This Day in Jewish History

1821: A Finance Tycoon Is Born

Mark Goldmann changed his name to Marcus Goldman and went on to found Goldman Sachs.

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On December 9, 1821, in Trappstadt, Bavaria, Mark Goldmann was born. The world remembers him as Marcus Goldman, as he adapted his name after becoming a naturalized citizen of the United States, where he founded the trading firm that became known as Goldman Sachs.

Goldman grew up in a middle-class Jewish family that owned a livestock business. He was an excellent student, but by 1848, as Germany faced political and economic instability, his father decided to send him and his younger brother Simon to the United States to seek their fortune. Mark landed in Philadelphia (while Simon continued on to California), where he married and began selling household goods from a horse-drawn cart. Later, he trained as a tailor, and with his wife, Bertha Goldmann, a seamstress who was also an 1848 arrival from Germany, opened a clothing shop. The business expanded and the clothes they manufactured were also sold by other retailers.

In 1869, however, as economic conditions changed, and with pressure from Bertha, who wanted to live in the big city, Goldman moved to New York. He hung up a shingle in the Wall Street area and began buying up promissory notes at a discount from local wholesale jewelers. In doing so, he would provide them with capital for the expansion of their businesses, and at lower rates than they would get at commercial banks. In the meantime, Goldman would resell the notes at a slight margin to some of those same uptown banks.

Goldman’s ultimate ambition, however, was to be a trader of stocks and bonds and eventually to have a seat on the New York Stock Exchange. He had his opportunity with the financial panic of 1873, which led to a flow of investments from railroad stocks to jewelry and gemstones, a business that Goldman knew intimately. By 1882, his business was turning over $30 million a year. The following year, he invited his son-in-law, Sam Sachs, the son of Joseph Sachs, to become his partner. Goldman had known Sachs in Germany and crossed paths with him several times in America. Two years later, after another son-in-law, Ludwig Dreyfuss, as well as Goldman’s son Henry, joined the firm, it took on the name of Goldman Sachs & Co. Until the 1930s, it was run by the extended family alone.

The Goldmans were part of a New York German-Jewish neo-aristocracy that created a number of leading financial institutions during the period. These families, which included the Loebs, Seligmans and Lehmans, socialized together, attended the same Reform synagogue (Emanu-El), and had their children learn German.

Early in the 20th century, under the leadership of the younger generation, Goldman Sachs became a pioneer in the initial public offering market, and made a name for itself in managing the IPO of the Chicago mail-order retailer Sears Roebuck in 1906. Henry Goldman and Sam Sachs were in frequent conflict, both because of a clash of personalities and over the running of the company. In 1917, Henry retired from the firm after having openly expressed his support for Germany in World War I, and refused to allow the firm to lead an Allied war bond effort. In the early 1930s, he even moved to Germany, and only narrowly escaped the Holocaust in 1936, leaving behind a large fortune.

Marcus Goldman finally bought his seat on the NYSE in 1896, and retired four years later. He died in New York on July 20, 1904.

The history of the firm he started singlehandedly has been filled with great successes, and not a few scandals, most recently regarding its role in the subprime mortgage crisis of 2007, from which it profited grandly. Today, it concentrates on investment banking, trading and investments, and assets management. In 2011, its 33,300 employees generated revenues of $28.8 billion and profits of $2.5 billion.