P
R
O
L
O
G
U
E
The
Parable
of
the
Staircase
Between two rooms, a staircase runs. At the bottom, in the autumn of 1869, a Bavarian immigrant in
his late forties sat at a borrowed desk in a single rented room on Pine Street, in the lower reaches of
Manhattan, buying pieces of paper — promissory notes signed by jewellers who needed cash before
their goods sold. At the top, in the autumn of 2009, a dark glass tower at 200 West Street looked out
over the Hudson from a hundred feet in the air, sheltering one of the most powerful financial institu-
tions the world has ever known. The distance between the two rooms is not measured in blocks. It is
measured in trust.
A biography of an institution is still a biography. Every great firm is a person in the eyes of the law,
and something more than a person in the eyes of history: it has a childhood, a conversion, a moral
trial, a reputation to lose, and a legacy to leave. Goldman Sachs has had all of these, sometimes in the
space of a single decade. It was born on the street, and it has never quite left the street behind.
"Streetwise" is not an insult here. It is the firm's oldest inheritance — the knowledge, carried in the
blood of its earliest partners, that a promise is only as good as the person who signs it, that risk is paid
for in attention, and that the world is read most truthfully at close range, where the ink is still wet.
The story that follows is the story of that education. It runs through the partnership with Lehman
Brothers that underwrote the age of the department store; through the leveraged trust of 1928 that
nearly killed the firm and the quiet resurrection led by a boy from Brooklyn who had started as an of-
fice helper; through the invention of the block trade and the rise of the trading floor; through the
fourteen principles that became the firm's constitution; through the long procession of partners
who left Wall Street for Washington; through an initial public offering that ended a hundred and
thirty years of partnership; through a financial crisis that turned the firm into a bank holding com-
pany and the public's patience into ash; through a reckoning with regulators, juries, and commenta-
tors; and through a patient, unglamorous climb back toward respectability.
This is not a hagiography. The firm's history is crowded with brilliance and with blindness, with
statesmanship and with self-dealing. A biography that flatters is a brochure; a biography that con-
demns is a polemic. What follows tries to be neither. It tries, instead, to tell the truth as a good histo-
rian would tell it — with sympathy for the difficulty of the thing attempted, and with honesty about
the cost of the thing achieved. The staircase goes up, but it has never stopped being a staircase: each
step is a negotiation, and the man at the bottom, endorsing a stranger's note with his own name,
would recognize the arithmetic at the top. The names have changed. The signature has not.
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