William Street” became synonymous with Kuhn, Loeb and with Schiff,
just as “New Court” in London was the abbreviation for the Rothschilds.
Schiff’s fame spread, and his circle of acquaintances widened. To friends
and the press he became a barometer and forecaster of economic condi-
tions, and he frequently aired his views before the Chamber of Commerce
and in occasional articles for journals. So influential were Schiff’s opinions
that a warning from him on how an inelastic currency could bring about a
panic of major proportions triggered an immediate decline of the market.
Secure in his power after the reorganization of the Union Pacific, he
shared his opinions, solicited or unsolicited, with successive presidential
administrations.^74
Schiff’s family expanded too. Frieda married Felix Warburg in 1895 and
by 1907 had given birth to five children. Mortimer married Adele Neu-
stadt in 1900, and two children, Dorothy and John, were born to them. A
loving grandfather, Schiff gathered the family together on Friday nights;
Frieda’s brood often shared long vacations with Jacob and Therese in their
summer homes. Since Morti was given 932 Fifth Avenue as a wedding
present, the parents moved to 965 Fifth Avenue. When Frieda and Felix
built their mansion on Fifth Avenue and Ninety-second Street, the entire
family lived within a few blocks of each other.^75
The Insurance ScandalsLess than a year after the Northern Securities decision, Kuhn, Loeb was
again in the public eye. In the heyday of the muckraking era, when insu-
rance companies were attacked for mismanagement, for undemocratic
procedures that denied policyholders a say in management, and for links
with bankers that jeopardized the safety of their funds, Kuhn, Loeb too was
under fire. As public hostility led increasingly to a clamor for government
regulation, the firm’s involvement in the companies, specifically the Equi-
table Life Assurance Society, brought it unwanted notoriety.
Ties between the companies and investment bankers like the House of
Morgan and Kuhn, Loeb were commonplace. Just as much as the compa-
nies needed bankers for investing their funds in securities, so did the bank-
ers need the companies to supply them with ready capital. But unlike the
Northern Securities case, where the correct boundary between the two
parties (in that case the railroads and the banking houses) was not an issue,
New York’s probe of insurance companies in 1905 focused specifically on
the evils of the company-banker connection. Kuhn, Loeb had long done
business with Equitable as well as with the other two major insurance com-
panies, Mutual Life and New York Life, and Schiff had been a director of
the Equitable Society since 1893. The banker claimed that he had sought
The Making of a Leader 25