to New York, expensively, via England. But the main need was for warehouses where Southern cotton could be stored for the duration of the war. Mayer approached a merchant named John Wesley Durr, a partner in a firm which owned the Alabama Warehouse. Mayer and Durr formed a partnership called Lehman, Durr & Company, and bought the Alabama Warehouse.
Among Mayer Lehman’s close friends were such Confederate celebrities as Thomas Hill Watts, wartime Governor of Alabama and, for a time, Attorney General under President Jefferson Davis (Watts called Mayer Lehman “one of the best Southern patriots”). Another friend was the Confederate political leader, Hilary A. Herbert (after whom Mayer would name his youngest son, Herbert H. Lehman). As Joseph Seligman had done in the North, Mayer offered his services to the Confederacy “to assist in every way possible.”
In 1864 the South was agitated by reports that captured soldiers were being starved and brutalized in Union prisons (similar rumors about Confederate barbarity were stirring up the North), and the Alabama Legislature authorized Governor Watts to spend half a million dollars for the relief of Alabama captives. A plan was devised. A shipment of cotton would be sent through enemy lines to New York, accompanied by an agent. In New York the cotton would be sold and the agent, after deducting his commission, would buy and distribute blankets, medicines, and provisions to the prisoners from the proceeds. Mayer Lehman, who was eager to see how his brother in the North was faring, offered to be this agent, despite the “extreme hazard” of the operation. Watts agreed, and wrote to President Davis, saying of Mayer: “He is a foreigner, but has been here fifteen years and is thoroughly identified with us. It will be necessary for him to go through the lines. I ask that he may be furnished with the proper passports and indorsed by you as the Agent of the State of Alabama.” Jefferson Davis complied, drew up the requested papers, and some fifteen hundred bales of cotton were actually shipped to Mobile to await Union permission for their transportation, along with Mayer, through the lines.
That this plan—which, today, seems to have been conceived in wonderful innocence—should have failed is no surprise. Still, in January, 1865, we find Mayer Lehman writing a polite letter to the Commander of the Union Armies, General Grant, requesting safe conduct through the battle lines and saying: “We well know what a gallant soldier must feel for those brave men, who by the fortunes of war are held prisoners exposed to the rigors of climate to which they are not accustomed, the severities of which are augmented by the privations necessarily attendant upon their condition.” The letter could not have been more diplomatic. But Grant must have thought the whole scheme utterly dotty—or perhaps fishy. Why should Mayer Lehman, one of the South’s leading cotton merchants, be concerned with shivering prisoners and Northern weather? As far as Grant could see, all Lehman wanted to do was sell his cotton in the Northern market. In any case, Grant did not answer Mayer’s letter. Two weeks later, Mayer wrote again, enclosing a copy of the original communication. This was not answered, either.
Washington in the meantime, which Mayer had no way of knowing, had embarked upon a tough policy of attrition against the South, designed to wear the rebels down and end the war quickly. In April came Lee’s surrender, and before the Federal troops moved into Montgomery over 88,000 bales of cotton were set to the torch, including the entire inventory of the Alabama Warehouse Company.
Emanuel Lehman in the North, after the initial blow of Lincoln’s blockade, was able to carry on his business through the war, in a limited way. He sold what cotton made its way through the blockade from Mayer, and agented shipments that came by way of England, which he visited several times. In London he found an atmosphere more cordial to his Southern sympathies than in New York. Mayer wrote to him there suggesting that, through connections with men like Watts and Herbert, Emanuel might like to be an agent for the sale of Confederate bonds. Emanuel found the European market for Southern securities—during the early stages of the war, at least—considerably better than for Northern ones.
In London, Emanuel Lehman and Joseph Seligman encountered one another, each with his supply of bonds, two salesmen for two warring powers. Their manner toward each other was cool, reserved. Though both men were loyal to their respective causes in the “unholy rebellion,” as it was called, they were not really in the business of fighting a war. They were in the business of making money.
Up to the outbreak of the war, August Belmont had been financial adviser to the President of the United States. During the war’s first months, Lincoln leaned on Belmont for Rothschild money as heavily as Gitterman and the Quartermaster Corps leaned on the Seligmans for uniforms. This placed Belmont in an awkward position. Reflecting the general frame of mind in Europe, the Rothschilds had grave doubts about the North’s chances of winning, and gave Belmont and the United States Treasury only lukewarm and hesitant support. Lincoln’s fund-raisers were forced to look for new sources of supply, and found them in the bond-selling efforts of such men as Joseph Seligman. As the war progressed, affection for Belmont in Washington declined and esteem for Seligman grew. By the war’s end, though he may not have actually “won the war,” Joseph Seligman was very dear to Washington’s heart.
Obviously, this was the mom
ent for Joseph to put his great plan to work. Within hours of Lee’s surrender, Joseph had summoned his brothers together to organize the international banking House of Seligman. The house would span the American continent and sweep across the face of Europe. Each brother would be given an assignment suitable to his temperament and talents. William Seligman, who had bought the portentous clothing factory and who loved good food and wine, would be placed in charge of Paris. Henry, who had remained in Germany longest of all the brothers, was given Frankfurt. Isaac, the first Seligman to meet a President, was assigned to London and told to do everything possible to meet the Rothschilds. Joseph, James, and Jesse—whose old friend Grant was the American hero of the day—would remain in New York. Abraham and Leopold, whom Joseph by now knew to be the least competent of his brothers, were assigned to San Francisco, a city, now that the great gold wave was subsiding, that had become of less importance. The House of Seligman was a frank copy of the House of Rothschild, and Joseph admitted it. After all, what other models were there?
J. & W. Seligman & Company, World Bankers, was officially born. But an even more meaningful moment occurred a few days later when Joseph was walking down Nassau Street. Coming from the opposite direction, with the patrician limp from the old dueling wound that had become his trademark, was none other than the great man himself, August Belmont. As Belmont approached, he looked at Joseph, smiled slightly, touched his silk hat, said, “Hullo, Seligman,” and limped on. Joseph knew that he had arrived.
That evening Joseph bought his wife a present. It must be remembered that the 1860’s were not a period of great taste. It was the era of the whatnot, the figurine, the antimacassar, the rubber plant, and the piano sweltering beneath a Spanish shawl. Joseph’s gift to Babet was considered one of the decorative “musts” of the day—a gold-plated rolling pin, designed to show that its owner “no longer made her own bread, but was financially able to endure the strain of purchasing ready-made loaves at the grocer’s.”
The Jews in America Trilogy Page 10