Russell Sage

• Born: August 4, 1816
• Birthplace: Shenandoah, New York
• Died: July 22, 1906
• Place of death: Lawrence Beach, Long Island, New York

American banker, investor, and politician

Sage was one of the leading financiers of the nineteenth century, amassing a large fortune from the railroads and banking. His wealth was used for worthy social purposes, and after his death his widow established a prominent foundation and a women’s college.

Sources of wealth: Banking; investments

Bequeathal of wealth: Spouse

Early Life

Like most boys of his era and family economic status, Russell Sage received a brief and indifferent education and left school early. He had been born while his father Elisha Sage and mother Prudence (née Risley) Sage were trekking from Connecticut by oxcart destined for Michigan. The exact location of Sage’s birthplace is open to question and is variously given as Verona Township or Shenandoah, New York, both in Oneida County. His New England-born father supposedly could trace his ancestry in America back to the 1650’s.

After Sage’s birth, the family progressed no farther than upstate New York, where his father purchased land and began farming. The young Sage labored as a farmhand, and in his early teens he went to work at his older brother’s store. Despite his lack of formal education, he was bright and ambitious and began attending night school to learn arithmetic and accounting practices. He began trading in securities and by the age of twenty-one had amassed enough capital to buy his brother’s store. Within a relatively short time he had sold the business at a profit.

First Ventures

Sage’s business acumen resulted in the establishment, with a partner, of a wholesale grocery company in Troy, New York, in 1839. Besides the sale of meats and grains, the company expanded to include horse trading. The partners also maintained a fleet of ships on the Hudson River to transport their goods. Quickly becoming a significant citizen in his small town, Sage made his first foray into politics as a Troy alderman in 1841 and served in this capacity until 1848. In 1841 he also married his first wife, Maria Winne, a local girl.

From his initial political office he advanced to the position of Rensselaer County treasurer. By his early thirties, Sage was a force in the local Whig Party and was elected to be a delegate to the party’s national convention. He next turned his ambitions toward Congress, to which he was elected, after an initial defeat, in 1852. He won reelection two years later but did not seek another term. During the time he held office he deserved at least partial credit for urging the restoration of Mount Vernon, George Washington’s Virginia home.

Mature Wealth

By the mid-1850’s, Sage had departed political life to devote full time to building his fortune, which he accomplished through banking and by investing in railroads. His interest in railroads apparently had been sparked by a chance meeting, supposedly in a railway station, with the notorious “robber baron” and railroad manipulator Jay Gould. Sage had loaned money to a small Midwestern railroad in which he became a major stockholder. When that line expanded into a much larger regional line, the Chicago, Milwaukee and St. Paul Railroad, his investment paid off handsomely. He was also made a director and then a vice president of this rail line. Much of Sage’s fortune was made when smaller railroads in which he had invested were merged into larger companies.

During the height of the Civil War, Sage moved to New York City. He had become increasingly involved in the stock market, buying a seat on the exchange, and he is credited with being the originator of the financial instruments called “puts” and “calls” in the early 1870’s. He still retained interests in several railroads and served as a director for many of them, including the mighty Union Pacific. He also served on the boards of many large banks.

Two years after his wife Maria’s death in 1867, he married for a second time to Margaret Slocum. This same year he ran afoul of the law in a usury case and was fined, although he avoided a jail term. Sage increasingly had linked his business activities with those of Gould, and together they attempted to seize control of the elevated lines in New York City. Their method of stock manipulation was widely decried, and their partner, the well-regarded industrialist Cyrus West Field, was permanently tarred by this venture. Sage and Gould, however, not only gained control of the lines but also emerged from the bruising battle relatively untouched. Although moguls like Gould tended to be bold and audacious, Sage was more conservative in his financial dealings, preferring possibly smaller but more certain profits. Speculation was generally something he avoided, and this philosophy stood him in good stead as his vast fortune grew. His greatest reversal came during one of Wall Street’s many “panics,” during which he lost an estimated $7 million in the mid-1880’s.

