From Court Jew to Head of the Fed
As is well known, Jews in just about all European countries, from the Middle Ages well into the 19th century, were not permitted to own land, thus barring them from becoming farmers; nor were they admitted into guilds, the necessary portals to the crafts and professions of the times. So, faute de mieux, Jews became merchants—many on a small scale functioning locally, with a minority becoming serious businessmen engaged in long-distance trade. Some of the latter came to serve members of the nobility high and low, thus becoming what came to be known as Court Jews.
An important function of most Court Jews was to secure loans for their bosses, since Christians were forbidden to charge interest, a prohibition partly based on a variety of not all that univocal Biblical passages, partly inspired—via the Scholastics—by Aristotle who had declared that money is sterile and not at all like cows who beget more cows.
The status of Court Jews was privileged, if only because they were exempted from many of the restrictions everywhere imposed upon Jews. But their lives were also precarious, dependent as they were on masters who were in debt to them, with more than one Court Jew tried for (mostly) presumed crimes and jailed or executed.
Meyer Amschel Rothschild (1744-1812) may not have been the first Court Jew to distance himself from his court by founding a bank, but he is surely the most important. Ranked 7th in the Forbes list of the 20 most influential businessmen of all time, not only for founding the House of Rothschild—with branches in London, Paris, Vienna and Naples already during his own lifetime—but for his insight into the principles of banking, “introducing such concepts as diversification, rapid communication, confidentiality and high volume.”
If the Jewish banker was thus born, he flourished as late as the middle of the 19th century, when Bismarck, Prussia’s capo, acquired his own banker, Gerson von Bleichröder, recommended by a Rothschild who was not available because he served rival Austria. Under the leadership of his boss, this latter-day Court Jew not only oversaw Prussia’s financial affairs, but was crucially active in the unification of Germany.
Was he the last in the line of Court Jews? Yes and no. Today, in the New World, the equivalent role of national banker is the head of the Fed, or, more formally, the Chairman of the Board of Governors of the Federal Reserve System. Shortly, Ms. Janet Yellen will assume that office. As the 15th head of the Fed, she will crown a distinguished academic career to become the first woman in that job, but also the sixth who is Jewish.
Before commenting on the role of today’s descendents of the banker as Court Jew a brief account of those six will be needed. The first Jewish chairman of the Fed was Eugene Meyer (1930-1933), son of Alsatian Jews who bought the Washington Post after leaving that post, to be followed as its publisher by Phil Graham, the husband of his daughter, Katharine, who assumed that role after Phil’s death.
The second Jewish head of the Fed was Arthur Burns (1970-78) born in Galicia (with the name Burnseig) who, precociously, translated the Talmud into Polish and Russian at the age of 6, if the Wikipedia article is to be believed. He is the first who came to the Fed job after a career in the academy, where he notably persuaded his Rutgers student, Milton Friedman, to pursue the study of economics.
The third Jewish Fed chairman is Paul Volcker (1979-1987), although that might be considered a case of cheating, since Judaism can claim him only on technical grounds. Volcker’s father was not Jewish nor was young Paul brought up as a Jew. But since his mother was born Jewish and according to Jewish law children inherit that ethnicity from their mother, he can be claimed as a Jew, according to one way of reckoning. Volcker’s classy education did not induce him into an academic career, but led him to a number of private sector and government roles before becoming the inflation killer as head of the Feds.
The successor to Volcker, Alan Greenspan (1987-2006) missed by a few months the distinction of having served the longest in that position. He and I would have been classmates at George Washington High School in Manhattan, had I not opted for the shops of Brooklyn Tech. For a while, Greenspan studied economics under Arthur Burns at Columbia, but later received his PhD from New York University. Like his predecessor, he did not follow an academic career, but served as consultant and in high-level posts in Republican administrations before being appointed to head the Fed by President Reagan.
Ben Shalom Bernanke was brought up in Dillon, SC, in one of very few Jewish families of a town with fewer than 7,000 inhabitants. After the local high school, however, came Harvard and doctoral studies under a group of economics stars at MIT, leading to a thoroughly academic career that concluded after six years of the economics chairmanship at Princeton. Like Alan Greenspan, Bernanke was appointed to chair the Fed by both a Republican and a Democratic administration.
Brooklyn-born Janet Yellen, to take over the Fed in 2014, also had a distinguished academic career, most significantly at the University of California at Berkeley, combined with various economics-related governmental posts, most recently as second in command of the institution she will now head.
In a way, these six—or five-and-a half are Court Jews, smart, self-made energetic if not downright driven. Not they so much, but the “Court” has become very different. The current bankers are no longer high class servants of the rulers of the day, but, as servants of the commonweal, they are related in complex ways to more than one contemporary institution. Appointed by a president, most likely after having been approved by his Treasury Secretary and subject to confirmation by the Senate of the United States. Once in office, though immensely influential, the Chairman of the Fed—will it henceforth be the Chairperson?—oversees a Board of Governors no member of which is a patsy. And, finally, that powerful officer has to deal with institutions that Meyer Amschel Rothschild did not have to be concerned with: a vigilant press and an alert and vocal Congress and public.
Forty percent of all heads of the Fed have been Jewish. Not surprisingly, that has led to a certain amount of anti-Semitic chatter. But this state if affairs would be better seen as the distillate of more than a thousand years of anti-Semitism that prevented Jews from assuming many of the professions they might have chosen, pushing some of them to become merchants and bankers. Deeply ingrained habits die hard.