Henry Goldman: Immigrant Outsider as Empire Builder
Today, second generation German-Jewish immigrant Henry Goldman is primarily remembered for his role as an early partner in Goldman Sachs, the international investment bank that still bears his family’s name. His accomplishments stretched well beyond his own firm, however. In addition to revolutionizing Goldman Sachs, he helped change the American economy by shifting investment banking away from railroads and heavy industry and toward mass-retail establishments. He also pioneered an approach to capital valuation that focused not on physical assets, but on future earnings.
Henry Goldman (born September 21, 1857 in Philadelphia, PA; died April 4, 1937 in New York, NY) was a central architect not only of modern investment banking but also of modern American capitalism. In a fairly brief time period – from roughly 1905 to 1915 – Goldman played a central role in revolutionizing both Goldman Sachs and the American economy. By shifting investment banking away from railroads and heavy manufacturing and towards mass-retail establishments such as Sears and Woolworths, Goldman helped build up big corporations in economic sectors where, prior to his entry, other investment bankers feared to tread. By underwriting the stock issues of large retail corporations (as well as the first automobile company), Goldman helped usher in an economic transformation that would eventually see the American economy shift away from railroads and steel and towards department stores, consumer goods, and automobile-centered suburbia. In fact, if one were interested in tracing the financial origins of today’s corporate service economy, Henry Goldman would be a good place to start, since Sears and Woolworth became, respectively, the Amazon and Walmart of their day. Additionally, Goldman also had an important impact on the way that American financiers valued companies and priced capital. When taking retail industries such as Sears public, Goldman pioneered an approach to capital valuation that focused not on physical assets but on future earnings. In doing so, he helped redefine how financiers thought of capital and became one of the founding fathers of the most dominant asset valuation tool used today – price per earnings ratio.
Henry Goldman, in short, was an empire builder. But this empire would not have come into being if Goldman hadn’t also been something else – the son of a German-Jewish immigrant. Although Goldman was born in the United States, his financial career was constantly shaped by his ethnic background and the immigrant experience. If Goldman had not been Jewish, for instance, it is unlikely that he would have turned to the retail sector. Goldman, in fact, was forced to enter into risky and novel enterprises precisely because Wall Street’s entrenched “Yankee” bankers, such as J.P. Morgan, had essentially shut Jewish bankers out of the more established business of railroad and industrial securities. What is more, the crucial business ties that Henry Goldman forged in order to build up his underwriting empire – most notably with fellow German-Jewish financier Philip Lehman – were clearly shaped by his family and ethnic background.
Despite his great success as an American capitalist, Goldman never left the “Old World” of Europe completely behind. Throughout his life he remained an iconoclastic outsider – even within his own, close-knit German-Jewish community. An ardent admirer of German culture at a time when most German-Jewish elites were interested in Anglo-Americanizing themselves, Goldman not only preferred to vacation in Baden-Baden but also sided, at least at first, with Germany – not France or England – in World War I. Moreover, Goldman never fit into the bourgeois culture of Wall Street. He dropped out of Harvard, spent a decade in what amounted to commercial exile, and butted heads throughout his career not only with J.P. Morgan but also with his very own partner and brother-in-law Samuel Sachs.
Much has been written about the way in which Goldman’s iconoclasm – especially his initial support for Germany in World War I – led to his eventual demise as a Wall Street power broker. This is all true, but as this article will show, Goldman’s “outsider” approach was also the engine that powered his greatest accomplishments. When the conventional business wisdom of the era said to go one way, Goldman went the other. It was this contrarian, out-of-the-box approach to finance that allowed him to amass an extraordinary fortune and great power.
Henry Goldman was born in Philadelphia on September 21, 1857. To understand Henry Goldman’s early life, however, we must begin with his father Marcus – the founder of the Goldman Sachs bank. Like so many other Germans Jews of this era, Marcus Goldman immigrated to the United States in the late 1840s. The son of a cattle merchant in the Bavarian countryside, Marcus Goldman was no socialist revolutionary or liberal thinker and had taken no part in the revolutions that rocked Europe in 1848. Rather, Goldman moved to America in the late 1840s for the same reason as most other German Jews: a mixture of German anti-Semitism, which led to countless restrictions on Jewish entrepreneurs, and financial constraints resulting from the dislocation wrought by industrialization on the traditional Jewish economy. In this sense, Marcus Goldman was just going with the flow. According to the census, in 1850 there were almost 600,000 native-born Germans in the United States. By 1860, that number had ballooned to 1.3 million. Before 1840, there were approximately 15,000 Jews in America. By 1880, on the eve of the second wave of Jewish immigration from Eastern Europe, there were roughly 250,000 Jews, nearly all of whom were from German-speaking regions of Central Europe.
