Despite not belonging to one of the elite New York Jewish banking families, Carl Morris Loeb became president of American Metal Company and later established his own investment firm Carl M. Loeb & Co.
Carl Morris Loeb (born September 28, 1875 in Frankfurt-Main, Germany; died January 4, 1955 in New York, NY) worked at his firm, Carl M. Loeb, Rhoades and Company, until one month before he died in 1955. It was a company that very much reflected his personality and tastes and despite having taken on many partners, Loeb was very much the driving force behind it. His business instincts made Loeb one of the most powerful men on Wall Street, and he helped to link business across two continents over three tumultuous decades. Born in Germany, Loeb naturalized as an American quickly. He had been successful in business for over four decades, during which time he and the firm overcame setbacks, wars and depressions to build one of the most successful investment banking and brokerage firms on Wall Street. He was president of the American Metal Company, a subsidiary of an important German company, Metallgesellschaft, before establishing his own investment firm, Carl M. Loeb & Co, which became Loeb, Rhoades in 1938. His success in such an industry was not necessarily a foregone conclusion. New York Jewish society and banking were, to an extent, dominated by other families—the Seligmans, Lehmans, Loebs (another, unrelated family), Goldmans, and Sachses. That this young, ambitious immigrant became so powerful in the banking world without connections to the powerful families of “our crowd,” indicates his abilities and determination.
Carl Morris Loeb was born on September 28, 1875 in Frankfurt-am-Main, Germany. His parents, Adolph and Minna Loeb, were dry goods merchants and the family was solidly middle-class. Adolph was born to a Jewish family in Simmertal, a village between Trier and Darmstadt in the Rhineland, where his ancestors had lived since the early 1700s. He moved to Frankfurt to pursue more opportunities in 1864, following the example of many other German Jews who left behind rural areas and small towns that were vulnerable to the vagaries of the agricultural economy and regulations that governed their mobility, legal status, and family life. In 1872, Adolph Loeb married a woman from Hesse named Minna Cohn who, although also Jewish, had been educated at a local convent.
Frankfurt was a liberal and prosperous city, a center of both Jewish and financial life, and the Loebs lived comfortably there, with a maid and a cook. There was no official discrimination against the Jewish inhabitants of this city and in fact many Jews developed successful commercial enterprises, often before their Christian counterparts. Many prosperous Jews, in Frankfurt and other cities, believed that adopting the same consumer habits as the Christian middle class was key to being fully accepted as German citizens. Carl Loeb may have internalized this pressure to conform to bourgeois standards and the view that culture, education, manners and living well could transcend any differences of nationality or religion was certainly apparent in his life in America. Perhaps his father’s own desire for expanded horizons also influenced the young Carl. Loeb was the second of three children; he had an older brother, Julius, and a younger sister, Ella. The two sons were provided with a good education at the gymnasium (high school) in Frankfurt. The gymnasium provided an intense education, equivalent to a two-year college and both boys studied the classics, history, mathematics and modern languages, including English and French.
In 1890, Julius graduated top of his class and won an entry-level position at Metallgesellschaft, a prominent company in Germany, and perhaps the largest nonferrous metal company in the world. Soon after accepting, Julius was transferred to a trading subsidiary in New York, the American Metal Company, a company that traded in lead and zinc. When Carl graduated in 1893, he was not at the top of his class, but had decided to follow his older brother to America. He was confident when he approached the American Metal Company and was in fact offered a job with one of its American subsidiaries. Carl was seventeen when he first arrived in New York in 1893, with a $250 advance (or $6,250 in 2010 dollars) from his company. In 1898 he was naturalized as a citizen of the United States. Julius also remained in America, although his younger brother’s career soon eclipsed his own, but both sons returned to Frankfurt-am-Main for visits throughout their lives.
Carl Loeb was eager to embrace the opportunities he was afforded through the close business connections that existed between the United States and Germany. As a relatively privileged member of the middle class, and not particularly religiously observant, his decision to emigrate was motivated more by ambition than a desire for greater freedom. His daughter believed that he did not particularly miss his family once he got to America and that he, like “many Germans[,] felt that the new world was the land of great opportunity.”
The late nineteenth century saw the rise of a German-Jewish banking elite in New York City. Even though not all of these men arrived in the United States with capital and contacts, Loeb and others like him had a strong connection to German culture and business practices. They were a cosmopolitan group who used their trans-Atlantic connections to import capital from Europe when needed. Carl Loeb was clearly a product of his cultural background and after he married an American, Adeline Moses, he took his young bride to visit Germany and she remained behind for seven months to learn German. Such was the connection between Germany and America that many of the prominent men in banking returned there to find a bride, or to retire, such as Charles Hallgarten, a prominent German-American banker and social reformer, and Abraham Kuhn, co-founder of the investment bank Kuhn, Loeb and Co. Throughout Carl Loeb’s life, although America was his home and that of his family, both recreational and business trips to Germany were still frequent. In fact, Carl and his family would return every three years until World War I, after which the family’s visits stalled for a number of years. German affiliation was a central and cohesive force for many German-Jewish bankers in America, and when war broke out, Loeb’s loyalty was firmly on the side of his new home, even though he was dismayed at the prospect of war.
The American Metal Company was incorporated in 1887 in New York as exporters, importers and dealers in metal. The company acted as agents for Metallgesellschaft und Metallurgesische Gesellschaft of Frankfurt, Henry R. Merton & Co. of London, and the Société le Nickel of Paris. Metallgesellschaft and Henry R. Merton & Co. had been established by two brothers, Wilhelm and Henry Merton, in the 1860s. A cousin of the Mertons, Berthold Hochschild, moved to the United States in 1884 to supervise its metal-trading business there, and in 1887 Jacob Langeloth, an executive in the Frankfurt office who was originally from Mannheim, convinced Wilhelm Merton to send him to New York so he could assist Hochschild in expanding the business. Under the name the American Metal Company, the business grew quickly, thanks in large part to a boom in copper production. The American Metal Company exported nickel and opened refining plants for lead and copper. It benefited from its German connections during this period, as Germany consumed one-third of U.S. copper exports. Loeb worked as a runner for a short time in the New York office of the company and then in 1893 was then sent to St. Louis, Missouri to a branch headed by a man named Bernstein. An exuberant Loeb wrote home to his parents, describing his trip to Niagara Falls and the Columbian Exposition in Chicago en route to his new position. He noted that in Chicago he stayed in “a German hotel” and before visiting the fair took the step of “buttoning up my coat and all my pockets, prepared to be attacked and robbed or killed,” thanks to newspaper reports that the Exposition and Chicago were dangerous “It did not take long to realize that these reports were grossly exaggerated.” He added that on reaching St. Louis he connected with an acquaintance from Frankfurt, who brought him to Tony Faust’s, a renowned German restaurant there, and was treated to a bottle of champagne. “I could not have wished for a finer beginning.”