Among Sage’s business dealings was his involvement with Gould in the founding of the Atlantic and Pacific Telegraph Company, which eventually merged with Western Union Telegraph Company. As he grew older he became even more conservative, preferring to be involved in loaning money to others rather than risking it himself. He was said to have made loans of several million dollars in the course of a single day. In spite of his great wealth, Sage lived a relatively spare life, except for his indulgence in raising racehorses, and he could even be called somewhat miserly in his everyday domestic dealings. His wife was credited with being the instigator of much of the couple’s charitable activities, and she obviously did not share her husband’s penuriousness. As did many of their rich contemporaries, the Sages owned appropriately plush homes on New York’s Fifth Avenue and on Long Island.

In December, 1891, Sage was the target of a bomb-thrower named Henry Norcross, who attempted to murder Sage in his office after being denied a large sum of money. Although he was seventy-five years old, Sage survived his injuries well, but his attacker was killed. Another man who was injured in the attack sued Sage, but despite being awarded court judgments he never collected any compensation.

At the time of Sage’s death in 1906, just two weeks short of his ninetieth birthday, he was said to be worth about $70 million (estimates range from $60 to $80 million), equivalent to many hundreds of millions in 2010. His wife Margaret outlived him by twelve years and died at the age of ninety. The couple had no children, and Margaret was the beneficiary of Sage’s entire estate. She donated much of this bequest to various charities and built the Russell Sage Memorial Church. In addition, several million dollars was used to establish the Russell Sage Foundation in 1907, and Margaret financed the founding of Russell Sage College for women in Troy, New York, in 1916. She also contributed heavily to the Emma Willard School, which was also in Troy.

Legacy

Perhaps Russell Sage’s greatest achievement in his lifetime came from the moneylending in which he was involved late in his career. This activity may well have helped to stabilize the financial health of corporations in the late nineteenth century. His “invention” of the financial instruments “puts” and “calls” was probably a positive influence on the smooth operation of the stock market. His more lasting legacy was the use to which his widow Margaret Sage put her large inheritance, especially the establishment of the Russell Sage Foundation and Russell Sage College. The former has been instrumental in forming beneficial social policies and the latter has educated generations of women.

Bibliography

Bowman, John S., ed. The Cambridge Dictionary of American Biography. Cambridge, England: Cambridge University Press, 1995. Contains an article about Sage.

Columbia Encyclopedia. 6th ed. Detroit: Gale, 2009. Contains an article about Sage.

Crocker, Ruth. Mrs. Russell Sage: Women’s Activism and Philanthropy in Gilded Age and Progressive Era America. Bloomington: Indiana University Press, 2006. Chronicles Margaret Sage’s rise from relative poverty to great wealth and the effects of her philanthropy on early twentieth century American social policies.

Glenn, John M. Russell Sage Foundation, 1907-1946. 2 volumes. New York: Russell Sage Foundation, 1947. Reprint. n.p.: Kirk Press, 2007. A compendium of Sage Foundation activities and publications during its first forty years of operation.

Ingham, John N., ed. Biographical Dictionary of American Business Leaders. Westport, Conn.: Greenwood Press, 1983. Contains an article on Sage.

Patton, Julia. Russell Sage College: The First Twenty-five Years, 1916-1941. Troy, N.Y.: The Press of Walter Snyder, 1941. The early history of the school established by Mrs. Russell Sage.

Sarnoff, Paul. Russell Sage: The Money King Who Banked the Tycoons. New York: Ivan Obolensky, 1965. A biography of Sage that speculates that his second marriage was only for appearance’s sake and that his widow established Russell Sage College for women to defy her husband’s memory; Sage presumably did not believe women should receive higher education.

Spears, George James. Russell Sage College: The Second Quarter Century, 1941-1966. Troy, N.Y.: Birkmayer, 1966. The continuing saga of the school founded by Mrs. Russell Sage.