Due to historical restrictions on Jewish land ownership in Central Europe, most German Jews who immigrated to the United States were not farmers, although they generally came from rural areas and not cities. The fact that Jews had not owned land set them apart from most central or northern European immigrants to America during this era. Instead of embracing the Jeffersonian idea of yeoman republicanism and freehold landownership, most German Jews, even those who went West, gravitated toward small commercial cities like Cincinnati that were emerging in this era. In short, German-Jews’ ethnic backgrounds nudged them towards urban commerce rather than rural farming.
As with most German Jews who had been raised as petty retailers in rural Europe, Marcus Goldman sought the familiar and began working as a peddler in Philadelphia. A few years later, he opened his own clothing store. Itching for greater economic success, he closed his shop in 1869 and moved his family to the one place where anyone interested in making a fortune wanted to be: New York City. Upon his arrival, Marcus began advertising himself as a banker and a broker of commercial paper for the wholesale tanners and jewelers along Maiden Lane, only a block from Wall Street. Why did Marcus Goldman turn from clothing to banking? This remains unclear, but the fact that he was a German-Jewish immigrant was likely key. During this era, numerous German-Jewish families were getting into the banking business on Wall Street, including the Kuhns, the Lehmans, and the Loebs. Only a few years before, German-Jewish immigrants Joseph Seligman and Jacob Schiff had begun to make it big as Wall Street financiers. While there is little evidence that Marcus Goldman knew the elite Jewish banking families upon his arrival in the United States, the German-Jewish community was a tight-knit group, so it is likely that Goldman’s ethnic background helped him get a foot in New York’s financial door.
From his experience as a Philadelphia storeowner in the 1850s and 1860s, Goldman would have appreciated the importance of short-term capital to small-time merchants, and he would have also recognized the profits to be made in meeting that need. Indeed, nearly all Jewish bankers started off in the dry goods business (in most cases after a brief stint as peddlers). For instance, the Lehmans were peddlers before they were cotton brokers; and the Kuhns and the Loebs once operated a general store in Cincinnati. When Goldman turned to banking in New York City, he focused on becoming a middleman between established banks and wholesale tanners and jewelers on Maiden Lane. Apparently, at the start of his career, Goldman began each day by lending money to small-time immigrant businessmen by purchasing their promissory notes. Each afternoon, he would head to Chemical Bank, National City Bank, or some other large financial institution and sell the notes to born-and-bred Americans for a nice commission. Here again, we see the importance of ethnic identity to entrepreneurs: many of Goldman’s customers on Maiden Lane where either German or Jewish or both. It is doubtful that he would have received their business were it not for their shared culture or language. Marcus Goldman, therefore, was not only a middleman between big banks and small businessmen, he was also a bridge between American and immigrant culture.
To conclude, while Marcus Goldman appears to have been very good at his job, he was no financial visionary. In dealing with very short-term commercial paper, he had entered into the same conservative and mercantile mode of operation that had dominated New York finance for generations. Yet while his business practices were not particularly novel, he still made very good money. By 1882, Goldman was turning over $30 million ($681 million in 2011) worth of commercial paper a year to the tune of $50,000 ($1.13 million in 2011) in profit. Marcus Goldman had come a long way from the Bavarian foothills, and he had become very rich.
Henry Goldman, therefore, was no self-made man. As an adolescent, he went to school at the Sachs Collegiate Institute for Boys on 59th Street, whose alumni included the Morgenthaus and the Lehmans. Run by Julius Sachs, the husband of his older sister Rosa, the school helped Henry Goldman integrate into the elite German-Jewish circle that referred to itself as “our crowd.” The Goldman family was also, at least partially, integrating within the Anglo-Saxon American establishment: in the early 1870s, Henry Goldman was accepted to Harvard.
Despite Harvard’s willingness to admit Goldman, he remained an outsider to American bourgeois culture, and his experience in Cambridge made that clear. Goldman did not survive long there, dropping out of Harvard after only a year. Family lore places the blame on his deteriorating eyesight (Goldman always wore very thick glasses), but one would think that such a disability would have also hindered his efforts to build a financial empire, which seems not to have been the case. Was the problem that Goldman was Jewish? Homesick? Socially awkward? A lover of German culture? It is impossible to say. Our only hint is the fact that, later in life, Goldman donated a great deal of money to help found a department for the study of Germanic culture at Harvard. In so doing, he may have been attempting to reshape the institution that had somehow rejected him. While Marcus had Anglicized his name (by dropping the second “n” in Goldmann) soon after arriving in America, Henry remained proud of his German heritage. He was not going to follow in his father’s assimilated footsteps.
