Founded first by immigrant Henry Lehman as a mercantile store in Montgomery Alabama, Lehman Bros. underwent a series of reinventions with the help of his brothers Mayer and Emanuel to become first an important commodity brokerage and eventually an investment bank in New York.
When New York investment bank Lehman Brothers filed for Chapter 11 bankruptcy protection on September 15, 2008, it represented the largest bankruptcy in U.S. history. This massive investment bank had been founded with modest assets in the mid-nineteenth century in Montgomery, Alabama. The story of how Lehman Brothers grew under the leadership of Mayer Lehman (Born: January 9, 1830 in Rimpar, Kingdom of Bavaria; died: June 21, 1897 in New York City) and his brother Emanuel illustrates how hard work and shrewd business sense can overcome many obstacles. Henry, who was the oldest of the Lehman brothers and the first to immigrate to the United States, opened the business initially as a mercantile store in 1845. Henry’s two brothers Emanuel and Mayer (the latter being the youngest of the three) eventually joined him in Montgomery, and by 1850 the store had become known as Lehman Brothers. Henry died tragically of yellow fever in 1855. After recovering from this shock, the two remaining brothers continued to expand the business by becoming involved in the booming Alabama cotton industry. The controversies that ultimately led to the Civil War were growing and as cotton brokers, the brothers maintained financial interests on both sides of the impending conflict. To be closer to buyers, Emanuel Lehman opened a branch of Lehman Brothers in New York in 1857. Mayer remained in Montgomery to stay close to the source of cotton. The war was hard on business, but the Lehman Brothers rebounded from the difficulties with considerable vigor. In 1868, Mayer joined his brother in New York. The business grew as Mayer organized the New York Cotton Exchange in 1870. Later, the firm expanded its business to other commodities, joining the coffee exchange, the sugar exchange, and the petroleum exchange in the 1880s, and invested in cotton mills, iron and steel manufacturing, railroads, real estate, and banks. When Mayer Lehman died in June of 1897, Lehman Brothers was one of the leading businesses in New York City. The firm continued to grow and shifted its business activities to investment banking under the leadership of the second generation of Lehmans.
Family and Ethnic Background
Mayer Lehman (born Maier Lehmann) was born on January 9, 1830, to Abraham and Eva Lehmann of Rimpar, a small village north of Wϋrzburg in the kingdom of Bavaria. No information is available regarding Abraham’s parentage, but records exist indicating Eva was the first child of Seligman Löw and his wife Edel (whose maiden name was Lesser), who lived in Hiedingsfeld, another small village near Wϋrzburg. Abraham and Eva had a total of ten children during their lifetime.
When Abraham settled in Rimpar in 1807, it was a small village of 1,278 people, 118 of whom were Jews. As Jews in predominantly Catholic Bavaria, Abraham and Eva lived a very restricted life. Typically, Jews had little social interaction with non-Jews, so the 118 Jews in Rimpar would have been a close-knit group. The “edict concerning the relations of Jews in the Kingdom of Bavaria”—promulgated in 1813 and first enforced in the Wϋrzburg region in 1816—relaxed most of the restrictions. The edict allowed Jews to possess land, enter universities, and enter some professions that had previously been closed to them. There were two other interesting effects of the edict. First, the edict required all Jews to choose distinctive family names to replace the custom of using “son of” and one’s father’s name. Abraham Löw, presumably the son of someone named Löw, chose the last name Lehmann. The brothers who immigrated to the United States later dropped the second n, changing the spelling to Lehman. Second, the edict restricted the number of Jewish families that could reside in any municipality to the number of Jewish families residing there at the time of the edict. As a result, only the eldest son could expect to settle in the same location as his parents. A younger brother who wanted to stay would have to wait for the death of someone without children or for a family to move away. This restriction led a large number of younger sons of Bavarian Jews to leave the region, many of whom immigrated to the United States.
To claim one’s place on the list of Jews allowed to live in a given town, people had to register. On March 24, 1817, the heads of all Jewish households in Rimpar and some other villages came to Wϋrzburg to register. Abraham Löw, now Abraham Lehmann, put his name on the list for the village of Rimpar. Interestingly, Abraham was able to sign his name in Latin letters, but many of his fellow citizens used Hebrew letters and required an official to authenticate their signatures. As a cattle dealer, Abraham had many more dealings with the outside community than some of the other Jews of Rimpar, which might account for his familiarity with Latin letters.
Like his children and grandchildren after him, Abraham was a successful business man. In 1810 records credit him with having trade capital of 400 florins, and in a June 1817 accounting his trade capital is listed as 600 florins. The 50 percent increase over the seven years represents a considerable success. As a successful business man Abraham could afford to send his children to school. In fact, the Lehman children attended two schools: Rimpar’s Catholic school in the morning and a Hebrew school taught by the local cantor in the afternoon.
