Central Bank for the Support of Jewish Cooperatives in Lithuania, Kaunas, 1923. Flanking the entrance to the bank are (left) A. Baloserio Bookstore and (right) a bicycle shop. In the foreground is a sign for the Pasazas barbershop. (YIVO)

Find more information about

at the Center for Jewish History:

NOTE: you will be redirected
to the Web site for the

Banking

From the beginning of Jewish settlement in Eastern Europe, moneylending and money dealing in its various forms represented—alongside commerce, tax farming, and leasing—a central area of their economic activities. Into the nineteenth century, Jewish entrepreneurs were typically involved in more than one of these areas. Furthermore, in the early modern period Jewish communities played a significant role in the monetary economy of Eastern Europe by borrowing from church institutions and the aristocracy. In the nineteenth century—considerably later than in Western or Central Europe—the whole of Eastern Europe witnessed the emergence of prominent figures who served, either primarily or exclusively, as private bankers. With the rapid spread of joint stock banks, such figures declined in significance by World War I. However, the proportion of Jewish capital in these public companies remained significant, and Jews continued to be prominent in the management of those company’s affairs.


Middle Ages

Jewish moneylending and money dealing in Eastern Europe began with the earliest settlement of Jews in the region. In the fifteenth century, Jewish credit operations—which should be seen as an extension of trade—were centered in Poznań, Kalisz, and Kraków. Through the Statute of Warka (1423), which restricted Jewish moneylending to loans made on security of moveable goods, Jewish credit operations in Poland were, in practice, limited on the one hand to especially privileged individuals and on the other hand to generally high-interest small loans. As a result, commerce and leasing took on greater importance. Kraków-based Lewko ben Yarden (fl. late 14th century) was one of the first entrepreneurs to conduct substantial banking activities with the court. He served as financier to the successive Polish kings Casimir the Great (Kazimierz Wielki; 1333–1370), Louis of Hungary (Louis d’Anjou or Ludwik; 1370–1382), and Władysław II Jagiełło (1386–1434), as well as to the gentry. In addition, he leased the Kraków mint, the salt mines of Wieliczka, and a share of Kraków’s income tax revenues. In Lithuania, Michal Ezofowicz , a native of Bohemia who was knighted in 1525, held a similar position as court banker, leaseholder of Lithuania’s fiscal revenues, and creditor to the gentry. Another prominent entrepreneur active as a court financier was Mosheh Fiszel (late fifteenth century; d. before 1489) of Kraków, who probably originated from Bohemia.


Early Modern Period

The inflationary conditions of the sixteenth and early seventeenth centuries meant that moneylending grew considerably less profitable, causing Jews to break into the field of trade. Characteristic activities of Jewish banks became the discounting and issuing of bills of exchange—financial transactions closely linked with mercantile activity. Examples of this include the banking house of Jakob Bogaty (d. 1642) in Kraków and the Nachmanowicz and Israel Złoczowski banks in Lemberg (Lwów). This corresponds to the transition also taking place in Central and Western Europe from purely commercial bills of exchange to exchange as a covert form of bank lending. When both parties to such credit transactions were Jewish, the local community leadership as well as the regional councils and the Council of Four Lands attempted to enforce rules for the rate of interest, trade in bills of exchange, and limits on competition.


Schoolchildren posing with their savings books in front of a banner advertising the PKO (Pocztowa Kasa Oszczędności; Post Office Savings Bank), Poland, ca. 1930s. The Polish and Hebrew posters in the background read: “Security and Trust.” (YIVO)

In the seventeenth century, the boards (kahals) of the Jewish communities similarly began to serve as guarantors to Jewish debtors of Christian lenders from the ranks of the clergy, church institutions, and the gentry. Over the course of that century, the kahals took out substantial loans in the community’s name, plunging the latter into serious, long-term debt. It has been estimated that the clergy and the church were creditors to at least three-quarters of these debts, a practice for which Pope Benedict XIV rebuked the Polish church in his 1751 encyclical A quo primum. By the middle of the eighteenth century, these debts amounted to between 300,000 and 722,000 złotys for Pinsk and Vilna, respectively (two of the larger communities in Poland–Lithuania); for rural communities and the Council of Four Lands, the figure was 2.5 million złotys. The level of debt of the communities and of their regional representatives was based on the comparatively low rate of interest on loans from the gentry and the church, which were given on the form of standing loans bearing a low rate of simple interest—in the eighteenth century usually 7 percent—known as widerkaf. A consequence of this practice was that the gentry and the church had an interest in supporting those Jewish institutions (often communities and regional councils) that owed them money. Thanks to the inflow of capital from non-Jewish sources, these Jewish bodies could expand their operations substantially.