Henry’s departure from Harvard is not the only clue that he was a social and cultural outsider, both within American elite society and his very own family. Even more revealing than his failure in Cambridge is the fact that Henry did not return to New York City to work for his father’s bank for more than a decade after leaving Harvard. At the time, it was customary for German-Jewish bankers to send their sons off on an apprenticeship in another city for a few years before inviting them back to the family business. Henry was sent off to work as a traveling salesman for Dreyfuss, Willer & Co. But whereas most young men remained away for only a few years, Goldman spent more than a decade in a kind of commercial exile. Such a protracted stay was odd, because German-Jewish finance was still very much dominated by dynastic, familial business partnerships and strong kinship ties. For example, when Marcus Goldman made Samuel Sachs a partner and renamed his bank Goldman Sachs in 1882, he did so only after Sam had married his daughter Louisa, and after Sam’s brother, Julius, had married his daughter Rosa. In the world of Jewish finance, a wedding often preceded a merger or a partnership. Yet while the Goldmans and the Sachses were using weddings to cement their business partnerships, Henry Goldman remained on the outside looking in. By the time he joined the family business in 1885, Samuel Sachs had already been promoted to full partner, which meant that Henry found himself working not only under his father, but also under his brother-in-law.
What did Henry Goldman do for eleven years as a traveling salesmen? Not enough documentation remains to answer this question, but Goldman’s lengthy “internship” may have been a source of his future success. While most Wall Street financiers of this era, including the Jewish-American elites, rarely circulated outside their own close-knit social milieu, Goldman spent a decade witnessing how ordinary Americans outside of New York City lived their lives. In an era of far-ranging capital investments and ever-increasing streams of business knowledge, Wall Street financiers were coming to rely more and more on abstractions such as annual corporate reports or statistical economic indicators. (In 1896, for example, the Dow Jones Industrial Average was born). Goldman, on the other hand, had the advantage of having seen the inner workings of the American economy for himself. Perhaps this is why he eventually pushed Goldman Sachs away from international money markets and towards domestic consumer markets.
Henry Goldman’s impact on Goldman Sachs’s business strategy was not immediate. Up until the turn of the twentieth century, it was Samuel Sachs’s approach to finance that set the tone for Goldman Sachs. Much like Marcus Goldman, Samuel Sachs was a conventional and conservative merchant banker who focused almost exclusively on commercial paper. And much like Marcus, Sam Sachs was good at what he did. By the 1890s, Goldman Sachs was the nation’s biggest dealer in commercial paper. In 1894, sales reached a whopping $67 million ($1.81 billion in 2011), and in 1896 the bank joined the New York Stock Exchange. In 1897, with the assistance of the Rothschilds’ New York banker August Belmont, Sam Sachs convinced the incredibly wealthy and powerful British merchant firm Kleinwort Sons to tap Goldman Sachs as their American agent. This was a boon for the firm and it grew accordingly. During these years, Goldman-Sachs also expanded geographically, opening branches in major commercial cities such as Chicago, Pittsburgh, and Boston. Importantly, it was Henry Goldman who was typically sent out to these branches on regular business trips. Once again, he was personally witnessing the growth of the domestic American economy in ways that Wall Street insiders may have missed.
While Samuel Sachs had transformed Goldman Sachs into a commercial banking behemoth, he had hardly changed the nature of the firm. Goldman Sachs remained a traditional, conservative commercial banking center that made much of its profits on low-risk financial moves such as arbitrage between the London and New York money markets. By the early twentieth century, however, Henry Goldman was ready and willing to change the business of Goldman Sachs forever.
Unlike Sachs, Goldman wanted to focus on the domestic economy and not international mercantile exchange. And unlike Sachs, Goldman was itching to get out of the commercial paper business and transform Goldman Sachs into an investment bank that underwrote securities, marketed bonds to the public, and orchestrated corporate consolidations. In Goldman’s era, this sort of investment banking was dominated by three firms – J.P. Morgan, Kuhn-Loeb, and Speyer & Company – and these firms focused nearly all of their underwriting energies on a single industry: railroads. Never one to shy away from confrontation, Henry Goldman made aggressive attempts to get in on the railroad action in the mid-1890s. Unfortunately, his efforts were to no avail: after J.P. Morgan expressed his contempt for Goldman’s aggressive tactics, Sam and Julius Sachs, ever conciliatory, decided that Henry would not pursue the railroad business any further.
Goldman did not concede defeat. Rather, he turned away from railroads bonds and toward the emerging world of industrial securities. Prior to the late nineteenth century, most American corporations were railroads, banks, or insurance companies. The end of the century, however, brought with it the “great merger movement.” Hundreds of small, proprietary manufacturing firms began to consolidate – with the underwriting assistance of investment banks such as J P. Morgan, of course – into a few giant corporate monopolies such as U.S. Steel.
