Kuhn Loeb & Co. history

Investment banking firm founded by two German immigrants—Abraham Kuhn and Solomon Loeb—in 1867 in New York. The two were merchants from Cincinnati who had already opened a New York City dry goods store before trying their luck at banking. Kuhn returned to Germany, where he offered a job in his bank to Jacob SCHIFF, who arrived in the United States in 1873. From that time, Schiff became the dominant figure at the firm and rivaled only J. P. Morgan as New York’s senior banker.

The firm remained small for the first decade after Schiff arrived but found its fortune in restructuring the UNION PACIFIC RAILROAD after Jay GOULD was no longer involved in its operations. Other significant financings included those for the Southern Pacific Railroad, Pennsylvania Railroad, Royal Dutch Petroleum, and Shell Transport & Trading. In most cases, the firm underwrote the companies’ bonds and acquired a reputation as a bond financier.

The firm began to expand its number of partners in the late 1890s, adding Paul Warburg and Otto Kahn, among others. Schiff served as an adviser to Theodore Roosevelt and was opposed to the development of the FEDERAL RESERVE when the idea of a new central bank was first discussed in the years before 1910. After World War I began, out, Kuhn Loeb participated in the large war loans of the day for the European allies, although the firm deliberately refused to participate in the largest loan to date, the Anglo-French loan of 1915. Partners of the firm remained sympathetic to the plight of European Jews during the war and were incorrectly labeled pro-German as a result.

Jacob Schiff died in 1920, and Otto Kahn assumed leadership of the firm. The firm’s business remained much the same as it had during the days of Schiff: It underwrote mainly bonds and provided financial advice to its corporate clients. MERGERS and acquisitions became one of its specialties and remained as such for decades. It also acquired something of a flamboyant image because of Kahn’s affinity for Hollywood and being seen in public, a diametrical shift from the days of Schiff. But the firm could not survive the postwar years without changing. Being a partnership, its capital base remained very small compared to the larger investment banks dominating Wall Street in the 1970s.

Rather than expand or go public, the firm agreed to be bought by LEHMAN BROTHERS in 1977, and its independence came to an end. As a partnership to the end, Kuhn Loeb’s reputation was inextricably linked with the personalities of its senior partners, most notably Schiff and Kahn. In the last two decades of its independence, it remained one of the better-known Wall Street merger firms, acting mostly as adviser.

See also INVESTMENT BANKING.

Further reading

• Birmingham, Stephen. “Our Crowd”: The Great Jewish Families of New York. New York: Harper & Row, 1967. 
• Geisst, Charles R. The Last Partnerships: Inside the Great Wall Street Money Dynasties. New York: McGraw-Hill, 2001.