This letter shows Loeb’s excitement at his good fortune and also demonstrates the close links between Germans who were already established in America and those arriving from overseas. In St. Louis, Loeb rented a room in a boarding house run by two sisters, Grace and Rose Moses, members of a once-prosperous Southern family. Their niece, Adeline, would become Loeb’s wife. Adeline’s family also came from a German Jewish background, but via colonial New York. One of her ancestors, Abraham Isaacs, emigrated from Emden, Germany in the 1690s and was living in New York by 1723. In 1807, his great-granddaughter, Rebecca Phillips, married Isaac Moses, an emigrant from Bederkese, Germany, in Charleston, South Carolina. Their grandson, Alfred Huger Moses, was raised in Charleston and married Jeanette Nathans, from a Jewish family in Louisville, Kentucky; Adeline Moses was one of their five children. After the Civil War, Alfred and his brothers relocated to Montgomery and founded a real estate and banking firm called Moses Brothers. In another example of the close ties among urban Jewish communities, Alfred Moses became firm friends with Mayer Lehman, a cotton dealer in Montgomery and eventually one of the founders of Lehman Brothers, the banking firm that eventually relocated to New York City. Lehman’s granddaughter Frances (Peter) married Carl Loeb’ and Adeline Moses’s son, John, in 1926.
In 1883, Alfred founded the town of Sheffield, on the banks of the Tennessee River in Alabama, with the hope that it would rival Birmingham as an industrial town, and became its first mayor. His daughter Adeline was a popular girl, an accomplished musician and singer who had the privileged upbringing of a wealthy American girl. The family’s luck turned in the 1890s, however, when an English banking crisis combined with a New York stock market panic weakened Moses Brothers. “When the Bank of England shook, the Bank of Sheffield failed,” Adeline Loeb would later tell her children. Alfred and his brothers allowed a run on the bank instead of closing its doors and Alfred and his family moved to St. Louis to begin a new life. Adeline Moses no longer lived the life of a cosseted ingénue. She made her own dresses, studied typing and stenography and gave piano lessons. After meeting at the Moses sisters’ boarding house, she and Carl Loeb were drawn to each other and the ambitious twenty-one-year old Loeb married the nineteen-year-old Adeline on November 12, 1896, three years after they met. They went to New York on their honeymoon, using a railroad pass that was a gift from the American Metal Company.
Adeline provided the unknown Loeb with social cachet. Despite her genteel poverty, her father was the patriarch of one of the most socially prominent Jewish families in the South, and so Adeline’s social credentials were impeccable and probably very important when the couple moved to New York. Loeb was a generous husband. While on honeymoon in New York, Adeline admired a blue velvet picture hat in the window of Henri Bendel’s store on Fifth Avenue. The hat cost thirty-five dollars, but Loeb insisted she buy it. At the same time though, he displayed caution when it came to large sums of money and lived frugally initially. During William Jennings Bryan’s 1896 campaign for the presidency, Loeb, a strong believer in the gold standard, hid his savings, about $1,000 in gold coins (2010 value $26,800), in a cigar box under his bed.
Not long after the wedding, Loeb’s boss Bernstein was fired from the St. Louis office for unrecorded reasons. A mere three years after he had joined the firm, the twenty-one-year old Loeb became the interim branch manager. Loeb acted quickly to cement his position in St. Louis. He wrote to Jacob Langeloth, the head of the American Metal Company in New York, to argue that he should run the office permanently. Langeloth informed him that he disagreed, and Loeb countered with a strong letter declaring that if he did not receive the promotion it would be “too mortifying to stay here after being deposed.” Langeloth, perhaps reminded of his own ambition years earlier when he had successfully pushed for Metallgesellschaftto expand its American operations, visited St. Louis and decided to allow Loeb to run the office. Loeb’s instincts and drive would prove invaluable in his long career, although his seeming over-confidence would eventually work against him in his relationship with the American Metal Company. Loeb would remain a protégé and friend of Langeloth until his death in 1914. He called his son John Langeloth in his mentor’s honor and later became a trustee of his estate, overseeing gifts of over $3.3 million ($73.9 million in 2010 dollars) to various charities and cultural institutions in New York, Mannheim, and Langeloth, Pennsylvania, an American Metal company town.
The Loebs’ first child, a daughter named Margaret, was born in 1899, John Langeloth in 1902, and Carl, Jr. in 1904. Loeb’s work at the St. Louis office was noted by New York and in 1905 he was made vice president of American Metal and the family moved to New York where the youngest child, Henry, was born in 1907. In 1910, Loeb bought one of a row of recently constructed “American basement” houses at 41 West 85th Street between Central Park and Columbus Avenue. Loeb was promoted to president of American Metal when Langeloth died suddenly in 1914 and remained in the role until he resigned from the company on June 30, 1929.
Under Loeb’s direction, American Metal’s operations expanded to include the ownership of mining, smelting, and refining facilities. Metallgesellschaft, its parent company, actively pursued lead, silver and zinc mining opportunities in Northern Mexico, with the American Metal Company serving as its sales agent and later taking direct control of its assets during World War I. American Metal Company had exclusive contracts with multiple large mines to purchase their entire output. For example, in 1918 it had access to some 159 million pounds of copper through such contracts. Refineries in which American Metal Company had an ownership stake treated the metal it purchased. In 1917, the entire yearly turnover of the company in copper alone was 250 million pounds, while zinc turnover was 547 million pounds and lead 168 million pounds. Loeb’s yearly salary did not exceed $30,000 (2010 value $510,000) but in 1917 he received a bonus of one million dollars (2010 value $17 million) as president of the company.