Goldman knew that the corporate reconstruction of domestic manufacturing would be far riskier than commercial paper but also far more profitable. But here, too, he encountered the wrath of the House of Morgan, which – after the massive one-billion dollar merger of U.S. Steel in 1901 – was coming to control the underwriting of industrial securities as well. Morgan’s approach was not only driven by money, but also by his own anti-Semitism. Morgan, for instance, referred to Jewish banker Jacob Schiff as “that foreigner,” and as Morgan biographer Ron Chernow has noted, by the early 1900s, the “Yankee-Jewish banking split was the most important fault line in American high finance.” In general, Morgan was not interested in sharing his industrial underwriting business with Jewish firms. Goldman, however, managed to turn his ethnic identity into an advantage: J.P. Morgan had decided not to deal with Jewish manufacturing companies. Henry Goldman quickly filled the void.
Goldman began with the cigar manufacturing industry. At the turn of the century, three cigar companies had merged into the United Cigar (later renamed General Cigar) Company, which was run by German-Jewish businessman Jacob Wertheim. Wertheim was eager to issue bonds in order to raise much needed long-term capital. Unfortunately, however, United Cigar Company – unlike railroads or other heavily mechanized industrial sectors such as steel production – did not have many physical assets that could serve as collateral for large loans. Wertheim turned to Goldman for assistance, and the latter did not disappoint. Demonstrating his ability to think outside of the box, Goldman convinced shareholders that the United Cigar Company’s impressive revenue stream assured that it was a safe and profitable investment. Here, Goldman was helping to revolutionize the art of capitalization: instead of valuing capital according to physical assets in the present, he was pushing his shareholders to re-conceptualize the very definition of capital as streams of future income. Rather than viewing capital as a static “stock” that depreciated over time, Goldman was encouraging shareholders to think of capital as a dynamic future flow.
Investment banking, however, not only required a good sales pitch but also a great deal of money. The process of underwriting securities required Goldman Sachs to purchase the securities from the issuing corporation (in this case, United Cigar) and then to sell them to investors for a profit. Goldman Sachs was not willing to use its own capital for such a risky investment – but Philip Lehman was. The close personal and business relationship between Henry Goldman and Philip Lehman further reflects the importance of German-Jewish ties in the history of modern investment banking. The Lehman Brothers had come from Alabama, and they had originally made their money on slave crops such as cotton and coffee. But after the Civil War they relocated to New York City, where they were looking to make their mark. Goldman and Lehman came up with a shared business model that lasted for over a decade: Lehman would supply the capital, and Goldman would supply the clients. It was the beginning of a very profitable partnership.
The success of United Cigar served as a harbinger for things to come. Goldman and Lehman bought $4.5 million worth of United Cigar stock and sold it within months for $5.6 million. In underwriting United Cigar, Goldman had recognized the profitability of high-earning firms with little physical assets. Following his cigar successes, Goldman took his approach even further by abandoning industrial manufacturing firms altogether and, in an unprecedented move, turning his underwriting talents to the retail and mass-consumption sector.
Once more, German-Jewish ethnicity and the immigrant experience shaped the contours of Henry Goldman’s entrepreneurial activities. In the late nineteenth century, Sam Sachs’s sister, Emelia Hammerslough, who was married to fashion retailer Samuel Hammerslough, took in her husband’s nephew, a second-generation German-Jewish immigrant who had recently moved to New York from Illinois to gain experience in the retail trade. The young man’s name was Julius Rosenwald, and after his stint in New York, he returned to Illinois, where he became a successful merchant. Rosenwald was an ambitious fellow, and he was interested in buying a portion of Sears, Roebuck Co. but did not have the money. Through his connection with the Sachses, Ronsenwald reached out to Henry Goldman for some loans. Intrigued by Sears’ potential, Goldman financed Rosenwald's purchase of Alvah Roebuck’s half of the business for $70,000 in 1895 ($1.93 million in 2011). That the company name was not changed to Sears-Rosenwald may have reflected the anti-Semitic sentiments of the era. Nevertheless, Rosenwald was clearly running the show at Sears – by the early twentieth century, annual sales reached nearly $50 million.
