J. P. Morgan

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John Pierpont Morgan (April 17, 1837 – March 31, 1913) was an American financier, banker, philanthropist, and art collector who dominated corporate finance and industrial consolidation from the 1890s to 1913. In 1892 Morgan arranged the merger of Edison General Electric and Thompson-Houson Electric Company to form General Electric. After financing the creation of the Federal Steel Company he merged some of the largest independent steel companies into United States Steel Corporation in 1901, the first billion-dollar industrial corporation. Morgan played a key role in rescuing the U.S. Treasury in 1895 and ending the Panic of 1907. A leading art collector he bequeathed much of his famous collection to the Metropolitan Museum of Art in New York City. At the height of Morgan's career during the early 1900s, he and his partners in New York and London had financial investments in many large corporations and were accused by critics of controlling the nation's high finance. By 1901, he was one of the wealthiest men in the world.

His financial strategy, called "Morganization", shifted a company's equity from interest-paying bonds to stocks that depend on earnings. (Unlike credit default swaps, it was a financial innovation that worked.)

He was the greatest banker and financier of the Progressive Era, and his dedication to efficiency helped transform American business. Morgan redefined conservatism in terms of financial prowess coupled with strong commitments to religion and to high culture.

Early life and education

J.P. Morgan was born in Hartford, Connecticut, to Junius Spencer Morgan (1813—1890), an international banker based originally in London, and Juliet Pierpont (1816—1884) of Boston. Pierpont, as he preferred to be known, had a varied education including the Hartford public schools and the Episcopal Academy in Cheshire, Connecticut. In 1851, Morgan entered English High School of Boston, a school specializing in mathematical preparation for business careers. In the spring of 1852, an illness that was to become more common as his life progressed struck; rheumatic fever left him in so much pain that he couldn't walk. His father sent the boy to the Azores in order for him to recover. After convalescing for almost a year, Pierpont returned to the school in Boston. After graduation he attended a private school near the Swiss village of Vevey. When Morgan had attained fluency in French, his attended the University of Göttingen in order to improve his German.


Early years

Morgan entered banking in his father's London branch in 1856, moving to New York the next year where he worked at the banking house of Duncan, Sherman & Company, the American representatives of George Peabody & Company. From 1860 to 1864, as J. Pierpont Morgan & Company, he acted as agent in New York for his father's firm. By 1864-71 he was a member of the firm of Dabney, Morgan & Company; in 1871 he partnered with the Drexels of Philadelphia to form the New York firm of Drexel, Morgan & Company.

In 1895 it became J. P. Morgan & Company, and retained close ties with Drexel & Company of Philadelphia, Morgan, Harjes & Company of Paris, and J. S. Morgan & Company (after 1910 Morgan, Grenfell & Company), of London. By 1900 it was one of the most powerful banking houses of the world, carrying through many deals especially reorganizations and consolidations. Morgan had many partners over the years, such as George W. Perkins, but remained in firm charge.[1]

Railroad consolidation

Morgan's ascent to power was accompanied by dramatic financial battles. He wrested control of the Albany and Susquehanna Railroad from Jay Gould and Jim Fisk in 1869, he led the syndicate that broke the government-financing privileges of Jay Cooke, and soon became deeply involved in developing and financing a railroad empire by reorganizations and consolidations in all parts of the United States. He raised large sums in Europe but instead of only handling the funds he helped the railroads reorganize and achieve greater efficiencies. He fought against the speculators interested in speculative profits, and built a vision of an integrated transportation system. In 1885 he reorganized the New York, West Shore & Buffalo Railroad, leasing it to the New York Central. In 1886 he reorganized the Philadelphia & Reading, and in 1888 the Chesapeake & Ohio. After Congress passed the Interstate Commerce Act in 1887, Morgan set up conferences in 1889 and 1890 that brought together railroad presidents in order to help the industry follow the new laws and write agreements for the maintenance of "public, reasonable, uniform and stable rates" The conferences were the first of their kind, and by creating a community of interest among competing lines paved the way for the great consolidations of the early 20th century.

James J. Hill (1838-1916), after the failure of the Northern Pacific railroad in the depression of 1893, joined forces with Morgan and other friends to gain control of the Northern Pacific. Hill formed the Northern Securities Company to consolidate the operations of the Northern Pacific and the Great Northern, but President Theodore Roosevelt, a trust-buster, strongly disapproved and took it to court. In 1904 the federal courts dissolved the Northern Security company and the railroads had to go their separate, competitive ways. By that time Morgan and Hill had ensured the Northern Pacific was well-organized and able to survive easily on its own.

