The Last of the Imperious Rich: Lehman Brothers, 1844-2008
by Peter Chapman
Reviewed by Steve Weinberg
As books about the collapse of Wall Street investment bankers rain down from publishers, one book focusing on Lehman Bros. places the history above the more recent scandal. For Peter Chapman, a Londoner who writes and edits for the Financial Times, the past is prologue. Finding the seeds of Lehman Bros.' destruction within a chronicle looking backward to 1844 is challenging, but ultimately worth the effort.
The Last of the Imperious Rich: Lehman Brothers, 1844-2008, begins with the arrival by ship of Henry Lehman in New York City, as he escapes a German region shot through with political oppression and anti-Semitism. Two younger brothers, Emanuel and Mayer, followed Henry to the United States when they came of age.
The brothers did not look to teeming New York City at first as their center of operations. Instead, they settled in Montgomery, Ala., hoping to make money from the pre-Civil War cotton economy, grounded in cheap slave labor.
Alabama was mostly rural, and Lehman had knowledge of farming from Germany. Cotton exports from the Southern tier of the United States found markets in Germany. In addition, Lehman was acquainted with German emigrants who had already settled in Mobile, Ala., where Lehman visited before moving along to Montgomery, with its river access and moneyed class ready to buy what the immigrant hoped to sell.
Given language, religious and economic barriers, it is remarkable how quickly and permanently the Lehman brothers succeeded as merchants selling equipment and advice to the practitioners of the cotton trade.
Success seemed endangered when, in 1855, Henry Lehman contracted yellow fever and died. Emanuel, then 29 years old, and Mayer, then 26, could not afford to mourn for long, and certainly could not afford to give up. That is when they looked north.
The shift from Alabama to Wall Street came gradually. Chapman offers context for the move as the nation changed drastically and violently before, during and after its Civil War. Slowly but surely, the Lehman family became a household name in New York City, then across the nation.
Other than the three founding Lehman brothers, the most visible characters are Herbert Lehman, who won terms as New York governor and U.S. senator; and Robert "Bobbie" Lehman, who directed the Wall Street firm, by then well established, with a flair but also enjoyed diverting his attention to purchases of rare paintings and antiques.
It is telling that Chapman opens the book with a quotation from Herbert Lehman, the successful politician: "Grabbing and greed can go on for just so long, but the breaking point is bound to come sometime."
Chapman is not an overbearing moralist, but it is difficult to read the history as anything but a morality play. Contrasting the integrity of the founders with the ethically questionable business practices of later generations, Chapman can perhaps fairly be visualized wagging his finger and muttering "tsk, tsk."
Only about 10% of the text is devoted to the scandals leading to Lehman Bros.' demise two years ago. Names other than Lehman enter the saga, with Dick Fuld, expectedly, playing a major role in the rise and demise.
Fuld thought of the company he ran as the mother ship. Chapman says the company turned out to be more like Moby Dick, the "white whale of legend. Mortally wounded, it turned and rammed the American ship of state."
Chapman's reporting about the scandal is complete enough for readers to nod in agreement when he comments, "Lehman Brothers died when over 150 years later a once proud institution was caught peddling junk to the world."