Having worked his way up from janitor’s assistant to the head of the firm, Sidney Weinberg’s is a true rags to riches story and one that contradicts the well refined, Ivy League-educated image that Wall Street has curated for itself over the last century.
Despite his lack of such an education and upbringing, Weinberg led Goldman Sachs from a small, but respectable investment bank into a behemoth who counted General Electric (GE), Ford and General Foods (and others) among its clients and whose influence spanned the globe.
Early Life
Sidney James Weinberg was born on October 12 1891 in Brooklyn, New York. The third of eleven children born to Polish Jewish immigrant and wholesale liquor dealer Pincus Weinberg and his wife Sophie, the Weinberg family weren’t rich by any means.
His family were active members of the local synagogue and congregation, with Sidney’s mother serving as sisterhood president for a year between 1912 and 1913 and father serving as president of the congregation from 1919 until 1921. As such, Sidney, as with all his siblings, attended the Talmud Torah.
Though he attended the local PS-13 high school, Sidney was uninterested in school and regularly flunked off school to do anything other than schoolwork. He was finally expelled after flunking an entire week off school.
Due to this (and partly at the recommendation of one of his teachers), Sidney decided to “get a real job” as one biographer would later put it.
He quickly found employment, first as a newsboy, then an oyster shucker, then as a feather deliverer for a milliner and finally as a messenger for three different brokerage houses.
This conflict of interest resulted in him being fired from all three brokerage houses and meant that Sidney, now 16 years old, was once again looking for a job.
As the economy wasn’t doing great – the Panic of 1907 was then in full force – no one was looking to hire a 16 year old nobody Jewish kid from PS-13 who spoke with a thick Brooklyn accent.
But this didn’t deter Sidney. He soon came up with a plan of ridding the elevators of several skyscrapers to the top floor (where all the important executives worked) and politely asking if they “Wanted a boy?” to errands for them.
Perhaps unsurprisingly, most dismissed Sidney Weinberg without giving it a second thought. Only one firm, located at 30 Pine Street and bearing the name “Goldman Sachs” offered him a job as an janitor’s assistant for $3 a week.
Goldman Sachs
By no means a well paying job – $3 is roughly $89 adjusted for inflation – nor a glamorous one, it was the only offer Sidney received after asking dozens of firms, so he took it.
His daily tasks included brushing the partners’ hats, wiping the mud off their overshoes and cleaning out the office’s spittoons. Most of the partners, including Samuel Sachs and Henry Goldman (the duo who headed the firm), didn’t bother to learn his name, simply referring to him as “boy”.
But this soon changed when he met Paul J. Sachs, another partner at the firm who was Samuel Sachs’ son and Henry Goldman’s nephew (and thus a grandson of Marcus Goldman, the firm’s founder).
Impressed by the young Jewish teenager’s work ethic for doing the same thing day in, day out, Paul placed Sidney in charge of the mailroom, which he quickly reorganized and made more efficient. Now partners got news far quicker.
Going one step further, Paul gave Sidney $25 (roughly $725 adjusted for inflation) for lessons at Brooklyn’s Browne’s Business College so he could improve his penmanship – leaving school early meant his handwriting was almost illegible.
When the US entered WWI in 1917, Sidney resigned from Goldman Sachs to help with the war effort, enlisting in the Navy and serving as a cook due to his poor eyesight before transferring to a job inspecting cargo near the war’s end.
Return to Goldman
Following the war’s end, Sidney Weinberg was discharged from the Navy and rejoined Goldman Sachs as one of their securities traders. But Sidney differed from Goldman’s other traders in how he went about his job.
Rather than just speculate about which securities were going to appreciate and depreciate (and by how much), Sidney began forming syndicates with other traders to sell underwritings and personally oversaw the issuing and pricing of new issues.
For this, Goldman Sachs bought him a seat on the New York Stock Exchange in 1925 and promoted him to partner in 1927.
Partner
In many ways, his promotion to partner was very similar to his first job at the firm: he cleaned up the messes left by other partners.
Placed in charge of running the firm’s investment trusts, including its then-famous Goldman Sachs Trading Corp., which he co-lead with Waddill Catchings (the first Goldman Sachs partner to not have been a member of the Goldman-Sachs family).
However, Catchings’ mismanagement of the Goldman Sachs Trading Corp. left the entire company vulnerable.
Prior to its launch in 1928, the initial offering was set at $40 million ($652 million adjusted for inflation). But the fund’s popularity saw Catchings up this to $100 million (roughly $1.6 billion adjusted for inflation).
When launched, a stake in the fund cost $100 ($1,600 adjusted for inflation) and had more than doubled within its first five days, and reached a high of $326 not long after. Then came Black Tuesday and the Great Depression soon followed.
The fund, as with most publicly-traded companies, crashed in the ensuing days and weeks, plummeting to an all-time low of just $1.75!
