Jewish banking houses were instrumental to the process of capital formation in the United States in the late 19th and early 20th century.[11] Modern banking in Europe and the United States was influenced by Jewish financiers, such as the Rothschild family and Warburg family, and Jews were major contributors to the establishment of important investment banks on Wall Street.

In the middle of the 19th century, a number of German Jews founded investment banking firms which later became mainstays of the industry. Most prominent Jewish banks in the United States were investment banks, rather than commercial banks.[12] Jonathan Knee postulates that Jews were forced to focus on the development of investment banks because they were excluded from the commercial banking sector.[13] In many cases, the efforts of Jewish immigrants to start banks was enabled due to the substantial support of their Jewish banking connections in Europe.[14]

Several major banks were started following the mid-19th century by Jews, including Goldman Sachs (founded by Samuel Sachs and Marcus Goldman), Kuhn Loeb (Solomon Loeb and Jacob H. Schiff), Lehman Brothers (Henry Lehman), Salomon Brothers, and Bache & Co.(founded by Jules Bache).[15]

The firm of Kuhn, Loeb & Co. played a prominent role in the area of railway finance.

In the late 1860s, The Seligman family transitioned from merchandising to banking, setting up operations in New York, St. Louis, and Philadelphia as well as Frankfurt, Germany, London and Paris that gave European investors an opportunity to buy American government and railroad bonds. The firm's conservative policies allowed it to ride out the panic of 1873. [16] In the 1880s the firm provided financing for French efforts to build a canal in Panama as well as the subsequent American endeavor. In the 1890s J.& W. Seligman & Co. Inc. underwrote the securities of newly formed trusts, participated in stock and bond issues in the railroad and steel and wire industries, and invested in Russia and Peru, and in American in shipbuilding, bridges, bicycles, mining, and other enterprises. In 1910 William C. Durant of the fledgling General Motors Corporation gave control of his company to the Seligmans and Lee, Higginson & Co. in return for underwriting $15 million worth of corporate notes.[17][18][19]

Lehman Brothers entered investment banking in the 1880s, becoming a member of the Coffee Exchange as early as 1883 and finally the New York Stock Exchange in 1887.[20][21] In 1899, it underwrote its first public offering, the preferred and common stock of the International Steam Pump Company. Despite the offering of International Steam, the firm's real shift from being a commodities house to a house of issue did not begin until 1906. In that year, under Philip Lehman, the firm partnered with Goldman, Sachs & Co.,[22][23] to bring the General Cigar Co. to market,[24] followed closely by Sears, Roebuck and Company.[24] During the following two decades, almost one hundred new issues were underwritten by Lehman, many times in conjunction with Goldman, Sachs. Among these were F.W. Woolworth Company,[24][25] May Department Stores Company, Gimbel Brothers, Inc.,[26] R.H. Macy & Company,[26] The Studebaker Corporation,[25] the B.F. Goodrich Co. and Endicott Johnson Corporation.

In the 1890s, a time of severe depression, Populist politicians decried the influence of a Jewish conspiracy to control the world's gold supply at the expense of honest farmers. . The fiery orator Mary E. Lease denounced President Grover Cleveland "the agent of Jewish bankers and British gold."[27] The Populist movement almost totally collapsed after 1896, and the bitter rhetoric largely disappeared as prosperity returned.

After 1920 many banks which had their roots in the German-Jewish immigrant community began to lose their Jewish character. They no longer filled the ranks of management nor sought their capital needs from within the community. By the 1930s, Jewish presence in the private investment banking had diminished sharply.[28]

Jacob Schiff was perhaps the most influential Jewish banker in the United States at the end of the 19th century. He was president of Kuhn Loeb and financed railroads such as the Pennsylvania Railroad and the Louisville and Nashville Railroad, and he took part in the reorganization of the Baltimore & Ohio Railroad in 1896-99, and at various times aided the Westinghouse Electric Company, and the Western Union Telegraph Company.[29]