Two factors likely contributed to Mayer Lehman’s decision to immigrate to the United States. Undoubtedly, the most important reason was that two of his older brothers had established themselves in the United States. Henry (born Hajum) had immigrated to the U.S. in 1844, and Emanuel (born Mendel) had joined him in 1847. The two brothers were running a successful store in Montgomery, Alabama, so Mayer knew he would have a support network if he came to the United States. The other factor may have been the failure of the 1848 political revolutions in the German states. These revolutions were an attempt by German liberals to gain political rights such as freedom of the press, the right to found political clubs, and to elect parliaments based on expanded suffrage. Mayer Lehman was a friend of some of the leaders of the Bavarian revolutionary movement and he likely sympathized with some of their aims. We do not know how active he was in the demonstrations and other activities surrounding the revolution. Of particular interest to Mayer and the other Jews was a call for full civil rights for German Jews. On December 14, 1849, the lower house of the Bavarian parliament passed a law repealing the Jewish edict, but the measure was rejected by the upper house in February 1850. In the long run, the revolution in Bavaria, like the revolutions in the other German states, failed to affect significant political or social change. The aristocracy’s grip on power was too strong. Had Mayer been thinking of staying in Bavaria, or another German state, at the time, such ideas likely left his mind as soon as it became clear that the revolutions were headed for failure. Late in the spring of 1850, Mayer traveled north and boarded the Admiral in Hamburg. He arrived in New York City on July 17, 1850, and quickly made his way south to Montgomery to join his brothers.
Much later, after Mayer and his brother Emanuel became prosperous, they traveled back to Bavaria to visit their many relatives. Although they remained in contact with family through letters and the occasional visit, they became thoroughly Americanized, quickly learning the language and adopting many of the customs of their new country.
The story of Lehman Brothers starts with Mayer Lehman’s older brother Henry. Seligman, Abraham and Eva Lehmann’s oldest child, stood to inherit his father’s right to live in Rimpar, so Henry had no choice but to move elsewhere if he wanted to start a business or raise a family of his own. He chose to leave for the United States in the summer of 1844, at the age of 21. He arrived in New York on September 11, 1844, and quickly set sail again for Mobile, Alabama. It is possible that he chose Alabama as a destination because he knew people who had settled there. It is also possible that he chose Alabama because it was a lightly populated agrarian state where the son of a cattle trader might find familiar surroundings. What we do know is that Henry left Mobile as a peddler and made his way inland to Montgomery, where he settled down. He opened a store with a hand-lettered sign on the front that simply read H Lehman and lived in the back room of the store.
Alabama was booming in the 1840s because its rich soil was suited to growing cotton. When Henry arrived, Montgomery was a small town of 6,000 residents, 2,000 of whom were slaves. Though small, there was a sense that Montgomery had a bright future. Henry’s mercantile store prospered, and his brother Emanuel, five years his junior, joined him in 1847. The store, which now exhibited a sign reading H Lehman and Bro, continued to prosper. In 1848, the two Lehman brothers moved their store to a larger location on a corner lot in the center of town. In 1850 the third Lehman Brother, Mayer, joined his two brothers and started as an apprentice in the store. As a result, the storefront sign changed from H Lehman and Bro to Lehman Brothers.
The Lehman brothers’ business developed in an environment dominated by cotton. Cotton was a huge cash crop for the farmers and plantation owners in Georgia, Alabama, and Mississippi. Textile mills in New England and in England were willing to buy all the cotton they could get their hands on at very attractive prices. The whole of Montgomery depended on cotton, and many of the Lehman brothers’ customers were cotton planters of various sorts. Some of their business was done on a cash basis, but the unstable nature of banking in nineteenth century America made it profitable to do a considerable amount of business through barter. The Lehmans also extended credit as a part of their business because many planters were short of funds until their cotton was harvested. This practice led to considerable cotton holdings at various times and thus it was natural for the brothers to expand into the cotton brokerage business.
Cotton brokers were businessmen who connected suppliers, the cotton growers in Georgia, Alabama, and Mississippi with the demanders, who were the exporters in New Orleans and the spinning mills in New England. Through their business activities, the three brothers gravitated towards different aspects of the brokerage business. Henry frequently traveled to New Orleans to talk to owners of warehouses and exporters. Emanuel represented the firm in New York, meeting with textile factory owners and settling accounts with New York banks that financed much of the cotton trade. Mayer stayed in Montgomery and became an expert in the supply side of the cotton brokerage business. Over time he became an expert in the entire cotton business. In his book on the Lehman family, Kenneth Libo writes, “Mayer became the cotton expert in the family, mastering every intricacy and nuance of the trade with the same patience and persistence his ancestors had applied to the Talmud.”
In 1855, tragedy struck the Lehman brothers. Henry Lehman, who had always feared the yellow fever that often plagued the citizens of Montgomery, fled to New Orleans to avoid an outbreak of the fever, only to die of it on November 17, 1855. Emanuel and Mayer continued the business. By 1859 the cotton crop was double what it had been in 1849, and the Lehman brothers prospered during this decade because of their willingness to accept cotton as a medium of exchange. They expanded their connection to New York, which had become the center of the cotton business. In 1858, Emanuel moved to New York and opened an office at 119 Liberty Street. Mayer remained in Montgomery to keep track of the business in the South.
