Jacob Schiff
Jacob Henry Schiff was a German-born American banker, businessman, and philanthropist. He helped finance the expansion of American railroads and the Japanese military efforts against Tsarist Russia in the Russo-Japanese War.
Born in Frankfurt, Germany, Schiff migrated to the United States after the American Civil War and joined the firm Kuhn, Loeb & Co. From his base on Wall Street, he was the foremost Jewish leader from 1880 to 1920 in what later became known as the "Schiff era", grappling with all major Jewish issues and problems of the day, including the plight of Russian Jews, American and international antisemitism, care of needy Jewish immigrants, and the rise of Zionism. He also became a director of many important corporations, including the National City Bank of New York, Equitable Life Assurance Society, Wells Fargo & Company, and the Union Pacific Railroad. In many of his interests he was associated with E. H. Harriman.
Early life and education
Schiff was born in 1847 in the Judengasse in Frankfurt am Main, Germany, to Moses and Clara Schiff, members of a distinguished Ashkenazi Jewish rabbinical family that traced its lineage in Frankfurt back to 1370. One ancestor, David Tevele Schiff, became lead rabbi in Great Britain and from 1765 until his death was acting head of the London Synagogue. Meir Ben Jacob Schiff, another relative, had become renowned as a Talmudic scholar and commentator in the 14th century. Jacob's father, Moses Schiff, was a broker for the Rothschilds. Schiff was educated in the schools of Frankfurt, and was first employed in the banking and brokerage business as an apprentice in 1861.After the American Civil War had ended in April 1865, Schiff came to the United States, arriving in New York City on August 6. He became a broker on November 21, 1866, and joined the firm of Budge, Schiff & Company in 1867. He became a naturalized citizen of the United States in September 1870.However, Schiff's modern biographer Cohen, says this happened a year later.
Upon the dissolution of Budge, Schiff & Company in 1872, Schiff decided to return to Germany. In 1873, he became manager of the Hamburg branch of the London & Hanseatic Bank. He returned to Frankfurt, however, upon the death of his father later that year. In 1874, Abraham Kuhn of the banking firm of Kuhn, Loeb & Company invited him to return to New York City and enter the firm. Not long after joining the firm of Kuhn, Loeb & Co., Schiff was in essence running the business.
Career
Along with H. B. Claflin, Marcellus Hartley, Robert L. Cutting, and Joseph Seligman, he was a founder of the Continental Bank of New York in August 1870.Kuhn, Loeb & Company
Schiff accepted Kuhn's invitation in January 1875, bringing to Kuhn, Loeb & Company his connections with Sir Ernest Cassel of London, Robert Fleming of Dundee, and of the Banque de Paris et des Pays-Bas. On May 6, 1875, he married Therese Loeb, daughter of Solomon Loeb. The couple were the parents of a son, Mortimer L. Schiff and a daughter, Frieda.In 1885, Schiff became head of Kuhn, Loeb & Company. Besides financing Eastern railroads such as the Pennsylvania and the Louisville & Nashville, he took part in the reorganization of the Baltimore and Ohio Railroad in 1896–99, and at various times aided the American Smelting & Refining Company, the Westinghouse Electric Company, and the Western Union Telegraph Company. Less fortunate was his share in the reorganization in 1902 of the Metropolitan Street Railway of New York.
He became associated with E. H. Harriman in notable contests with James J. Hill and J.P. Morgan & Company for control of several Western railroads. Schiff served as a director of the Equitable Life Assurance Society, National City Bank of New York, Central Trust Company, Western Union Telegraph Company, Union Pacific Railroad, and Bond & Mortgage Guarantee Company. He was elected a director of Wells Fargo & Company in September 1914 to succeed his brother-in-law, Paul Warburg, who had resigned to accept appointment to the original Federal Reserve Board.
