July 14 (Bloomberg) -- “The entryway on Goldman Sachs’s executive floor is hung with paintings of all the senior partners since the firm’s inception,” says June Breton Fisher. “I took a close look and finally asked, ‘Where’s my grandfather?’”
He wasn’t there. No portrait, no photograph, not even a snapshot recalled Henry Goldman, the founder’s son whose financial innovations created the modern banking business.
Fisher’s book, “When Money Was in Fashion: Henry Goldman, Goldman Sachs, and the Founding of Wall Street” (Palgrave Macmillan), creates a vivid portrait of her grandfather, a man erased from Goldman’s history.
Lundborg: What’s your favorite memory of your grandfather?
Fisher: We spent summer vacations as a family at my grandparents’ home in the Adirondack Mountains. You could see him in a more relaxed mode, see the fun side of him, like when he went around in a cape and a crown.
Lundborg: Did you and he do things together?
Fisher: During tennis or croquet tournaments, I’d sit on the hill with him. Since he was blind by then, I’d be the sportscaster and tell him what was going on.
Lundborg: By then, he’d really revolutionized the business.
Fisher: He was a visionary in business: the progenitor of the IPO, the P/E ratio, and the Fed, plus he’d underwritten 56 major corporations that were the building blocks of the economy.
Junk From a Cart
Lundborg: Your great-grandfather Marcus, who established the firm, was even more impressive. He came to this country in 1848 as a poor immigrant and went from selling junk from a horse-drawn cart in Philadelphia to creating Goldman in New York. Yet at first, he asked his son-in-law, Sam Sachs, to join the firm. Not Henry. Why?
Fisher: He underestimated Henry, who was not voluble in conversation. Plus he’d dropped out of Harvard because of his bad eyesight
Lundborg: Henry finally joined Goldman in 1885, so what changed?
Fisher: The business had grown so fast, Marcus needed more help. Henry was not hired at the same level as Sam Sachs, but he immediately started to make a lot of money as a railroad bond speculator.
His mind was quick and he found a lot of new things to invest in. To me, what was most remarkable is that he laid out the plan for issuing preferred and common stock in a company like United Cigar in one hour.
Lundborg: What precipitated the bitter Goldman vs. Sachs feud?
Fisher: To begin with, it was the total disparity between Sam and Henry’s view of World War I. My grandfather was very pro-German and Mr. Sachs was pro-Ally. They yelled at one another about that for quite some time.
Lundborg: Until Henry finally left the company?
Fisher: He was angry and weary of all the conflicts, so he finally cleared out his desk and walked out. He took 15 of the biggest clients plus his share of the funds in the firm.
He’d been the most important partner, so he’d accumulated the most money.
Lundborg: Why did he love Germany so much?
Fisher: My grandfather spent six months of the year in Germany. He thought the German people were industrious, innovative in their work habits, and they loved children and flowers, which was the big line then.
Lundborg: Hitler helped him change his mind?
Fisher: Henry and his wife were in Berlin, where they’d always had a wonderful time. Now many of their former friends wouldn’t speak to them, they couldn’t get seats at the opera, and the ice cream parlor waiter they’d known for 30 years was reluctant to serve them.
Even though he had a white cane, Henry was also shoved around on the streets. He realized the country had changed.
Lundborg: What was his response?
Fisher: He helped a lot of friends -- artists, writers and scientists -- get visas and work.
Lundborg: How did he become an art collector, despite his bad eyesight?
Fisher: He fell in love with paintings, and with the help of Joseph Duveen, acquired some great ones. His first major purchase was Rembrandt’s “The Apostle Bartholomew,” when he could still see.
He memorized all the details of each work and only sold the collection when he knew he was dying.
Lundborg: Henry was also a great music lover. For Yehudi Menuhin’s 12th birthday, he bought him the 1733 Prinz Khevenhueller Stradivarius violin. How did the relationship come to end on such a sad note?
Fisher: He and Yehudi were very close -- he called him “Uncle Henry.” But his mother was very jealous and didn’t want anyone meddling in his life.
When Henry was bed-ridden, my grandmother wrote to Yehudi and asked him to come play Beethoven for him one last time. His mother said “No way.” Unbelievably, he was 19 by then and still obeyed her.
Lundborg: Goldman Sachs has been making headlines recently, but this is not the first time the firm has been involved in such controversy?
Fisher: No, Goldman was really pilloried in the 1930s. Waddill Catchings, the man who was brought in to replace Henry, was bright, but he was a scoundrel. He put together some investment trusts that made a lot of money until they crashed. It was all really just a Ponzi scheme.
Lundborg: What do you make of the current situation?
Fisher: I find it disappointing. My grandfather and Mr. Sachs were very ethical, moral businessmen and what they really wanted to do above all else was preserve the Goldman Sachs name.
To buy this book in North America, click here.
(Zinta Lundborg is a critic for Muse, the arts and leisure section of Bloomberg News. The opinions expressed are her own. This interview was adapted from a longer conversation.)
To contact the reporter on this story: Zinta Lundborg at email@example.com.
To contact the editor responsible for this story: Manuela Hoelterhoff at firstname.lastname@example.org.