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In 1882 Founder Goldman took his son-in-law, Samuel Sachs, into the business, and by the century's turn Goldman, Sachs & Co. was the largest commercial paper house in the land. It still is. The commercial paper business was the chief reason for the firm's emergence as the leading industrial banking house of pre-Depression days. As it is done now the commercial paper business consists of buying promissory notes direct from the borrower instead of secondhand. For corporations needing money for short periods, commercial paper is often cheaper than bank loans. This type of business keeps Goldman Sachs in close touch with corporate treasuries, often gives it an inside track to security deals.
While J. P. Morgan & Co. and Kuhn, Loeb & Co. skimmed the cream of railroad financing, Goldman Sachs concentrated on industrials, which to a large extent meant selling stock, not bonds. Its clients include Woolworth, Goodrich, General Foods, Continental Can, The Lambert Co., Pillsbury Flour, United Biscuit, Phoenix Hosiery, Endicott Johnson, National Dairy Products.
In fame and fortune Goldman Sachs reached an unenviable peak in 1929 under the domination of Waddill Catchings, leading apologist of the New Era, co-author of The Road to Plenty. It was the imperious Mr. Catchings who led the conservative old house into the investment trust fireworks of Goldman Sachs Trading Corp., Shenandoah Corp. and Blue Ridge Corp. When his road to plenty ran up a tree, Mr. Catchings got out, joining his old friend, Utilitarian Harrison Williams.
The wreckage Mr. Catchings left behind him in Goldman Sachs was appalling. Market value of Goldman Sachs Trading shriveled from $500,000,000 to less than $10,000,000. Funnyman Eddie Cantor, who lost a sizable fortune in the stock, made the name of Goldman Sachs a sure-fire gag from coast to coast. Law suits received so much publicity that Wall Street pranksters used to call up Goldman Sachs, ask for the "litigation" department.
To a Senate committee the firm reported a $12,000,000 loss for 1930. Rich, the firm stood the loss, tightened its belt for rehabilitation of its name. Of the three sons of Samuel Sachs, only one remained in the firm, Walter Edward Sachs, who sold his yacht and set to work on the wreckage. His brother Paul had long since retired to an art professorship at Harvard and an associate directorship of Harvard's Fogg Art Museum. Brother Arthur retired last year to the life he preferred in France. Dignified, cultured Walter Sachs, a Harvard classmate of Franklin D. Roosevelt has only one family partner, Howard Sachs, a son of Founder Sachs's Brother Harry. The others are Henry Bowers, Ernest Loveman, and Sidney Weinberg, who is the most active partner today.