Published by EH.Net (January 2017)

George W. Liebmann, The Fall of the House of Speyer: The Story of a Banking Dynasty. New York: I.B. Tauris, 2015. xii + 244 pp. $35 (hardcover), ISBN: 978-1-78453-176-8.

Reviewed for EH.Net by Eli Cook, Department of History, University of Haifa.

George Liebmann has written a richly detailed and highly useful history of the final fifty years of the German-Jewish Speyer family’s investment banking empire which spanned across England, the United States and Germany — if not the world. Deeply researched, the book paints a precise picture of the two Speyer brothers — James in United States and Edgar in England — who ran the investment bank on both sides of the Atlantic at the turn of the twentieth century. Hardly a one-track book, Liebmann delves not only into the Speyer’s business interests but also their philanthropic work, cultural milieu, spousal relations, musical talents, political leanings and personal problems. A declentionist narrative that laments the end of free trade and the rise of “nationalism,” Liebmann convincingly portrays how the Speyers suddenly found themselves torn between warring national allegiances. In tracing the fall of the House of Speyer through Edgar’s exile from England and James’s fall from grace in the United States, the book reminds us how difficult it was for cosmopolitan German-Jewish banking elites living in the Anglo-American world to maintain not only their banking business but their personal ties (which were indistinguishable from each other) following the outbreak of World War I. In the end, as Liebmann carefully shows, a banking empire built on linking German capital with American and English elites was unable to survive the belligerence of the early twentieth century. The rise of Hitler served as the final straw, and the Speyer’s empire collapsed in 1939.

True capitalist pioneers, Phillip Speyer opened the wealthy Frankfurt family’s New York branch in 1837 — well before the Schiffs, the Kuhns, the Goldmans, the Sachses or the Loebs ever made their names in the city. After marketing Union bonds to Europe during the Civil War, the family built much of its fortune and reputation as central architects in the financing of the transcontinental railroads in the 1870s. However, as he is interested mostly in the lives of Phillip’s grandsons, James and Edgar, between the 1890s and the 1920s, Leibmann does not focus much on the Speyers’ role in those great — and, as Richard White’s Railroaded (W.W. Norton, 2012) has taught us, highly corrupt — railroad adventures.

Liebmann’s own account of the Speyers’ business — like the family’s vast financial network — spans the globe. The book does an excellent job of covering James and Edgar’s wide-ranging investment portfolio, be it Los Angeles Aqueducts and London subways, Cuban and Weimar Republic bonds, Philippine and Bolivian railroads, or Hungarian and Bulgarian League of Nations loans. Thick descriptions of all these investment deals will likely be the most useful part of the book for the economic historian. Liebmann shows, for instance, that while Edgar Speyer made the London tube the only privately financed subway in the world, the project only became profitable after the Speyers also made sure to buy the biggest bus company in London. In covering the Speyer’s marketing of Cuban loans, Liebmann nicely demonstrates how this lucrative issuance was secured by Edgar and James’ ability to get the Pro-American Cuban government to commit to permanent taxes (known as the “Speyer Taxes”) on tobacco, alcohol and sugar following the Spanish-American War. Similarly detailed chapters examine the central role the Speyers played in Latin and Central American railroads as well as Eastern European sovereign debt.

Yet while Liebmann does an excellent job documenting the life and work of James and Edgar Speyer, he often misses the opportunity to use his vast knowledge of the Speyers as a lens into bigger historical questions. For example, Liebmann notes how Edgar Speyer was an influential free-market Liberal who railed against increased government and municipal expenditure. Yet he takes this position as a given, and does not link Edgar’s austerity politics with his own business interests. As owners of the London Underground, could it be that the Speyers — and other financial elites — rejected government investment because they were afraid to be priced out of the profitable infrastructure business?

The Speyers could have also served as a tremendous case study for understanding the rise of American imperialism in the early twentieth century, as they were central players in the “dollar diplomacy” taking place in Cuba and the Philippines — the two prize regions that the United States wrested away from Spain at the turn of the century. Their actions — such as the establishment of the Speyer Taxes — would have massive political repercussions. As Liebmann notes, up until 1940 the Cuban government had to devote a whopping 15 percent of its national revenue to service the Speyers’ debt, a development which surely played a role in the Cuban Revolution of the 1950s. Such investments, as well as the sovereign debt loans to Weimar Germany and Eastern Europe, belie Liebmann’s simplistic claim that the free-trade Speyers were victims of “nationalism.” If anything, nation-building and the Speyers’ close ties to government leaders helped make them rich.

Finally, the Speyers’ shifting investment patterns — from transcontinental American railways to global railroads and sovereign debt — could have also offered a fascinating look at the United States’ own epochal shift from a nation that attracts capital to a country that exports it. Such a transformation of American capitalism from debtor to creditor has been painfully overlooked by historians, and while Liebmann’s book offers rich material, his analysis of this transformation is lacking.

Despite these faults, Liebmann has written the best account yet of the House of Speyer, the third largest investment banking firm at its peak in the 1900s and one that managed in 1913 the 2015 equivalent of $52 billion in assets. Often overlooked by the Houses of Morgan, Lehman, Goldman and Sachs — perhaps because they are no longer a household name — this book will be an invaluable read for any historian interested in the biggest financial players of the era.

Eli Cook is an Assistant Professor of American History at the University of Haifa in Israel. He received his Ph.D. from Harvard University in 2013, where he was part of the Program for the Study of Capitalism. He is currently finishing up a book manuscript for Harvard University Press titled The Pricing of Progress: Economic Indicators and the Capitalization of American Life.

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