Goldman Sachs & Co. history
An INVESTMENT BANKING company founded by Marcus Goldman immediately after the Civil War. Goldman arrived in the United States from Bavaria in 1848 and became an itinerant merchant. He opened a small finance house 20 years later near Wall Street and began trading in commercial bills, which later would become known as COMMERCIAL PAPER.
In 1880, Goldman took his son-in-law Sam Sachs as a partner, and in 1885, the firm was renamed Goldman Sachs & Co. Before World War I, the firm entered into an agreement with LEHMAN BROTHERS that allowed the two firms to share underwritings for new stock issues. One of their first joint ventures was the underwriting for a common stock issue of SEARS ROEBUCK & CO., the large retailer. Over the next 20 years, the two shared more than a hundred underwritings, many for retailers, which catapulted Goldman to prominence on Wall Street. In the 1920s, prior to the crash, of 1929, the firm embarked upon marketing its own investment trusts. The trusts did not fare well in the aftermath of the crash, and the firm’s reputation was tarnished as a result. The chairmanship then passed to Sidney Weinberg, who had joined the firm originally as a janitor’s assistant before the war. Under his leadership the firm continued to grow and severed its relationship with Lehman.
Goldman’s most notable success in the years following World War II was the initial public offering of Ford Motor Co. The firm had never sold shares under Henry Ford’s leadership, but his grandson brought the company to market with Weinberg’s help. The deal secured the firm’s position as one of Wall Street’s notable equity houses, and by the time Weinberg died in 1969 its reputation was secure. Commercial paper continued to be one of its specialties in addition to a full array of investment banking services.
In the 1970s and 1980s, the firm began to expand internationally but remained a partnership. Many of its senior members also served in several administrations in Washington, in various capacities ranging from economic advisers to Treasury secretary. Robert Rubin, a partner, served in the Clinton administration as secretary of the Treasury.
Continual pressures to expand and a few isolated poor financial years led the firm to consider a public offering. The issue was planned for 1998 but was postponed because of the troubles in the marketplace created by the downfall of LONGTERM CAPITAL MANAGEMENT. It finally was brought to market in 1999, making Goldman the last major Wall Street investment bank to go public.
Further reading
- Endlich, Lisa. Goldman Sachs: The Culture of Success. New York: Knopf, 1999.
- Geisst, Charles R. The Last Partnerships: Inside the Great Wall Street Money Dynasties. New York: McGraw-Hill, 2002.
