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This Month in Business History

Banker J. P. Morgan Born

Arnold Genthe, photograph. Morgan, J.P., portrait painting.1935. Library of Congress Prints & Photographs Division.

J.P. Morgan was a titan of American business. In the late 19th and early 20th centuries his position and connections put him squarely in the middle of the development of American industry.

John Pierpoint Morgan was born April 17, 1837, in Hartford, CT. His father, Junius Spencer Morgan, was a businessman of note who had high expectations for his son Pierpoint and started training him at a very early age. He worked at his father’s bank, Peabody, Morgan & Co., and later the firms of Duncan, Sherman & Company and Dabney, Morgan, and Company. Later he helped to form the firm Drexel, Morgan & Company which was renamed J. P. Morgan & Company after the death of Anthony Drexel. Over time, his influence was so great that one wouldn’t be totally wrong in thinking that J.P. Morgan was banking.

However, Morgan was not content just in the banking world – he had many interests elsewhere. Adolph Ochs, publisher of the Chattanooga Times, secured a loan with J.P. Morgan’s help and managed to save the New York Times. His personal and business interests extended to steel and railroads. He purchased U.S. Steel from Andrew Carnegie and merged it with a few other firms to create United States Steel in 1901. Over 100 years later that firm is still going strong. He also played a role in the fight over control of the Albany & Susquehanna Railroad, a situation which I touched on in the post about Jay Gould and James Fisk Jr..

Morgan had an interest in, and saw the potential in electricity. He and Thomas Edison had a long history which began when Morgan helped to finance Edison’s early experiments in electricity. In 1881, Morgan decided to go further and had Edison electrify his house. Then the next year, Morgan had him electrify his office building. Like other early adopters who often experience problems, even Morgan wasn’t immune. His problem turned out to be the very noisy small steam engine that kept the power running. In the end, the solution to this problem ended up benefiting more than just Morgan because it led to something bigger and better – moving away from an individual power supply to a more universal supply. Eventually Edison, with Morgan’s help, began the process to electrify the city of New York.

It was the world of banking and high finance where Morgan was the most visible and made the biggest impact. Twice he put his power behind efforts to stabilize the economy. First, in 1873, he coordinated with the Rothschilds (a large and long standing banking family) to supply gold to the U.S. Treasury during the Panic of 1873 and he stepped in again in 1907. The Panic of 1907, sometimes referred to as the Bankers’ Panic, was brought on when many banks found themselves on the edge of going bankrupt with no way to save themselves. J.P. Morgan stepped in and pledged his own money as well as convincing other wealthy individuals to do the same in order to stabilize the banking system. However, like many wealthy and powerful men, Morgan had his detractors and they would soon have their day.

Morgan, along with other financiers of the day, would come under increasing scrutiny. A resolution introduced by Congressman Charles Lindbergh Sr. in 1912 called for a probe of Wall Street’s power. This led Congressman Arsène Pujo of Louisiana to obtain congressional authorization to form a subcommittee of the House Committee on Banking and Currency. The Money Trust Investigation (Investigation of Financial and Monetary Conditions in the United States under House Resolutions Nos. 429 and 504) AKA the Pujo Committee, met between May 1912 and January 1913 and was tasked to investigate the so-called “money trust,” a small group of Wall Street bankers that was seen to exert powerful control over the nation’s finances. While there were others that were of interest, J. P. Morgan was a major figure, so his testimony was a very big deal and garnered a lot of interest.

Morgan died in Italy on March 31, 1913, but his legacy lives on. In 1933 as a result of the Glass–Steagall Act, what was known as the House of Morgan was broken up into 3 separate firms – J.P. Morgan & Co., which later became Morgan Guaranty Trust; Morgan Stanley; and Morgan Grenfell in London. But Morgan’s companies did not really go away. In 1990 Morgan Grenfell was acquired by Deutsche Bank and both J.P. Morgan Chase and Morgan Stanley are still around, though battered a bit after the financial crisis of 2007. You cannot look at the history of banking in the United States without studying J.P. Morgan, nor can you study the development of business and industry without running into him.

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