In 1904, Rosenwald started making plans to expand Sears Roebuck’s business through the construction of a massive, forty-acre mail order plant on Chicago’s West Side. Once again, Julius Rosenwald needed capital, and once again he turned to Henry Goldman for a loan. While Goldman began arranging the usual commercial paper financing for Sears, he also had bigger plans in mind. This was the underwriting opportunity that he and Lehman had been looking for, and he proposed a massive $40 million public stock offering of Sears’ securities that he and Lehman would personally underwrite. Goldman was treading on uncharted ground – no mail-order company had ever gone public before. Sam Sachs was naturally against it, but when Kleinwort Sons gave it the green light, Henry moved forward. In pricing the initial public offering, Goldman once again pushed to redefine the very nature of financial value by focusing on the future earning potential of Sears Roebuck and on how often the retailer turned over its inventory. Goldman backed the issuance of common stock by reframing Sears’ future earnings as “goodwill,” an unprecedented business move in its day. On July 17, 1906, Sears went public. It was a massive success. Goldman Sachs pocketed $10 million ($258 million in 2011) in profit, thus doubling the wealth of the firm in a single deal. Sears, meanwhile, was able to finish its new plant in Chicago. At three-million square feet, it became the largest building in the world. The Amazon of its day, Sears went on to dominate the mail-order market for generations. Gentile firms, perhaps realizing that they had underestimated their Jewish competition, sneered “Let the Jews have that one.”
After the Sears deal, Goldman continued to focus on underwriting retail corporations with Philip Lehman. In 1911, they teamed up once again to take the first American car company – Studebaker Co. – public. While J.P. Morgan struggled to underwrite General Motors in this era, Goldman managed to sell all $43 million ($1.05 billion in 2011) of Studebaker stock with relative ease. Goldman had found his calling. In the next few years, he orchestrated the public offerings of such companies as May Department Stores, Stern Brothers, Underwood Typewriter Company, B.F. Goodrich, Cluett, Peabody & Co., Continental Can Company, Jewel Tea Company, Brown Shoe Company, and, perhaps most importantly, F.W. Woolworth.
The underwriting of Woolworth in 1912 once again reveals how Goldman thought outside of the box. Woolworth was in some ways the Walmart of its day, a mass-retail chain that sold mostly cheap goods (hence the nickname “five-and-dime store”). Not recognizing the profitable potential of mass consumption, most investment bankers were unwilling to involve themselves in such “low-brow” investments. Except for Henry Goldman, of course. Despite Woolworth’s measly assets, Goldman managed to raise $15 million dollars of preferred stock and fifty million dollars of common stock by using goodwill and emphasizing projections that sales would rise rapidly. Common stock was offered at $55 dollars at the start of the day on which Woolworth went public; by the end of the day, it stood at $80. Woolworth used the influx of capital to build the iconic Woolworth skyscraper a year later. Woolworth also represented a turning point in the history of Goldman Sachs, since it was not a Jewish company. By 1914, Goldman Sachs had made 114 security issues for fifty-six different corporations. The bank was leaving its ethnic outsider reputation behind. The same could not be said about Henry Goldman, however.
Henry Goldman’s initial support for Germany in World War I was the most dramatic example of his outsider status on Wall Street. But before turning to the war, we should examine other instances of his iconoclasm, most notably his politics. In 1912, Goldman switched his support from the Republican Party – the party traditionally associated with New York finance – to Woodrow Wilson and the Democratic Party. Once Wilson had been elected, Goldman lobbied for a central bank and was one of the power brokers behind the creation of the Federal Reserve Act in 1913. Goldman’s backing of Wilson created a schism in the company since Sam Sachs, like most Wall Street financiers of the era, continued to support the Republican Party and did not support the Federal Reserve Act.
That said, we must not overplay this political divide. Following the Panic of 1907, when J.P. Morgan had to superintend the bailout of a beleaguered group of New York banks, most Wall Street financiers, perhaps begrudgingly, came to support the founding of a central bank that would create an elastic currency and serve as a lender of last resort in times of crisis. If anything, it was the Morgan-backed Republicans who initially pushed for a central bank even more than the Democrats, who feared – in the anti-monopoly tradition of Jefferson and Jackson – that the creation of such an enormous banking institution would corrupt the nation and place an enormous amount of power into a few hands. In fact, the basic foundation of the Federal Reserve Act had actually been shaped in the years after the Panic of 1907 by the Republicans and Nelson Aldrich, a known associate and friend of Wall Street.
So why didn't Wall Street support the founding of Wilson's Federal Reserve? When it comes to complex legislation, the devil is always in the details. Very generally, however, the answer to this question lies in the fact that most Wall Street bankers, including J.P. Morgan, wanted a strictly private central bank – like the Bank of England. Wilson and the Democrats, led by Senator Carter Glass, on the other hand, wanted to create a public-private hybrid that would be subject to some, albeit limited, government oversight. If we recall Goldman’s love of Germany, it is not surprising that he was willing to support a publicly-regulated central bank: in statist Germany, where Bismarck had created a powerful, highly interventionist government, such an approach was the norm. As he noted in a letter to Woodrow Wilson in which he lobbied for the Federal Reserve, European central banks had managed to stabilize their economies whereas America underwent a serious financial panic every decade or so. While Goldman’s admiration for German state building was common among Progressives of the era, it was unusual among financiers. Clearly, Goldman’s ethnic identity had shaped his politics and pushed him towards the political margins of the financial mainstream.