At the same time, the debt service of all tax-paying community members within the framework of community liability made it possible for community leadership to enforce its sovereignty in a broad manner. To this extent, the practice of conducting credit transactions was directly connected to the development of Jewish autonomy in the Polish–Lithuanian Commonwealth. However, while communities continued to borrow money under the widerkaf system, this factor did not reflect significant growth in the banking sector among Jews. An expression of the limited economic performance of Polish Jewish bankers was the increasing tendency over the eighteenth century for the Polish aristocracy to turn to foreign bankers, for example, to the Viennese court Jews and bankers Samuel Oppenheimer (1630–1703) and Samson Wertheimer (1658–1724) for their credit needs.


Nineteenth and Twentieth Centuries

After the division of Poland and the Napoleonic Wars, the low level of development in the credit system led to the growing influence of Central and Western European financial centers and large-scale bankers on the monetary economy in Eastern Europe. Western European private banks extended large bank loans to the Russian government or were responsible for the transfer of state loans. Thus the London banking house Rothschild lent Russia 10 million pounds sterling in 1822, and the Paris branch of the same bank transferred all French state loans to Russia between 1889 and 1901. The Berlin banking house of Joseph and Abraham Mendelssohn (founded in 1795) extended substantial industrial and infrastructure loans to borrowers in Eastern Europe. Furthermore, private bankers, above all from the German-speaking realm, settled in Russia as well as in regions formerly belonging to the Polish crown. In addition, the influence of the financial center of Vienna on banking in Galicia, Bohemia, and Hungary was very strong.


Holiday card for Shavu‘ot, issued by the owner of the Jewish bank in Borszczow, Poland (now Borshchiv, Ukr.). (YIVO)
Russia.

In Saint Petersburg, the brothers Nikolai (d. 1827; converted ca. 1812) and Ludwig Stieglitz (1777–1843), natives of the Duchy of Waldeck and provisioners to the Russian army, were appointed court bankers. For decades, Ludwig Stieglitz’s son Aleksandr (1814–1884), the “last court banker of the tsars,” oversaw Russian state bonds abroad. Due not least to the restrictive settlement policies in tsarist Russia, a Jewish banking industry developed, initially on small and middling scales, in the regional centers of the Pale of Settlement (Kiev, Odessa, and Berdichev). Only after the Russian defeat in the Crimean War (1853–1856) were large Jewish banking houses established in Russian metropolises through investments by the most prominent Russian Jewish entrepreneur of his day, Evzel’ Gintsburg (1812–1878) and his son Goratsii (Horace; 1833–1909); the brothers Ya‘akov (Yakov; 1832–1909), Shemu’el (Samuil 1837–1888), and Eli‘ezer (Lazar; (1842–1914) Poliakov; Avraam Zak (1829–1893), the Russian representative of the Polish banker and industrialist Leopold Kronenberg.


Evzel’ Gintsburg, whose very considerable fortune had derived from his monopoly of the leasehold on Russia’s fiscal revenues from the production and distribution of alcohol, founded the I. E. Gintsburg private bank in Saint Petersburg in 1859, an institution that quickly assumed a leading role and represented the major European banks in Russia. He also founded the Private Commercial Bank in Kiev, a discount bank in Odessa, and a discount and credit bank in Saint Petersburg. Without investing in the railroad, Gintsburg’s credit institutions, as well as their Russian and Western European investors, made available a considerable share of the capital required for this enterprise. His son Goratsii succeeded Gintsburg as the head of the I. E. Gintsburg private bank.


Ya‘akov Poliakov, the oldest of the Poliakov brothers, who had amassed a fortune through leaseholding, which he had then successfully invested in the railroad, went on to found two leading banks in southern Russia (the Azov-Don Commercial Bank and the Don Mortgage Bank) together with his brother Shemu’el. Shemu’el also founded the Moscow Mortgage Bank. In addition to his involvement in the latter bank, Eli‘ezer Poliakov founded the first of his own banking houses in 1873. Under the leadership of Avraam Zak, the Saint Petersburg Discount and Credit Bank developed into one of Russia’s foremost credit institutions. Zak also played a prominent role as a government adviser on finance, economic, and railroad-related questions. The nationalization of the entire finance sector after the October Revolution of 1917 put an end to private banking in Russia until the collapse of the Soviet Union in 1991.


