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Lehman Brothers – a Family Business

If you haven’t seen The Lehman Trilogy, go and see it. And, if you are not a theatre type, don’t worry; the Piccadilly Theatre will, outrageously, sell you a nice big glass of wine to gulp in your seat.

You might plausibly expect this show to be all about 2008, but you’d only be partially right. There are no men in braces (or, as the Americans say, suspenders), just three fairly orthodox itinerant Jewish brothers from Rimpar in Bavaria, who took the boat to America.  The pioneering older brother, Henry, is first to arrive, in Montgomery, Alabama in 1844, at the heart of the cotton belt. When he sets up shop, the others follow.

It’s called The Lehman Trilogy but in fact there are three trilogies to the story – Trilogy 1) three founding brothers, Henry, Emmanuel and Mayer. Trilogy 2) three generations of the Lehman dynasty. Trilogy 3) three big financial crashes in the life of the firm. (Before the biggie that destroyed it).

The three financial crashes are, the panic of 1857 (apparently caused by over-expansion of the U.S. economy), a stock market collapse of 1873, and The Wall Street crash of 1929. The difference about the one we remember in 2008, that killed off the firm, was that it was partly caused by Lehman. But – and this is the point – this takes place 39 years after the last Lehman was in charge.

The story is the age old one – about an empire, albeit a financial one; its growth, flowering, decline and fall. But, in particular, for those of a business bent, it is a salutary lesson of what can happen when a business loses touch with its collective memory, its roots, its DNA, and when carefully built up capital becomes the plaything of others.

I am reminded of one of my business heroes, Arnold Weinstock, the man who built up GEC and led it for thirty-three years between 1963 and 1996. By all accounts a nightmare of a man to work with, with his attention to detail and ferocious attention to costs, he was relentlessly castigated for decades by the stock market for not spending his cash mountain which at one time amounted to $5bln. For the stock market disdains nothing more than a cash rich company – it wants to see utilization. It does not see cash, as most family firms do, as insurance. After his son and planned successor Simon died, Weinstock was ousted. Five years later the money was spent, the name gone, and the company bust.

The focus of The Lehman Trilogy is not so much post mortem as prequel. It is an examination of what made Lehman great for 125 years and only, by implication, what a crock of dog mess it ultimately became under its new owners.

Three great actors, led by the recently knighted Simon Russell Beale – if you don’t know him, think Beria in The Death of Stalin (2017) – conjure up the brothers and all who interact with them. I had read in reviews that the three took on a multitude of parts. But this is not true, they do not play them, they create them out of thin air, like all good story-tellers, with mime and improv, to advance their tale. To see Simon Russell Beale move from orthodox Jew to southern belle and on to cotton baron in the course of a few minutes is to be in the presence of your best ever dinner guest.

And what a story it is. The programme notes rehearse the well-known cliché to describe many Jewish businesses, the unshakeable trust between family members, the circumstances in host countries that drove generations of Jews into professions that aristocrats in other societies deemed below their status – metals and scrap, I am pleased to say, being one of them. What is slightly unusual is that the three brothers turn up in the same country. I remember Marc Golodetz’s father, a sugar trader, telling me that, of his brothers, one was sent to America, one remained in Russia, while he was sent to England. It split the family risk and, if they survived, they had an international business. For a while the Golodetzes were ubiquitous in steel, ring dealers on the LME, and intrinsic to the floor of the softs markets – today the name is almost forgotten.

The story the play tells inches towards rescuing the Lehman name from its indelible association with the crash. Those at the helm from the time of its sale to American Express in 1984, were not Lehmans. They were no more Phillipp Brothers than Phibro, or Lazarus than Lazmet.

All the affairs of man, business included, have a biblical cycle to them, to which Lehman was as condemned as any. There is a financial time to live, and a financial time to die. The distinctive fact about Lehman’s success, which appears to require re-learning for a new generation, is how the success of most corporations comes from imagination, hard work, trust and luck – but above all providing a service of some kind; and having a view to the horizon rather than stock market targets and monthly reporting.

It was lucky, for example, that, days before the Wall Street crash, Lehman had taken in money that had not yet been deposited into a fund. But it was not luck that the owners did not choose either to stick revolvers in their mouths or step off a window-ledge. Financial crashes are not a happenstance to a family business, but certainty. It is something to be planned for on every sunny day, and after every good trade. In a family business, you build up net worth not to spend but to have enough financial fat to survive the inevitable famines and disasters. What emerges in this story is how the partners through three generations took decisions that they stood to lose from. That is very different to betting the bank with other people’s money on complex financial instruments that have no societal purpose. It is a lesson for the whole of our degraded financial system to learn – a City that appears content to manipulate success and award bonuses one year in the full knowledge that, in the event of bad times, they will be sunning themselves on a beach in the Bahamas. Family businesses – and they don’t have to be Jewish – simply don’t think like that.

Michael, at my office, told me the story about a young French trader, Edouard d’Archimboud, whose start date at Lehman was the rather inauspicious date of 11th September 2008, the day of the crash, and as he entered the building for the first time was handed a cardboard box to put his things in. That, looking back on it, might possibly have been the most fortuitous day of his life and I cannot help wondering what became of him.

Perhaps he founded a family business? I certainly hope so.

Published June 12th 2019 on www.lord-copper.com