The outbreak of the Civil War interrupted the expansion of Lehman Brothers. Montgomery was the first capital of the Confederacy. Jefferson Davis was inaugurated there as president of the Confederacy on February 11, 1861. Mayer Lehman was a southern patriot and a civic leader in Montgomery. In his early thirties, Mayer could have joined the Confederate Army but chose to become a blockade runner instead. The war presented some business opportunities for individuals willing to take chances. Prior to the blockade of the South imposed by President Lincoln in April of 1861, Lehman Brothers sold cotton in New York and used the proceeds to replenish the shelves of its store with manufactured goods from the North. Once the blockade was in place, this model no longer worked. Maneuvering cotton through the blockade to the North was difficult and at times it even had to travel to New York via England. In 1862, Lehman Brothers entered into a joint venture with John Wesley Durr, an established cotton merchant in Montgomery. Lehman, Durr & Company purchased the Alabama Warehouse in Montgomery and became one of the leading cotton firms in the town.
A well-known episode illustrates the respect and confidence that his fellow southerners placed in Mayer Lehman. In December 1864, the Alabama legislature authorized the expenditure of $500,000 (roughly $7.2 million in 2010$) to be used to improve the conditions of citizens of Alabama held in Union prisons. Mayer Lehman was assigned the task of delivering the relief to the captive Alabamans. The plan was to sell cotton in New York and use the proceeds to provide blankets, medicine and other provisions. Mayer Lehman went to Richmond, Virginia to ask Jefferson Davis for permission to approach General Grant to request safe passage through the battle lines on this mission of mercy. After obtaining President Davis’ permission, Mayer Lehman wrote to General Grant on January 14, 1865. He wrote again two weeks later but never received a reply. Six weeks after Mayer Lehman wrote to General Grant the second time, the Confederate forces under General Lee surrendered and the war came to an end.
In the end, though the war was difficult for the Lehman Brothers’ business, it was not a disaster. As Harold Woodman chronicles, several southern businessmen prospered despite the blockade and the war. Though New York was cut off from Montgomery, Emanuel Lehman was able to sell some cotton that made it through the blockade or made the roundabout journey from the South to England and then back to New York. Given Lehman Brothers’ rapid recovery after the war, it is very likely that Mayer Lehman did not suffer as much as many other supporters of the Confederacy due to his profitable business activities during the conflict. Still, Mayer did suffer some financial losses. For example, after the surrender of Confederate troops Lehman and Durr decided to burn the cotton in the Alabama Warehouse so it would not fall into the hands of advancing Union troops.
After the war, Lehman Brothers regained its momentum quite rapidly. The Lehmans kept the store in Montgomery, but most of the business focused on cotton brokering. Emanuel reopened the shuttered Lehman Brothers office in New York, this time at 176 Fulton Street. Soon thereafter, the offices were moved from Fulton Street to 109 Water Street, less than two blocks from the busy East River wharves. In 1867, the New York offices moved again to 133-35 Pearl Street, just off Hanover Square, the center of the cotton trade in New York. The Lehmans also entered into another partnership, this time in New Orleans. The New Orleans partner was Benjamin Newgass, the younger brother of Mayer’s wife Babette. Lehman, Newgass & Company reconnected the mercantile triangle of New York, Montgomery, and New Orleans that the brothers had first established before the Civil War.
Lehman Brothers played an important role in the reconstruction of the South, particularly Alabama. After the war, the state of Alabama appointed Lehman Brothers as its fiscal agent. The firm was charged with raising money for the state by selling bonds and managing the state’s debt. Emanuel had some experience in this type of venture since he had tried to sell Confederate bonds in England during the war. Given the low credit rating of states in the South, it could not have been easy to market the bonds of the state of Alabama. The firm was also responsible for repayment of Alabama’s debts and for making the interest payments due on outstanding bonds. This type of business was a far cry from the business of running a store that had launched the Lehmans in America. Many of the responsibilities were closer to those of an investment bank than the more familiar activities of a commodities broker or a store owner.
Accounts vary regarding the reason for Mayer’s move to New York City in 1868. The business history of Lehman Brothers suggests that the move resulted from expansions of the business in New York and a realization that Durr in Montgomery and Newgass in New Orleans were capable of managing the affairs in their respective partnerships. Peter Chapman’s account indicates that the deterioration of the South, accelerated by the actions of carpetbaggers and scalawags, influenced Mayer’s decision to leave Montgomery. Roland Flade suggests that Mayer wanted to get away from political strife caused by groups such as the Ku Klux Klan and other white supremacist organizations. Jews, particularly wealthy Jewish businessmen with family connections in the North, were not likely to be favored by these groups. Regardless of the reason, Mayer’s move to New York to join his brother proved very important for Lehman Brothers.