World War I complicated business for both American Metal and Metallgesellschaft. At the start of World War I in Europe, Richard Merton, son of Wilhelm, had overseen the transfer of Metallgesellschaft’s 51% ownership stake in American Metal Company into nominal ownership by several company managers who were American citizens. The United States entered the war with Germany in April 1917 and the Trading with the Enemy Act was passed in October 1917 which called for the placement of German-owned business assets with a newly established Alien Property Custodian office. Germany-based businessmen in many sectors responded to the measure by transferring ownership of companies and assets in the United States to naturalized German-Americans; a variety of complications developed after the war as executives in Germany and the United States wrangled over whether these transfers constituted only cosmetic or authentic changes in ownership. Loeb complied with the law and reported that Metallgesellschaft was the true owner of the 51% stake, and the stock was transferred into a trust controlled by three men approved by the Wilson administration—Henry Morgenthau, Berthold Hochschild, and Joseph F. Guffey.
Although trade with Germany was halted, Allied military needs for various metals more than compensated for the loss of the German business and generated huge profits. The company was affected by a momentary scandal in 1918, when American Metal was confronted by allegations of war profiteering prompted by a report by the Federal Trade Commission. It is not clear whether the American Metal Company was singled out because of its German affiliation or simply because of the bookkeeping practices it used. The FTC report derisively referred to the salaries American Metal Company executives received as “an illuminating example of high remuneration charged to the expense account” that violated the principles of sound accounting. Loeb was said to have received $364,326.73 (2010 value $5.28 million) while Otto Sussman, a vice-president, earned $221,596.04 (2010 value $3.21 million). Loeb wrote a letter to the Federal Trade Commission that was released to the New York Times declaring that the payments he and other officers had received were a consequence of the company’s profit-sharing system rather than a sign of profiteering. In a letter to American Metal vice-president Henry Bruere, Loeb commented that “the effect which the Federal Trade Commission’s report had on the minds of leading men in Washington is most unfortunate,” and that a full disclosure of the company’s records would not only show that it had made smaller profits than many other comparable corporations but that, indeed, the company had tried to cooperate with the Wilson administration even at its own expense. The profit-sharing method the company used meant that its executives were “compelled to take chances on the results of our work,” profiting or losing according to the success of their business strategies. The company would never have been accused of profiteering, Loeb mused caustically, if instead “we [had] capitalized our surplus and goodwill and acquired fortunes through the sale of watered stock to the public,” a method used by many other corporations at the time.
After the war, the American Metal Company’s German connection re-emerged when the Alien Property Custodian sold off the 51% stake confiscated from Metallgesellschaft. The shares were sold at public auction for $5,750,904 in late 1918 (2010 value $83.3 million) and many were bought by a syndicate including Hochschild. Company executives entered into a partnership with Vogelstein and Co., another metal-trading firm, to raise the necessary funds to buy the stock. Ludwig Vogelstein became the largest individual stock holder, owning twenty percent of the company, but Loeb consolidated his power as president by buying a substantial number of the newly released shares, as the officers of the company had first call. By 1920, Berthold Hochschild was chairman of the board, Loeb was president and the board included vice presidents Otto Sussman, Henry Bruère, Harold Hochschild, Carl’s brother Julius, and Vogelstein. When Warren G. Harding replaced Wilson as president, treasury secretary Andrew Mellon became a member of the board to represent the government’s interest in the company. Loeb later recalled that Mellon “never missed a meeting, because he didn’t want to miss the $10 gold piece directors received.”
In 1921, Richard Merton filed a claim arguing that Metallgesellschaft’s American Metal Co. shares had in fact been transferred to a Swiss subsidiary before the U.S. went to war with Germany, invalidating the Alien Property Custodian’s control of the stock, and bribed several Harding administration officials and allies to receive the money raised from the stock sale. The eventual revelation of these bribes led to a sensational series of trials, culminating in the indictment of Harding’s attorney general, Harry Daugherty, for his involvement in the affair. Daugherty was tried twice and narrowly acquitted in 1927. Loeb appears to have complied with the Alien Property Custodian in good faith and was not accused of any wrongdoing. But Metallgesellschaft’s attempts to hide its control and the subsequent bribery scandals ensured that American Metal Company was subject to heightened scrutiny for many years over the course of the 1920s.
During his tenure as president of American Metal, Loeb and several of his colleagues became involved in a mining venture they became aware of thanks to their position. Metallgesellschaft did not want its American subsidiary to operate mines but did not forbid officers from investing privately; nonetheless, “apparently, with few exceptions, they were profitless ventures.” In 1916, Max Schott, the manager of American Metal Company’s ore-buying Denver office, heard reports of large molybdenum deposits being found outside Climax, Colorado. Molybdenum was a little known metal at the time; a metallurgist had discovered it could be used as an alloy of steel instead of vanadium, although the proportions used were not perfected at that time. Demand for alloy steel was very high because of the war and the limited supply of tungsten, so American Metal executives were eager to develop domestic sources of molybdenum. Loeb and the other executives formed a syndicate which fronted the capital to build a mill in exchange for a 75% interest in the new mine. Loeb was named president of the corporation established to manage the syndicate’s interests, the Climax Molybdenum Company, in 1917.
Despite the initial wartime demand for molybdenum, by 1918 the market for Climax’s products decreased drastically and the mine closed for six years. Following its usual practice in not investing in mining directly, American Metal Company had initially taken on only a 7.5% share of Climax Molybdenum and in 1918 had 250,000 pounds of molybdenum, but the stock was now valued at only ten cents a share. So, Loeb, the Hochschilds, and some other associates bought control of all of the stock at cost from the American Metal Company and sat on it until finally, in 1924, interest in molybdenum began to pick up. Molybdenum was recognized as a versatile material that could be used in steel alloys for constructing automobiles, in wire form in incandescent lamps, and in pharmaceutical and other applications. A 1924 article in Scientific American declared molybdenum research was “one of the most important branches of American metallurgy.” Climax’s sales of molybdenum soon took off. The stock rose 116,900% from 1926 to 1936, and stock that was worth twenty cents earlier in the century was worth $171 a share by 1955 (2010 value $1,390). In 1938, a resentful American Metal Company stockholder, who was not a shareholder in Climax, unsuccessfully brought suit against the Climax Molybdenum Company, charging that the officers of American Metal Company had committed a breach of faith as corporate executives when they personally subscribed to the syndicate.
