at a time, and to do this, according to Birmingham, Goldman loaned Sachs fifteen thousand dollars, which was to be repaid in three annual payments over three years. As agreed, Sachs repaid ten thousand dollars over two years. On May 28, 1884, the Sachses’ third son, Walter, was born, and in recognition of the birth of yet another grandchild, Marcus Goldman agreed to forgive his son-in-law’s third and final installment of the original fifteen-thousand-dollar debt. In Goldman’s “old-fashioned German script,” according to Birmingham, he acknowledged his son-in-law’s “energy and ability” as a partner, thus relieving him of his final portion of the debt. Louise Goldman Sachs had kept her father’s letter to her husband plus a copy of the canceled note. “And thus,”Walter Sachs said later in an oral history of his life after seventy-two years as part of his father’s and grandfather’s firm (he died in 1980, age ninety-six), “it appeared that on the very first day of my entrance into the world, I concluded my first business deal for Goldman, Sachs.”
With Samuel Sachs’s arrival, Marcus Goldman’s business began to look more like the other small, Jewish Wall Street partnerships that had evolved from their roots as merchants. The firm became known as M. Goldman & Sachs. Not everything went as swimmingly, of course, as the various accounts of the firm’s history would have one believe. For instance, in February 1884, one of the pieces of paper Marcus Goldman carried around in his hat went awry. A Mr. Frederick E. Douglas has purchased a $1,100 note from Goldman & Sachs, written on the account of an “A. Cramer” and endorsed by “Carl Wolff.” Goldman was selling the six-month note for Wolff, with Douglas being the buyer. But, it turned out, Cramer’s signature had been forged, Wolff ran away, and the note became worthless. Douglas sued the firm in superior court on the grounds that it “had, by implication, guaranteed the note to have been made by Cramer.” This certainly was one of the first legal examinations of the role of the responsibility of a financial intermediary in a transaction between a buyer and a seller. Would the jury hold Goldman & Sachs responsible for the IOU as if it had been an underwriter of the paper—the role of an underwriter of a security being one that Goldman Sachs would soon pioneer at the beginning of the twentieth century—or would the jury hold Goldman blameless and rely on the tried-and-true concept of caveat emptor, or buyer beware? A Judge Freedman instructed the jury to find for Douglas “if they believed the defendants to have been acting as brokers for Wolff at the time of the sale of the note.” In the end, “the jury found a verdict for the defendants” and the new firm was spared liability for the fraud. Had the jury found differently in March 1886, the tantalizing possibility exists that the Goldman Sachs we know today might have been an early victim of the plaintiffs’ bar.
Relieved of that potential legal burden for the moment, M. Goldman & Sachs plowed ahead. In 1885, Goldman asked his son Henry and son-in-lawLudwig Dreyfus to join the firm and, as a result, it became formally known as Goldman, Sachs & Co. (It was also briefly known asGoldman, Sachs & Dreyfus.) The partners lived near one another in town houses on the Upper West Side of Manhattan. Marcus Goldman gave up his house on Madison Avenue and moved to West Seventieth Street. Sam Sachs bought the town house next door.Harry Sachs, Sam’s brother, bought a town house on West Seventy-fourth Street, andHenry Goldman, Marcus’s son, bought “an even larger one” on West Seventy-sixth Street.
In December 1893, the growing firm narrowly avoided losing $22,500—some 5 percent of its capital—lent toN. J. Schloss & Co., a small manufacturer of boys’ clothing on lower Broadway. It turned outthe company’s bookkeeper had embezzled $50,000 and, when caught, tried to commit suicide by lying
With Samuel Sachs’s arrival, Marcus Goldman’s business began to look more like the other small, Jewish Wall Street partnerships that had evolved from their roots as merchants. The firm became known as M. Goldman & Sachs. Not everything went as swimmingly, of course, as the various accounts of the firm’s history would have one believe. For instance, in February 1884, one of the pieces of paper Marcus Goldman carried around in his hat went awry. A Mr. Frederick E. Douglas has purchased a $1,100 note from Goldman & Sachs, written on the account of an “A. Cramer” and endorsed by “Carl Wolff.” Goldman was selling the six-month note for Wolff, with Douglas being the buyer. But, it turned out, Cramer’s signature had been forged, Wolff ran away, and the note became worthless. Douglas sued the firm in superior court on the grounds that it “had, by implication, guaranteed the note to have been made by Cramer.” This certainly was one of the first legal examinations of the role of the responsibility of a financial intermediary in a transaction between a buyer and a seller. Would the jury hold Goldman & Sachs responsible for the IOU as if it had been an underwriter of the paper—the role of an underwriter of a security being one that Goldman Sachs would soon pioneer at the beginning of the twentieth century—or would the jury hold Goldman blameless and rely on the tried-and-true concept of caveat emptor, or buyer beware? A Judge Freedman instructed the jury to find for Douglas “if they believed the defendants to have been acting as brokers for Wolff at the time of the sale of the note.” In the end, “the jury found a verdict for the defendants” and the new firm was spared liability for the fraud. Had the jury found differently in March 1886, the tantalizing possibility exists that the Goldman Sachs we know today might have been an early victim of the plaintiffs’ bar.
Relieved of that potential legal burden for the moment, M. Goldman & Sachs plowed ahead. In 1885, Goldman asked his son Henry and son-in-lawLudwig Dreyfus to join the firm and, as a result, it became formally known as Goldman, Sachs & Co. (It was also briefly known asGoldman, Sachs & Dreyfus.) The partners lived near one another in town houses on the Upper West Side of Manhattan. Marcus Goldman gave up his house on Madison Avenue and moved to West Seventieth Street. Sam Sachs bought the town house next door.Harry Sachs, Sam’s brother, bought a town house on West Seventy-fourth Street, andHenry Goldman, Marcus’s son, bought “an even larger one” on West Seventy-sixth Street.
In December 1893, the growing firm narrowly avoided losing $22,500—some 5 percent of its capital—lent toN. J. Schloss & Co., a small manufacturer of boys’ clothing on lower Broadway. It turned outthe company’s bookkeeper had embezzled $50,000 and, when caught, tried to commit suicide by lying
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