Congress Poland.

A leading role in banking in Congress Poland was played by the four sons of the Warsaw merchant Jakub Epstein (1771–1843), the private bankers Josef (1795–1876), Adam (1799–1870), Jan (1805–1885; converted) and Herman Epstein (1806–1867). Josef Epstein, above all, was successful as a private banker, his enterprise serving as a leading bank in Congress Poland from the 1830s.


“Mothers! Take Care of the Future of Your Children! Keep your savings in the Folks-bank.” Poster in Lithuanian and Yiddish. Printed by Br. Beregovskiy, Kaunas, ca. 1925. Artwork by Y. Caplan. (YIVO)

Herman Epstein’s son Mieczysław (1833–1914) trained as a banker in Berlin and Paris and at the Brussels office of the House of Rothschild. In 1871, he founded and ran Poland’s first shareholding discount bank, Bank Dyskontowy Warszawski. He was also president of the Warsaw Stock Exchange and invested in a broad range of industrial and agricultural enterprises. The German-born Leopold Antoni Fränkel (1773–1833; converted 1806), settled in Warsaw during the era of Prussian rule (1796–1806), married Atalja Teresa, one of the daughters of Shmul Zbytkower, and ran the largest private bank in the Polish capital. Together with the banking house of Epstein, he negotiated a state loan of 150 million złotys for the Kingdom of Poland in 1833.



Two other leading private banks in Warsaw were founded by German Jewish bankers during the Prussian era: the banking houses of Isaak Flatau and Isaak Simon Rosen (father of the banker and industrialist Mathias Rosen). During the era of the Duchy of Warsaw (1806–1815) and after the foundation of the Kingdom of Poland (1815), local entrepreneurs who had made their fortunes as army suppliers and through the leasing of fiscal revenues founded private banks. These included Gabriel Bergson (1790–1844), the grandson of Shmul Zbytkower; B. M. Horowitz, daughter-in-law of Shmul Zbytkower; Joseph Dawidson; and Jakob Janasz.


From the 1830s, the owners of Warsaw’s largest banking houses in the middle of the nineteenth century—Kronenberg, Rosen, Fränkel, and Epstein—invested heavily in infrastructure (railroad, shipping) and industrial projects (textiles, mining, agriculture) while at the same time maintaining their predominance in leasing fiscal revenues (tobacco monopoly, lottery). The banking house of S. L. Kronenberg was founded by Samuel Eleazar Kronenberg (1773–1826) in Warsaw during the Prussian era; under his son, Leopold (1812–1878; converted 1845), it became the largest private bank in the kingdom.


Leopold Kronenberg was also among the founders in 1870 of the Handlowy Bank (Commercial Bank), the first to be founded as a joint stock company. Along with its credit activities, the bank invested heavily in the construction of railways and in mining. Jan Bloch (1836–1902; converted 1851), who hailed from a modest family from the Radom region, played a similarly prominent role in the banking business, in the construction of railways, and in industry. With the fortune he amassed through railways in Russia, he founded a private bank in Warsaw. Bloch was also involved in founding the Handlowy Bank. He submitted a memorandum on Jewish legal equality to the Warsaw Stock Exchange, the publication of which in the daily Niva in 1886 unleashed a hefty debate.


Like Bloch, Hipolit Wawelberg (1843–1901) engaged in extensive banking and industrial and investment activities in the Kingdom of Poland and Russia; unlike other leading bankers of his generation, however, he did not convert. After receiving his professional training at his father’s bank in Warsaw and Berlin, Wawelberg founded his own banking house in Saint Petersburg in 1869, which quickly developed into one of the highest-volume private banking institutions in the Russian capital. Jewish entrepreneurs were also involved in founding the Commercial Bank in Łódź.


