Schiff ’ s father , Moses , was much more parochial about Jacob ’ s education and insisted that he become well-grounded in both secular and religious studies available in his hometown of Frankfurt , Germany . Jacob ’ s formal education ended in 1861 when he was just 14 . After that he began an apprenticeship with a Frankfurt bank , followed by a brief stint with a banking firm run by a brother-in-law . Jacob , however , developed a fascination with America and pressed his father to both finance a trip to New York and to lend assistance in finding work with a Wall Street firm . His relocation to New York coincided with the end of the American Civil War and the early development of the country ’ s industrial growth . Even though his proficiency with English at that time was barely passable , he found positions with Jewish-owned firms and quickly proved to be a young man with a promising future in the United States .
When he returned to Frankfurt upon his father ’ s death in 1873 , Schiff was introduced to Abraham Kuhn who , with his partner Solomon Loeb , had founded a successful dry goods operation in Cincinnati they named Kuhn , Loeb & Co . The two founders , however , went their separate ways , with the homesick Kuhn returning to Germany and Loeb moving the company to New York with a focus more on finance than on dry goods . Kuhn , impressed with Schiff ’ s already budding career on Wall Street , suggested that he contact Loeb upon his return to New York . He did that , and by 1875 , at age 28 , Schiff became the managing partner of Kuhn , Loeb & Co .
Railroad Wars
The Gilded Age banking business conducted at J . P . Morgan and at Kuhn , Loeb was very different from today ’ s commercial banking . Neither bank , for instance , held customer deposits or made loans to promote commercial trade . They did not advertise their businesses and baldly stated that , “ We do not chase after business … we do business with people who come to us .” Accordingly , there was not so much as a sign on the door at 23 Wall Street where J . P . Morgan & Company was located or at 52 William Street where Kuhn , Loeb did business .
In the narrowest description , the two firms made money by raising permanent , long-term capital to facilitate the
Certificate for 10 shares in the Pennsylvania Railroad Company , 1919 .
New York Central and Hudson River Railroad bond , 1898 .
industrial transformation of the American economy . They sponsored major investment offerings to provide the capital needed for railroad development and , as a related activity , reorganized railroads that were struggling . Because the United States was a debtor nation after the Civil War , the investment capital was raised primarily in the United Kingdom and on the European continent . Morgan and Schiff ’ s financial expertise , business reputations and familial ties to those countries put the two firms in a favorable position to attract international investors . ( Morgan and Schiff , of course , did not have that fast-growing market totally to themselves . Several “ Yankee ” firms such as Kidder , Peabody & Co . and Lee , Higginson & Co . were prominent in international finance , very often as participants in the offering syndicates Morgan created ; likewise , “ Jewish ” firms such as J . & W . Seligman & Co . and Speyer & Co . often wound up as part of Kuhn , Loeb originations .)
Collection of the Museum of American Finance Collection of the Museum of American Finance www . MoAF . org | Spring 2021 | FINANCIAL HISTORY 29