Gotham_ A History of New York City to 1898 - Edwin G. Burrows [725]
Close on their heels came another firm that had emerged out of wartime profitmaking. Abraham Kuhn, a German Jewish immigrant, had founded a prosperous drygoods business in Cincinnati. He was joined, after 1848, by a distant relative, Solomon Loeb, son of a Worms wine dealer. During the war they made a fortune providing uniforms and blankets to the Union Army. After Appomattox, they took their capital of half a million dollars to New York City and opened Kuhn, Loeb, a private banking establishment in Nassau Street. Kuhn soon retired to Germany, but the mother country supplied a more than ample replacement when Jacob Schiff, scion of an ancient Frankfurt family of scholars and bankers, joined the firm in 1875.
In the 1870s investment banking firms like Drexel, Morgan, the Houses of Belmont and Seligman, and Kuhn, Loeb constituted New York’s financial elite, partly because they channeled such huge amounts of capital into western industrialization, but also because they were known as ethical operators. Not that they weren’t ruthless businessmen, but they did tend to adhere to a gentlemanly code that emphasized discretion, honest agency, and restraint in competition with one another. These standards worked to their advantage and the city’s: by garnering the trust of distant investors they sustained New York’s reputation as a reliable haven for foreign capital.
THE SCARLET WOMAN OF WALL STREET
Not all New York financiers were honorable men. Ever since the days of Hamilton and Duer, the market had inevitably been a magnet for those who hoped to profit by manipulating the market itself. Prudential investment and speculative rascality were the Castor and Pollux of Wall Street.
The Panic of 1857 wiped out most of the older generation of traders, and the Civil War brought to prominence a breed of brash gamblers, men who played big-stakes games with cutthroat earnestness. In the postwar years, these travelers down Wall Street’s dark side were fortified by an atmosphere of feverish growth, a virtual absence of regulation, and a political system in New York City that facilitated skullduggery.
John Duer’s most notorious incarnations in this era were the improbable trio of Daniel Drew, Jim Fisk, and Jay Gould. Drew, now in his seventies, was one of the few survivors from prewar days, having been a leading Wall Street figure since 1838, when he’d given up driving cattle and turned to manipulating stock. Jim Fisk—tall, florid, and fat—was a vulgarian even by the lights of a gaudy age. With his pomaded and waved light brown hair, his loud suits, his frilled shirtfront garnished with huge diamonds, and his theatrical style, he looked like the huckster he had in fact once been. During the war Fisk wangled contracts to sell dry goods to the government and smuggled cotton through the Union lines. At war’s end he came to New York, bet and blew a fortune speculating on Wall Street, and started anew as a broker handling work for Daniel Drew. He soon demonstrated that behind the genial Falstaffian buffoonery lay a speculative freebooter of the first order.
Jay Gould was not a man who, by his appearance, would shock polite New York (indeed he married into it and set up a model family life on Fifth Avenue). Small, thin, intense, and abstemious, Gould was an enigma, not a peacock, but in his own way quite as amoral as his friend and colleague Fisk. Gould grew up poor and sickly in upstate New York, first visiting New York City in 1853 when he came down to exhibit his grandfather’s better mousetrap at the Crystal Palace. He entered the leather business, moved to New York to deal in the Swamp, then shifted into the stock market as a “guttersnipe,” teaching himself the tricks of an increasingly nasty trade. Learning how to control big enterprises with small holdings, Gould