The Jews in America Trilogy

by Birmingham, Stephen;

  With the creation of the Securities and Exchange Commission and the network of laws controlling the stock market, Wall Street banking lost much of its old raffishness and, to many people’s way of thinking, much of its romance and all its fun. In place of its old free-wheeling excitement—the noise and hubbub, sights and sounds that had first appealed to the early Seligman brothers—Wall Street assumed a new sobriety; the daredevil days were over, and in their place had come a new mood of caution, a new emphasis on conformity and routine. The handshaken agreement—as well as the double-cross—became less popular in an age of adding machines, paperwork, and lawyers. Investment banking and stockbrokerage had become, according to one Wall Street man, “less of a game and more of a business.” At the same time, any essential differences between the operations of the German Jewish bankers, who had once relied heavily on ties of friendship and kinship, and their gentile counterparts began to blur and disappear. And, ironically, as Wall Street, that notorious painted lady, became respectable, the third- and fourth-generation German Jews had, in many cases, turned to more “respectable” operations than banking—to teaching, medicine, law, publishing. Soon there was not a single one of the so-called “Jewish houses” which did not have a number of non-Jewish partners, and only a few today are headed by members of the founding families. Among them are Kuhn, Loeb, whose senior partners today include John M. Schiff and Frederick M. Warburg, both great-grandsons of Solomon Loeb, and Gilbert W. Kahn, Otto Kahn’s son who, through his mother, is a grandson of another founder, Abraham Wolff. Lehman Brothers, too, is headed by Emanuel Lehman’s grandson, Robert Lehman. But others, such as Goldman, Sachs and J. & W. Seligman & Company, have passed “out of the crowd.”

  There is one young Jewish house which has demonstrated that much can be accomplished in the old-time way—through a judicious mixture of marriages, sons, mergers, and money. Carl Morris Loeb was born in Frankfurt, the son of a dry-goods merchant, and, in what was becoming a time-honored way, ran away from the family retailing business as a youth to work as an office boy for one of Germany’s leading metal-fabricating firms, Metallgesellschaft. In 1892, when Loeb was seventeen, the firm sent the young man to work in the St. Louis office of its United States subsidiary, the American Metal Company. He had an uncanny “feel” for commodity values, and within three years was manager of the St. Louis office.

  At this point, young Loeb came to the attention of American Metal’s president, Jacob Langeloth. But even more important, from the standpoint of his future career, was Carl Loeb’s choice of a wife. She was Adeline Moses, the daughter of Alfred Huger Moses, the head of one of the most prominent Jewish families in the South.* The Moses family had been merchant bankers in Montgomery, and, though Adeline’s father had experienced hard times in the post-Civil War South—which explained his presence in St. Louis in the real-estate business—he had other important qualifications. The original Lehman brothers, Mayer and Emanuel, had been his best friends in Montgomery.

  Jacob Langeloth brought Carl Loeb to New York, at the age of thirty, to be a vice president of American Metal, and there—though, as everyone pointed out, they were not “real” Loebs—Adeline’s connection with the Lehmans proved socially helpful. The new Loebs became fixtures of the German Jewish crowd, and ten years later Carl M. Loeb was president of the American Metal Company. This was his fortunate position when, during World War I, American Metal became separated from its German parent, Metallgesellschaft, and, in one of the shortest success stories on record, Carl Loeb found himself in control of the American company.

  Soon however, Carl Loeb was quarreling with his board of directors, who considered their president too dictatorial. In the summer of 1929 Loeb offered his resignation, and it was accepted. Once again, he had chosen, uncannily, the most auspicious moment. Part of the separation agreement was that he sell back some eighty thousand shares of American Metal that he owned at the stock’s considerably inflated market price. He did so, and six months later American Metal had dropped 50 percent in the great crash. In 1930 Carl Loeb was out of a job, but very rich.

