Goldman Sachs

Based on Wikipedia: Goldman Sachs

In the basement of a small New York building in 1869, next to a coal chute that heated the cramped space above, a German immigrant named Marcus Goldman started what would become one of the most powerful financial institutions in the world. His modest beginning—literally a one-room operation—was far from glamorous. Yet within decades, Goldman Sachs would grow from this humble origins into an American institution that reshaped how companies raise capital, how Wall Street values businesses, and how the global financial system operates.

The story begins with Marcus Goldman's pioneering use of commercial paper for entrepreneurs—short-term debt instruments that allowed small businesses to access credit without traditional collateral. This innovation fundamentally changed financing in America. When his son Henry Goldman joined the business in 1885, followed shortly by Samuel Sachs through marriage, the firm adopted its now-iconic name: Goldman Sachs & Co.

The firm's early years were marked by ambitious underwriting deals that would establish its reputation for taking companies public—the first being Sears, Roebuck and Company in 1906. The deal was facilitated by Henry Goldman's personal friendship with Julius Rosenwald, owner of Sears. This represented something new: a bank not merely facilitating capital raises but actively shaping how valuation should occur. Instead of relying on book value, Goldman Sachs pioneered the price-earnings ratio as a method for valuing companies—revolutionary at the time and now standard practice across global markets.

By 1928, the firm had grown powerful enough to launch Goldman Sachs Trading Corp., a closed-end fund that would become one of the most visible symbols of pre-crash speculation. The fund failed spectacularly during the Wall Street Crash of 1929, amid accusations of share price manipulation and insider trading that would tarnish the firm's reputation for generations.

The catastrophe forced radical reinvention. In 1930, under pressure from partners rattled by the collapse, the firm ousted Waddill Catchings—who had accumulated the largest single stake—and installed Sidney Weinberg as senior partner. Weinberg pivoted the firm away from trading and toward investment banking, restoring damaged credibility through high-profile mandates like the Ford Motor Company IPO in 1956, a $657 million deal that represented a major victory.

Weinberg's influence extended beyond strategy: he established the firm's investment research division and municipal bond department, pioneered risk arbitrage, and pushed the firm toward its famous philosophy of being "long-term greedy"—the idea that short-term losses were acceptable as long as money was made over time. Partners reinvested nearly all earnings back into the firm, creating a self-funding model that distinguished Goldman Sachs from competitors.

The 1970s brought another existential crisis when Penn Central Transportation Company went bankrupt with over $80 million in commercial paper outstanding—most issued through Goldman Sachs. The resulting lawsuits, notably from the SEC, threatened the partnership's capital and survival. Yet this crisis, paradoxically, birthed the credit rating system for every issuer of commercial paper that exists today.

The firm opened its first international office in London under partner Stanley R. Miller in 1970, establishing the "white knight" strategy in 1974 during hostile takeover defense of Electric Storage Battery against International Nickel and Morgan Stanley. By the 1980s, Goldman Sachs had joined both the London and Tokyo stock exchanges, expanding global reach.

The acquisition of J. Aron & Company in 1981—merged with the Fixed Income division to become Fixed Income, Currencies, and Commodities—brought future CEO Lloyd Blankfein into the firm through commodities trading in coffee and gold markets. The firm's role in facilitating the Soviet Union's privatization movement during its dissolution positioned it at the center of global financial restructuring.

By 1986, Goldman Sachs underwrote Microsoft's IPO, advised General Electric on RCA acquisition, and formed Goldman Sachs Asset Management for institutional and individual investors. The firm became first to distribute investment research electronically and created the first public offering of original issue deep-discount bonds—each milestone reinforcing its position at the intersection of innovation and capital markets.

Today, Goldman Sachs stands as one of the largest investment banks in the world by revenue, ranked 32nd on the Fortune 500 and considered systemically important by financial regulators. It operates across investment banking, securities underwriting, prime brokerage, asset management, wealth management, and complex product structuring—trading both on behalf of clients and for its own account.

The firm that started in a coal-heated basement has become a pillar of global finance: advising corporate takeovers worth billions, underwriting historic public offerings, and managing assets that dwarf most national economies. From Marcus Goldman's one-room office to the current headquarters in Manhattan's Battery Park City, Goldman Sachs remains defined by its willingness to be "long-term greedy"—taking calculated risks across generations to reshape how capital moves around the world.