New York City was very different from Montgomery, Alabama. When the Lehman brothers moved to Montgomery in the 1840s, they joined a very small cohort of Jews. They were active in the local Jewish community, but their social circle was not restricted to this group. As time progressed, Mayer became an increasingly prominent businessman in Alabama’s state capital. He was well connected in state political circles, as indicated by his selection by the governor during the Civil War as an agent to get provisions to Alabama prisoners of war and by the state of Alabama’s decision to appoint Lehman Brothers as its first fiscal agents following the conflict. Mayer found in Alabama a life that did not include the restrictions faced by his father in Germany. The partnership with John Wesley Durr, who was not Jewish, is additional evidence that Mayer’s connections were not limited to the small Jewish community in Montgomery.
By 1870, 80,000 Jews lived in New York, many of them recent immigrants from Germany. Unlike the South, non-Jewish banks and law firms would not accept Jewish directors or partners. As a result, Jewish people living in New York inhabited a mostly separate social world. The separation was not enforced by laws, as it had been in Europe, and was not nearly as restrictive. Still, it was likely a shock for Mayer, who had been treated as an equal by everyone in Montgomery, to encounter discrimination in New York similar to that which had convinced him to leave Rimpar. Moreover, Mayer had been a slave owner and a dedicated supporter of the Confederacy, and remained a lifelong Democrat. Surely he must have had to moderate his political beliefs as he moved around the financial circles in New York City.
After the Lehman brothers reconnected in New York, Mayer and Emanuel developed into a potent team. Mayer was the more social of the two and also more aggressive. Family members were fond of saying that, “Mayer made the money and Emanuel conserved the money.” When Mayer arrived in New York, he continued to focus on the cotton trade. Mayer played a leading role in the formation of the New York Cotton Exchange (NYCE) in 1870. The NYCE was critical to organizing and regulating trade that had become quite chaotic following the war. Cotton exchanges in New Orleans, Mobile, Memphis, and Savannah were founded shortly thereafter, but the NYCE is credited with playing a leading role in the development of futures contracts for cotton. Mayer sat on its first board of governors and was in charge of finances. Although futures markets were not new (a rice exchange had existed in Japan for many years, and futures markets for grain existed in Chicago), the cotton exchange was the first futures market based in New York City. As a futures market, the NYCE managed the purchase and sale of contracts, not cotton. A cotton mill could buy a contract for the delivery of cotton at a set price at a certain date, and a cotton farmer could buy a contract that guaranteed a set price for the sale of cotton at a certain date. These futures contracts allowed those on both sides of the market to reduce the risk associated with transactions involving a commodity whose spot price—the price to immediate delivery—could vary widely.
Other futures markets opened in New York after the cotton exchange. The Lehman brothers participated in several of them, joining the exchanges for coffee, sugar, and petroleum. These activities came naturally to Mayer and Emanuel Lehman, since they involved transactions in commodities. The same principles that guided their activities in the cotton market could be applied to the markets for other commodities.
The Lehman brothers did not limit themselves to commodity trading but diversified their investments, taking advantage of the economic resurgence of the New South. They organized a group of New York investors to back Samuel Noble, an iron and steel expert who had started a business in Georgia but with backing from the Lehmans soon moved to Alabama and started the Woodstock Iron Company in Anniston in 1873. The Lehmans also held interests in the Shelby Iron Company in Alabama and the Chickamaugua Coal and Iron Coal Company in Georgia. In 1878, Mayer and Emanuel set up the Tallassee Falls Manufacturing Company near Montgomery as a cotton mill and also bought the Lane Cotton Mills of Louisiana. With these investments, the Lehmans were involved fundamentally in two of the major industries that led to an economic revival of the South: iron and steel that eventually centered in Birmingham, Alabama, and textile mills that spread throughout the South.
The Lehman brothers also invested in real estate and railroads in the South and in commercial banking. In real estate, Lehman Brothers was involved in the Anniston City Land Company and the Alabama Mineral Land Company, among others in Alabama. The Southern States Land & Timber Corporation in south Florida was another Lehman venture. Its activities have been described as one of the single most important factors in the opening of southern Florida. In the railroad industry, Lehman Brothers invested in the Richmond & Danville, the Montgomery & Tuscaloosa, the Savannah & Western, the Louisville, Evansville & St. Louis, the Georgia Central, and the Richmond & West Point Terminal Company. The banks that had important contributions from Lehman Brothers included the Mercantile National Bank (later merged with Irving Trust Co.), the Trust Company of American (later merged with Chase National Bank), and the Mutual Alliance Trust Company (later part of Manufactures Trust Company).
Not all Lehman Brothers investments were resounding successes. For example, in the late-nineteenth century Lehman brothers backed the electric car, investing in the Electric Vehicle Company, which resulted in a massive failure.
