The Guggenheim Family Combination
DAVID FERGUSON IN WORLD MAGAZINE
The recent action of the firm of M. Guggenheim’s Sons of New York in voluntarily assuming a loss of a million and a half dollars rather than see their associates suffer, has brought thii remarkable combination of seven brothers into prominence. They are preeminent as miners and smelters and are at present turning their energy to the development of the Alaskan gold fields.
WHEN a group of Wall Street men voluntarily assume a loss of $1,500,000, most of which could have been shifted upon others without violating the Street rule of business, there is something remarkable about them, especially when the group is composed solely of brothers.
It will be many a day before the financial district gets through talking about the Guggenheims for insisting upon shouldering the total loss of a venture in which they had many outside partners. With the cynicism with which Wall Street men view everything they doubted the good faith underlying the Guggenheims’ action—that is, the portion of Wall Street which does not know the brothers. Those who know them intimately accepted the matter on its face value. They had been surprised before by things of the same sort done by the Guggenheims.
But, by this time, pretty much all of Wall Street knows that the Guggenheims took the million and a half dollar loss simply in obedience to the family’s code of business honor, not Wall Street’s. They have a peculiar record. Never in their business history has any outsider who joined them in a venture suffered a dollar’s loss. To keep that record intact cost them a million and a half, but they deem the money well spent.
The Guggenheims are remarkable folk from the Wall Street viewpoint lor many reasons. The outsider is regarded as the legitimate, natural prey of the insider. The ordinary
motto is : “Do him as early, as late
and as often as you can.” But that isn’t the Guggenheim way.
There are seven brothers of them, and by many they are regarded as the greatest family of money-makers the country has ever produced, not even excepting the Rockefellers. In fifteen years they have built up an aggregate fortune which may be as little as one hundred millions or as great as five hundred millions. In the Rockefeller family John D. is known to be the great money-maker, William and1 the others merely trailing along and benefiting by his genius.
In the case of the seven Guggenheims each one is a money-maker, but they work as a unit. It is as if the genius, skill and industry of seven men were merged into a single man. There are seven intellects, seven sets of experience, seven bodies all • working in absolute harmony and perfect unison ; each trained by an expert in the craft of making money.
It is a combination that has worked wonders, and prophets say that the marvels to come will exceed those of the past in manifold ways ; that the combined Guggenheim wealth will some day make the combined Rockefeller wealth look like a pittance.
The Rockefellers deal in oil. The Guggenheims deal in gold, silver, copper and lead. To-day they are the greatest producers of silver and lead in the world. When their plans in Alaska have been perfected, which will be a matter of years, it is the prediction that they will be the greatest producers of gold in all the world. In copper they now rival the Amalgamated, the largest single producer of that metal in the world.
These seven men are extremely modest, almost diffident. They lay no claims to business or financial greatness themselves. Whatever they are or have accomplished they say is due to their father. He was a wonderful old man, Meyer Guggenheim, and the brothers bury their own identity by calling themselves M. Guggenheim’s Sons. That is the title of their business and family co-partnership. They mean it to be a monument to the one who made their own successes possible.
It was Meyer Guggenheim’s wish that his boys should always stand or fall together. He had a novel way of showing them the truth of the old1 saw that in union there is strength. One by one as they grew to manhood and were ready to embark in business, he would produce a bundle of fairly stout sticks or pieces of wood'. Taking one he would give it to the boy and tell him to break it. The son would break it over his knee with ease. Then the old gentleman would take seven sticks, tie them firmly together and, handing the bundle to the boy, would say :
“Do your best to break that.’’
Try as hard as he would, not one of them was ever able to break the seven sticks. In that simple way the father made the sons see the advantage of standing together and facing the world with a united front, and it was a lesson that none of them has ever forgotten. He had other pieces of advice, and the chief one was :
“Get money, but don’t try to get it by walking over the graves of your fellow-men.”
Perhaps that piece of advice had something to do with the action of the Guggeniheims in assuming all of the million and a half dollar loss a week ago. Had that venture yielded a profit, however, their partners in the project of underwriting the shares of the Nipissing Cobalt mines would have shared in the gains.
The sons venerate the father’s memory because of the tremendous fight he made against almost overwhelming odds. Meyer Guggenheim came to this country as a poor boy of nineteen in 1848. He came on a sailing-ship, and landed in Philadelphia. To support himself he travelled on foot about the country around Philadelphia peddling all sorts of things, carrying a heavy pack on his back. He was a prodigious worker, and frugality was his watchword. Slender as his earnings were, he saved something, for he had a great ambition. On the ship which brought him to Philadelphia was another passenger, a young girl named Barbara Myers, who came from his native town, Langnau, in Switzerland. His ambition centred in that girl.
Meyer Guggenheim was brought to this country by his father, a widower. Barbara Myers was accompanied by her mother, a widow. Soon after their arrival, the elder Guggenheim and the Widow Myers were married. It was the ambition of Meyer Guggenheim to make Barbara Myers his wife, and he did so in 1852.