The total number of Jewish entrepreneurs in the credit system in the Kingdom of Poland in 1843 was 391; in Warsaw the corresponding figure was 163, of whom 13 were bankers, 20 were currency traders, and 130 were moneylenders. Of the 26 leading private banks in 1897, 15 were owned by Jews (including the banking houses of Natanson, Wawelberg, Nelken, Baumritter, and Leon Goldstand), 3 had been founded by converts (Jan Bloch, Jan Epstein, Juliusz Wertheim [1819–1901]), and Christians owned 8. Jewish predominance in the field was even further accentuated in the provinces, where 19 of the 21 banking houses were owned by Jews.


VIDEO
Jewish Folks Bank, Gródek, Poland (now Horodok, 2003), ca. 1930. (YIVO)

By World War I, the number of important Jewish banks still in private hands had diminished to two: the S. Natanson i Synowie (S. Natanson and Sons) and M. D. Szereszewski banking houses, the latter of which was headed by Rafal Szereszewski, the son of the founder, Moses David Szereszewski. The management of the joint stock banks that stepped into the breach left by the private banks, some of which continued to operate after World War I, was generally conducted by Jewish bankers, including at the Dyskontowy (Discount Bank) in Warsaw; the Warsaw Commercial and Industrial Bank, founded in 1910; the Zachodni (Western) Bank, founded in 1913; the Warsaw Commercial Bank; and the commercial bank founded by Wilhelm Landau. The same applied to the leading banking houses in the industrial metropolis of Łódź, where Jewish bankers managed the Commercial Bank (Bank Handlowy, founded 1872) and the Merchant Bank (Bank Kupiecki, founded 1897).



Hungary and the Czech Lands.

The development of credit and banking institutions in Hungary were marked by dependence on the imperial capital Vienna, as observable in the founding of the Austro-Hungarian Bank in 1878. Besides non-Jewish bankers, the houses of Arnstein and Eskeles (bankrupt in 1859) dominated much of the Austro-Hungarian credit market already in the eighteenth century, joined in the nineteenth century by the house of Rothschild. The nineteenth century saw a number of prominent banking entrepreneurs in Hungary, such as Siegmund Kornfeld (in 1878 director of the Hungarian General Credit Bank, founded 1867 in cooperation with the house of Rothschild), and Nandor Beck de Madarassy (Hungarian Ungarische Hypothekenbank, founded 1869) and Moritz von Ullmann (in 1909 director of the General Hungarian Bank).


Furthermore, in the course of the nineteenth century, Central or Western European banking houses, like the private Speyer bank (London), the French bank Société Générale du Credit Mobilier (founded 1852 by the brothers Isaac and Émile Pereire), or the Prussian banking house Mendelssohn gained substantial influence on the credit market in Hungary, Galicia, and in the Czech lands. Banking institutions in the Czech lands developed following the lines of ethnic divisions, which led to the founding of separate German and Czech banking infrastructures, with a small number of Jewish banking institutions (e.g., the bank of the Petschek family, founded 1920).

Suggested Reading

Boris Vasil’evich Anan’ich, Bankirskie doma v Rossii, 1860–1914 gg. (Moscow, 2006); Evreiskaia entsiklopediia, 16 vols. (1906–1913; rpt., Moscow, 1991), see entries on Goratsi Gintsburg, Evzel’ Gintsburg, Abram Zak, Lazar’ Poliakov, Samuil’ Poliakov, Jakov Poliakov, Rothschild, Shtiglits, Hipolit Wawelberg; Nachum Gross, ed., Economic History of the Jews (New York, 1975), pp. 211–225; Judith Kalik, “Patterns of Contact between the Catholic Church and the Jews in the Polish-Lithuanian Commonwealth: The Jewish Debts,” Scripta Hierosolymitana 38 (1998): 102–123; Benjamin Nathans, Beyond the Pale: The Jewish Encounter with Late Imperial Russia (Berkeley, 2002), see passages on Evzel and Goratsi Gintsburg; Polski słownik biograficzny (Kraków, etc., 1935– ), see entries on Jan Gottlieb Bloch, Leopold Kronenberg, Adam Epstein, Herman Epstein, Jan Epstein, Józef Epstein, Mieczyslaw Epstein; Ignacy Schiper, Dzieje handlu żydowskiego na ziemiach polskich (1937; rpt., Kraków, 1990).

YIVO Archival Resources

RG 28, Poland (Vilna Archives), Collection, ca. 1850-1939.

Author

Translation

Translated from German by Deborah Cohen