Goldman Sachs History

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  • Topic: Goldman Sachs, Sidney Weinberg, Marcus Goldman
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  • Published : December 14, 2010
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Company History:
The Goldman Sachs Group Inc.--the company changed its name from Goldman, Sachs & Co. after it went public in 1999--has been a respected player in world finance for more than 100 years. The company operates as a leading global investment banking and securities firm with two main divisions. The first division is Global Capital Markets, which includes investment banking, financial advisory services, trading, and principal investments. The second division is Asset Management and Securities Services, a business unit responsible for investment advisory services. Goldman Sachs's clients include corporations, financial institutions, governments, and wealthy individuals. The company operates over 40 offices across the globe. Early History: Late 1880s

The company was founded by Marcus Goldman, a Bavarian school teacher who immigrated to the United States in 1848. After supporting himself for some years as a salesman in New Jersey, Goldman moved to Philadelphia, where he operated a small clothing store. After the Civil War he moved to New York City, where he began trading in promissory notes in 1869. In the morning, Goldman would purchase customers' promissory notes from jewelers on Maiden Lane, in lower Manhattan, and from leather merchants in an area of the city called "the swamp." Then, in the afternoon, Goldman visited commercial banks, where he sold the notes at a small profit. Goldman's son-in-law, Samuel Sachs, joined the business in 1882. The firm expanded into a general partnership in 1885 as Goldman, Sachs & Co. when Goldman's son Henry and son-in-law Ludwig Dreyfus joined the group. Henry Goldman led the firm in new directions by soliciting business from a broader range of interests located in Providence, Hartford, Boston, and Philadelphia. In 1887, Goldman, Sachs began a relationship with the British merchant bank Kleinwort Sons, which provided an entry into international commercial finance, foreign-exchange services, and currency arbitrage. On the strength of this growing exposure, Goldman, Sachs won business from several midwestern companies, including Sears Roebuck, Cluett Peabody, and Rice-Stix Dry Goods. With the establishment of Goldman, Sachs offices in St. Louis and Chicago, Henry Goldman became responsible for the firm's domestic expansion. Railroads--indispensable to the opening of the American West--were the preferred investment of financiers in the eastern United States at this time. But Goldman, Sachs, committed to a diversified portfolio, saw great potential in a number of other developing industries. At first difficult to market, these investments became profitable ventures only after Goldman, Sachs persuaded companies to adopt stricter accounting and auditing procedures. In 1896, soon after Samuel Sachs's brother Harry joined the company, Goldman, Sachs joined the New York Stock Exchange. With Harry Sachs in the company, and with the New York operations firmly under control, Samuel Sachs took special responsibility for Goldman, Sachs's overseas expansion. Through Kleinwort, he gained important new contacts within the British and European banking establishments. The Company Co-Manages Its First IPO in 1906

In 1906, one of the firm's clients, United Cigar Manufacturers, announced its intention to expand. Goldman, Sachs, which had previously provided the company with short-term financing to maintain inventories, advised United Cigar that its capital requirements could best be met by selling shares to the public. Although Goldman, Sachs had never before managed a share offering, it succeeded in marketing $4.5 million worth of United Cigar stock; within one year United Cigar qualified for trading on the New York Stock Exchange. On the strength of this success, Goldman, Sachs next co-managed Sears Roebuck's initial public offering (IPO) that same year. Henry Goldman was subsequently invited to join the boards of directors of both United Cigar and Sears. The practice of maintaining a...
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