On June 7, 1854, the first of seven sons, Isaac, was born. Then came Daniel, on July 9, 1856 ; Murry, on Aug. 12, 1858 ; Solomon, on Feb. 2, 1'861 ; Benjamin, on Oct. 26, 1865 ; Simon, on Dec. 27, 1867, and William on Nov. 6, 1868. There were three daughters also.
In his peddling expeditions the elder Guggenheim met a man who had a receipt for the manufacture of stove polish, and who wanted to sell his secret. Meyer Guggenheim deliberated a long time before he decided to buy. The sum involved was trifling, but to the peddler it looked very large. He finally bought the receipt, and in a small way began the manufacture of stove polish. That was in 1859. He prospered and the business grew. Then as a side issue he imported lye for use in the making of soft soaps. That helped to swell his income.
It had long been his hope to some day import to this country the laces made by the peasant folk of his native village in Switzerland and build up a market for them in this country. The importation of lye had been most profitable, aad his business grew to such proportions that he formed the American Lye Company, and then he engaged in the spice business with Charles H. Graham, of Philadelphia, and made more money.
In the late ’sixties he was in shape financially to embark in the business he had dreamed of. He began by importing laces, but was soon dealing in all kinds of embroideries, and in a few years his firm became known all over the United States.
After that he was always on substantial ground financially, but his active mind, always on the alert for new avenues of business endeavor, led him into many ventures. One of these chance transactions was the accidental cause of his family becoming the greatest mine owners, developers and smelters in the United States, if not in the world.
In the early eighties he loaned money to a man who owned mines at Leadville, Col. The venture went to smash, the mines were sold under foreclosure and, much to his regret,
Meyer Guggenheim became their owner. He sent one of his sons to Colorado to look the properties over, and the young man became imbued with the idea that the mining industry could be made most productive. Soon there were two mines owned by the Guggenheims in effective operation, the A. Y. and the Minnie.
Gradually Meyer Guggenheim extended his mine holdings, being one of the first to take American capital into Mexico to develop that country’s mineral wealth. The three younger sons—Benjamin, Simon and William—were put in charge of the mining ventures, and then smelters were built, first one and then another, until there was a chain of them throughout the West. These wrere subsequently brought into one concern—the Philadelphia and Pueblo Mining Company.
In 1889 Mr. Guggenheim decided to move his business and family to New York, and the firm of M. Guggenheim’s Sons was formed and took charge of the embroidery business. All of the sons as they reached maturity, were given a practical business education under the immediate direction of the father. Each one served a period of time in the embroidery business, was sent abroad to learn the languages by actual contact with the people of different European countries, and then had to serve an educational period in the mines and in the smelters. In this way all seven not only absorbed the rules of business conduct which the elder Guggenheim ¿aid down, but obtained a practical knowledge of mining and smelting.
In the middle nineties the mining and smelting properties had become so extensive that it was decided to abandon all other business interests, including the embroidery firm, and concentrate upon the industry that was heaping up millions for the family at an astonishing rate. Meyer Guggenheim retired, and for several years prior to his death in March, 1905, had taken little or no active part in the management of the family possessions.
Though he says it is nonsense, the other six brothers declare that the genius of the family is Daniel Guggenheim, the second son. He says the other six have done quite as much as he in enlarging and developing the family interests.
The brothers have their offices on the eighth floor of No. 71 Broadway. They work in one big room in the rear of the building, overlooking the North River. They have desks a few feet apart.
Nowadays there are only four of them there all the time. Simon has made his home in Colorado for several years, but come>s east frequently to consult with the others. It was found necessary some time ago to have a member of the family resident in the West to be in closer touch with the various smelting interests. Simon had' made a specialty of that industry and he was selected for the place. He will soon be taken out of all active participation in the business affairs of the family as the Republican Legislature of his adopted State at its coming session will elect him United States Senator. He intends to retire from all corporations of which he is an officer before going to Washington.
The four brothers who are in the offices at No. 71 Broadway every business day in the year are Isaac, Daniel, Murry and Solomon. Benjamin’s specialty was mining machinery, and he was President of the Mining, Machinery and Power Company. This corporation was recently
absorbed by the International Pump Company, of which he is now chairman of the board. William, the youngest son, for a long time looked after the Mexican mining interests of the family, but is not now active in the work.
Because of his exceptional executive ability Daniel Guggenheim is President of the various large corporations the family owns. Every " day there is a consultation of the brothers at No. 71 Broadway, at which they discuss every matter of importance that has come up in the previous twenty-four hours in their business affairs.
It was one of Meyer Guggenheim’s laws that the majority should rule in all questions, and this has always been binding upon the sons in their discussions of business procedure. No step of importance, like the purchase of a new mine, the erection of a new smelter or any other venture is taken until each brother has presented his views. Then, whatever the majority decide upon is agreed to by all. The lesson of the seven sticks, as taught by their father, prevents disagreement or failure of brotherly cohesion.