Relations between the board of American Metal Company and Loeb deteriorated throughout these events. Loeb resented what he saw as its excessive involvement and the board felt the president was too dictatorial. Jealously of Loeb’s personal wealth may also have played a part. According to family records, Loeb felt that the company was under-financed, as he specifically wanted separate and additional financing for its large commitments in African copper. On a 1927 trip to Africa to investigate possible copper investments, American Metal vice-president Otto Sussman became interested in investing in the copper belt of Northern Rhodesia (now Zambia). Sussman reached out to Chester Beatty, an American mining investor already active in Northern Rhodesia, and committed American Metal to investing in the project. Arthur Storke, one of the most important mining engineers working for the Climax project, was shifted to the new project. In order to raise money to develop its two largest investments in Northern Rhodesia, Roan Antelope and Mufulira copper mines, American Metal Co. dramatically increased its leverage from 1927 to 1929, issuing an additional $20 million in stock and $20 million in corporate notes due in gold, vastly outspending other mining companies that had also been drawn to the copper belt. Loeb was critical of the strategy and in June 1929 offered his resignation, ostensibly because his board would not agree with his stance on financing the copper mines. Along with his disagreements with the board, the long-drawn-out bribery case involving Merton and Daugherty might also have played a part in Loeb’s decision to leave American Metal. The board accepted his resignation and Loeb left American Metal at the age of fifty-four.
In an auspicious twist, as part of his settlement, the board agreed to buy Loeb’s 80,000 shares of American Metal Company at eighty-five dollars each, or $6.8 million in total (2010 value: $86.6 million). Six months later, the stock dropped to half that price in the Great Crash, and by the early thirties, American Metal was selling for one dollar a share. Loeb’s misgivings were somewhat vindicated when American Metal had to repay the $20 million in gold it had borrowed in 1932 and with neither money to repay the note nor room to renegotiate, it had to give up part of its stake in Rhodesian copper investments. In 1934, Union Carbide offered American Metal nine dollars (2010 value, $147) a share for Climax Mine, but Loeb would not sell his preferred stock, which meant that he was the controlling partner. Loeb had paid twenty dollars (2010 value, $255) a share for the preferred stock of American Metal in 1928; in 1937, the American Metal Company had to pay him sixty dollars (2010 value $911) a share and back dividends.
In December 1930, Loeb and his son John formed Carl M. Loeb and Company, initially to manage the family’s holdings, paying $250,000 (2010 value $3.26 million) to become a member of the Wall Street Stock Exchange. Adeline Moses reportedly pleaded with her son to “please do something to get your father out of the house. He is like a caged lion and is driving me absolutely mad!” John Langeloth Loeb did not hesitate to get involved in business with his father. He believed his father’s instincts and timing were impeccable and even though Carl Loeb was “an original thinker, he never was carried away by his enthusiasms.” Loeb acted as a mentor to his eldest son, John Langeloth Loeb, who admired his father’s work ethic and intuition. He used to tell John “the only time you can afford to be cocky is when you’re down and out—then you may turn out to be right.” John was the floor broker and he recruited Teddy Bernstein, who had worked with him at Wertheim and Company, and Teddy’s father Theo, who was a partner at Hirsch, Lilienthal and Co. Theo handled the back office and Teddy brought in new business while Carl Loeb supervised the entire operation.
On January 31, 1931, business formally opened at 50 Broad Street with four partners and twelve people on staff. The stock market was close to reaching its nadir and the firm successfully passed its early years without a significant loss or management crisis. The company offered a broad variety of national and international services, purchasing and selling stocks and bonds and commodities of every description on a commission basis. Its brokerage services catered to both individual and institutional investors and the firm acted as an agent in the purchase of blocks of securities through private negotiation for public distribution. It also traded a variety of futures contracts, acting briskly to minimize the margins that had to be paid on each transaction. Customers were sought by capitalizing on the many and varied personal connections of the firm’s partners, who worked hard to bring in business.
Contacts, both domestic and foreign, were an integral part of the business, and emblematic of the tight-knit banking community in New York. The company began working in the investment banking field with Rome Cable in 1936, a new company established by Herbert Dyett, who had been head of General Cable when Loeb was president of American Metal. Loeb & Co. was also one of four underwriters when J. P. Morgan first sold shares to the public in 1935 and it was also one of the first underwriters for the flotation of Eastern Airlines in the 1930s. Shortly after the firm was established, Ludwig Bendix, a German banker who headed his own firm in New York, became a special partner of the firm, involving the company in the foreign securities business, which became the major part of its business in the future. Bendix’s contacts with the Reichskreditgesellschaft, a state-owned investment bank for the government’s industrial holdings, provided a new business opportunity. Loeb & Company began purchasing dollar-denominated bonds for the German government at a steep discount to help it better manage its interest payments. Loeb’s contacts in Europe were essential to this endeavor. He was still connected with the Mertons of Metallgesellschaft, mining investor Chester Beatty, Ernest Oppenheimer of Anglo-American, and other metal-industry firms. The firm opened its first foreign office in Berlin in April 1931, led by Adolf Elkeles, who worked closely with Bendix’s Berlin contacts. Events in Europe were becoming problematic—the Depression was spreading and European banks were failing—but Loeb & Co. opened an office in Amsterdam, too. A similar operation was set up in Paris when Andre Paulve, a well-known film producer in France, became a limited partner of Loeb & Company. Loeb instructed the company to buy a seat on every important commodity exchange in America. Even though Carl M. Loeb & Company was a small and relatively new company, because of their international contacts in Berlin, Amsterdam, London, Paris and Geneva, it swiftly became a leading international brokerage house.
