Blue-chip greed

Greed is good, said the managing partner of Goldman Sachs, but it ought to be long-term greed

Greed is good, said the managing partner of Goldman Sachs, but it ought to be long-term greed. This history of the bluechip US investment bank struggles to reconcile the human desire to get rich as speedily as possible with the notion of serving clients who, if you are patient and conscientious, will eventually make you rich. Last month, after Lisa Endlich sent her manuscript to the publisher, the Goldman Sachs partners voted to sell some of the firm to the public, making themselves very rich indeed.

There is much agonising about whether Goldman Sachs, which now has outside shareholders to answer to, can be as successful as when it was a partnership. Agonising or no, the partners trousered small fortunes. Their motives in going public were no doubt of the purest.

Goldman Sachs's reputation on Wall Street is awesome. It recruits the cream of the top American business schools. One managing partner expected employees to be able to answer correctly his wakeup call, made at 3 a.m. He would ask them what Goldman Sachs stood for. They were expected to reply: "Client service, integrity and teamwork." The bleary-eyed ones should complete the mantra with "strategic dynamism and a commitment to change". You could make a lot of money at Goldman Sachs, but it wasn't much fun.

The earlier days were more light-hearted. Sidney Weinberg, the man credited with giving Goldman Sachs its pre-eminent place in investment banking, once placed an advertisement in a New York paper as a prank, saying that one of the partners was investing in a new Broadway musical and wanted to personally interview prospective chorines. The ladies who turned up at Goldman Sachs's offices were bitterly disappointed.

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The early history of the firm is well told, with a rich strain of anecdote. One of the Goldman family heard the 12-year-old prodigy Yehudi Menuhin perform at Carnegie Hall and invited the youngster to lunch at the bank. What, he asked Menuhin, would he most like in the world. "A Stradivarius," Menuhin replied. He got it. The same Goldman was so impressed with Albert Einstein he made him a present of a yacht. (It does not sound much like the sort of thing that would appeal to Einstein, but in any event the Nazis confiscated it.)

Mostly the book is about modern Goldman Sachs. There is an interesting account of the collapse of the Robert Maxwell empire. Goldman Sachs in London were his main bankers. Lisa Endlich - a former vice-president and trader at the firm 's foreign exchange department - does not explain what appears to be extraordinary naivete of sophisticated banks and traders in dealing with Maxwell. His reputation in the City of London was well known, yet Goldman Sachs did business with him as though he was the Bank of England. It cost them dearly, both in financial terms and in reputation.

The vast amounts of money made in Wall Street before the 1987 crash are now seen as the hubris that comes before a fall. One trader told Endlich of a visit to New York by the Chamber of Mines of South Africa to celebrate the sale by a Goldman Sachs company of its one millionth Krugerrand. At dinner, the guests were each given a set of Krugerrand cuff links as a token of the South Africans' appreciation.

"You've got to remember that at this time gold was worth $500 or maybe $600 an ounce," he said. "After dinner we walked out on to the street and a guy came up to us begging for some change. I was married at the time to a Jamaican woman and basically couldn't stand the South Africans, so I gave them to him. I just gave them to a guy on the street begging for a quarter. That's when I knew we were making too much money."

The Goldman Sachs partners are back in the money-making business. New Labour's favourite economist, Gavyn Davies, a Goldman Sachs partner, stands to make £50 million. Our own Peter Sutherland - not mentioned in this book - stands to make something similar. Only time will tell if the Goldman Sachs culture, which underpinned the firm's success, will survive the change in ownership.

Jim Dunne is an Irish Times journalist