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photograph with the large circular center trading desk center surrounded by various booths
Trading room of the New York Cotton Exchange, between 1914 and 1917, Emile Berliner collection.

Cotton, Mortgages, and the Lehman Brothers

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In spite of Broadway being an artistic business, it isn’t often that business themes themselves end up on a Broadway stage though there have been a few productions such as the musicals How to Succeed in Business Without Really Trying and Hamilton. Now Broadway has another, The Lehman Trilogy, a 3-act play that looks at the three Lehman brothers, Henry, Mayer, and Emanuel, who founded Lehman Brothers. The play tells some of the story of the brothers and the history of the firm over its 164-year history as it grew from small entrepreneurial beginnings to a global financial services firm caught up in the global financial crisis of 2007/2008.

advertisement for Lehman, Newgass and Co cotton factors and general commission merchantes 188 Graver New Orleans Louisiana
The Semi-Weekly Republican,, 26 March 1872.

If you to want to know more about the history of the company, which is long and complex, this blog post offers a rough outline of the highlights of that history. The story begins in 1844 when Henry (Heyum) immigrated to the U.S. and founded H. Lehman, a dry goods store in Montgomery, Alabama. His brother Emanuel joined him a few years later, followed by their brother Mayer, and the business became Lehman Brothers. After Henry Lehman died in New Orleans in 1855 the business continued under the remaining two brothers. The business became heavily involved in the cotton trade, leading the bothers to open another office in New York  when that city became the center of trading in cotton. In the early 1860’s, shortly after the beginning of the Civil War, Mayer Lehman and cotton merchant John Wesley Durr formed Lehman Durr & Company.

The company survived the war despite Mayer’s support of the Confederacy, and the firm relocated to New York City where Lehmann and Durr helped to found the Cotton Exchange and later became members of the Coffee Exchange and the New York Stock Exchange. The firm remained in the cotton business and maintained an office in New Orleans as well, under the name Lehman Newgass & Co., later Lehman Abraham & Co.

advertisement for Lehman Abraham and co cotton factors and commission merchants corner of Gravier and Baronne in New Orleans Louisiana
The Advertiser, 19 April 1878.
photograph of Emanuel Lehman from his obituary
New York Tribune, 11 January 1907.

In 1899, two years after Mayer Lehman died, the firm underwrote its first stock; however, it didn’t fully move into the underwriting business until a few years later. The last brother, Emanuel, died in 1907, and his son Philip took over. After Philip retired, his son Robert  took over and ran the firm for many years. After Robert died in 1969, for the first time in its history, no family member ran the firm.

The next decades brought many changes to the firm – including a number of name changes. In the mid 1970’s it merged with Kuhn, Loeb & Co., which was bought by American Express in the 1980’s and the firm became known as Shearson Lehman/American Express. That in turn merged with E.F. Hutton & Co., becoming Shearson Lehman Hutton Inc., and lastly, in the mid 1990’s it was spun off to become Lehman Brothers Holdings, Inc. It moved into the mortgage origination business, and eventually the firm became a big player in the subprime market. When the subprime market collapsed, Lehman lost billions and was unable to recover. The company filed for Chapter 11 bankruptcy protection on September 15, 2008, and while parts of the company were sold to other companies, the company itself ceased to exist.

Newspaper snip looking at the net worth of Emanuel and Mayer Lehman both reported to be worth $5 million with annual income of $25 thousand and paying $2,500 in income tax
The Evening World, 10 February 1894.

If you want to know more, you can see the company’s archived website as well as books on the history of the company including one published by the company to celebrate its first 100 years. There are also materials related to the firm’s various troubles including 2008 hearings related to the financial crisis. The Federal Reserve’s FRASER project project also has material related to the Financial Crisis while the history of Wall Street guide created by Business Reference has resources for those interested in the broader topic of Wall Street.

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