Another important and lucrative aspect of the business was its involvement in silver arbitrage with Kleinwort, Sons and Company in London. Herman Andreae was the senior partner at Kleinwort and initially wanted to have a joint arbitrage account in securities with Loeb and Company. Carl Loeb confidently told Andreae “dealing in the same shares in different markets for a fraction of a spread isn’t worth the effort. Tell your friends at Kleinwort’s if they want to do a real business, I’ll teach them the silver arbitrage business.” Andreae told John Loeb “the reason I want to do business with you is because I know your father and I believe German Jewish bankers from Frankfurt are the most able.” Loeb and Paul Linz, a colleague from American Metal who became a partner in Loeb and Company in 1932, both knew the metals markets and were eager to take advantage of the increased interest in silver: “The speculation of the public in the silver futures market created a spread between spot and futures, making it attractive for banks to sell futures and buy spot on an interest basis.” Loeb & Company was perfectly placed to benefit from the renewed worldwide interest and so they traded in all international markets, buying and selling silver on behalf of Kleinwort and Loeb, and doing commission broker business for banks and the public from the floor of the Commodity Exchange in New York. At one time, Loeb & Company accounted for approximately half of the business in silver on the Commodity Exchange. However, the government intervened and the Silver Purchase Act was passed in 1934, which instructed the United States Treasury to purchase silver until the world price of silver rose above $1.29 (2010 value $21) per ounce, or until the monetary value of the U.S. silver stock reached one-third the monetary value of the gold stock, and levied a fifty percent tax on silver that effectively eliminated commodity trading.
Loeb needed an alternative for his suddenly defunct silver department and decided rubber would be a profitable replacement. Loeb & Company discovered it could buy spot rubber and sell forward delivery rubber on the New York Mercantile Exchange, holding the spot rubber until the due date, making approximately fifteen to twenty percent profit per annum, although this eventually decreased to six percent. Loeb & Company traded with every major rubber company and was soon ranked fourth among importers of rubber. By World War II, despite United States embargoes against Japan to prevent it from importing fuel, lubricants and scrap iron, the Japanese were entering and blocking the market in Southeast Asia, so quotas on rubber were set on the basis of past business, ensuring that Loeb’s volume would still be significant. In fact, the company had stockpiled large quantities of all grades of rubber in New York, so that it always had a supply available for consumer requirements. Relationships proved invaluable in this endeavor as a Loeb contact, Theodor Cremer, loaded rubber on to all of the available boats of the Dutch East Indies, just as the Japanese moved in, and consigned them to Loeb and Company, even though the company had not ordered them.
The success in rubber inspired the company to expand its merchant banking side. The basic principle was to carry merchandise for sundry trades, either hedged or sold for forward delivery, which would yield bank interest. The first new departure was into cocoa, with the department opened in March 1935 under John Plough, another Loeb and Company contact. Problems with the supplier, who tried not to fulfill his orders to Loeb when the market price had more than doubled, as well as the discovery of worms in one shipment of cocoa, which the Department of Agriculture would not allow into the country, ensured that cocoa profits were negligible.
Even before World War II, rising tariff barriers and the fixing of import quotas further strangled the volume of foreign trade. The Loeb firm’s flexibility and range of interests ensured that it remained profitable and thriving during the 1930s and into the war years. One area in which it became very successful was hides. It initially began by dealing in domestic hides contracts on the Commodity Exchange, but then switched to foreign hides from Argentina when defense needs stimulated domestic demand. The firm opened an office in Buenos Aires in 1940 and soon became the exporter of a majority of Argentine output. This experience led to opening an office in Boston in 1941 and establishing a wool department which expanded as the war progressed. The company was proving adept at switching fields of interest as government controls increasingly dictated market exchanges.
Carl M. Loeb & Co. was one of the first companies to admit publicly that Wall Street in the early 1930s was in need of reform. Loeb agreed with many of the New Deal security reforms of the Securities and Exchange Commission, often in contrast to other members of the financial world. Congress passed the Securities and Exchange Act in 1934 to regulate the brokerage business following the Securities Act of 1933 which dealt with investment banking. Loeb & Company was only indirectly affected by the latter as its interest at the time in the investment bank field was minimal. Wall Street in general was hostile to the 1934 act, but Loeb & Company felt there was a need for federal regulation of the brokerage business. John Langeloth Loeb wrote that his early experiences as the firm’s broker on the floor of the Stock Exchange convinced the company that reform was necessary. “I took a buy order from Lehman Brothers over to the Kroger specialist. Seeing I had a buy order—buy orders were in black, sell orders in red… before I could open my mouth the specialist traded Kroger up a half-point with a friend of his, a specialist in something else. I couldn’t prove anything actually illegal happened. So I was forced to pay a half-point more. On the floor, I witnessed a lot of skullduggery.” Loeb partners Harold Linder and Hans Widenmann, who had previously been with the Federal Reserve Board in Washington, helped to draft the SEC’s Regulation T, regulating margin ratios for investors—that is, the amount of money investors are permitted to borrow to fund stock market transactions.
Concerned with developments in Europe but hesitant to believe that there would be another war between his native country and America, Carl Loeb was reluctant to close the firm’s office in Germany, although his son convinced him to do so in 1938. John and his wife, Frances Lehman, had experienced the situation in Germany firsthand, as presumably had Carl on one of his many trips to Europe. When visiting Berlin in 1931, at a business luncheon with Ludwig Bendix, Frances was assured that Hitler’s anti-Jewish stance was “propaganda … the minute he gets in, he’ll change.” They returned to Berlin in 1934 and when walking in the Tiergarten, Frances was shocked to see signs reading Keine Juden (“No Jews”) on the park benches. Kristallnacht, the anti-Semitic pogrom launched by the Nazis that vandalized thousands of Jewish shops and synagogues, happened on November 9–10, 1938 and finally John Loeb rang his father to tell him that “as a Jewish firm” he didn’t think they should have an office in Germany. Carl was not easily convinced and they argued. Finally, Loeb & Company called a meeting of all of its European executives in Paris, hoping to give the partners and employees a reason for leaving Germany without arousing suspicion. The firm offered severance pay and assistance to employees who did not want to return to Germany. One employee, Rambeau, remained in Paris, but later disappeared from occupied France and died in a concentration camp. F.A. Freundt, head of the Berlin office, stayed in Germany and apparently helped many Jewish people to leave.