National loans
What is perhaps Schiff's most famous financial action took place during the Russo-Japanese War. Schiff met with Takahashi Korekiyo, deputy governor of the Bank of Japan, in Paris in April 1904. Schiff agreed to extend loans to the Empire of Japan in the amount of $200 million, through Kuhn, Loeb & Co. These loans were the first major flotation of Japanese bonds on Wall Street, and provided approximately half the funds needed for Japan's war effort. Schiff made this loan in part because he believed gold was not as important as national effort and desire to win a war and due to the apparent underdog status of Japan at the time: a European empire had not yet been defeated by a non-Western nation, in a modern, full-scale war. It is quite likely Schiff also saw this loan as a means of answering, on behalf of the Jewish people for the antisemitic actions of the Russian Empire, specifically the recent Kishinev pogrom in 1903.This loan attracted worldwide attention, and had major consequences. Since their domestic economy was still developing, Japan's military was dependent on massive imports of munitions, purchases made possible by Schiff's loan. In 1905, Japan awarded Schiff the Order of the Sacred Treasure, and in 1907, the Order of the Rising Sun, Gold and Silver Star, the second highest of the eight classes of that Order. Schiff was the first foreigner to receive the Order in person from Emperor Meiji in the Imperial Palace. Schiff also had a private audience with King Edward VII of the United Kingdom in 1904.
In addition to his famous loan to Japan, Schiff financed loans to many other nations, including those that would come to comprise the Central Powers. During World War I, Schiff urged U.S. President Woodrow Wilson and other Allied statesmen to end the war as quickly as possible, even without an Allied victory. He feared for the lives of his family, back in Germany, but also for the future of his adopted land. He arranged loans to France and other nations for humanitarian purposes, and spoke out against submarine warfare.
Schiff forbade any of the funds from his loans from going to the Russian Empire, due to the Tsarist regime's oppression of the Jewish people. When the Tsar was overthrown in 1917, Schiff believed that the oppression of Russia's Jews would end and formally repealed the impediments within his firm against lending to Russia.
However, Schiff's stance changed again upon the Bolsheviks' seizure of power:
"Schiff's gripe against Russia had been its anti-Semitism. At home Schiff had never shown any sympathy for socialism, not even the milder Morris Hillquit variety. Schiff had declared victory for his purposes in Russia after the tsar was toppled in March 1917 and Alexander Kerensky, representing the new provisional government, had declared Jews to be equal citizens. In addition to repeated public statements of support, he used both his personal wealth and the resources of Kuhn Loeb to float large loans to Kerensky's regime. When Lenin and Trotsky seized power for themselves in November 1917, Schiff immediately rejected them, cut off further loans, started funding anti-Bolshevist groups, and even demanded that the Bolsheviks pay back some of the money he'd loaned Kerensky. Schiff also joined a British-backed effort to appeal to fellow Jews in Russia to continue the fight against Germany."
Charitable endeavors
Schiff believed in the Jewish charitable principle of Zedakah. Beginning in childhood he recalled "Kindness was the keynote of the household... It was made our duty to put one-tenth aside for charity according to the old Jewish tradition."Schiff always felt strongly about his connection to the Jewish people, and demonstrated this through his philanthropy. He founded the Jewish Industrial Removal Office which relocated New York immigrant Jews to the Western United States. He also founded an additional point of immigrant entry to the U.S. through Galveston, Texas. He supported relief efforts for the victims of pogroms in Russia, and helped establish and develop Hebrew Union College, the Jewish Theological Seminary, the Jewish Division in the New York Public Library, and the American Jewish Committee.
Schiff grew to be one of American Jewry's top philanthropists and leaders, donating to nearly every major Jewish cause, New York examples being the Montefiore Home for Chronic Invalids, of which he was president, the Young Men's Hebrew Association building and the Jewish Theological Seminary.
He was also involved with many secular American causes: in addition to serving on the Board of Managers of the New York Zoological Society, he gave to such organizations as the Boy Scouts of America, the Harvard Semitic Museum, the American Museum of Natural History, Metropolitan Museum of Art, American Fine Arts Society, American Geographical Society, and Barnard College; and a number of other organizations for civil rights and the disadvantaged, such as the American Red Cross, the Visiting Nurse Service of New York and Henry Street Settlement and Tuskegee Institute.
Schiff was actively concerned with the improvement of civic conditions in New York City. He was a vice president of the New York Chamber of Commerce, and a member of the Committee of 70 which resulted in the overthrow of the Tweed Ring.
On his 70th birthday, he distributed $700,000 among various charitable organizations and public institutions.
Schiff believed in the Talmudic principle that "twice blessed is he who gives in secret." He did not permit his name to be attached to the buildings he sponsored, with the one exception of the Schiff Pavilion at his Montefiore Hospital, and never discussed the size of his gifts. Because of his secrecy, the exact amount of his philanthropic donations is impossible to calculate, but it has been estimated between $50 and $100 million.