The last tycoons: the secret history of Lazard Frères & Co by William D. Cohan Read Free Book Online Page B

and this time he succeeded by promising him that if his performance was up to David-Weill's considerable expectations, Andre would be made a partner of the French firm. Andre joined Lazard as an associate in 1926, in part because he had been so impressed by the gutsy trading positions Lazard had taken during the franc crisis. Within a year, David-Weill kept his promise and promoted Andre to a partner of Lazard Freres et Cie, at the same time he named his son Pierre David-Weill to be a partner as well. Andre, with his financial genius and forceful personality, would dominate Lazard for the next fifty years.

    AT THE START of 1927, Altschul turned his attention to establishing General American Investors Company as the nation's first closed-end mutual fund. And in May 1927, with Lazard and Lehman Brothers as its principal investors and owners, the fund opened for business to "acquire, hold, sell and underwrite securities of any nature, both foreign and domestic." Another fund, the Second General American Investors Company, was started on October 15, 1928. On September 5, 1929--a month before the Crash--the first and second General American funds were merged into one fund, which at the end of 1929 had $33 million in assets. General American would remain one of Altschul's passions for the remainder of his long life, but would lead to a permanent and irrevocable rupture of his relationship with Andre Meyer.
    In New York, it is clear from Altschul's correspondence with his new partner Albert Forsch, there was increasing concern in Lazard's offices during the summer leading up to the stock market crash of 1929. "It seems to me that the cycle through which we are passing has not run its course, and aside from a slight change in the sentiment I fail to detect any indications of any betterment," Forsch wrote Altschul, who was in Paris. "The construction figures are certainly most discouraging. The automobile business if anything is worse, commodity prices have not changed their trend, and unemployment shows not only no signs of improvement but seems to be on the increase, and I think we shall see real distress this winter for the first time in many years."
    Forsch was prescient, of course. The stock market slide, which began in September 1929 and ended in July 1932, sliced an astonishing 89.2 percent off the Dow Jones Industrial Average. Much of the industrialized world was thrown into a near-decade-long depression. The three Lazard houses survived the Crash and its aftermath--just barely--but the firm's latest brush with death ironically had nothing to do with the momentous macroeconomic events and everything to do with serious mismanagement.
    A series of unexpected events, beginning in March 1931, almost led to the total liquidation of Lazard. First came the sudden death of Andre Lazard, son of Simon and brother of Christian, who had only three years earlier taken over as senior partner upon the death of his cousin Michel. Andre had died, at age sixty-two, in Nice after a short illness. He was the last Lazard family member to be a part of the firm. The impression has been given over the years that the reason for this was the lack of male issue in the Lazard family lineage following Andre Lazard's untimely death. And to some degree that is accurate. But the descendants of Elie Lazard did have several sons in their lineage. Whether they were ever part of the firm is not known. It is likely that the David-Weills used the occasion of the deaths of Andre and Michel Lazard to consolidate their control over the firm.
    On the other hand, in the late spring and summer of 1931, as a result of an untimely combination of world events and a rogue Czech trader sitting in a Lazard Brothers office in Brussels, the David-Weills almost lost everything--yet again--that they had so carefully constructed during the previous eighty years. Financial trouble had been brewing for some time in Europe by 1931, for any number of reasons, among them the exporting