The commodity business was shrinking for Loeb and Company, so in an effort to diversify its operations, the company built a network of firms to support an aggressive trading and underwriting program. Repatriation of funds to America and the growing European crisis as well as a recession in 1937 muddied the markets. That year, New York Stock Exchange volume decreased by 20% of the previous year’s levels and it dropped a further 25% in 1938. Overheads had to be reduced, older partnerships or connections in Europe were shifting and so mergers were an obvious way to cut expenses. The war took its toll on the company too as the London office shrunk to a skeleton staff as employees enlisted. To boost its position in domestic securities, Loeb & Co. acquired another brokerage firm, Rhoades & Company. Rhoades was doing well in the American domestic market, but it was not well-capitalized and needed money to bolster its position because it had been hit hard in the Depression. After much negotiation about the new name of the merged company, the firm was renamed Carl M. Loeb, Rhoades and Company on February 1, 1938 and five of Rhoades & Company’s seventeen partners remained with the firm. The merger provided Loeb and Company with a bond department and out-of-town correspondents. After the war, the contacts in England of one of the new partners, Palmer Dixon, proved especially important. In another example of the tight network that made up the world of finance in New York, Dixon was a Harvard classmate and friend of John Loeb’s.
By 1942, approximately one hundred and forty employees—almost half of the total—had left to join the war effort, and those who were left were pushed desperately as the “Colossus of Rhoades” kept up a frantic pace. Loeb and his staff worked very closely with officials of the New York Stock Exchange to push through some reforms of the brokerage process and in arbitration issues. Loeb, Rhoades & Company were instrumental in getting legislation passed which ended the use of transfer tax stamps, a practice which necessitated keeping excessive records for tax purposes. They also cooperated with the New York Stock Exchange on the elimination of the need to witness signatures and of the guarantee of bank signatures.
Perhaps an unusual area for bankers to be involved and proactive in was regarding the employee wages and health insurance. Carl Loeb felt very strongly that employees at all levels should have adequate compensation and insurance. Even during the depression of the 1930s, employees received a bonus every year and during World War II, but the company came up against the War Labor Board and the Strategic Services Unit, which tried to freeze wages and salaries. Employees from Loeb, Rhoades and Company joined a march on the War Labor Board in 1943, apparently with Loeb’s encouragement, and Christmas bonuses were paid that year. Furthermore, the company instituted a group life policy on January 1, 1937, which was financed wholly by the company and covered every employee who was on the payroll for three years, for an amount up to $5,000 (2010 value $75,900), depending on their pay schedule. By 1944, perhaps because of the number of employees who had become involved in the war effort, the insurance was offered to employees who only had been with the firm for two years. By 1945, three hundred and fourteen employees and fifteen partners were insured for $929,000 (2010 value $11.3 million). A group hospitalization policy was established on March 18, 1940, partly financed by the firm; this policy covered two hundred and fifty-five employees and their families. Although a Wall Street tycoon, Loeb was clearly socially progressive.
Loeb was socially ambitious for his children and it was very important to him that his family be accepted by New York City’s self-contained German-Jewish elite. Its insularity was “almost as much a matter of defense as of spontaneity,” one scholar has remarked, with its “conventional social graces” confronting “ethnic stigma” on the part of New York’s Christian elite. “For only a small minority was assimilation an acceptable solution to the problem… for the great majority the answer was a society within a society, an elite perhaps equal but certainly separate, forced into being by prejudice and buttressed by participation in a specialized culture.” Most of its families were connected through business; they also belonged to the same social clubs, attended the same synagogues (albeit infrequently), generally married within their own ranks and pursued similar cultural and philanthropic causes.
It may have rankled Carl Loeb that despite its inclusion within this elite his family was not considered to be equal in status to the Loeb family of Kuhn, Loeb & Co. Loeb waited fifteen years to be accepted as a member of the Century Country Club, in Westchester, a private (Jewish) country club. Adeline Loeb shopped at Bergdorf Goodman, and one of Loeb’s oldest friends in America was Henry Ittleson, who founded the first car finance business in America, the Commercial Investment Trust. Loeb’s son John Langeloth married Frances (“Peter”) Lehman in 1926, thus cementing the family’s links with one of the most prominent elite Jewish families. Birmingham’s book claims that John Loeb was seen as an adventurer, marrying Frances Lehman for her money, but the couple remained married until her death in May 1996. John died a few months later that December. John L. Loeb was a partner in the firm from 1931 to 1955 and following the death of his father became the senior partner, a role which he retained through 1977 when the firm merged with Hornblower, Weeks, Noyes & Trask, a move which proved very costly. In 1951, John Loeb became a governor of the New York Stock Exchange. In 1956, Loeb Rhoades acquired a controlling interest in the Cuban Atlantic Sugar Company and sold its stake on December 31, 1958, a day before the Cuban Revolution. In 1978, John L. Loeb handed over control of the firm to his nephew, Thomas Kempner, a grandson of Carl Loeb who had joined the firm in 1950; but the company soon merged again to form Shearson Loeb Rhoades. Sanford Weill, from Shearson Hayden Stone, was named the CEO of the combined firm and John Loeb became the firm’s chairman. At the time, Shearson Loeb Rhoades was among the largest investment banking houses with $250 million of equity capital. The tradition of impeccable timing and fortuitous mergers continued under Loeb’s descendants through the 1970s.
The United States posed some difficulties for immigrants—even wealthy and successful ones like Carl Loeb. It was ostensibly an open society and Jews were not a harassed minority. In fact, because of their communalism and the laissez-faire nature of the economy, Jewish business men rarely experienced hindrances to their career. Carl Loeb had good relationships with non-Jewish people too, including Chester Beatty of the Selection Trust, George Whitney of J. P. Morgan & Co. and Herbert T. Dyett of Rome Cable, all of whom were invaluable business contacts. The Loebs were famous for their dinner parties and Loeb particularly valued good chefs. The family shared one anecdote in particular that illustrates Loeb’s exacting standards. Adeline and Carl had separate bedrooms, as was usual for the time, and Carl would send a note to Adeline on the nights that he would visit her, to give her time to dress and prepare herself. After a dinner party one night, Carl sent a little folded note to Adeline’s room, signed as usual CML. Adeline anticipated a visit, thinking he wanted to congratulate her on their successful night. However, when she read the note, it said merely, “Fire the cook!” Apparently, he entertained in a very gracious and luxurious style, but often held dress rehearsals for important dinner parties before the actual event. Carl and Adeline had a “B” list of friends who were invited to dinner so that the menu could be given a trial run, before the “real” guests came to dinner a few nights later. His dining room at home was an important aspect of his business life too and Loeb, Rhoades was also famous for the quality of its private dining room, with invitations at a premium.
