destroyed most letters he received, Cassel’s opinions must be pieced to-
gether from Schiff’s answers. Schiff, who often wrote several times a
month, fed his “Lieber Freund” a running commentary on the state of the
American market. Supplementing their occasional meetings in America
and Europe, the friends exchanged gifts and shared news and gossip, not
only on economic conditions but on family matters, vacations and travel,
people they knew, and Jewish affairs. Although Schiff was the austere Puri-
tan and Cassel the cavalier bon vivant, a sense of mutual trust and devotion
pervades the correspondence.^34 The letters suggest that Schiff confided
more than Cassel did, and indeed, on the subject of his secret conversion to
Catholicism, Cassel kept silent.
Bankers and Railroads: The Union Pacific AffairBy the turn of the century Kuhn, Loeb ranked second only to the House
of Morgan.* The firm owed its phenomenal success principally to its busi-
ness with railroads. Assisted by European capital, it participated in the de-
velopment and expansion of the nation’s arteries from 1875 on. Like other
bankers, Schiff managed securities issues for individual roads and advised
with them on financial matters. In a very short time, by the process of re-
organization, his firm came to share in the management of individual rail-
road lines.
The reorganization of the Union Pacific Railroad and its dramatic con-
sequences catapulted Schiff into national prominence. The sequence of
events that climaxed in the Wall Street panic of 1901 underscored the
workings of finance capitalism, in this case the bankers’ control of the
northwestern roads. Involving Schiff with the House of Morgan and with
two railroad giants, James J. Hill and Edward H. Harriman, the Union Pa-
cific affair illustrated the rivalry of both railroad owners and the bankers
who backed them. In the end, the affair set Kuhn, Loeb permanently in the
American financial elite.
Intrigued by the possibility of economic expansion in the territory west of
the Mississippi, Schiff showed a keen interest from the start of his career in
the burgeoning railway system. As early as 1870, Budge, Schiff & Company
12 Jacob H. Schiff
*The manifold operations of Kuhn, Loeb lie outside the scope of this study. Only
several outstanding episodes—the Union Pacific affair, the Equitable insurance case,
involvement in the Far East—will be discussed. Together with questions of how
Schiff related to businessmen and other bankers, where he stood on the issues of
government and the economy, and what character traits he displayed in his business
dealings, they provide a necessary background for his activities as a Jewish leader.