  He was a handsome, imperious man, whose wife never called him anything but a respectful “Mr. Loeb.” In New York the couple occupied what has been described as a “His and Hers apartment,” a vast affair spread out across a building so large that their respective bedrooms were exactly a block apart. Mr. Loeb’s favorite means of communication throughout this large territory was the handwritten memorandum signed “C.M.L.” He liked to entertain opulently, and, before an important dinner party, he liked to stage a full dress rehearsal of the forthcoming dinner one night ahead of the actual affair, complete in every detail including substitute guests who stood in for the guests expected the following night.* Sometimes, as is so often the case in show business, the rehearsals went better than the actual performances—as happened when Loeb entertained a visiting Belgian financier whom he particularly wanted to impress. The dinner was disastrous. Mrs. Loeb had retired to her bedroom afterward, when she heard her husband’s footsteps approaching down the long corridor that separated the two apartments. Waiting breathlessly for his angry knock, she saw instead a memorandum slipped beneath her door. It said: “Fire the cook. C.M.L.”

  Adeline Loeb was the crowd’s Mrs. Malaprop, beloved for her slips of the tongue and, at times, what seemed like slips of the entire mind. Meeting Otto Kahn for the first time, she is said to have gushed, “I know your father, the Aga!” When told the story of how Oscar Levant, whose ex-wife married Arthur Loew, had wickedly telephoned the newlyweds on their wedding night to ask, “What’s playing at Loew’s State?” Mrs. Loeb waited patiently for a punch line and, when none came, asked, “Well, what was?” On another occasion, when one of her sons got into a fight at the Century Country Club and she reproached him, he said, “But Mother, he called me a son of a bitch!” Mrs. Loeb replied, “That’s funny. He doesn’t even know me.”

  For a while after his retirement from American Metal, Carl Loeb busied himself as a gentleman of leisure, and he and his wife took a world cruise. But he was a restless, ambitious man, and soon Adeline Loeb was turning to her son John to say, “Do something about your father. I’d do anything to get him out of the house.” John Loeb’s solution was simple and direct. He suggested to his father that they buy a seat on the New York Stock Exchange. Carl asked his son one question: “Do you think you can run an investment banking house?”

  John replied that he thought he could. He had already learned certain lessons from previous generations of bankers in the crowd, and among them was the importance of marrying well. Just as the Lehmans had secured their position by marrying Goodharts and Lewisohns, so John L. Loeb secured his by marrying a Lehman—the youngest daughter of the Arthur Lehmans, Frances, who is always called “Peter” because, some say, she bore a childhood resemblance to Peter Rabbit. Others say her father, in his Old World way, had always wanted a boy. When John and Peter Loeb were married, it was said that he was an adventurer and had married her for her money, even though the great fortune she might have inherited from her grandfather, Adolph Lewisohn, failed to materialize, thanks to the latter’s industrious spending. What she had more than money was social position and, of course, banking connections. One sister was married to Richard Bernhard, a partner at Wertheim & Company. Another married Benjamin Buttenwieser, still one of the most important partners at Kuhn, Loeb.

  John Loeb’s new firm opened its doors in January, 1931. Six years later, through a merger with Rhoades & Company, an old gentile firm that needed money, the Loebs’ firm, which needed a prestige name, became Carl M. Loeb, Rhoades & Company. Like his banking predecessors, John Loeb has kept his house tightly “in the family,” employing, among others, his son, John Loeb, Jr., a nephew, Thomas Kempner, and, until his recent death, a son-in-law, Richard Beaty, as Loeb, Rhoades partners. There has never been any doubt, however, about who is in charge. Today, John L. Loeb (the L. stands for Langeloth) heads a firm whose partners decorate the boards of directors of s
ixty American corporations; which manages investment funds totaling over $500 million; which has brokerage income alone of $27 million a year; which has fourteen offices and more than a thousand employees of its own, plus twenty-two correspondent firms in 140 cities in the United States and Canada. The firm’s $12.5 million in stated capital places it among the top firms in Wall Street. It need hardly be added that John Loeb, since he is married to one, enjoys excellent relations with the still larger and more prestigious House of Lehman.