The two immigrant brothers from Bavaria managed Lehman Brothers as it established itself in New York and later integrated the next generation of the family into the business. Meyer H. Lehman, the eldest son of Henry, was the first of his generation to work with Emanuel and Mayer, and became a junior partner in 1880. In 1878, Sigmund M. Lehman, Mayer’s eldest son, joined the firm. He was made a partner in 1882, the year Philip Lehman, one of Emanuel’s children, began working for Lehman Brothers. Yet despite the inclusion of the younger generation, Lehman Brothers remained very much the firm of its two existing founders. Both held the largest shares and made the major decisions. Interestingly, the brothers trusted each other so completely that they did not even hold separate bank accounts.
The firm was held closely for quite some time. The first partnership to someone not of direct Lehman lineage was not granted until 1924, almost 75 years after the firm was founded. Even the husbands of Henry, Emanuel, and Mayer’s daughters could not become partners. To be a partner prior to 1924 one had to be a Lehman by blood; in-laws were not included.
After a brief illness, Mayer died at the age of 67 on June 21, 1897. On the day of his funeral, the New York Cotton Exchange closed for an hour in honor of his contributions to its founding. Lehman Brothers continued to grow and diversify. Emanuel Lehman was active in the firm for three or four years after the death of his brother. He died on January 10, 1907 at the age of 80. As he became less active in his final years, the leadership of Lehman Brothers passed to the Lehmans born in the United States, primarily Philip Lehman, Emanuel’s son.
Lehman Brothers’ transformation from a mercantile establishment turned commodity brokerage firm into an investment bank came under the leadership of the second generation of Lehmans. Led by Philip, Lehman Brothers found an unfilled niche to exploit. Philip thought the leading investment banks, led by white, Anglo-Saxon, Protestants (WASPs) such as J. P. Morgan, among others, focused too exclusively on heavy industry, particularly railroads and steel. Philip found a partner who agreed with this viewpoint in Samuel Sachs, his back fence neighbor at a summer home in Elberon, New Jersey. Samuel introduced Philip to his partner at Goldman Sachs, Henry Goldman. Philip and Henry, also the son of a former peddler, decided to focus on companies closer to the final consumer than rather than the heavy industries that had been the targets of other investment banks. The first issue of stock underwritten by the two was for the United Cigar Manufacturers’ Company. That was followed by an initial public offering for Sears, Roebuck and Company. Between 1906 and 1925, Lehman Brothers and Goldman Sachs operated as the underwriters for the shares of a large number of companies. Continental Can, Underwood Typewriter, Brown Shoe, S. H. Kress, and Woolworth were among the more well-known companies whose stock they underwrote. The arrangement with Goldman Sachs lasted until 1926 and greatly enhanced the position of both firms.
Social Status and Personality
Of the two Lehman brothers, Mayer was much more outgoing and social than his older brother Emanuel. He acted as a community leader in Montgomery and later in New York. On January 6, 1858, twenty-eight-year-old Mayer married Babette Newgass of New Orleans. Babette was eight years younger than Mayer and had come to New Orleans from Rieneck, a town near Rimpar in Bavaria, in 1854. Mayer and Babette had first met in Bavaria two years before Mayer immigrated to the United States. In November of 1848, they both attended the marriage ceremony of Mayer’s older brother Seligmann, a relative of Babette by marriage. It is difficult to think there was much attraction at the time, as Mayer was nineteen years old and Babette only eleven. When they met again in New Orleans at the ages of twenty-eight and twenty, however, the circumstances were quite different.
Babette and Mayer had eight children, four born in Montgomery and four born in New York. Consistent with this large family and Lehman’s prosperity, Mayer and Babette lived in a very large house covering nearly an entire city block in Montgomery. The house was located across the street from the firm’s office, and the firm’s office workers ate lunch with the family. In New York they owned an even more impressive house: a five-story brownstone at 5 East Sixty-Second Street near Central Park, constructed in 1876.
In Montgomery, Mayer was very well connected both politically and socially. He was a staunch Democrat and strong supporter of the Confederacy. The family owned seven slaves: four women and three men. It was political and economic suicide to oppose slavery in the South in the 1850s and 1860s, so no matter what they may have truly thought of the practice, Mayer and Babette owned slaves who worked in the house and in the offices. Two of them accompanied the family as freed people when the Lehmans moved to New York in 1868, and one of the women stayed with the family for a long time, helping to raise several of the children.