Goldman’s support for Wilson, however, was not nearly as controversial as his reaction to World War I. It is here that we see just how out of place Goldman was not only on Wall Street, but also in his own firm. Throughout his life, Goldman remained a passionate devotee of German culture. He vacationed in Baden-Baden and Berlin, and spent a great deal of time as an adult in Germany. When war broke out in Europe after the assassination of Archduke Franz Ferdinand of Austria-Hungary, Wall Street – Samuel Sachs and Philip Lehman included – sided with the British and the French. Henry supported Germany.
Goldman’s iconoclasm came became an issue in September 1915, when the House of Morgan began arranging an enormous private loan in support of the Anglo-French war effort. The largest bond issue in history, the loan reached $500 million ($11.5 billion in 2011) and included sixty-one underwriters and a whopping 1,570 financial industries. Sam Sachs was eager to join in, but Henry – by then a longtime senior partner – nixed any involvement.
Henry’s unwillingness to finance the English and French war effort reverberated through the world of finance like a tidal wave, seriously compromising Goldman Sachs’s reputation on Wall Street. His close relationship with Lehman was ruined, as Philip refused to speak with him. Sam Sachs lent $100,000 of his own money to the war cause, but this was not enough to mollify the powers that be. When the British firm Kleinwort got wind of Henry Goldman’s stance, they threatened to sever their ties with Goldman Sachs. With the bank on the brink of collapse, Henry Goldman – the man who had transformed Goldman Sachs into one of the most powerful investment banks in the world – was forced to resign. He would be the last Goldman to work at Goldman Sachs.
While Henry Goldman’s financial and political stances were iconoclastic, his personal life and hobbies were fairly typical for a man of his social standing. What is more, it appears that no one in his family shared his contrarian views. Goldman had married Babette Kaufman – the Kaufmanns were yet another elite German-Jewish family who had dropped the second “n” in their name – and they had three children: Robert, Henry Jr. (referred to as “Junie”), and Florence. Judging from Babette’s philanthropic activities for the United Hebrew Fund, Mount Sinai Hospital, and various social service agencies for deaf and crippled children, she seems to have fit right in with the German-Jewish elite of the era. Goldman’s children also appear to have led conventional, assimilated American lives: for example, both sons joined the Navy during World War I (even though this may have created a stir within the Goldman household). Admittedly, Robert was always something of a black sheep within the family, but his unconventional behavior manifested itself more in multiple marriages and career struggles than in political, social, or economic radicalism. Junie, meanwhile, followed his father’s footsteps and became a banker, albeit not for Goldman Sachs. Florence married a prominent New York lawyer.
Following his resignation from the bank, Henry spent much of his spare time pursuing interests that were typical for retired, super-rich investment bankers of his era. Like J.P. Morgan, he collected an astonishing collection of Renaissance and Baroque art, which included works by Masolino, Donatello, Van Dyck, and Rubens. Not surprisingly, Goldman’s hobbies often had a German twist: he was acquainted with physicists Max Born and Albert Einstein; in the 1920s, he spent a good deal of time in Weimar Germany with opera singer Elena Gerhardt, and he hosted dinner parties for the likes of violinist Fritz Kreisler and author and Nobel Laureate Thomas Mann. Goldman, it could be said, had transformed himself into a Germanophile alternative to J.P. Morgan.
Finally, it is important to note that Goldman’s Judaism played a much lesser role in his cultural and political proclivities than his German roots. Henry was not a religious man. According to his granddaughter, he ran a completely secular household and appears to have had no interest in Reform Judaism. As his granddaughter recalls, Goldman was also “no Zionist.” While his ethnic identity and social position was obviously rooted in German-Jewish institutions and familial relations, there is little evidence that he was an admirer of Jewish tradition. It was German – not Jewish – culture that he truly loved.
Walk into the gleaming entryway to Goldman Sachs’s executive floor these days, and you will find a portrait of all the senior partners since the firm’s inception. All of them, that is, except one: Henry Goldman. Even decades after his death, Goldman remains an outsider. Yet while his picture might not be on the wall, the empire he built lives on. With the de-industrialization of the United States in the 1970s and the meteoric rise of Wall Street and the “big box” corporate service sector, it has become increasingly clear that Henry Goldman didn't just build up Goldman Sachs, he also shaped contemporary America.
