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The Partnership Summary

4 min read ⌚ 

The Partnership SummaryThe Making of Goldman Sachs

Goldman Sachs is the most powerful investment bank in the world. It generates revenue of almost $40 billion on a yearly basis, and, in 2016, its total assets worth almost $1 trillion.

In “The Partnership,” Charles D. Ellis tells its story from the very beginning.

About Charles D. Ellis

Charles D. Ellis is an American author and investment consultant, famous for his philosophy of “passive investing through index funds” explained in one of his best-known books “Winning the Loser’s Game.” He has written fifteen more, in addition to numerous articles on investing.

“The Partnership Summary”

As we have previously reminded you, Lao-Tze once said that a journey of a thousand miles begins with a single step. Well, Goldman Sachs, the multinational investment banking behemoth, is a great proof of this.

It was founded in 1869. And, as Charles D. Ellis writes in “The Partnership”, back then, the financial colossus was an “inconspicuous business of a single immigrant with no staff and almost no capital.”

That immigrant was Marcus Goldman, a German businessman who had moved to the United States as a 27-years-old man some twenty years before, during the first Jewish immigration wave to America.

And for 23 years, Goldman Sachs was only Goldman and was mostly a dwarf in a world of financial giants, such as “J. & W. Seligman & Co.” However, Marcus Goldman worked hard and by 1882 his firm had annual profits of about $50,000.

It was then when his son-in-law, Samuel Sachs, became Goldman’s junior partner. By the end of the 19th century, Goldman Sachs & Co.’s capital would rise in the realm of the millions. Goldman Sachs was “the nation’s largest dealer in commercial paper.”

After the retirement of Marcus Goldman, his son, Henry, would become Samuel Sachs’ partner. However, the First World War would put an end to this partnership. You see, Henry Goldman had a pro-German stance during the Great War. So, he had to resign after it ended.

Goldman Sachs was now firmly into the hands of the Sachs family. To this day, not many of the members of these two families are on speaking terms.

On December 4, 1928, Goldman Sachs launched the Goldman Sachs Trading Corporation. The closed-end fund collapsed just a year later during the stock market crash, losing the company millions of dollars.

And that’s when Mr. Wall Street came to the rescue. To make matters a bit more interesting, just a decade or so before he restored Goldman Sachs, he was its employee.

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