Jacob Schiff: American Financier

 

                                                        

Jacob H. Schiff was a banker and philanthropist in the early 1900s who communicated with European countries to gain financing for the construction of many of America’s industrial enterprises, which included railroads and mines. Schiff helped make the United States one of the world’s leading industrialized economies.  Schiff was very instrumental in the promotion of all the bonds that were being issued in the United States for all the major railroads.[1] 

 German-Jewish immigrant Jacob Schiff became very successful in the financial market in New York. Schiff had a very stressed and unique relationship with many in the entrenched banking world in New York. He often found himself being shunned by prominent bankers like J.P. Morgan.[2]  When reviewing some of Schiff’s financial transactions, it is easy to see where he was often excluded. This is very evident in a journal piece on Schiff by Stanley Chyet, where he expounds on how Schiff along with Edward H Harriman were in a struggle for the control of the Great Northern Railroad and were up against J.P. Morgan and James J. Hill and this struggle for control eventually provided an impetus to the stock market panic of May, 1901.[3]

Schiff started to gain a reputation for his advice to many companies, not only in the United States, but overseas as well. An example of Schiff’s knowledge of what was going on in the United States and the rest of the world can be found in a biographical book on Schiff, by Cyrus Adler.  Schiff realized that agriculture was the mainstay in commerce. Schiff believed in the concept of agriculture being the driving force in commerce. He once told someone that he did not look to the stock market for business opportunities, but he followed the crop reports to get his information.[4]

In a review of the book, The Money Kings, by Daniel Schulman, Jacob Goldstein writes in The New York Times about a meeting that took place in Schiff’s Fifth Avenue mansion. In attendance were a group of powerful and influential Jewish men. The purpose of the meeting was to discuss the threatening war between Japan and Russia. Schiff explained to the others that he had been approached by someone about helping the Japanese fund the war, by way of a loan. Then he asked a question: “What does it mean for the Jews?”[5]  Schiff cared deeply about the treatment of Jews around the world. However, he was always looking to make more money. This character of Schiff is made more evident in the publication Immigrant Entrepreneurship.   Schiff was able to incorporate business along with his moral values when he decided to loan money to Japan, which helped them defeat Russia in the Russo-Japanese War of 1904-05, even with Japan being the underdogs in this fight.  Schiff detested Czarist Russia because it persecuted Jews living there. By making these loans for Japan, he was convinced that Kuhn, Loeb [Schiff’s firm] would more than likely make a good profit.[6]

It was during this period from 1890 to 1920 that Tom Yuz, in a piece on Schiff, referred to this time as the “Schiff era.”  Schiff, through his hard work and financial savvy, was able to turn the United States into the world’s premier industrialized economy.[7]  Sometimes, this period in the United States is more frequently referred to as the “Progressive Era.” According to Gabriel Kolko in his book, The Triumph of Conservatism, it was during this time that President Wilson was working on setting up the Federal Trade Commission, or FTC.[8]  Kolko goes on the explain that part of the process in getting the FTC passed, President Wilson had to gain support for this new commission by courting members of Congress and businessmen.  “New Freedom”, Wilson’s campaign platform of 1912, called for the passage of the Federal Trade Commission.[9]  An article in Politico states, on this day in 1914, President Woodrow Wilson signed into law the Federal Trade Commission, which was to be a bipartisan five-member body, with the authority and power to help limit unfair trade practices and to issue cease-and-desist orders to large corporations, if need be. According to Wilson, the establishment of the FTC was needed to help battle trusts. The establishment of the FTC and other policies issued in this period have been politicized into the time known as the Progressive Era.[10]

The Federal Trade Commission had two main objectives: the first being breaking up trusts, which came to be known as trustbusting. And second, the FTC wanted to try and control corporate power. This went against what Schiff saw as the best way to run industry. Schiff was a strong believer in a German model of integrated industry. Schiff was not in favor of what was going on in America at this time, which was unrestrained and the crushing of competition. Even with all of Schiff’s political connections with presidents and members of Congress, he was unable to win them over to his ideas on industry. Trust-busting was the winner at this time.[11]  The progressive movement's platform often did not mesh with Schiff’s views on business. Schiff was very much in favor of the creation of a decentralized banking system, which would later become known as the Federal Reserve. Judy Wallace writes that Schiff’s preference for decentralized banking and his stance on international finance made working with the FTC difficult because of their staunch positions that they wanted to follow.[12]

Even though he never met Henry Ford in person, Schiff had an indirect conflict with Henry Ford.  Judy Wallace lets us know that Schiff and Ford were economic influencers who had ideological conflicts in the first years of the twentieth century.  Ford’s approach to business and industry was one of hands-on and personal involvement in the company’s day-to-day decisions.  Schiff, on the other hand, was more in favor of a professional management style, which relied on strategic financial decisions. A strategy of a network of managers who were relied upon to oversee the day-to-day operations of his investments and corporate expansions, instead of one individual.[13]  Schiff and Ford were opposites when trying to determine the vision of capitalism in America. Schiff promoted a vision of international and finance-oriented.  Ford, however, favored one that was domestic and production-centered.[14]

