legal advice on his rights under insurance laws and was told that Kuhn,
Loeb was free to sell securities to companies in which he held a director-
ship.^76 But as he learned from subsequent developments, that defense car-
ried little weight. Both his personal integrity and the good name of his firm
were on the line.
In January 1905 news of a bitter in-house struggle for control between
two of Equitable’s officers, James Hyde and James Alexander, compounded
public concern. Schiff, who sided at first with Hyde, served in February on
a committee of two that attempted to reconcile the rivals. The committee’s
report was rejected by the board, and shortly thereafter the state superin-
tendent of insurance announced an investigation of Equitable. Newspapers
and journals had a field day. Rumors flew thick and fast about the
company’s malpractices and the shady schemes of its officers. Some articles
and cartoons singled out Schiff in particular. One source said that the
banker was asked to resign; another told how Schiff and a few others were
working underhandedly to give control of Equitable to the Rockefellers. At
the beginning of June, Schiff washed his hands of the dispute and resigned
from the board. After new disclosures of Equitable’s misconduct, he
blamed both the Hyde and the Alexander sides for the affair.^77
From February through July the banker busily defended himself. Not
one to suffer such attacks in silence, he lashed out at others while protest-
ing his innocence. He faulted Alexander for seeking to discredit him, but
he put most of the blame on the yellow press for a willingness to sacrifice
reputations for headlines. He wrote long letters to friends and journalists
and to important public figures, including Roosevelt and ex-President
Cleveland. One letter went to Adolph Ochs of the New York Times with the
comment that the banker wanted the “conservative” press to know the true
story. To a German journalist, Schiff added that Kuhn, Loeb had done as
much if not more business with Mutual Life and New York Life. Rational-
izing that those active in public life had to cope with jealousy and other
“low” forms of behavior, he denied that he was upset. But the time and en-
ergy he expended on fence-mending revealed his true state of mind.
The banker confided to his son that the “troublesome affair” was “like a
wet blanket over everything.” In his own defense he claimed that he and
Kuhn, Loeb were singled out for criticism in order to draw attention away
from the real culprits. He said that he personally had no interest in the fight
between Hyde and Alexander and that he had sided with Hyde for the sake
of the company against Alexander’s “scheming ring.” On the major
charges—that Kuhn, Loeb had acted improperly with regard to its sale of
securities to Equitable and that Schiff, a director, could not be both a buyer
for Equitable and a seller for Kuhn, Loeb—he explained that he never had
served on the executive committee, the body that authorized transactions.
On rare occasions, Kuhn, Loeb had bought and sold securities for Equitable
26 Jacob H. Schiff