Monday, March 31, 2008

The Ethno-history of Finance

Robert Teitelman at TheDeal.Com offers a tantalizing study of the ethnic and social history of New York banking (link):

Let me offer a minor historical quibble about a New York Times Sunday business story on Bear Stearns Cos. In an attempt to give Bear some company in the outer boroughs, the Times describes Lehman Brothers Inc. as another "scrappy" firm, in contrast to those white-shoe types at, say, Morgan Stanley. Well, that's a big boo-boo.

Lehman was for much of its history pretty white shoe, run by top-drawer investment bankers from Bobbie Lehman, whose brother Herbert Lehman was a banker there and later governor of New York, to Pete Peterson. Lehman and Kuhn, Loeb & Co., which merged in 1977, in fact, were the "Jewish" analogue (German-Jewish, in fact, as recounted in Stephen Birmingham's "Our Crowd") to the old J.P. Morgan & Co., with powerful client lists and relationships. Only in the '80s, with the rise of a powerful trading franchise under Lewis Glucksman did Lehman begin to effectively diversify beyond traditional investment banking. The resulting archetypical clash between banking and trading, famously chronicled in Ken Auletta's "Greed and Glory on Wall Street," sent bankers like Peterson and Steve Schwarzman into exile, eventually to form Blackstone Group LP and provoked the disastrous merger of Lehman with American Express Co.

These cultural stories are always tricky. Arguably, the vaunted Goldman, Sachs & Co. was, historically, scrappier and more outer borough (meaning Eastern European Jewish by pedigree) than Kuhn Loeb or Lehman. But all these firms did business with each other, and there are exceptions to every cultural stereotype, which is the reason they're stereotypes.

Good stuff all around, but one of the most interesting points is the reference to Stephen Birmingham’s Our Crowd—still hanging in there at #167,000 at Amazon (link) (or 430,438, or some other number, depending on which edition you pick). I don’t know when it was first published but I know I read it (with great pleasure and profit) about 1965. There’s been a good bit of high-quality financial history published since then (I’m talking to you, Ron Chernow and you, Naill Ferguson), and in a way it is surprising that Birmingham has not been superseded. I guess I’d better go give it another try.

Assignment for Somebody: I’d also like to know more about the history of accountancy. I’ve heard, and often said, that American accountants are offshoots of European firms who established a presence here to supervise the importation of European capital. I suspect this is at best an exaggeration and perhaps, not true at all.

1 comment:

New York Crank said...

I happen to have known the late Lew Glucksman – in the 1960s my former inlaws were locker neighbors of his at the Deal Casino on the Jersey shore – and trust me, golfing, bridge playing, bon mot dropping Jimmy Cayne is no Lew Glucksman.

Lew wasn't so much scrappy as openly and forthrightly crude. If you were out to dinner with him he would on occasion push the dishes in front of him to the side, declare, "This conversation is boring me," put his head down on the table and go to sleep. (This is how I found out that he snored.)

On the other hand, aristocratic Fettes graduate David Ogilvy, the late advertising genius, was also known to misbehave in restaurants. Frequently.

Some years ago that I also learned from a young Lehman associate that one morning at 3 AM, at the Claridge's Hotel in London, Lew Glucksman received a telephone call that required immediate action. He ran out into the corridor of Claridge's wearing nothing but his boxers and began pounding on the doors of his sleeping entourage. "Get packing!" he boomed, "We're going to Tokyo in half an hour."

Late in his life Lew divorced and remarried. Now, in the honor his second wife, and for a contribution heftier (I assume) than all the money I ever earned in my lifetime, there is a "Lewis and Loretta Brennan Glucksman Ireland House" at New York University. It's located on the east side of Fifth Avenue, half a block north of the Washington Square arch.

That's the miracle of American capitalism for you. Only in America can a poor Jewish boy from the boroughs grow up to be a rich Manhattan Irishman.

Crankily as ever,
The New York Crank