Ethnic relations and the immigrant experience were defining aspects of Henry Goldman’s business career. From his inauspicious beginnings as a college-drop out and traveling salesman, through his rapid rise as an investment banker, and to the bitter end when he was forced to resign, Goldman’s German-Jewish roots played a crucial role in his entrepreneurial development.
While counterfactual questions make for bad history, they can be useful in summarizing the arguments this paper has sought to advance. Would Marcus Goldman have turned to finance, instead of farming, if he had not come from a Jewish background? Would Henry Goldman have turned to risky stock issuances if he had been a “Yankee” banker at J.P. Morgan? Would Henry have been able to bypass the House of Morgan and underwrite United Cigar or Sears if he had not shared ethnic affinities with these firms? And finally, would Henry Goldman’s career have ended so inauspiciously if he had not grown up admiring German culture? The answer to all these questions, as I hope this paper has shown, appears to be one and the same: no. The career of Henry Goldman, the rise of Goldman Sachs, and the development of mass-retail underwriting would not have proceeded as they did if Henry Goldman had not been the son of a German-Jewish immigrant.
 On this transformation, see Lizabeth Cohen, A Consumers’ Republic: The Politics of Mass Consumption in Postwar America (New York: Vintage Books, 2003); Michael Bernstein, The Great Depression: Delayed Recovery and Economic Change in America, 1929-1939 (New York: Cambridge University Press, 1989).
 Price per earnings has also become a crucial tool in attempts to recognize market bubbles. See, for example, Robert Shiller, Irrational Exuberance (Princeton, NJ: Princeton University Press, 2000).
 See Hasia Diner, A Time for Gathering: The Second Migration, 1820-1880 (Baltimore: Johns Hopkins University Press, 1995); Barry E. Supple, “A Business Elite: German-Jewish Financiers in Nineteenth Century New York,” The Business History Review, vol. 31, no. 2 (Summer 1957).
 For census figures, see Supple, “A Business Elite,” 146. Since the census did not ask for religious affiliation, it is challenging to estimate the size of the Jewish population in America in the nineteenth century. For the above estimates, see Oscar and Mary Handlin, “A Century of Jewish Immigration to the United States,” American Jewish Year Book, vol. 50 (1948-1949). In 1880, the Union of American Hebrew Congregations estimated that there were 230,257 Jews in America. For a report, see David Sulzburger, “Growth of the Jewish Population in the United States,” vol. 6, American Jewish Historical Society, 1897.
 Supple, “A Business Elite,” 150-58.
 June Breton Fisher, When Money was in Fashion: Henry Goldman, Goldman Sachs, and the Founding of Wall Street (New York: Palgrave McMillan, 2010), 7-23. On New York City as the center of American business and capital, see Sven Beckert, Monied Metropolis: New York City and the Consolidation of the American Bourgeoisie, 1856-1896 (New York: Cambridge University Press, 2003).
 Stephen Birmingham, “Our Crowd”: The Great Jewish Families of New York (New York: Harper & Row, 1967), 87. Biographies of Seligman and Schiff are included in the present collection.
 Fisher, When Money was in Fashion, 27-30; Charles D. Ellis,The Partnership: The Making of Goldman Sachs (New York: Penguin, 2009) 4-5; Supple, “A Business Elite.”
 For more on this, see Hasia Diner’s essay in the present collection.
 Ron Chernow, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance (New York: Grove Press, 1990), 89; Supple, “A Business Elite,” 152.
 Ellis, The Partnership, 5.
 On the history and relatively conservative nature of American banking in the nineteenth century, see Bray Hammond, Banks and Politics in America from the Revolution to the Civil War (Princeton, NJ: Princeton University Press, 1991).
 Ellis, The Partnership, 5. All current values (in 2011 USD) are based on Samuel H. Williamson, “Seven Ways to Compute the Relative Value of a U.S. Dollar Amount, 1774 to present,” MeasuringWorth, using the Consumer Price Index.
 Fisher, When Money was in Fashion, 29; Birmingham, “Our Crowd,” 132.
 On the name change, see Lisa Endlich, Goldman Sachs: The Culture of Success (New York: Knopf, 1999), 33.
 On the ongoing importance of kinship ties in American business, see Chernow, The House of Morgan, 89; Naomi Lamoreaux, Insider Lending: Banks, Personal Connections and Economic Development in Industrial New England (New York: Cambridge University Press, 1996).