Jacob Schiff was not only a very wealthy financier, but he was also a very generous philanthropist. Schiff was a man who donated his time and money to many organizations and colleges. Some of the organizations and colleges Schiff gave money to include the Jewish Theological Seminary of America, Harvard, Cornell, and Columbia Universities, the Montefiore Home and Hospital, and the Henry Street Settlement.[15]. Schiff’s philanthropy did not end only with Jewish causes in America and around the world or with his academic donations to Jewish and non-Jewish colleges and universities. Schiff also gave to organizations that were trying to promote racial equality in America, as evidenced by his donation to W.E.B. DuBois of the NAACP.[16]

Readers are reminded by Judy Wallace that the legacy of Jacob Schiff confirms that a finance capitalism vision and a philanthropic vision can work hand-in-hand. Schiff was able to accomplish this during the Progressive Era with his commitment to international investment and multi-charity donations. This went against the industrial nationalism that was favored by Henry Ford and most of the politicians and industry giants at the time. Schiff’s philosophy was an alternative to the industrial nationalism championed by figures like Henry Ford.[17]

Much of what Jacob Schiff accomplished is not always remembered in history because a lot of his ideas were eventually rejected. After all, the large industrial companies were backed by the federal government, and they followed the Henry Ford method for United States industrial growth. Henry Ford's method was one that was production-centered and a domestic profit model. He wanted to rely on tariffs to protect his industry instead of seeking international finance.”[18]

 However, Heilbrunn reminds the readers that Schiff was a very generous philanthropist and established institutions that promoted the ideals and social issues that were considered of value to him. Schiff encouraged his family to continue with the charitable endeavors that he started, at least for the next 30 years. One thing that Schiff could not do was to transfer his leadership abilities or his dedication to community, nor could he permanently arrest the appeal of imitation.[19]

 

Portrait from the repository Leo Baeck Institute, New York

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[1] Bernice Heilbrunn. “Jacob H. Schiff.” Immigrant Entrepreneurship, accessed July 10, 2025, http://www.immigrantentrepreneurship.org/entries/jacob-h-schiff/

[2] Judy Wallace. “Economic Influencers between 1900 and 1929: Jacob Schiff (1847-1920).” Yehudit Institute, https://yehudit.institute/economic-influencers-between-1900-and-1929/

[3] Stanley F. Chyet. Jewish Social Studies 32, no. 2 (1970): 169–71. http://www.jstor.org/stable/4466583

[4] Cyrus Adler.” Jacob Henry Schiff: A Biographical Sketch,” Berman Archive, https://www.bjpa.org/content/upload/bjpa/jaco/Jacob%20Henry%20Schiff23.pdf

[5] Jacob Goldstein, The Money Kings, by Daniel Schulman, Book Review, New York Times, November 14, 2023

[6] Bernice Heilbrunn. “Jacob H. Schiff.” Immigrant Entrepreneurship, accessed July 10, 2025, http://www.immigrantentrepreneurship.org/entries/jacob-h-schiff/

[7] Tom Yuz. “Jacob Schiff: The Right Hand of American Expansionism.” Journal of Internal Relations, November 2018.

[8] Gabriel Kolko, The Triumph of Conservatism: A Reinterpretation of American History, 1900-1906 (New York: The Free Press, 1963), 255-278.

[9] Ibid

[10] Andrew Glass, “Woodrow Wilson creates Federal Trade Commission, Sept. 26, 1914, POLITICO (September 2012)

[11] Bernice Heilbrunn. “Jacob H. Schiff.” Immigrant Entrepreneurship, accessed July 10, romote.2025, http://www.immigrantentrepreneurship.org/entries/jacob-h-schiff/

[12] Judy Wallace. “Economic Influencers between 1900 and 1929: Jacob Schiff (1847-1920).” Yehudit Institute, https://yehudit.institute/economic-influencers-between-1900-and-1929/

[13] Ibid

[14] Ibid

[15] Cyrus Adler.” Jacob Henry Schiff: A Biographical Sketch,” Berman Archive, https://www.bjpa.org/content/upload/bjpa/jaco/Jacob%20Henry%20Schiff23.pd

[16] Du Bois, W. E. B. (William Edward Burghardt), 1868-1963. Letter from W. E. B. Du Bois to Jacob H. Schiff, September 4, 1918. W. E. B. Du Bois Papers (MS 312). Special Collections and University Archives, University of Massachusetts Amherst Libraries

[17] Judy Wallace. “Economic Influencers between 1900 and 1929: Jacob Schiff (1847-1920).” Yehudit Institute, https://yehudit.institute/economic-influencers-between-1900-and-1929/

[18] Ibid

[19] Bernice Heilbrunn. “Jacob H. Schiff.” Immigrant Entrepreneurship, accessed July 10, 2025, http://www.immigrantentrepreneurship.org/entries/jacob-h-schiff/