Mayer had many friends among the political elite of Alabama, as well as many business associates. His membership in the Montgomery Masonic Lodge attests to the fact that he was well accepted in the community. It must have been very difficult for Mayer and Babette to leave Montgomery. They moved in the highest social circles and had survived the war with more of their resources intact than many people. The postwar political and racial strife in Alabama must have been distressing to them and likely served as a major impetus for their decision to uproot themselves and move from Montgomery to New York, leaving their extensive social network behind. The much larger Jewish community in New York soon replaced their Montgomery friends. As the Lehman Brothers business flourished, they became part of the exclusive German-Jewish community in New York City
Author Stephen Birmingham describes this elite community of wealthy, German-Jewish families in his book Our Crowd. The “Crowd” included several large families, all of whom prospered in the period following the Civil War. James Seligman and his brothers of the J. & W. Seligman & Co., Meyer Guggenhheim and his sons, who made their money in mining and smelting, Abraham Kuhn and Solomon Loeb of the investment banking firm of Kunh, Loeb & Co., Samuel Lewishon and his sons, who made their money in mining and smelting, Marcus Goldman and Joseph Sachs of the investment bank Goldman, Sachs and Co., and the Lehmans family all belonged to this close-knit social network. Most of the families were quite large. They socialized together as well as engaged in mutually beneficial business arrangements. Also, as one might expect in this kind of a community, there were many marriages that cemented ties among the families.
Mayer was a religious and civic leader from an early age. By all accounts, he was a very religious man. He spoke and read Hebrew. Babette was also dedicated to her faith. She attended services regularly and the family celebrated all Jewish holidays. In 1859, at age twenty-nine, Mayer joined a small group of Jews in Montgomery to form a committee to build a synagogue. Mayer was the treasurer of the committee. By 1862, they had constructed the building. Peter Chapman writes, “Local historians believe it was the only synagogue built in the South during the Civil War.” This is quite possibly because building anything in the South during the Civil War was a difficult task. When he moved to New York, Mayer joined Temple Emanu-El. While it would be accurate to say the Lehman brothers were orthodox Jews upon their arrival in the United States, the synagogue Mayer helped found in Montgomery was more liberal, and Temple Emanu-El was a reformed synagogue, the most liberal form of Judaism practiced in the United States. Mayer served on the board of trustees of Temple Emanu-El for many years.
Mayer was also involved with many charitable organizations. He was particularly devoted to the Mount Sinai Hospital, serving on the hospital’s board of directors for nineteen years. Mayer also supported the Hebrew Sheltering Guardian Society of New York, the Lebanon Hospital, the Montefiore Home for Chronic Invalids, the Hebrew Infant Asylum of the City of New York, and donated money to several educational institutions. Mayer’s wife Babette also spent a considerable amount of time volunteering for charitable activities, particularly with the Home for Infirm and Aged Hebrews.
Babette dominated Lehman family life. While this was likely due to the fact that Mayer’s many business interests occupied much of his time, it also reflected the combination of Mayer and Babette’s personalities. Mayer was very easy going, while Babette was not. She was quite shrewd and involved herself in Mayer’s business, in addition to remaining very much in charge of the household. Their youngest son, Herbert, remembered his mother this way:
I don’t think my father ever took an important step in business without consultation with my mother. She had a very, very keen and practical mind, and she was very, very much a factor in the family life, during and after my father’s lifetime. She was as near a matriarch as anyone I’ve ever known. I don’t think a day passed that every member of the family failed to call on my mother until her death in 1919. 
It was not so much that Mayer was uninvolved with his children as it was that Babette dominated all of their lives. One outstanding example of his involvement with his children was the trips Mayer took every Sunday with his three youngest children, Arthur, Irving, and Herbert, to visit the wards of the Mount Sinai Hospital. He wanted his children to see the difficulties people face and the benefits of his charitable activities with the hospital. All three of the boys went on to become major donors to various causes.
Lehman family life was quite comfortable. They lived in a large house in Manhattan and spent their summers on the Jersey shore at Elberon with many of the Our Crowd families. During the summer months, the men of these families worked in Manhattan during the week and traveled to the shore on weekends to spend time with their families. Elberon was a predominantly Jewish enclave, much like more WASP-ish resorts such as Newport, Rhode Island.
Perhaps because Babette demanded it, the children of Mayer and Babette Lehman lived quite close to their parents’ house at Five East Sixty-Second Street. Hattie and Settie lived just across the park in adjoining houses on West Eighty-First Street. Clara and her husband resided with Babette and Mayer until Mayer’s death. Arthur and his wife lived not far from the family home on West Fifty-Sixth Street. Irving Lehman lived at home while attending college, Herbert lived at home before leaving for Williams College in 1895, and again after finishing college until his marriage in 1910.
The children of Mayer and Babette Lehman all married into prominent Jewish families of German origin that were part of Our Crowd. Some of these marital connections proved advantageous to the Lehman Brothers business. Sigmund married his cousin Harriet, Emanuel’s daughter, thus keeping the money in the family. Hattie married Philip Goodhart of P.J. Goodhart & Company, a Wall Street brokerage firm. Settie married Morris Fatman, owner of Raritan Woolen Mills of Raitan, New Jersey. Clara married Richard Limburg, a member of the New York Stock Exchange. Arthur married Adele Lewisohn, the daughter of Adolph Lewishon who made his fortune in copper. Irving married Sissie Straus, whose father Nathan co-owned the department store R. H. Macy & Company. Herbert married Edith Altschul whose father was the managing partner in the investment bank Lazard Freres & Company.
