How Jewish Bankers Helped Change the Balance of Geopolitical Powers in 1905
A chance conversation over dinner in London between a despondent baron from Japan and a Jewish investment banker resulted in an investment that helped Japan win the Russo-Japanese War. This victory in a little-known but geopolitically significant war made Japan the first Asian nation to defeat a European nation, and brought Japan onto the world stage for the first time. It also allowed Jewish bankers in New York to retaliate against Russia for its policy of anti-Semitism and its frequent pogroms against the Jews, afforded Jews protection during the Holocaust, but also resulted in some negative effects.
In the early 1900s, London was the financial capital of the world, so when Japan needed to raise money to continue fighting Russia in the Russo-Japanese War – a war in which Japan won every battle but which Russia could afford to prolong due to its deep pockets – it sent Baron Korekiyo Takahashi there to raise money raise ten million pounds sterling (the current equivalent of about two billion dollars) to buy a fleet to defend themselves against an anticipated Russian naval attack. Takahashi received a tepid commitment for about half the money Japan needed to remain in this first “modern” war.
There were several reasons for this lack of support. At the time, so-called “white” nations were not inclined to support the efforts of a “non-white” nation, especially when tackling a power such as Russia. The Czar (Nicholas II) knew this, and persisted in fighting despite being advised by his Imperial Minister of War, Alexei Kuropatkin, that the war was a lost war; in every battle, Japan repeatedly demonstrated its superior planning and military technology. But Nicholas II would not concede. It was not merely a matter of pride, and fear of losing its superpower status in the eyes of the world; the real motive behind the war was a desire to stir up patriotism and distract the population from all that nonsense about revolution, which was all but inevitable.
Despite how many times Takahashi had been rejected in his quest to raise the funds that Japan needed, he had the good fortune to be seated at a dinner in London beside Jacob Schiff, head of the investment bank Kuhn, Loeb & Co., head of the American Jewish Committee and founder of other organizations that supported Jewish causes. For some time, Schiff had been looking for ways to retaliate against Russia for its treatment of Jews at the time when anti-Semitism was the official government policy. (In addition to pogroms, these included the May Laws that limited where Jews could live to the Pale of Settlement, restricted their professions and how and when business could be transacted, and instituted quotas on university acceptance.) Supporting Japan and making it possible for this little-known island nation to defeat a great superpower was how he would make his point. On the spot, Schiff committed to raising all the funds that Takahashi sought.
When Schiff returned to New York, he assembled his Jewish banker friends and told them that by supporting Japan, they would demonstrate to Russia that they could not continue to persecute Jews without experiencing consequences.
The money Schiff provided made it possible for Japan to thwart Russia’s “surprise” naval attack, but it still took the negotiating skills of President Theodore Roosevelt (for which he became the first American to win the Nobel Peace Prize) to bring about the end to the war. But Schiff’s actions had other beneficial results. In addition to receiving unprecedented (for a foreigner) honors from the Emperor of Japan, Schiff’s actions led Japan to open its doors to Jews fleeing from persecution in the 1930s, particularly from Germany and Russia.
Schiff’s benevolent action, however, had one unintended consequence: in Russia, it led to even greater persecution of the Jews.