  John Loeb has inherited his father’s astonishing sense of timing. Thanks to antennae around the world that amount to something very like a private CIA, he completed the sale of the firm’s major Cuban sugar holdings the day before Fidel Castro took over. In 1945 the Loeb and Lehman millions received a new infusion of wealth when Clifford W. Michel joined Loeb, Rhoades. Michel was married to the former Barbara Richards, one of the granddaughters of Jules Bache, and therefore related to the Cahns and the Sheftels and, by marriage at least, to the Lewisohns (to whom the Lehmans, of course, were already related). Another Bache granddaughter was Mrs. F. Warren Pershing, wife of the son of the World War I General, and head of Pershing & Company, a rich brokerage house. Then, in 1953, John Loeb’s daughter, Ann, married Edgar Bronfman, elder son of Samuel Bronfman, the founder and chief executive of Distillers Corporation—Seagrams, Ltd., undoubtedly the richest man in Canada and among the wealthiest in the world. Bronfman money is not formally a part of Loeb, Rhoades capital, but one of the firm’s partners has said, “He’s a kind of partner who is awfully important.” (At the Loeb-Bronfman wedding, Mr. Loeb was overheard to say, “Now I know what it feels like to be a poor relation.”) The Bronfman millions, however, have joined Loeb-Lehman and Bache holdings to make up the largest single holding of stock in New York’s Empire Trust Company, which has assets of some $300 million. Edgar Bronfman, now in his middle thirties and head of his father’s American subsidiary, Joseph E. Seagram & Sons, joined the board of directors of the Empire Trust Company in 1963. The young Bronfmans occupy a New York apartment with its own gymnasium, an air-conditioned estate is Westchester built in the Georgian style, and a 4,480-acre hideaway in Florida called, appropriately, the V.O. Ranch.

  At sixty-four, John Loeb, a governor of the New York Stock Exchange, is held in almost dreadful awe in Wall Street. A tall, slender, handsome, and immaculately tailored man with jet-black hair and dark, beetling brows, he looks half his age. In the Salvador Dali portrait of him that hangs in his house in Westchester, an armored knight on horseback prances in the middle distance; one suspects that this romantic dash and flair were what the artist saw in John L. Loeb. He is a firm believer in rigid exercise, which accounts for his youthful looks and splendid physique.

  He has been called an overpowering father, and a tough-minded, high-handed, even ruthless businessman. “Whenever I approach Mr. Loeb,” says an acquaintance half-seriously, “I automatically begin to say, ‘I’m sorry.’” One of Loeb’s favorite tactics, when an associate is ushered into his office, is to work busily at some item on his desk for a moment or two, and then look up and inquire, “What time is it?” Recently a visitor was so dismayed by this approach that he replied, “Whatever time you say it is, Mr. Loeb!” Another habit is to receive petitioners—who come, as a rule, with elaborate presentations explaining why Loeb, Rhoades should help finance their companies—to listen to their arguments patiently, to smile and nod sympathetically as they talk, and then, when they finish, to stand up and say, “No.” “It’s discouraging,” says one man, “because you never know at which point he might have been willing to bargain or negotiate.”

  John Loeb believes that a deal, when set, “is set in concrete,” according to a friend. Not long ago, when a major corporation had sought out Loeb, Rhoades for a major underwriting venture, the president of the company at the last moment began demanding further concessions. John Loeb turned abruptly to his partners and, suggesting that their time could be better spent on other matters, led them out of the meeting. The next few hours were tense ones at Loeb, Rhoades, for most members of the firm were certain that they had lost an important account. John Loeb, however, had suspected that the corporation needed Loeb, Rhoades money and, sure enough, the president telephoned later in the day to say that he was ready to sign—on Loeb’s original terms.

  Because of his personal power, to say nothing of the vast financial power he now wields, one approaches John Loeb’s special chair under the ormolu chandelier in the Loeb, Rhoades private dining room on tiptoe, always certain of the importance of what one has to say. He has, in other words, the kind of influence and presence that has not been seen on Wall Street since the days of Jacob Schiff.