All around the offices of M. Guggenheim’s Sons are the offices of the various corporations they control, those of the American Smelting and Refining Company being on the same floor. In this way the brothers are always in close touch with the executive heads of the different concerns, and during the day they are constantly being consulted bjr mining experts, geologists and others.
One of the rules of the brothers is to employ the ablest talent they can find the world over. When they decide that a certain man is needed by them they fix practically no limit on the salary to be offered h*m. As a result of this policy they have a number of men in their employ whose salaries exc 1 %at of the President of the United States.
Their chief mining engineer is John Hays Hammond, who is regarded as the greatest expert in his particular calling in the world. His salary is said to be $100,000 a year, or twice that of President Roosevelt. A. Chester Beatty, the assistant general manager and engineer, is reported to have a salary of $60,000 a year. In all the various departments of their many interests they have the best men that money can hire, the result being an organization of human machinery that is one of their greatest assets.
It has been their rule to never place on the market the shares of a company until it has proved its worth. The result of this practice is that the stock of practically every Guggenheim corporation listed on the Stock Exchange sells at par or better.
The Guggenheim Exploration Company, which takes hold of mines and develops them, has $25,000,000 capital. The stock sells at $325 a share, making the market value of the capital stock a trifle more than $81,000,000.
The American Smelting and Refining Company has $100,000,000 capital stock, half common and half preferred. The common sells at 150 or more, making the 50,000,000 actually worth $75,000,000. The preferred sells at 115, making the market value about $5'7,000,000. The actual value of $100,000,000 is therefore $132,000,000.
The American Smelters’ Securities Company has $47,000,000 preferred and $30,000,000 common stock. This stock is not dealt in actively, nearly
all of it being held by the Guggenheims and their close associates.
In these three companies they have a majority of the stock. They control many others, however, chiefly the Federal Mining and Smelting Company, the Utah Copper Company, the Nevada Consolidated Mining Company, the Yukon Consolidated Gold Fields Company and the Continental Rubber Company.
The recent craze on the part of the public to buy stocks in mining companies is regretted by the Guggenheims. They have had wider experience in dealing in mines than any other group of men in the country, and their opinion, based upon that experience, is that only one mine out of three hundred of the kind offered to the public for investment or speculation is a success. They regard dealings in the average mining stock as simply blind gambling, with the chances all against the public.
Even with the trained body of experts by whom they have surrounded themselves, they have sometimes purchased mines that proved utter failures, though the purchases were not made until their own experts had examined the properties and had made the most skilful investigations that knowledge and science could devise.
Men who know the secrete of the Guggenheims assert that they never speculate in stocks, but operate their companies regardless of the ups and downs of the stock market. They get their profits from what is taken out of the ground and from the earnings of their smelters.
The Guggenheims now have two tremendous propositions on their hands. One is the development of the Alaskan gold fields on an extensive scale with adequate transportation facilities and modern mining machinery. They believe that Alaska will become the greatest mineral producing part of United States territory, but because of the physical difficulties it will be a rich man’s mining camp. Enormous expenditures of money will be necessary before the development can go ahead on a scale commensurate with the natural wealth of the country.
They regard Alaska as being now in the position of California half a century back, when the pioneer miners supposed they had exhausted with pick and shovel the treasures of its gold fields. Under primitive methods Alaska has yielded $100,000,000, and the Guggenheims believe that, with scientific treatment, its gold fields will produce many times that amount.
In the rough their Alaskan plans call for the building of railroads and smelters and the establishment of modern mining towns. They have acquired large interests in the territory and work is now under way developing them.
It’s a far cry from Alaska to the Congo Free State in Africa, but the Guggenheims have joined with Thomas F. Ryan to develop the mineral wealth of many thousands of acres in that country. Mr. Ryan recently obtained concessions from King Leopold of Belgium for the rubber and mineral products of an immense region. Because of their exceptional organization of mining experts and the fact that they are heavily interested in the rubber industry through the Continental Rubber Company, which they control, the Guggenheims were invited to join in the Congo enterprise and accepted. The Congo
plans have not yet been worked out, but it is the general purpose to introduce American business methods, American men and American machinery to get at the natural wealth of the country.
With interests in Alaska, in the Congo, in Mexico, and in nearly every State in the Union having mineral wealth, the Guggenheims are never too busy to see anybody with á legetimate reason for calling on them. They are all plain, simple, democratic men. They have no use for the tricks of the modern financier. They go on the theory that the smallest stockholder in any of their companies is as much entitled to know what is going on as the largest, and is also entitled to his pro rata share of all profits. In the mining industry they occupy much the same position that James J. Hill does in the railroad world.
All of the seven brothers are married and all except William, the youngest, have children. The sons of the elder brothers have been put through the Columbia School of Mines, and some of them are already in harness in the mining country learning the practical end of that business and of smelting. The sons of the younger brothers will be put through the same course as rapidly as they grow up. The same business precepts which Meyer Guggenheim handed down to his sons are being taught to those of the third generation.
These are the facts which cause some of the prophets of Wall street to predict that in time the Guggenheim wealth will exceed the Rockefeller millions.