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Thursday, July 19, 2018

More often than not during the past 100 years, succession to the top job at Goldman Sachs (GS) has been a blood sport.

A careful reading of former Goldman employee Greg Smith’s infamous New York Times op-ed article — along with a twist of conspiracy theory — suggests that the jockeying to replace Lloyd Blankfein, who has been Goldman’s chief executive officer since June 2006, is well under way.

It’s also possible that Smith may have unwittingly, or perhaps wittingly, given a boost to one candidate previously thought to have been out of the running: J. Michael Evans, head of the firm’s global growth markets.

Despite what Goldman would have you believe about how carefully orchestrated its leadership changes have always been, the firm has rarely had an orderly succession. Consider the exit of Waddill Catchings, the first person from outside the family to run Goldman Sachs. In 1930, partners Sidney Weinberg and Walter Sachs decided that Catchings, whose creation of the Goldman Sachs Trading Corporation had by then cost the firm $13 million and nearly put it out of business, had to go.

Sachs first met with Catchings in Chicago to clip his wings, and Catchings apologized for having taken gambles without the approval of all partners. A few months later, Sachs and his brother Arthur decided to buy Catchings out of his contract for $250,000. “We had made up our minds to ask him to retire,” Walter Sachs recalled in an oral history in the 1950s. “This was because it had become clear to us that we just didn’t think alike, that he had come as near ruining the name and the reputation of the firm as any man could do.”

The Sachses selected Weinberg to be the senior partner, and he went on to become one of the greatest investment bankers of his generation. Yet he, too, refused to leave the stage gracefully in favor of his successor, Gus Levy. So in the mid-1960s, Levy forced Weinberg to move from Goldman’s headquarters in downtown Manhattan to an office in the Seagram’s Building in Midtown. But even kept out of the day-to-day flow, Weinberg would not go quietly, and until his death in 1969 he made sure Levy knew that he was still responsible for pay and promotions at Goldman.