Mayer and Babette Lehman both received excellent educations in Bavaria, though their schooling was primarily religious in nature. The second generation of Lehmans was educated quite differently. In their youth, all Lehman children were taught French and German by their European governesses. After prep school, the boys attended leading colleges and universities: Sigmund at Cornell University, Arthur at Harvard University, Irving at Columbia University, and Herbert at Williams College. Their educational path was consistent with that taken by many reformed Jews, who desired to assimilate, and thus utilized all secular opportunities offered by American society.
Most of Mayer Lehman’s sons worked for Lehman Brothers. Mayer’s oldest son, Sigmund, worked for the firm from 1878 to 1908. Arthur Lehman, the second oldest son, joined the firm shortly after graduating from Harvard College in 1894 and worked at the firm until his death in 1936. Irving Lehman was the exception in the group, choosing to become a lawyer and later a judge. He served as the Chief Judge of the New York State Court of Appeals from 1938 until his death in 1945. Herbert, the youngest son, worked for Lehman Brothers after college but quit to enter politics. A Democrat, Herbert was elected Governor of New York for four consecutive terms and served as a United States Senator for eight years. He died at the age of 85, suffering a heart attack as he was leaving his apartment en route to Washington to receive the Presidential Medal of Freedom. The success of the second generation of Lehman sons—with Sigmund and Arthur in business, and Irving and Herbert in law and politics—is testimony to the ability of families to rise from very humble beginnings to economic, social, and political prominence.
The story of the Lehmans is similar to that of many other prominent, German-American-Jewish families. A considerable amount of the fortune amassed by the Lehmans was due to the connections the brothers made with other recently arrived Jewish entrepreneurs, and indeed the list included many familiar names such as department store founder Adam Gimbel, investment banker Joseph Seligman, Bloomingdale Brothers Department Store founder Benjamin Blumenthal, merchandizer Levi Strauss, and banker Marcus Goldman. It was the second generation of Goldmans and Sachs who would form a lucrative partnership with the second generation of Lehmans. However, one must acknowledge that the group just mentioned is a very select sample of immigrants who succeeded spectacularly. In no way are these people typical.
One important commonality between a significant number of these successful Jewish-German entrepreneurs is that many, like elder brother Henry Lehman, started out as peddlers. Stephen Birmingham reports that the members of Our Crowd often disputed the merits of having peddler ancestors who “started with a wagon” verses those who “started on foot,” and it was debatable as to which kind of a start one should be most proud. The lessons learned as peddlers and as general store owners later proved invaluable for German-Jewish department store owners, investment bankers, and commodities brokers. First, a successful store owner must know when to sell goods on credit and when not to. Assessing the credit worthiness of customers is very difficult, particularly when the Lehmans were new in Montgomery. Second, since some of the transactions at the Lehmans’ store were barter transactions involving payments in cotton, the brothers had to determine a sensible price for the cotton offered in exchange for goods. Determining the sensible price is as much an art as it is a science. The fact that the Lehman Brothers expanded into the cotton brokerage business indicates that they had a knack for determining prices. Such skills indicate a successful store owner, and the same skills are critical in investing and being an investment banker. To succeed one must assess the credit worthiness of borrowers and determine the sensible price for investment vehicles.
One also cannot underestimate the advantages of the set of family connections that the Lehmans and the other German-American Jews in New York received from the intermarriage within a relatively small group of families. This was an accidental side benefit of anti-Semitism in New York. As mentioned above, Montgomery, Alabama was much more welcoming to a young Jewish immigrant than New York. In New York, Jews were restricted from forming many kinds of relationships and thus the Jewish community was in many ways a separate community. Intermarriage would be natural among families who lived together in New York and vacationed together on the Jersey shore. Their children attended the same schools and went to the same parties. They were bound to connect and their parents approved of the connections made within these social circles, which often helped cement useful business connections.
The growth of Lehman Brothers from a small southern store to a large northern business involved some luck, much hard work, and considerable good business sense. Henry, Emanuel, and Mayer were lucky to arrive in Montgomery, Alabama at a time when Montgomery’s cotton-based economy was booming. They worked hard to expand a very small store into a larger store in the middle of town. They demonstrated good business sense by expanding into cotton brokering and moving part of the operation to New York. The growth of the economy of the South, and with it the viability of the Lehman brother’s business model, came to a halt with the start of the Civil War. Many southern businesses never recovered. The Lehman brothers were fortunate that their business straddled the Mason Dixon Line; in retrospect perhaps the smartest thing they did was open a New York office before the Civil War. Mayer Lehman and his partner John Durr survived the war in better shape than many other businessmen, but still suffered great losses. In the long run, it made sense for Mayer Lehman to relocate to New York and join his brother.