He and Adeline had a close and happy marriage, although he teased her quite often. The Loebs had a formal marriage and Adeline always called her husband Mr. Loeb, which may have been a habit from her Southern upbringing. Adeline had been very slim when the couple married, but as she got older she put on some weight. Perhaps in view of his professional life, it is not surprising that Carl would often tease her that he “had only contracted for 127lbs.”! Loeb and his two oldest children were very close and after one particularly bad row between them and Adeline, who was the much stricter parent, Loeb wrote a self-deprecating poem as an apology:
Just imagine Mother’s dismay
When Blighty came in the month of May (Margaret)
Mother cannot bear to remember
Another Blighty came in November (John)
Now that all the damage is done
Please forgive your devoted Hun!
In 1946 on their fiftieth wedding anniversary, the couple wrote each other letters expressing their happiness on the occasion. Carl Loeb wrote to his wife, in part: “My first thought is one of profound gratitude to a kind Providence which has permitted us to reach this milestone… It has been our good fortune to see our children grow up and establish families of their own. I hope they will be able to duplicate our record… A devoted and self-sacrificing wife and mother has taken good care of us. In the endurance test in which she and I are engaged, she certainly deserves the greater credit.
Loeb was a very patriotic American and often declared “I have enormous confidence in these United States.” Loeb was grateful to his adopted country and never regretted leaving Germany, although he did visit it regularly before World War I, believing he would not have had the same opportunities if he had remained there. Loeb was also very cultured and could quote Goethe and Shakespeare, belonged to the Theatre Guild in New York, and had a box at the Metropolitan Opera. He was not active politically, and John Loeb, his son, was an active Democrat, but Loeb’s own social progressivism regarding health insurance has been noted earlier. Loeb’s parents had not been particularly observant Jews in Germany, and in the United States his family’s religious participation was generally limited to observing the traditional high holidays and rituals regarding death and sickness, and it did not follow Kosher dietary restrictions. The Loebs belonged to Temple Emanu-El and attended services on Yom Kippur (the Day of Atonement). Loeb went to work on most other Jewish holidays and sent his children to school on those days too. The family’s philanthropic efforts were markedly, but not exclusively, for Jewish institutions. In the 1920s Loeb was president of the Home for Aged and Infirm Hebrews and he attended board meetings there on Sunday mornings. He was also on the board of the Hebrew Orphanage and a trustee of the Federation of Jewish Philanthropies. He was a supporter of the New York Guild for the Jewish Blind and a life trustee of Valeria House, a vacation resort in Peekskill, New York funded by the will of his mentor Jacob Langeloth for persons of medium income. Loeb and his wife encouraged their children to be compassionate and Loeb often told his children “don’t think you’re God’s gift to the world.” Adeline organized sewing circles during the wars.
In 1954, Loeb and Adeline gifted Central Park a new boathouse at the Seventy-Second Street Lake, worth $305,000 (2010 value $2,470,000). Now a symbol of New York, the brick and lime building, containing a restaurant, was opened on March 12, 1954 by Mayor Robert F. Wagner, Parks Commissioner Robert Moses and Manhattan Borough President Hulan E. Jack. The Park Association awarded the Loebs the memorial plaque of 1953, honoring them for their “practical, public-spirited philanthropy.” The program declared “the Park Department and the people of the city of New York extend their heartfelt thanks to Carl M. Loeb for this generous gift of $305,000. The city also expresses its heart-felt regret that Adeline Loeb, who joined with her husband in making this great gift, did not live to see its completion.” The family believes that Adeline walked through the park frequently and the owner of the original cafe gave her hot coffee most mornings. He told her the building was going to be closed and she insisted on donating the money to refurbish the place. The coffee vendor never knew he was serving the wife of a millionaire!
Loeb’s other philanthropic efforts included donating a collection of manuscripts of Heinrich Heine to the Houghton Library at Harvard. In 1946, he and Adeline Loeb gave fifty-three acres and a number of buildings on the shore of Upper Saranac Lake to Syracuse University for use as a faculty rest home and a student art center. After his death, his firm established a Carl M. Loeb Professorship at Harvard University, perhaps because John Loeb had attended there, and the family gifted New York University the Loeb Student Center.
Carl Loeb was a driven and ambitious immigrant who completely embraced life in America. A prominent member of German-Jewish society in New York and a generous benefactor for many communal, educational, and religious institutions, Loeb believed in the possibilities that he saw offered in his new country. He was a dominating presence in the lives of the four children, thirteen grandchildren and ten great-grandchildren who survived him. His is not a rags-to-riches story, because he stemmed from a wealthy family in Germany, but we do know that his ultimate success in America was by his own striving. Despite his hectic schedule and old-fashioned beliefs about family roles, he was a loving husband and father who always made time for his children. He was also a compassionate employer, committed to making his employees’ lives better. Some aspects of his biography remain vague. Loeb was an excellent businessman, with an almost uncanny sense of timing and instincts about commodities, but his son has written that his father preferred to keep a low profile. He inspired loyalty among his business colleagues, making full use of the banking contacts he had made in Europe and further afield to further his success, and could also count on former work colleagues to join him when he established his own firm. His employees praised his “forthrightness, integrity, charm, his ability to appraise people that borders on the uncanny, his almost intuitive judgment … his insatiable curiosity, his constant aim not only to live with the times, but to pioneer in business ventures and business methods.” Interestingly, he quickly overtook his older brother Julius, who never quite reached the level of success that Carl achieved. They remained close, but Julius was remembered as being somewhat shy and resentful by the Loeb children.
Carl Loeb does not appear to have maintained strong ties to an immigrant or German-based community in America, beyond the German-Jewish business people who made up his social world. He and his family were very involved in American life and he wanted to be accepted as a member of New York society, rather than harboring any desire to return to Germany permanently, although he maintained close business contacts there. He enjoyed being successful and living well, knowing that he had worked hard for his money. This desire to live well may have been central to his sense of self-worth and may have come from his childhood in Frankfurt and the bourgeois standards his parents upheld. He may have maintained a German-Jewish sensibility in his attitude to his home and family, but Loeb did not self-identify as a German immigrant.
 Stephen Birmingham, “Our Crowd”: The Great Jewish Families of New York (1967; Syracuse, N.Y.: Syracuse University Press, 1996). This book describes the interwoven history of New York’s most prominent Jewish families. Carl Loeb’s family was often referred to as “not the Loebs”—i.e., the Loeb family of Kuhn, Loeb, & Co.—by this group, demonstrating that he was on the margins of this society for a number of years. His son John’s marriage to Frances Lehman, daughter of Arthur Lehman, finally secured their position as one of “our crowd.”