  In many ways, John Loeb is like his friend and contemporary, Robert Lehman, Philip’s son and the present head of Lehman Brothers, who has been called “the last of the imperiously rich men” and “the aristocrat of the autocrats.” Robert Lehman’s power in the money market is as vast as Loeb’s, perhaps even vaster, and the phrase, “Bobby wants to speak to you,” strikes terror in the breast of all at One South William Street. His office in the building is small—many junior partners have larger space—but it gives him a psychological advantage. “When you go into that little office, you really feel crowded out by him,” says one man. He himself, also slight of stature, seems to fill the room.

  Lehman, however, in recent years has turned his attention increasingly to his art collection. Started by his father, who bought paintings more for an investment than out of a love of beauty, the Lehman Collection has been so enormously added to by Robert that it is now the largest, and possibly the finest, private art collection in America. The paintings range from thirteenth-century Italian to twentieth-century French, and include Goya’s famous The Countess of Altamira and Her Daughter, El Greco’s Saint Jerome as Cardinal, Botticelli’s Annunciation, and The Legend of Saints Eligius and Godeberta by Petrus Christus, plus literally scores of others that are just as fine. The collection also includes Persian and Chinese ceramics, Renaissance medallions and enamels, and the largest assemblage of medieval aquaemanales (water pitchers) outside Nürnberg. The collection—guided by Robert Lehman’s straightforward philosophy, which is, “If I see something I like, I buy it”—hangs in the offices of Lehman Brothers downtown, and also on the walls of Robert Lehman’s eighteen-room Park Avenue apartment. But the bulk of it is contained in the late Philip Lehman’s town house in Fifty-fourth Street, which his son maintains as a private museum and which outsiders—art scholars only—may see by appointment. Here, heavily guarded, behind gold doors and in rooms covered with deep Persian rugs and hung with gold-fringed red plush, are most of the old masters, the Gothic tapestries, the Renaissance furniture, the Italian majolica, and the other objets d’art. Often at night the collector himself visits the house, sometimes with his curator, sometimes alone, and prowls the great, silent rooms like a solitary Croesus contemplating all that he has amassed.

  It was once supposed that Robert Lehman, being a banker, would buy art more with an eye to the dollar than with discrimination or taste. There is a concentration, in the collection, on Sienese primitives, which are painted with a great deal of gold leaf, and Lehman’s public-relations man, Benjamin Sonnenberg, once commented, “What other kind of paintings would a banker buy than Sienese, with all that gold in them?” At the same time, when some three hundred items from the Lehman Collection were sent for exhibit at the Orangerie of the Louvre in Paris in the summer of 1956, one French critic wrote; “We would like the purchases of our museums to be inspired by a taste as severe as that of which M. Robert Lehman today gives us dazzling evidence.” The exhibition was the talk of Paris, waiting lines formed outside the Orangerie, and over seventeen thousand people saw the show in the first two weeks alone—statistics which gratified the banker in Robert Lehman.

  Today Bobby Lehman is seventy-four, and the collection continues to grow. Its total value is now impossible to calculate, and, inheritance taxes being what they are, it
is unlikely that Lehman’s son or any of his other heirs will be able to maintain the Lehman Collection intact and in the family. The future of the town house in Fifty-fourth Street is uncertain, and the subject of much speculation in the art world. Benjamin Sonnenberg, however, has an answer. He says of his friend and client, “To begin with, Bobby isn’t going to die. He’s firmly convinced he’s immortal. And furthermore, if he should turn out to be wrong, being a Lehman he’ll figure out some way to take it all with him.”

  Robert Lehman himself is quite aware that his death and the disposition of his collection are often discussed, and he is able to view his situation with a certain humor. Not long ago he visited the Sterling and Francine Clark Institute in Williamstown, Massachusetts, where twin tombs for the museum’s founders flank the entrance to the building that houses their art collection. Starting up the museum’s steps, he paused to gaze solemnly at the marble plaques bearing the names of Mr. and Mrs. Clark. He whispered softly, “What a way to go!”

  * Dillon of Dillon, Read was originally named Lapowski before joining the gentile firm of William Read & Company, which grew to prominence in the early 1920’s. Though Jewish, as Fortune discreetly put it, Mr. Dillon was never “identified” with the Jewish bankers or the Jewish community of New York.