After the Civil War, the Lehman brothers’ success rested on further development of their commodity brokerage businesses, expanding into sugar, coffee, and petroleum as well as cotton and investments in other industries. They still maintained a strong connection to the South. They invested heavily in the industries that played a key role in reviving the South: iron and steel near Birmingham, Alabama, textile mills and real estate development in Florida, and southern railroads. As Lehman Brothers expanded and the second generation of Lehmans built upon the foundation laid by Mayer and Emanuel, the business shifted its focus to New York and to financial market activities. This second generation shift transformed Lehman Brothers from a commodity brokerage with outside investments into an investment bank.
 Maier probably changed the spelling of his name to Mayer because it was easier for Americans to pronounce.
 Roland Flade, The Lehmans: From Rimpar to the New World: A Family History, (Würzburg: Könighhausen & Newmann, 1999), 24-26. The ten Lehmann children were as follows: a girl named Zeria born prior to 1812; a girl named Brendel born in 1812; a boy named Seligmann born in 1814; a girl named Fratel born in 1817, who died after three months; a girl named Nanne born in 1820; a boy named Hajum, later called Henry, born in 1822; a boy named Samuel born in 1825, who died six months later; a boy named Mendel, later called Emanuel, born in 1827; Mayer born in 1830; and a boy named Moses, born in 1833, who died one month later.
 Ibid., 23.
 Ibid., 26.
 Ibid., 26-27.
 Ibid., 28.
 Ibid., 28. Determining an accurate conversion from Bavarian florins to early-nineteenth-century U.S. dollars is exceedingly difficult due to a variety of factors. A crude conversion from florins to British pounds to U.S. dollars adjusted for inflation yields approximately $2,500 and $3,900 respectively in 2010$, but these figures should be treated with extreme caution. A Handbook for Travelers in Southern Germany (London, Murray Johnson, 1857), 7-8; Samuel H. Williamson, “Seven Ways to Compute the Relative Value of a U.S. Dollar Amount, 1774 to present,” MeasuringWorth, 2012, using the Consumer Price Index; Lawrence H. Officer, “Exchange Rates Between the United States Dollar and Forty-One Currencies,” MeasuringWorth, 2012.
 Flade, 51.
 Flade, 41-43.
 Kenneth Libo, ed., “Lots of Lehmans: The Family of Mayer Lehman of Lehman Brothers, Remembered by His Descendants” (New York: Center for Jewish History, 2007): 6.
 Lehman Brothers, Lehman Brothers 1850-1950: A Centennial (New York: Lehman Brothers, 1950), 8. The location was near the busy business district that was beginning to coalesce around Wall Street in lower Manhattan. Today, it is less than a block from the site of the World Trade Center.
 All 2010 dollar conversions in the article, unless otherwise noted, are based on Samuel H. Williamson, “Seven Ways to Compute the Relative Value of a U.S. Dollar Amount, 1774 to present,” MeasuringWorth, 2011, using the Consumer Price Index.
 Peter Chapman, The Last of the Imperious RICH: Lehman Brothers 1844-2008 (New York: Portfolio/Penguin, 2010), 30-31.
 Harold D. Woodman, King Cotton and His Retainers: Financing and Marketing the Cotton Crop of the South 1800-1925, (Columbia, SC: University of South Carolina Press, 1968), 217 -224.
 Lehman Brothers, 14.
 Ibid., 14.
 Chapman, 33.
 Flade, 68
 Ibid., 74.
 Lipartito, 51.
 Lehman Brothers, 21.
 Ibid., 22
 Ibid., 22
 Ibid., 23.
 Lots of Lehmans, 22.
 Ibid., 35
 Lehman Brothers, 17.
 Flade, 51.
 Lots of Lehmans, 28. The eight children were Sigmund, originally named Sigismund, born in 1859; Hattie, born in 1861; Lisette, who went by Settie, born in 1863; and Benjamin, who died shortly after his birth in 1865, were all natives of Montgomery. Clara, born in 1879; Arthur, born in 1873; Irving, born in 1876; and Herbert, born in 1878, were natives of New York.
 Chapman, 26.
 Ibid., 38.
 Ibid., 22-24.
 Ibid., 26.
 Flade, 72-73.
 Ibid., 73.
 Lots of Lehmans, 44.
 Ibid., 18.
 Chapman, 43.
 Lots of Lehmans, 30-31.
 Ibid., 191-192.
 Three main factors affected the emigration of many of these very successful entrepreneurs. First, the treatment of Jews in Bavaria and throughout Germany played an essential role in encouraging emigration. The law prohibiting any son other than the first born to settle in the family’s village, combined with the many other restrictions imposed on German Jews, affected a great number of immigrants. Therefore, some of the impetus for emigration was due to the “push” factor. Second, in the Lehman family, and undoubtedly in many others, the first migrant’s success encouraged the ensuing migration of others. Thus the opportunities ripe in the United States in the mid-nineteenth century contributed to “pull” migrants from countries such as Germany that already “pushed” emigration. Third, the large numbers of successful German Jewish entrepreneurs who settled in New York from other parts of the country after the Civil War and their intermarriage enhanced an already successful business environment in which family businesses could prosper.
 Birmingham, 16.