 Amos Elon, The Pity of It All: A History of the Jews in Germany, 1743–1933 (New York: Metropolitan Books, 2002), 206–210; Barry E. Supple, “A Business Elite: German-Jewish Financiers in Nineteenth-Century New York”, Business History Review, 31.2 (1957): 143–178, here 148–149.
 Marion A. Kaplan, The Making of the Jewish Middle Class: Women, Family, and Identity in Imperial Germany, (Oxford, Eng.: Oxford University Press, 1991), 6–8. See also Elon, The Pity of It All, 222–231.
 Margaret Loeb Kempner, Recollection: A Personal Memoir of Margaret Loeb Kempner (Purchase, N.Y.: privately published, 1980), 2.
 Kempner, Recollection, 11.
 Ibid., 14.
 Supple, “A Business Elite,”158–161.
 Kempner, Recollection, 11.
 Poor’s Manual of Industrials: Manufacturing, Mining and Miscellaneous Companies, 1915, 1741.
 Navin, Copper Mining and Management, 341.
 John L. Loeb, Frances Loeb, and Kenneth Libo, All in a Lifetime: A Personal Memoir (New York: J.L. Loeb, 1996), 2.
 Loeb et al., All in a Lifetime, 4.
 Ibid., 4–12.
 Birmingham, Our Crowd, 376.
 Kempner, Recollection, 2.
 John L. Loeb, Jr., et al., An American Experience: Adeline Moses Loeb (1876–1953) and Her Early American Jewish Ancestors (New York: Sons of the Revolution in the State of New York, 2009), 35–37; Kempner, Recollection, 3.
 “Langeloth Leaves $5,267,075 Estate,” New York Times, August 17, 1915, 9.
 Walter Harvey Weed, The Mines Handbook (W. H. Weed, 1920), 71.
 Hans Widenmann, History of Carl M. Loeb, Rhoades & Co., pamphlet, 1945, 3. These figures may be incorrect—it is unclear whether the historical figures are actual or the family had already adjusted for modern values. We see in the contemporary New York Times article quoted below that Loeb’s bonus in 1918 was quoted as being $364,326.73.
 Mira Wilkins, The History of Foreign Investment in the United States, 1914–1945 (Cambridge, Mass.: Harvard University Press, 2004), 112–121.
Alien Property Custodian Report: A Detailed Report by the Alien Property Custodian of All Proceedings Had by Him under the Trading with the Enemy Act… to the Close of Business on February 15, 1919 (Washington: Government Printing Office, 1919), 101 and Navin, Copper Mining and Management, 276.
 “American Metal Co. Denies Profiteering,” New York Times, July 6, 1918, 13.
 Navin, Copper Mining and Management, 275–276, 341–342.
 Weed, The Mines Handbook,70.
 Loeb, All in a Lifetime,14.
 See Joseph Borkin, The Crime and Punishment of I. G. Farben (New York: Free Press, 1978), chapter 13, “Corporate Camouflage.” The case was not resolved until 1938, when Merton’s claim was definitively rejected and he was ordered to pay back to the government the money he had been awarded.
 Navin, Copper Mining and Management, 274.
 Navin, Copper Mining and Management, 274, and Kempner, Recollection,25.
 “Carl M. Loeb, 79, Banker, Is Dead,” New York Times, Jan. 4, 1955, 21.
 Navin, Copper Mining and Management, 274.
 Navin, Copper Mining and Management, 274.
 Birmingham, Our Crowd,375.
 Loeb, All In A Lifetime,81.
 Navin, Copper Mining and Management, 276–277. See also Kenneth Bradley, Copper Venture: The Discovery and Development of Roan Antelope and Mufulira (London: Mufulira Copper Mines, 1952), 91–94.
 Loeb, All in a Lifetime, 81; T.A. Wise, “Wherever You Look, There’s Loeb, Rhoades,” Fortune, April 1963, 128+.
 The next two decades were not profitable in Rhodesia but by 1952 American Metal was earning more from its African mines than from its domestic operations. Navin, Copper Mining and Management, 277–278.
 Kempner, Recollection,28.
 “New Firm Announced by Stock Exchange,” New York Times, Dec. 4, 1930, 40.
 Loeb, All in a Lifetime,81.
 Ibid., 82.
 Ibid., 82.
 Ibid., 82.
 Kempner, Recollection,124.
 Widenmann, History, 4.
 Kempner, Recollection,87.
 Widenmann, History, 5.
 Loeb, All in a Lifetime, 88.
 Ibid., 88.
 Widenmann, History, 6.
 Widenmann, History, 6–7, and Loeb, All in a Lifetime, 90.
 Ibid., 8.
 Ibid., 8.
 Loeb, All in a Lifetime,91.
 Ibid., 84.
 Loeb, All in a Lifetime, 84.
 Widenmann, History, 10.
 Ibid., 89.
 Widenmann, History, 12.
 Loeb, All in a Lifetime,96.
 Widenmann, History, 13.
 Loeb, All in a Lifetime, 97, and Widenmann, History, 14.
 Widenmann, History, 20.
 Kempner, Recollection,31; author interview with John Langeloth Loeb, Jr. (grandson of Carl Loeb), Feb. 14, 2012.
 Supple, “A Business Elite,”166.
 Birmingham, Our Crowd, 10.
 Loeb interview, Feb. 14, 2012.
 Kempner, Recollection, 45.
 Birmingham, Our Crowd, 377.
 “The Urge to Merge,” New York Magazine, May 28, 1979, 13.
 Kempner, Recollection, 18.
 Birmingham, Our Crowd, 376; Loeb interview, Feb. 14,2012.
 Kempner, Recollection, 11.
 Kempner, Recollection,50
 Letter from Carl reproduced in Recollection,77.
 Kempner, Recollection, 59.
 Ibid., 59.
 Ibid., 58.
 “Carl M. Loeb, 79, Banker, Is Dead,” 21.
 New York Times, April 30, 1954.
 Kempner, Recollection,123.
 Loeb, All in a Lifetime,86.
 Widenmann, History, 1.
 Kaplan, The Making of the Jewish Middle Class, 8–11.