Jacob Schiff: The Right Hand of American Expansionism

By Tom Yuz


A banker and philanthropist, Jacob Schiff typified America’s expansionist ideologies during his rise to commercial prominence. The “Schiff era” from 1880 to 1920 transformed the United States into the world’s foremost industrialized economy. Under Schiff’s innovative leadership in the 1890s, New York banking firm Kuhn, Loeb & Company marketed the bonds of every major U.S. railroad. Completion of America’s railroad infrastructure embodied the fulfillment of continental “Manifest Destiny”. During the Russo-Japanese War of 1904, Schiff singlehandedly financed half of Japan’s military expenditures. By accessing privileged relationships with Japan’s political elite, Schiff actively protected Open Door principles in China. Concurrently, Schiff’s discord with rising anti-Japanese racial discrimination invigorated his denunciation of Darwinist principles afflicting fellow minorities. From World War I to his death, the Wall Street Tycoon thus repulsed xenophobia generated by inter-imperial status jockeying. Overall, Schiff’s life offers a rich lens for elucidating the immigrant experience during America’s swift expansion into the Pacific.

The Early Making of a Capitalist

From the tender age of 14, Jacob Schiff immersed himself in Frankfurt’s bustling banking community. The commercial seat of the German Confederation, Frankfurt enabled Schiff to quickly polish his business acumen through apprenticeships at leading mercantile partnerships.1 Entertaining a desire to distance himself from his overbearing father, Schiff traveled to America in August of 1865. The multitude of American investment opportunities engendered by the end of the Civil War further shaped his decision to immigrate. Despite briefly returning to Germany under Hamburg- based banker Moritz Warburg, Schiff became an American citizen in 1870 and remained committed to the United States. Even his widowed mother urged him to take advantage of America’s meteoric growth: “You are made for America,” she told him.2 Just five years after naturalization, Schiff channeled connections in New York’s German-Jewish community and became partner at investment banking firm Kuhn, Loeb & Company. Under Schiff’s purview, Kuhn, Loeb would parallel America’s worldwide expansion and grow into the country’s second largest international broker. To forge its own post-colonial legacy, the United States ironically relied on European financial capital intermediated by immigrants such as Schiff. The fulfillment of America’s continental expansionism hence rested on the laurels of financial innovation inspired by Schiff’s transnational perspective.

Inter-Imperial Rivalry and the Russo-Japanese War

Schiff’s financing of the Japanese war effort during the Russo-Japanese War of 1905 shaped America’s inter-imperial relationships in the Pacific. At the beginning of the Russo-Japanese conflict, Bank of Japan Vice President Korekiyo Takahashi traveled to London to raise funds for munitions and supplies.12 After facing rejection from nearly all British investment houses, Takahashi auspiciously found himself sitting next to Schiff at a sponsored dinner. After a brief solicitation, Schiff would set the financial machinery of the United States in motion to float Japan’s foreign loans. On March 1st, 1905 in New York City, “a double line of [eager investors] extending across William Street and two or three doors up Pine Street” underscored market anticipation for Japanese bonds.13 With subscriptions selling like wildfire, Kuhn, Loeb floated issues in the sum of $200 million ($4.5 billion 2016) out of the total $410 million raised by Japan to win its war.

Although tinted with religious motivation, Schiff’s desire to aid Japan paralleled America’s general perspective on Pacific rivalries. In an article written for the prestigious North American Review, Schiff described the Russo-Japanese war as a “momentous struggle between the Northern Goliath and the Far-Eastern David.”14 It was not so much because of “Schiff’s interest in Japan,” his daughter Frieda later explained, “but rather his hatred of Imperial Russia and its anti-Semitic policies that prompted him to take this great financial risk.”15 To American policy, Japan served as a counterweight to Russian imperialism; to Schiff, Japan served as a vessel for divine retribution for the Kishinev pogrom. To both, Russian expansion in the Far East represented the predominant long-term threat to American interests. East Asia’s post-war imperial hierarchy, relying on implicit understanding between Anglo-American and Japanese interests, thus blossomed in parallel to Schiff’s new friendship with the Japanese state. Schiff bolstering of Japan’s war budget proved that the dollar is greater than the sword, and highlighted America’s adoption of economic expansionism as a strategic diplomatic initiative.

