The Role of Jewish Finance in 19th Century America

By Grugyn Silverbristle

 

The following paragraphs are condensed from The Course of Modern Jewish History by Howard M. Sachar:

"... so closely has Jewish economic activity been intertwined with the history of capitalism that many historians have forgotten that the Jews were its putty as well as its molders. Jews helped to shape the destiny of capitalism, but capitalism also shaped the destiny of the Jews ... There were circumstances peculiar to Jewish life which, as we have suggested, catapulted the Jews into business and finance. These included their detachment from the soil, their urban concentration, the insecurity of their legal status, their international connections, their experience in dealing with money, the speculative thinking that circumstances (not religion or race) had made necessary. Even if they did not originate capitalism, ... the Jews were often the yeast in the capitalist fermentation. It was primarily the Jews, for example, who took the initiative in developing a vital interurban trade; for their connections in cities and countries throughout Europe could not be matched by any other people or any other economic group."

"... During the first half of the nineteenth century the world of European high finance was deeply influenced by a small but immensely imaginative group of Jewish investment bankers. In truth, the growth of international Jewish banking has long been one of the most intriguing phenomena of modern European history. These financiers were only a handful of men, in no way typical of the great mass of West European Jewry. But the impact of their careers was far out of proportion to their numbers. They vitally affected -- if, indeed they did not dominate -- the economic policies of the Western state system. ...

"In the discussion of the Hofjuden of an earlier era, it will be recalled that Jewish financiers were traditionally associated with governments, and quite divorced from contact with ordinary people. These Jews extended services in return for protection and special privileges, rewards only the ruler could dispense. This tradition lingered into the nineteenth century, as Jewish financiers, in the manner of the earlier Court Jews, continued to look to the sources of authority, whether liberal or autocratic, for the protection, honor, and recognition they expected as the reward for state service. ... For governments alone - and not people, policies, or principles -- were the recipients of their loans. ...

"It was true that the careers of these financiers were often linked with to the citadels of conservatism. Yet, whatever their shortcomings, the bankers must have felt some inner misgivings about the gulf that separated them, ideologically as well as economically, from their fellow Jews. Whenever a serious crisis threatened their brethren, the Rothschilds and others did not hesitate to intercede with their governments; even for them, blood was thicker than coupons...

"The Frankfurt Stock Exchange, when compared to the exchanges in other German cities, already occupied a prominent position as early as the eighteenth century. The period of its most remarkable efflorescence, however, took place during the decade following Waterloo. The enormous expense of the Napoleonic wars had drained the Continent. Thus, the Frankfurt exchange, while a mere parvenu beside the great exchanges of London and Amsterdam, now found itself with virtually a monopoly of German economic activity -- such as it was.

"... the bulk of the city's wealth was concentrated in the hands of Jewish investment bankers. The foremost Jewish firms -- the Seligmans, Oppenheimers, Rothschilds, and others -- achieved so wide a dominance in Europe that the very word "Frankfurt" came to mean much more than a physical city. The House of Haber, for example, which had become prominent during the Napoleonic wars, was by 1820 among the most respected financial institutions of Germany and perhaps of Europe. Typically, the Haber family inherited its funds from several generations of privileged court bankers of the duchies of Wurttemberg and Baden. The family preserved and multiplied its holdings during the ensuing decades, acquiring a fortune of such magnitude that by 1833 Samuel von Haber became a founder of the mighty Darmstaeder Bank, one of the three largest in Central Europe.

"The Speyer Bank, which was created late in the eighteenth century, was a vital link between Germany and the American market. Like the Rothschild firm, this house maintained important family branches throughout Europe. In 1800, in fact, the Speyer Bank was many times more powerful than the emergent House of Rothschild, and remained exceptionally influential throughout the course of the nineteenth century. The Frankfurt bank of the brothers Bethmann, which had succeeded in salvaging the Hapsburg finances in the eighteenth century, was perhaps the first to carry on an active underwriting business on Central Europe ...

"There were other dominant banks that spread through Europe: the Warburgs in Hamburg; the Mendelssohns and the Bleichroeders in Berlin; the Oppenheimers of Cologne and Vienna; the houses of Eskeles and Arnstein in Vienna; the firms of Montagu, Goldsmid, Hambro, and Sassoon in London...

"... When the armies of France entered Hesse-Cassel and sent William packing, the elector made an inspired choice: he entrusted all his bullion and notes for safekeeping and investment to Rothschild. Meyer Amschel hid William's fortune in underground chambers in Frankfurt, catacombs originally constructed by Jews as sanctuary from hostile mobs. All the threats and bullying of Napoleon's invading army could not intimidate Meyer Amschel, now a middle-aged man, into revealing the whereabouts of the bullion. But the money, although hidden, was far from sterilized. With Rothschilds in London, Paris, Naples, Vienna and Frankfurt, the reserve funds could be listed as assets in any one of the five countries -- and invested in whichever part of Europe the opportunities for profit appeared good. Such opportunities appeared best in England, where highly advantageous discount terms persuaded Nathan Rothschild, on behalf of the family, to underwrite the British national bond issue. Later other loans were successfully extended to Denmark and several German states. All this was done on behalf of Elector William of Hesse-Cassel. Soon the original sum doubled, trebled, and then quadrupled. Eventually, with the discount and commission rates the Rothschilds had obtained in their capacity as William's agents, there was a fortune too for Meyer Amschel's family."