 On the rise of abstract, statistical forms of knowledge in this era, see Robert Wiebe, The Search for Order, 1877-1920 (New York: Hill and Wang, 1967); Alfred Chandler, The Visible Hand: The Managerial Revolution in American Business (Cambridge, MA: Harvard University Press, 1977); Walter Friedman, Fortune Tellers: The Story of America’s First Economic Forecasters (Princeton, NJ: Princeton University Press, 2013).
 Ellis, The Partnership, 6; Daniel Alef, Henry Goldman, Goldman Sachs and the Beginning of Investment Banking (Santa Barbara, CA: Titans of Fortune Publishing, 2010), 97.
 Alef, Henry Goldman, 130-39.
 Naomi Lamoreaux, The Great Merger Movement in American Business, 1895-1904 (New York: Cambridge University Press, 1988). See also Vincent Carosso, Investment Banking in America (Cambridge, MA: Harvard University Press, 1970); Navin and Sears, “The Rise of a Market for Industrial Securities,” Business History Review, vol. 29 (June 1955).
 Chernow, The House of Morgan, 90; on Morgan's anti-Semitism, see John Winkler, Morgan the Magnificent (New York: Vanguard Press, 1930), 10, and Suzie Pak, Gentlemen Bankers: The World of J.P. Morgan (Cambridge, MA: Harvard University Press, 2013), chapter 3. For a detailed and slightly different view of J.P. Morgan and his interactions with members of the German-American business elite, particularly German-Jewish firms, see Mary Rodgers’ essay in the present collection.
 Walter Sachs, “The Reminiscences of Walter E. Sachs,” Oral History Collection of Columbia University, New York City, volume 1, 87; Ellis, The Partnership, 9-10. Economist Irving Fisher was developing similar definitions of capital at this time. See Irving Fisher, The Nature of Capital and Income (New York: Macmillan, 1906).
 Ellis, The Partnership, 9-10. Endlich, Goldman Sachs, 38. For more on the Lehman family, see Birmingham, “Our Crowd,” and Supple, “A Business Elite.”
 Ellis, The Partnership, 10-12; Alef, Henry Goldman, 168. A biography of Rosenwald is included in the present collection.
 Walter Sachs, “Reminiscences,” 32; for a history of Sears, see Boris Emmet and John E. Jeuck, Catalogs and Counters: A History of the Sears, Roebuck and Company (Chicago, University of Chicago Press, 1950); James C. Worthy, Shaping an American Institution: Robert E. Wood and Sears, Roebuck (New York: New American Library, 1986). A company timeline can also be found on the Sears website.
 Quoted in Ken Auletta, Greed and Glory on Wall Street: The Fall of the House of Lehman (New York: Warner Books, 1987), 27.
 Walter Sachs, “Reminiscences,” 32; Alef, Henry Goldman, 287-88.
 Ellis, The Partnership, 12-13; Fisher, When Money was in Fashion, 78-79, 91; Alef, Henry Goldman, 287. Numerous books have been written on Woolworth’s key role in the rise of mass retail in America. See James Brough, The Woolworths (New York: McGraw-Hill, 1982); Nina Brown Baker, Nickles and Dimes, The Story of F.W. Woolworth (New York: Hartcourt, Brace & World, 1954).
 Fisher, When Money was in Fashion, 73-74, 93; Ron Chernow, The House of Morgan, 128-30, 181-82.
 On the origins of the federal reserve, see James Livingston, The Origins of the Federal Reserve System: Money, Class and Corporate Capitalism, 1890-1913 (Ithaca, NY: Cornell University Press, 1989); Eugene White, The Regulation and Reform of the American Banking System, 1900-1929 (Princeton, NJ: Princeton University Press, 1983); Chernow, The House of Morgan, 129-30.
 Livingston, The Origins of the Federal Reserve; Elmus Wicker, The Great Debate on Banking Reform: Nelson Aldrich and the Origins of the Fed (Columbus, OH: Ohio State University, 2005).
 Fisher, When Money was in Fashion, 74-76.
 Ibid., 99; Birmingham, “Our Crowd,” 334-35; Sachs, “Reminiscences,” 111-18.
 Walter Sachs, “Reminiscences,” 39.
 On the war bond issue, see Chernow, The House of Morgan, 197; Pak, Gentlemen Bankers, chapter 4.
 Fisher, When Money was in Fashion, 103-10; Birmingham, “Our Crowd,” 344; Ellis, The Partnership, 14-15.
 Fisher, When Money was in Fashion, 62, 80.
 Ibid., 80, 153, 258. Were it not for a few descriptions of encounters with anti-Semitism, one could read Henry Goldman’s granddaughter’s entire book and not even realize that he was Jewish.
 “Henry Goldman’s Granddaughter Talks about Sachs, IPOs,” Bloomburg Business, retrieved July 14, 2010.