Consequently, Schiff played a critical role in the recognition of Japan’s emergence on the world stage at the beginning of the twentieth century. Given his wartime financing rescue, Schiff became the first foreign private citizen to have a repast at Japan’s imperial palace.16 “[Theretofore],” Schiff later boasted, “only foreign princes have been thus honored.”17 Correspondingly, Schiff represented initial American optimism for continued fair trade in China. Upon departure from Japan in 1906, Schiff was “convinced that as far as Japan [was] concerned, the principle of the Open Door in Korea and Manchuria will be scrupulously honored, and that Japan will keep faith in every direction and meet every engagement, actual or moral.”20 Focused on Japan’s commercial prospects, Schiff believed that Japan’s development would provide “an impetus to the commerce of the entire world, from which Europe and the United States should profit for many a decade.” The Roosevelt-run White House equally maintained the conviction that the Japanese would not attempt to restrict trade. After all, a key provision of the Portsmouth Treaty maintained that Japan must “continue her support of the Open Door in Manchuria” and corroborate the restoration of the province to China. Schiff thus reflected the perception that the Japanese, neither overbearing nor intoxicated by their great military victories, would assume dominance in the East with a firm yet economically-impartial hand.

Cooling Japanese Sentiment

Nevertheless, Schiff’s confidence in Japan vacillated as U.S.-Japanese relations grew rivalrous. After Japan’s expansion into Southern Manchuria, Japanese bonds at Kuhn, Loeb notably lost popularity. Fearing Japan’s expanding imperial power, Americans suddenly avoided any security issuance which would serve as a conduit for financing Japan’s military operations. With an ear to the financial markets, Schiff preceded general awareness of Japan’s imperialistic designs for China. As early as 1906, Schiff sent a personal letter to Max Warburg in Hamburg noting that “the Japanese policy is very evidently directing all its attention to the creation of new markets by colonization, especially in Korea and Manchuria. There is no doubt that everything is being done to bring China and her great resources under Japanese influence.”21 In 1908, the Root-Takahira Agreement verified Schiff’s trepidation by attempting to save the status quo in the East. In exchange for acknowledging Japan’s right to annex Korea and Manchuria, the agreement affirmed China’s territorial integrity and recognized America’s annexation of the Philippines. Formalizing the private Taft-Katsura Agreement, Root politically voiced Schiff’s economic concerns regarding the state of Open Door principles in the Pacific.

Schiff, however, sensed early Japanese defection from Root’s terms. In 1908, Schiff wrote to Takahashi to prompt the sale of the South Manchuria Railroad to railroad king and long-time friend Edward H. Harriman. The contiguous extension of Schiff’s expertise in railroad financing from the U.S. mainland to China truly embodied American portrayal of China as the “new frontier.” Not only would China be mythically connoted with the disposal of American goods, it would also be tied to the survival of American capital. When the Japanese state respectfully declined Harriman’s offer, Schiff acknowledged the consolidation of Japanese power in Southern Manchuria. Concurrently, the U.S. government viewed Japan’s forceful acquisition of full ownership rights to the Railway as a clear violation of the Open-Door policy. Again, Schiff’s recognition of changing dynamics in Pacific rivalries foreshadowed readjustments of critical diplomatic stances.

Highlighting the impact of Schiff’s provocations, President Taft moved to quickly reassure Japan’s apprehensions. “In the Russo-Japanese agreement relating to Manchuria, signed July 4, 1910,” Taft avowed, “this Government was gratified to note an assurance of continued peaceful conditions in that region and the reaffirmation of the policies with respect to China.”24 Evidently, Schiff’s opinion as a titan of capitalism became closely linked with America’s image of Japan, and Japan’s gauge of sentiment in America. Cumulatively, Schiff’s economic objectives highlighted immigration’s inconsistency with the white, Protestant, and Anglo-Saxon portrait of America. Schiff, enlightened by the plight of Japanese-Americans, refused to let racial strife inhibit the success of any of America’s peripheral migrant groups.


Schiff’s relationship with American capitalism raised his status as a banker and student of the world, and shaped the course of history. By syndicating loans for every major U.S. railroad, Schiff built investment powerhouse Kuhn, Loeb on the back of America’s continental Manifest Destiny. Countering Russian imperialism in the Far East, Schiff financed over $180 million of Japan’s military costs during the Russo-Japanese War of 1908. Continuing to manage loans to governments and businesses worldwide, Schiff actively contributed to America’s pursuit of the China market as a new frontier. As a philanthropist, Schiff empowered his local German-Jewish community, combatted racial exclusion hampering minority subgroups, and contributed to various civic and cultural institutions. Even in the midst of a devastating war against his home country, Schiff loyally advanced the industrial and imperial preeminence of the United States. Touching the lives of innumerable people– rich and poor, powerful and weak, immigrant and Anglo-Saxon– Schiff embodied all that the American dream could hope to hold for the country’s multiplying millions.

