RUTHFULLY YOURS

Not all of Edgar Speyer’s interests were so ethereal. The British Speyer branch was a key source of railroad finance, and Edgar himself was best known for creating—in partnership with Charles Yerkes, a Chicago entrepreneur—the London tube system, with its innovative “deep-tube” design. Edgar persisted in expanding the system despite its precarious finances and for many years functioned as its chief executive.

Although Edgar Speyer was a baronet and a member of the king’s Privy Council, he would become a target of the McCarthy-style attacks that were directed at Germans in England during World War I. The attacks grew to such an intensity—Speyer was accused of signaling to German submarines—that he resigned his official positions, over the protests of the king and prime minister. He soon liquidated the British branch of the firm and joined his elder brother, James, in New York. James was then running the Speyers’ branch in America, but it too would succumb before the next war broke out. It is this arc of centuries-long success and sudden diminishment that George W. Liebmann describes in “The Fall of the House of Speyer,” a solid work of financial and social history. They don’t make bankers like this anymore.

ENLARGE

The Speyer bank, Mr. Liebmann tells us, had roots going back to the 14th century, at the threshold of a long surge in international commerce. New forms of paper—bills of exchange, letters of credit and much else—allowed traders to leverage up their businesses quite remarkably. Over time, houses like those of Baring, Rothschild and Speyer shifted out of their traditional-goods trading for the higher volumes and higher fees available from trading just the paper claims. The Speyers were known as the leading investment and trading house in Frankfurt, Germany, usually ranked just behind the Rothschilds in the Jewish financial imperium.

Philip Speyer came to New York in 1837 and opened an American branch. He was the first banker to place Union Civil War bond issues in Europe, and he introduced both Jacob Schiff and Otto Kahn of Kuhn, Loeb to the American market. James and Edgar were his nephews, born in New York in 1861 and 1862, respectively, and both educated in Europe. James may have been the more Germanophilic: He spent most summers in Germany and was on relaxed personal terms with the Kaiser, but he was also active in international peace groups and made a number of attempts to forestall the coming of World War I. Both brothers were small in stature, dapper, eager to collect beautiful objects and prickly to the point of imperiling their business relationships.

As Mr. Liebmann relates, Edgar and James frequently partnered on massive financings in Latin America, mostly in railroads, often in league with Percival Farquhar, a graduate of Yale and the Columbia Law School and a former ward-heeler in the Tweed organization. Farquhar was reputed to be able to sell anything to anyone—the perfect frontman for a bond operation. In truth, he accomplished prodigies, like the Madeira-Mamore railroad, designed to bypass the rapids of Amazonia; 3,600 men are reported to have died in its construction. Another Farquhar road, running from São Paulo to the city of Santos about 50 miles away, was called by a contemporary writer “one of the most difficult feats of railroad engineering in the world executed with absolute perfection.” Many of Farquhar’s railroads are still in use, although they are now typically owned by governments, for few of them made much money.

There were many reasons why the Speyer bank did not survive the interwar period. The J.P. Morgan bank was the gatekeeper of financing for European reconstruction and blackballed any Speyer participation, quite possibly because of the Speyers’ Jewishness. Both brothers, moreover, may have lost their taste for the business. Edgar concentrated on his musical and charitable interests after he emigrated to America, and James’s operation was a “one-man show,” with a small number of partners, and wound up both its New York and Frankfurt branches within a year of his retirement in 1938. He may also have run the business on a shoestring; a 1923 legal action revealed that the firm’s capital was only about $715,000, of which James owned a 30% share.

The author sums up: “The demise of the Speyer firm may have been due to nationalism, personal prickliness, and the brothers’ lack of sons.” But it may well have been doomed anyway, as Mr. Liebmann notes. The firm “dealt primarily in government and railroad bonds,” he writes, and fixed-income securities would not be good investments in a postwar world “in which the gold standard had been renounced in favour of the managed currencies of the Bretton Woods system.”

Mr. Liebmann has done a service by bringing the history of an important, but almost forgotten, banking family to notice. But his execution can be frustrating. Whole chapters can read like a recitation of investment activities or, in one case, of charitable bequests (the brothers were very generous). There is also a good deal of jumping back and forth between eras. And the notes are impossible. It is common for books to forgo, as “The Fall of the House of Speyer” does, numbered notes in the text, but then the back matter includes snippets from the text to link to the note. Here, the notes appear at the back but without textual clues. The curious reader must waste time trying to match a source to the text it refers to. Surely Edgar Speyer treated his London house guests with more courtesy.

Mr. Morris is the author of “The Tycoons: How Andrew Carnegie, John D. Rockefeller, Jay Gould, and J.P. Morgan Invented the American Supereconomy.”