"The financial advantages of Jewish investment banking connections were so apparent that the Rothschilds themselves consciously exaggerated their supranational characteristics. This involved more than merely the strategic location of five sons throughout Europe. Meyer Amschel Rothschild established connections with the princely House of Thurn, which was hereditary postmaster of the old Holy Roman Empire, in order to secure the use of its courier service for his own firm. The brothers Rothschild managed as well to obtain consular positions for themselves in the capitals of their respective countries, and instantly shared their information with each other for quick use on the Exchange. From time to time the contacts among these Jewish financiers resulted in celebrated coups..."

"... The reader may amuse himself further by contemplating other networks: Benedict Goldschmidt, of Bischoffscheim and Goldschmidt, sired ten children. One child, Leopold Benedict H., married Regina, daughter of Jonathan Bischoffscheim; another, Maximilian, married Minka Carolina, the daughter of Baron Wilhelm von Rothschild. Of the daughters of old Raphael Bischoffscheim, Amalia married the banker August Bamberger of Mainz, whose son, Heinrich, married the sister of Baron de Hirsch. A second daughter of Raphael Bischoffscheim, Clara, was the wife of L. Cahen d'Anvers, one of the promoters of Credit Mobilier. The celebrated Montefiores, too, were intermarried with the Rothschild family."

"... As far as Christian Europe was concerned, this one family -- let alone the many other Jewish bankers whose children intermarried -- was proof of Jewish internationalism. The distinguished historian, Hannah Arendt, writes: 'Where, indeed, was there better proof of the fantastic concept of a Jewish world government than in this one family, the Rothschilds, nationals of five different countries, prominent everywhere, in close cooperation with at least three different governments (French, Austrian, British), whose frequent conflicts never for a moment shook the solidarity of interests of their state bankers? No propaganda could have created a symbol more effective for political purposes than the reality itself'".

Howard M. Sachar
The Course of Modern Jewish History
New York, Vintage Books div. of Random House

The United States, at the close of the Revolutionary War, was an agrarian economy. While there did exist a thriving mercantile class which included the yet small population of American Jews, there was virtually no industry. It had been British policy to keep the colonies dependent on the mother-country for manufactured goods, and for this reason it had been illegal, under British rule, for American colonists to engage in any kind of industrial activity.

The rapid industrialization that occurred, at least in the northern states, following the Revolution, could not have happened without the aid of Jewish investment bankers. This period also coincided with the German Jewish migration to America, 1820 to 1850. A number of these immigrants either had or soon developed ties with the European Jewish banking houses, and set about creating a network of American correspondents: J.W. Seligman & Co., Lehman Bros., Goldman, Sachs & Co., Jules Bache & Co., Heidelbach, Ickelheimer & Co., Salomon Brothers, Kuhn, Loeb & Co., Speyer & Co., Ladenburg, Thalmann & Co. to name a few. These notables were the ones primarily responsible for building the New York Stock Exchange and the Chicago Mercantile Exchange into world-class markets, along the lines of the European model.

Especially considering the less than cordial relations that existed between the United States and England at the time, which impeded British-American investment, these Jewish financiers came to fill a void. They were the conduit that brought European investment capital into the United States, and it was this investment that financed the building of the iron foundries, railroads and factories that transfigured America, in the course of the nineteenth century, from a plantation republic to an industrial giant. It is fair to say that, to a great extent, it was the Jews who financed America.

But the investment bankers' power extended far beyond pure finance. It was customary in the 19th-century for the investment bankers to select the boards of directors of the corporations that they underwrote. As the Seligmans arranged the financing for new railroad construction, for example, they also came to control the railroad corporations themselves. It was the Rothschild-controlled National Bank of Cincinnati that raised up John D. Rockefeller from obscurity to become the most famous tycoon of his day. It was the Jew-controlled railroads that made it possible for Standard Oil to break all of its competitors. It was the Jewish investment bankers who provided the capital for Standard Oil to buy out its competition at fire-sale prices. And when the great John D. ventured too far afield and attempted to build a copper monopoly, it was the Guggenheims who put him back on his leash.

The Rockefeller interests were answerable to the Jews, who had raised him up and could have broken him at any time. He was nothing but a pit-bull on a Jewish leash. The same was true of Andrew Carnegie. The man knew next to nothing about steel, but his Jewish masters guided his career and raised him up to be their lackey. The most amazing deals kept falling into Carnegie's hands -- because he himself was but a glove upon an invisible hand. J.P. Morgan was another tycoon who had been raised up by the same invisible force. He began by working for the Jewish "cotton speculators" who pillaged the South during and after the Civil War, shipping contraband in bales of cotton. It is recorded that the price of cotton went as high as $300 per bale -- a year and a half's blue-collar wages -- not for the value of the cotton, but for the gold, silver, pewter and fine arts that were packed inside. Virtually all of the great "Robber Barons" were the puppets of Jewish investment bankers.

And so it was that, in 1913, when Paul Warburg engineered the institution of the Federal Reserve System, this was by no means an American invention or an isolated event. To the contrary, it was the next logical step of integrating a global banking system that had been evolving since the seventeenth century.


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