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General Merchants to Commodities Brokers

The story of the Lehman brothers in America dates to 1844, when twenty-three-year-old Henry Lehman, born to Jewish parents in Rimpar, Germany, immigrated to the United States. In Germany, Henry worked for his father, Abraham, a cattle dealer. When he came to America, he started as an itinerant peddler of household and farm goods around Mobile, Alabama.[1] He then settled in Montgomery, Alabama’s capital, where he opened a general store in Court Square that specialized in “Southern Domestics,” including cotton goods such as sheets, shirts, yarn, cotton rope, and coarse fabrics known as osnaburgs. In 1847, twenty-year-old Emanuel Lehman joined Henry, and they named their business H. Lehman & Bro. With the arrival of the youngest brother, twenty-year-old Mayer Lehman in 1850, the enterprise became Lehman Brothers. Henry Lehman died five years later of yellow fever in New Orleans, and Emanuel and Mayer ran the company over the next four decades.

Offices for Lehman Durr & Company, 1874. Herbert H. Lehman Papers, Rare Book and Manuscript Library, Columbia University Library. New York Cotton Exchange, c. 1884. Prints & Photographs Division, Library of Congress, LC-DIG-pga-00027. Engraving of Emanuel Lehman. Hall, Henry. America's Successful Men of Affairs. An Encyclopedia of Contemporaneous Biography. New York: New York Tribune, 1895. Baker Library, Harvard Business School. Mayer Lehman, 1867. Herbert H. Lehman Papers, Rare Book and Manuscript Library, Columbia University Library. Letter from Mayer Lehman to Lieutenant General Grant, February 1, 1865. Herbert H. Lehman Papers, Special Correspondence Files, Columbia University Library. New York Cotton Exchange, Organization and Board of Managers, 1886-1887. Courtesy of New York Stock Exchange Archives.

Offices for Lehman Durr & Company, 1874. Herbert H. Lehman Papers, Rare Book and Manuscript Library, Columbia University Library.

New York Cotton Exchange, c. 1884. Prints & Photographs Division, Library of Congress, LC-DIG-pga-00027.

Engraving of Emanuel Lehman. Hall, Henry. America's Successful Men of Affairs. An Encyclopedia of Contemporaneous Biography. New York: New York Tribune, 1895. Baker Library, Harvard Business School.

Mayer Lehman, 1867. Herbert H. Lehman Papers, Rare Book and Manuscript Library, Columbia University Library.

Letter from Mayer Lehman to Lieutenant General Grant, February 1, 1865. Herbert H. Lehman Papers, Special Correspondence Files, Columbia University Library.

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New York Cotton Exchange, Organization and Board of Managers, 1886-1887. Courtesy of New York Stock Exchange Archives. 

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The Lehmans often received payment for goods in their general store in the form of cotton—an arrangement that gave impetus to their entry into the business of buying and selling cotton for planters in the local Montgomery area. Mayer’s son Herbert H. Lehman remembered, “It was largely a barter agreement. The farmers would come in with their cotton and trade it for shirts and shoes and fertilizer . . . and seed, and all the necessities.”[2] Located along the Alabama River with access to the ports of Mobile and New Orleans, Montgomery provided an ideal base for the cotton trade. According to the 1860 U.S. Census, Mayer Lehman is listed as owning several enslaved persons, individuals who may have worked in the Lehman household and the firm.

As Lehman Brothers made the transition from general merchandisers to cotton commodity brokers, they opened an office in New York in 1858, the center of the commodities trading business. The firm served as brokers between farmers selling cotton and industrialists and exporters buying it. Mayer Lehman managed the store in Montgomery and did business with local planters and farmers, while Emanuel met with cotton manufacturers and exporters in New York. Positive credit reports on Lehman Brothers issued by the country’s first commercial credit agency R. G. Dun & Co. (later Dun & Bradstreet) helped establish the reputation of the new enterprise and foster its growth.[3] Through a partnership with John Wesley Durr in 1862, the brothers expanded their storage capacity and trading business, and Lehman, Durr & Co. soon ranked among the top cotton firms in the area. 

When the Civil War broke out, President Lincoln imposed a blockade preventing the shipment of cotton from the South to textile manufacturers in the North. Lehman Brothers devised several strategies to circumvent the blockade, including sending cotton from the South to England and then from England to New York.[4] Despite the devastation to the Southern economy during the war, business for Lehman Brothers picked up after 1865. In 1868, Mayer left the South and joined Emanuel in New York City. The firm moved from 119 Liberty Street to 133–135 Pearl Street, near Wall Street and Hanover Square, where the cotton brokers occupied offices. The two brothers, who bore a striking resemblance to one another, were well-known figures on the streets of New York. 

In 1870, Lehman Brothers helped found the New York Cotton Exchange, a commodities futures trading venture, where more than one hundred cotton merchants could trade in a central location. The Cotton Exchange represented a futures market in which buyers and sellers made deals before the cotton was harvested or brought to the factories. Later, Lehman Brothers branched out into other commodities and joined the Coffee, Sugar, and Cocoa Exchange, and the New York Petroleum Exchange. The firm continued to build its reputation and expertise, while expanding its client base. 

During this period, Lehman Brothers was appointed the Fiscal Agent of Alabama. In this capacity, its first venture into municipal financing, the firm sold state bonds as way to service the state’s debts, interest payments, and other financial obligations. Lehman Brothers activities at this time also centered on the industrialization of the South, including railroad, textile, mining, and real estate enterprises. 

When Mayer Lehman passed away in 1897, his memorial noted: “He did not build his fortune on the ruin of other men. With prudent care and self-denying life he slowly added to his well-earned wealth. . . . He was unto the very last a man of rare and simplest modesty.”[5] Emanuel Lehman, who died ten years later, was also characterized as being “the same man in prosperity that he was when still at the foot of the ladder. Success never turned him from his beaten path of justice, mercy and modesty.”[6] In addition to their business ventures, the Lehman brothers devoted themselves to philanthropic work.

[1] Henry Lehman’s parents were Abraham Löw Lehmann (1783–1865) and Eva Rosenheim (1786–1853).

[2] Herbert Lehman quoted in Lots of Lehman: The Family of Mayer Lehman of Lehman Brothers (New York: Center for Jewish History, 2007), 5.

[3] New York, Vol. 319, p. 500G, R.G. Dun & Co. Credit Report Volumes, Baker Library, Harvard Business School.

[4] At the end of the Civil War, cotton in Lehman, Durr & Co.’s warehouse was purposefully set fire in order to prevent Union troops from acquiring the supply.

[5] Louis R. Ehrich, “In Memory of Mayer Lehman,” In Memoriam, Mayer Lehman, 1897, 3.

[6] Joseph Silverman, “Spoken at the Funeral in Temple Emanu-El,” In Memoriam, Emanuel Lehman, 1907, 6.

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