The Last of the Imperious Rich
Lehman Brothers, 1844-2008
By: Peter Chapman
Published: September 2, 2010
Format: Hardcover, 320 pages
ISBN: 9781591843092
Publisher: Portfolio/Penguin
"The origin of the business that eventually became Lehman Brothers was solid practical goods that you could see and touch", writes Financial Times editor and journalist Peter Chapman in his brilliant and landmark book The Last of the Imperious Rich: Lehman Brothers, 1844-2008. The author describes the rise and fall of the once proud financial institution, that was part of building what what great in America, and of the greed that led to its demise.
Peter Chapman presents the story of immigrant Henry Lehman, who arrived in America on September 11, 1844, and his dream of making his fortune in a new land. Moving to Alabama, Henry began his business career as an itinerant peddler, who believed in giving fair value for his customer's money. He soon established permanent residence in the growing community of Montgomery, Alabama. Eventually, Henry began taking cotton in trade for his store goods. As he and his brothers became more familiar with the cotton business, they became commodity traders. They also became bankers. With the outbreak of the Civil War, the center of trade moved to New York City. The Lehman Brothers business migrated to the great metropolis as well. A new chapter in the story of Lehman Brothers began as part of the bustling Wall Street financial world. Eventually, the bank became established as a reputable financier of some America's leading companies.
Peter Chapman (photo left) continues his story of the ascent of Lehman Brothers through its financial backing of such iconic companies as Sears, Macy's, PanAm Airlines, and the United Fruit company. Over the course of the twentieth century, different family members took over the leadership of the organization, and growth saw the addition of non-Lehman partners as well. As the turbulent 1960s and 1970s turned into the 1980s, Lehman Brothers transformed from a traditional banker to more of an emphasis on stocks, bonds, and mergers and acquisitions. The rise of the bond business at Lehman Brothers was significant as that department spawned the future and final CEO Dick Fuld. During his tenure as CEO, Lehman Brothers rode the bull markets in bonds and stocks, but when those markets crashed, they took the historic Lehman Brothers down too. Not receiving the taxpayer supported bailouts of many of their other Wall Street brethren, Lehman Brothers collapsed on September 15, 2008.
For me, the power of the book is how Peter Chapman chronicles the rise and tragic fall of Lehman brothers in a balanced and page turning way. The story of Lehman Brothers, from its humble beginnings to its arrogant and final demise reads like a tragic play. The seeds of the collapse of Lehman Brothers were sown with the remaking of the bank into a bond and stock speculative firm. Leveraged far beyond the company's reserves merited, the stewardship of CEO Dick Fuld symbolized the greed and recklessness of the housing and market bubbles. Invested in derivatives, that Henry Lehman and his brothers would never have considered purchasing, the Richard Fuld led Lehman Brothers was an insolvency waiting to happen. When time ran out, Lehman Brothers and its rich history of backing some of the leading American corporations, ceased to exist. The story is told rich in detail, and with all of the mistakes laid bare for readers present and future to examine for themselves.
I highly recommend the definitive corporate history The Last of the Imperious Rich: Lehman Brothers, 1844-2008 by Peter Chapman, to anyone seeking a balanced, and unflinching account of the ascent of Lehman Brothers to the elite of Wall Street, and its downward spiral to eventual collapse. The story of Lehman Brothers is a tragedy, and a microcosm of the greed and avarice that replaced sound investment in building real companies. When leaders lose sight of their goals, and replace value with the illusion of wealth, the end result is their demise.
Read the brilliant cautionary story The Last of the Imperious Rich: Lehman Brothers, 1844-2008 by Peter Chapman, and discover how building for the future creates a great organization, and how shortsighted seeking of quick profits can send that same company to the dustbin of failed businesses. The lessons described in the book must be relearned by companies to prevent other repeat performances of the Lehman Brothers disaster.
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