Knowledge of Jewish History
It has been said that “those who do not know history are bound to repeat it.”
Jewish pioneers knew their history and were often able to use this knowledge for both successful ventures and profit.
Banking in the Early Wild West
Early banking in the Wild West at mid-nineteenth century was a get-rich scheme for those with money.
A group of businessmen would form a “bank” and offer to lend money.
Their main criteria was that the customer own a good asset — a ranch, a land grant, or a building.
They also preferred that the lendee be not too skillful in his trade.
Money was lent at the rate of 5 or 6%. Not too bad — until one realizes it was 5 or 6% per month! That came to 60 or 72% per year!
It was not long before the bankers owned the ranch, the land grant, or the building.
Isaias W. Hellman
In Los Angeles, Isaias W. Hellman was a young dry goods merchant with a safe that was bulging with other people’s money, in the form of gold and silver. He decided to open his own bank — the Farmers & Merchants Bank.
Hellman wanted a different kind of bank, one in which he would become a “banking partner” with the lendees.
His success would be dependent on their success, not their downfall.
He did not want their ranch, land grant, or building.
For the best interest rate, Hellman looked back to the Middle Ages when kings, barons, and dukes had a tiered economic and social system, all riding on the back of their serfs, whose job it was to produce enough wealth to sustain the nobility above them — and their armies. It was an impossible task.
The king or baron or duke was often required to raid other neighbors to make up the difference. Or, they could go to other nobles and borrow gold or money at 5 to 6% a month. (Sound familiar?)
The Jewish Moneylender
Fortunately for them, there was a third choice — the Jewish Moneylender.
The Jewish Moneylender learned early that 1% per month — 10 or 12% a year worked just fine.
He made a workable profit and the king or baron the duke never got behind to the point where he might simply use his noble sword as a quick and efficient means of canceling the debt.
Hellman concluded that if it worked well for the Jewish Moneylenders of the Medieval Europe, it should work well in the Wild West.
Hellman’s Success
Did it work? In just three years, Isaias W. Hellman was said to be the richest man in Los Angeles.
He was called to help a failing bank in San Francisco — the Nevada-California Bank. By simply putting his name on the door, money poured back into the bank.
Shortly thereafter another San Francisco bank was “on the block.” After making financial arrangements profitable for Hellman, he came on board as President and proceeded to turn the Wells Fargo Bank into one of the great banks of the West.
All this came about because Isaias W. Hellman knew his Jewish History and applied old concepts to modern times.
The California Gold Rush
If it were not for the Jewish merchants of San Francisco, the Gold Rush of the 49ers would have been a human disaster.
Think of it. 400,000 mostly untrained men poured through the new port of San Francisco or across the Great Plains and headed to the Gold Country at the base of the Sierras, roughly 150 miles east of San Francisco.
Every prospector/miner had to be outfitted with underwear, clothing, winter outerwear, shoes and boots, picks, shovels, pans, cooking utensils, blankets, mules, food, and on, and on. The merchandising “system” had to be created literally overnight!
Remember, the West operated with hard currency — gold and silver powder, nuggets, coins and bullion — no paper money. Under normal conditions the hard currency had to be collected and shipped to San Francisco to purchase supplies before they were sent out to the Gold Country.
This was a very slow way of moving merchandise.
We know from studying invoices and freight bills that non-Jewish importers, manufacturers, wholesalers, and distributors tended to deal with other non-Jews.
Jewish importers, manufacturers, distributors, and wholesalers tended to deal with other Jews.
Two different marketing systems operated during the Gold Rush.
The Normal System
On the non-Jewish side, gold moved West to San Francisco by guarded stage, wagon, or horseback. Then products moved East to the gold country and the miners by wagons — slow and steady.
The Ancient Jewish System on the Silk Road
Once again, the Jews looked back into our history. They looked way back to the time of the destruction of our First Holy Temple and our exile to Babylonia.
There, we sat and cried by the rivers of Babylon (the Tigris and Euphrates).
Once we stopped crying, we wiped our eyes, looked around, and said, “This looks pretty nice!” and settled in, started businesses and started trading Eastward.
We developed what would eventually become known as the Silk Road — a thousand years before the rise of Islam. Over the centuries, the Jews created a monopoly on the trading of silk, spices, and perfumes from the Far East to Western Europe.
The question then arises as to how we managed to pay for this merchandise and keep our caravans safe over this long, dangerous journey if we carried gold to the East.
Small Jewish settlements were established, six days apart, all the way to China. No gold traveled with the caravans — just paper — credit paper! In fact, two of the oldest pieces of paper found in the Far East hang in the British Museum today, written in Hebrew — a traveler’s prayer and a bill of lading.
Without gold, the caravans were generally left alone on their Eastward journey, perhaps giving a little tribute to the local warlords.
Coming back, their three products — silk, spices and perfumes — were not valuable items to the locals, but vastly valuable to Western Europe — so why bother them.
When we admire a sterling silver havdalah spice box, what does it often look like? A castle tower!
That is where the European nobles kept their spices, silks, and perfumes — in the tower. It was not reserved for the golden-haired princess. This indicates just how valuable spices and perfumes were to Europe.
Perfume saved them the time of taking baths in the long, cold winters.
Spices helped flavor their bland food.
Silks gave color to their garments because European cloth was generally white or brown.
The California Paper Credit System
A similar paper credit system was established among the Jewish businessmen during the Gold Rush. Merchandise rushed East to the miners. Credit paper rushed West to the bankers. The gold and silver came at its own pace and never hindered the flow of needed merchandise.
Jewish stores on the Gold Road were famous for being stuffed with the right merchandise, at the right time, and for the right price.
The same story holds true for the gold and silver strikes of Virginia City, Tombstone, Leadville, and other locations throughout the Wild West.
Jewish businessmen knew their Jewish history and made profitable use of it.
On to “The Value of Education. [Check here]
from Why the Jews Were So Successful in the Wild West…And How to Tell Their Stories, by David W. Epstein, Isaac Nathan Publishing, 2007.
