Everything You Ever Wanted to Know About (Goldman) Sachs

The Partnership: The Making
of Goldman Sachs
By Charles D. Ellis
The Penguin Press, 729 pages, $37.95

Around 1990, I read somewhere that over half the graduating class at Yale had signed up to be interviewed by Goldman Sachs. I found the thralldom to Mammon that this bespoke by turns amazing, discouraging and in its way disgusting, and I said so in the column I was writing at the time for this paper.

At that point, this once-great Republic had not yet turned—twice—to 55 Broad Street for its secretary of the Treasury: under Clinton, Robert E. Rubin, and now, even more significantly, Henry W. Paulson Jr., who in the eyes of many is really running this nation in distress, both out front and behind the scenes. To paraphrase Lady Bracknell’s memorable utterance, “To supply one Secretary, Messrs. Goldman Sachs, may be regarded as influence; to supply two smacks of omnipotence.” One can only wonder how well the qualities and skills Mr. Paulson learned, honed and manifested at Goldman Sachs will serve him and us in the parlous days ahead.

As if to satisfy our curiosity, here comes Charles D. Ellis with a history of the great (in all senses) investment banking house that takes us from its founding in 1869 as a modest dealer in commercial paper to up to about six months ago—in other words, to the brink of the moment this past summer when the colossus that bestrode the narrow world and dominated all it surveyed began to go weak in the knees.

(Here I should enter a disclaimer. Charlie Ellis and I were at Exeter and Yale together, and although we haven’t seen each other for what must be 30 years, I still think of him with warmth and approbation.)

MR. ELLIS HAS WRITTEN a thick, thorough book; when I at last finished the final page, I could think only of Dr. Johnson on Paradise Lost: “None ever wished it longer than it is.” But Wall Street histories, perforce a genre devoted to deals and dealers, can be pretty blinkered in their page-to-page outlook, and Wall Street people are really not the most interesting subspecies on the planet. As a guide for the perplexed, seeking in these pages to glean a clearer understanding through the history of Goldman Sachs of how we came to be in the fine fix we’re in, it may prove heavy, frequently tedious going. For Wall Streeters, however, it will be a must-read, and it gives me a certain satisfaction to realize that a great many of this sorry breed of navel-gazers will now have the extended leisure time available that a properly close perusal of these 700-odd pages requires.

How would I characterize the book overall? Well, imagine an extended Harvard Business School or McKinsey case study written by Bob Woodward. Roughly 40 percent consists of inside baseball: records of meetings; accounts of decisions to enter this geographical market or that line of business; extended interview quotations (with highest praise transparently lavished on obvious interview sources in the best approved Woodward manner); interminable accounts of the partner-minting and CEO-electing process (the chapters concerned with the stepping-down of CEO Steve Friedman had me creaking with ennui). The other 60 percent offers long, dry stretches of consultant-speak focused analytically and ruminatively on issues of technique, procedure and corporate strategy.

The tone of the book is unfailingly admiring. When Goldman makes what Mr. Ellis clearly feels is a misstep—as in its $6 billion acquisition of the specialist firm Spear, Leeds—the tone is muted. Still, unpleasant truth can here and there be found between the lines, as it were. In the pages devoted to the great Sidney Weinberg, who really put Goldman on the corporate map, and the pages devoted to Sidney’s son John and to John Whitehead, who co-managed the firm to greater glory in the late ’70s and ’80s, the word “ethical” recurs and recurs and recurs. But it cannot be found—at least not once that I detected—in the pages devoted to the reign of Gustave L. Levy (1969-1976)—which, take it from me, is as it should be.

I have only a few complaints. The first is that the book is abominably edited. I’m not talking about small mistakes (Bill Gossett, not “Bill Gussett”; Howard Morgens, not “Howard Morgans”) but a pervasive carelessness with regard to narrative flow. Time and again, while reading the book, I would say to my significant other, “You’re not going to believe this!”—and read aloud a passage in which the ordering of the paragraphs seemed almost random.