As if this wasn’t bad enough, it soon emerged that under Waddill Catchings, Goldman Sachs had engaged in stock manipulation and insider trading, which whilst not illegal at the time, seriously damaged the firm’s reputation with its clients.
So caught up with the fund’s initial success, Goldman Sachs partners had bought 10% of the initial issuance, representing over half the firm’s capital. With its collapse, the firm suddenly owed millions to the banks and had no little ability to make good on these obligations.
Senior Partner
Safe to say, the firm was left in a tight spot financially. But what did Waddill do to make the firm solvent again? Nothing.
And this both surprised and angered many Goldman partners. You see, Catchings was the Goldman partner with the single largest stake in the firm, and thus had the most to lose if the firm went bankrupt. But rather than fix it, he placed the issue firmly in others’ laps.
Perhaps not surprisingly, it didn’t take much for Sidney Weinberg to organize Catchings’ ousting as senior partner, a position he was quickly promoted to fill.
Using his newfound promotion and control over the firm to sell off the firm’s other assets to cover at least part of what it owed. At least for now, Goldman Sachs was on a somewhat stable financial footing.
It would take Sidney until the 1950’s to build Goldman’s capital back up to its pre-crash level of $10 million.
But worst of all, the collapse of the Goldman Sachs Trading Corp. had damaged the firm’s reputation beyond belief. No bank would do business with them, and clients who’d been with the firm for decades suddenly left.
To Sidney, who believed that maintaining the good reputation of the bank was the most important job of any partner, this was devastating. He would never forgive Waddill Catchings for this above all else.
But Sidney Weinberg was astute enough to realize that this was also something of a blessing disguise. He changed the firm’s focus from trading to investment banking, an action that started to rebuild the firm’s reputation.
In 1932, he doubled down on this commitment by personally leading Goldman Sachs’ takeover of Chicago-based Hathaway & Co., a leader in the commercial paper market.
New Deal
A lifelong Democrat, Sidney was one of the few men on Wall Street who supported Franklin D. Roosevelt over incumbent President Herbert Hoover. Sidney even met and befriended Roosevelt in 1932 whilst serving on the party’s National Campaign Finance Committee.
Perhaps due to this, or simply due to Sidney Weinberg’s reputation as a successful investment banker, he served as an unofficial economic advisor to Roosevelt whilst he drafted the New Deal, which upset many on Wall Street.
When it came to implementing the New Deal, Roosevelt created the Business Advisory and Planning Council (to act as a bridge between business and government) and made Sidney the head of the council.
As head of the council, Sidney’s first goal was to add other advisors. And this is where Sidney’s genius really began to show.
He purposefully avoided adding any other investment bankers to the council, but invited many of the country’s top executives. Ostensibly used to convince American industry as a whole to accept the New Deal, it also gave Sidney a great opportunity to network.
Though opposition to the New Deal still remained from many businessmen, there’s little doubt that Sidney’s involvement with the BAPC didn’t reduce their support considerably.
Indeed, President Roosevelt was so happy with him he joked that Sidney was “the politician” for his ability to skillfully mediate opposing views within the council.
WWII
When the US joined WWII in 1941, Roosevelt once again enlisted industry to help with the war effort. Once again, he relied on Sidney Weinberg to do this, entrusting him to establish the Industry Advisory Committee.
Answering only to the War Production Board’s Chairman, Donald M. Nelson (incidentally a vice president at Sears, Roebuck & Co., a longtime Goldman client) and the President himself, Sidney got dozens of executives who opposed Roosevelt to help their country in its time of need.
He did this not by threats or the promise of lucrative government contracts, but by networking and appealing to their humanity. After all, they’d seen first hand the brutality of the Axis with the attack on Pearl Harbour.
Sidney visited all of America’s top executives personally, sat in their offices and listened to their concerns. No matter what issues they raised, he always had a response to put them at ease. He then preceded to tell them all:
Our nation is in grave danger. America needs an enormous number of talented executive leaders to organize a massive war production effort. The President has sent me here to get your help in identifying your very best young men.
We need the smartest young stars you’ve got. And don’t even think of passing off older men or second-raters. I’m asking the same thing of every major company in the country, and I’ll be watching very closely how well your men do compared to the best young men from all the other corporations.
God forbid the people you pick are less than the best because God, President Roosevelt, and I would never, ever forgive you.
Despite Sidney’s initial apprehension when Roosevelt offered him the job, it was Sidney’s willingness to listen and his networking skills that convinced so many American corporations to contribute to the war effort.
And this success did not go unnoticed, in March 1942, Sidney Weinberg was named assistant to the Chairman of the War Production Board, effectively making him Donald Nelson’s right-hand.
Postwar Success
As the head of both the Business Advisory & Planning Council and Industry Advisory Committee, Sidney had not just relationships, but often friendships, with many of the country’s top executives.
