From
Court Jew to Head of the Fed1,2
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 position, 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
he 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.
_________________________________
1Written December 2013
2 For a quite different look at how Jews made a living, see
the next post, “My Son the Doctor.”
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