Tom Yuz is a junior at the University of Pennsylvania where he studies Finance and Statistics with a minor in International Relations.


[1] Nachum Gidal, Jews in Germany from Roman Times to the Weimar Republic (Cologne: Könemann Verlagsgesellschaft GmbH, 1998), 90, 148.

[2] Adler, Jacob H. Schiff, vol. 1, 7.

[3] Adler, Jacob H. Schiff, vol. 11-12.

[4] Thomas McCraw, Prophets of Regulation: Charles Frances Adams, Louis D. Brandeis, James M. Landis, Alfred E. Kahn (Cambridge, MA: Harvard University Press, 1984), 4.

[5] Cohen, Jacob H. Schiff, 5.

[6] Ibid., 5

[7] Adler, Jacob H. Schiff, vol. 1, 185-94; Birmingham, Our Crowd, 328-29.

[8] Steven Usselman, Regulating Railroad Innovation: Business, Technology, and Politics in America, 1840-1920 (New York, NY: Cambridge University Press, 2002), 243.

[9] Adler, Jacob H. Schiff, vol. 1, 83.

[10] The Jacob Schiff Papers document his frequent correspondence with Robert Fleming, first in Scotland and then in London, Ernest Cassel in London, Max Warburg in Hamburg, the Barings House in London, Edouard Noetzlin in Paris, Baron Korekiyo Takahashi in Japan, and others in Amsterdam and elsewhere.

[11] Daniel Howe, What Hath God Wrought: The Transformation of America, 1815-1848 (New York, NY: Oxford University Press, 2007), 117-20; George Tindal and David Shi, America: A Narrative History, 6th ed. (New York, NY: W. W. Norton & Company, 2004), 760-62.

[12] Ibid., 13.

[13] 17 New York Times, March 30, 1905.

[14] American Jewish Historical Quarterly, Vol. 61, No. 4 (JUNE, 1972), pp. 313-324 Published by: The Johns Hopkins University Press

[15] Schiff, “Japan after the War,” North American Review 183, no.597 (Aug.1906), p.161.

[16] Cohen, Naomi Wiener. Jacob H. Schiff: a Study in American Jewish Leadership. Hanover, N.H.: Brandeis University Press, 1999

[17] Schiff, Our Journey, p.20.

[18] Schiff to Max Warburg. April 8, 1906, Schiff Papers. Manuscript Collection No. 456. American Jewish Archives, Cincinnati, OH

[19] Gallen, J. M. (n.d.). THEODORE ROOSEVELT AND THE RUSSO-JAPANESE WAR. Retrieved from http://russojapanesewar.com/TR.html

[20] Japan will Keep Faith,” Los Angeles Times May 19, 1906, p.17.

[21] Schiff to Max Warburg. April 8, 1906, Schiff Papers. Manuscript Collection No. 456. American Jewish Archives, Cincinnati, OH.

[22] “Schiff Fears Japanese War,” New York Evening Post, March 6, 1910; “Schiff Sees Peril in Japan: Now She’s Allied with the Enemy of All Mankind,” The New York Times March 6, 1910.

[23] “Japan Tiff with Mr. Schiff,” The Literary Digest, December 17, 1910.

[24] Both quoted in The Hawaiian Star December 29, 1910, p.1.

[25] Quoted in “Japan Read Schiff’s Speech,” The Sun June 1, 1910, p. 14.

[26] Paul R. Spickard, Japanese Americans: The Formation and Transformations of an Ethnic Group (New Brunswick, NJ: Rutgers University Press; Revised Edition, 2009), pp.32-33.

[27] “Schiff Defends Japan: Sentiment Here for Citizenship, Says Banker. Honest in Money Matters.” New York Tribune June 27, 1913, p.7.

[28] Pak, S. (2014). Gentlemen bankers: The world of J.P. Morgan. Harvard University Press.

[29] Kramer, N. (2007). Civil courage: A response to contemporary conflict and prejudice. New York [u.a.: Lang.

[30] Annual Report of the National Association for the Advancement of Colored People (New York, NY, 1920), 94.

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