When the war ended and their military contracts were cancelled, many of these executives found that their companies were in dire need of capital to both survive and adapt to the rapidly changing postwar market.
And who did they turn to raise this capital? None other than their old friend Sidney Weinberg.
As he was already familiar with their businesses, Sidney had no issue signing these companies up as Goldman Sachs clients, and in many cases, joined their boards. Companies who became Goldman clients included:
- J.P. Stevens & Co (now WestPoint Home)
- General Foods
- Continental Can
- M.A Hanna & Company
- General Motors
- National Dairy Products Corporation (now Kraft)
- General Electric
Perhaps not surprisingly, this considerably raised Goldman Sachs’ profile on Wall Street; before the war it had just been one of the dozens of relatively small firms on Wall Street with an equally small client base.
Now, it had several major corporations that would’ve otherwise signed much larger Wall Street investment banks. Their signing by Sidney commanded the respect of the other investment banks.
But perhaps the most impressive of the clients Sidney signed from the War Production Board was the Ford Motor Company. Having met Henry Ford II in 1943 after the death of his father Edsel, the pair remained close as Henry often leaned on Sidney for advice.
You see, Ford had been losing money during the war (even in spite of lucrative wartime contracts) and with the cancellation of their contracts at the end of the war, was barely avoiding bankruptcy.
Sidney suggested hiring a new type of executive: someone without car manufacturing experience. Instead, they would have financial expertise or experience leading other manufacturing companies.
This led directly to Henry’s hiring of Bendix Aviation’s Ernest R. Breech (who became the Chairman of the Board in 1955), industrialist Lewis Crusoe and quantitative analyst Theodore O. Ynetma.
He even encouraged Henry to take Tex Thornton’s offer of the ten-man “Whiz Kids” team, who counted among their ranks seven future senior Ford executives, including a young Robert McNamara.
In exchange, Henry hired Goldman Sachs to perform the underwriting for Ford’s 1956 IPO. Personally lead by Sidney Weinberg, the Ford IPO was the largest in history at the time, raising $700 million ($7.2 billion adjusted for inflation) for the automaker.
Even a young Warren Buffett bought into Ford’s IPO (the first and only time he’s ever bought an IPO!)
Perhaps not surprisingly, the Ford IPO marked the beginning of Goldman Sachs being viewed as one of the top investment banks in the United States.
Expansion
Thanks to its newfound status as one of the top investment banks in not just the country but the world too, companies lined up around the block to hire Goldman Sachs as their investment bank.
So they could better serve their clients, Goldman Sachs began to move away from being a specialist investment bank and more towards a full service investment bank like we know it as today.
To that end, under Sidney’s watch, Goldman opened an investment research division and municipal bond department and pioneered risk arbitrage.
Needing to hire more people to do this, Sidney Weinberg led the firm’s move from 20 Pine Street (where the firm had been based for nearly 100 years) to 20 Broad Street in 1957.
But still, Sidney never really quit networking. Even in his sixties and seventies, Sidney was still working full-time at “his” firm, reaching out to young executives to sign their companies as his clients often through his political connections in the Democratic Party.
Death & Legacy
Sidney Weinberg passed away on July 23 1969. He was survived by his wife Helen, whom he’d married in 1920, and their two sons – John Livingston Weinberg and Sidney James “Jim” Weinberg Jr. – both partners at their father’s firm.
At the time of his death, his estate was worth an estimated $5 million (approximately $40 million adjusted for inflation) almost all of which was invested in Goldman Sachs, less a modest home in Scarsdale he’d bought and lived since 1923.
Similarly, he also sat on the boards of 35 different companies.
His death paved the way for Gus Levy, a fellow Goldman partner who he never really saw eye-to-eye with, to replace him as the company’s chairman. He served in this position until he had a stroke in 1976.
And the man who replaced him? None other than John L. Weinberg – Sidney’s son. Though only a co-leader (as was the traditional Goldman way) along with John C. Whitehead, Weinberg led the firm until 1990.
Sidney Weinberg’s grandchildren were likewise involved in the “family business”.
One of his grandsons, John S. Weinberg, served as vice chairman between 2006 and 2015 and as co-head of global investment banking from 2002 until 2015.
Another, Peter Weinberg, ran the company’s European division and later founded boutique investment bank Weinberg Perella Partners with former Morgan Stanley investment banker Joseph Perella.
It’s often been said that the surname “Weinberg” is virtually guaranteed to get you a job in investment banking, mostly thanks to the legacy left by Sidney Weinberg and his descendants. Not bad for “just a kid from PS-13”.
Interestingly, even after Roosevelt’s death in 1945, Sidney Weinberg continued to act as an unofficial financial and economic advisor to his successor, Harry Truman, and indeed, for every president until Johnson.
Has the story of Sidney Weinberg inspired you? Tell me in the comments!