Morgan was dedicated to efficiency. He took over businesses in order to reorganize them and eliminate waste and duplication, and install the newest technologies. The process was called "Morganization". Morgan's reorganized businesses indeed all returneto profitability.

Gold crisis of 1893

In 1895, at the depths of the Panic of 1893, the U.S. Treasury was nearly out of gold. President Grover Cleveland arranged for Morgan to create a private syndicate on Wall Street to supply the Treasury with $65 million in gold, half of it from Europe, to float a bond issue that restored the treasury surplus of $100 million. The episode saved the Treasury (and made a modest profit for Morgan of $300,000) but hurt Cleveland with the agrarian wing of his Democratic party and became an issue in the election of 1896, when banks came under withering attack from William Jennings Bryan. Morgan and Wall Street bankers donated heavily to Republican William McKinley, who was elected in 1896 and reelected in 1900 on a gold standard platform.[2]

In 1902, Morgan purchased the Leyland line of Atlantic steamships and other British lines, creating an Atlantic shipping combine, the International Mercantile Marine Company. It was the largest shipping line, controlling a fifth of the traffic on the Atlantic, but he paid too much for it and it was one of the few Morgan mergers that proved not profitable. It owned the White Star Line, builder and operator of the Titanic.[3]

In 1905 Morgan acquired two railroads and sold them to the Erie Railroad. Discovering the roads were much weaker financially than he had told Eire, Morgan bought them back and spent six years restoring them to financial health,

U.S. Steel

After the death of his father in 1890, Morgan took control of J. S. Morgan & Co.; ot was renamed Morgan, Grenfell & Company in 1910. Morgan began talks with Charles M. Schwab, president of Carnegie Co., and businessman Andrew Carnegie in 1900. The goal was to buy out Carnegie's steel business and merge it with several other steel, coal, mining and shipping firms to create the United States Steel Corporation. In 1901 U.S. Steel was as the first billion-dollar company in the world with an authorized capitalization of $1.4 billion—much larger than any other industrial firm, and comparable in size to the largest railroads.

U.S. Steel aimed to achieve greater economies of scale, reduce transportation and resource costs, expand product lines, and improve distribution. In global terms it overawed much smaller German and British competitors, who had to look for protected markets or specialized niches. U.S. Steel was denounced as a monopoly by critics, as the business was attempting to dominate not only steel but also the construction of bridges, ships, railroad cars and rails, wire, nails, and a host of other products. With U.S. Steel, Morgan had captured two-thirds of the steel market. After 1901 the market share clowly declined, and U.S. Steel was never officially targeted by the trust-busters.

Labor policy was a contentious issue. U.S. Steel was non-union and experienced steel producers, led by Schwab, wanted to keep it that way with aggressive tactics to identify and root out trouble makers. The lawyers and bankers who had organized the merger, notably Morgan and the CEO Elbert "Judge" Gary were more concerned with long-run profits, stability, good public relations, and avoiding trouble. The bankers' views generally prevailed, and the result was a paternalistic labor policy. U.S. Steel was finally unionized in the late 1930s.[4]

Morgan financed manufacturing and mining companies and controlled banks, insurance companies, shipping lines, and communications systems. Through his firm came enormous funds from abroad to help develop American resources.

1907 Panic

The Panic of 1907 was a financial crisis that almost crippled the American economy. Major New York banks were on the verge of bankruptcy with no mechanism to rescue them. Treasury Secretary George B. Cortelyou earmarked $35 million of federal money to quell the storm but had no easy way to use it. Morgan now took personal charge, meeting with the nation's leading financiers in his New York mansion; he forced them to devise a plan to meet the crisis. James Stillman, president of the National City Bank, also played a central role. Morgan organized a team of bank and trust executives which redirected money between banks, secured further international lines of credit, and bought plummeting stocks of healthy corporations. A delicate political issue arose regarding the brokerage firm of Moore and Schley, which was deeply involved in a speculative pool in the stock of the Tennessee Coal, Iron and Railroad Company. Moore and Schley had pledged over six millions of the Tennessee Coal and Iron (TCI) stock for loans among the Wall Street banks. The banks had called the loans, and the firm could not pay. If Moore and Schley should fail, a hundred more failures would follow and then all Wall Street might go to pieces. Morgan decided they had to save Moore and Schley. TCI was one of the chief competitors of U.S. Steel and it owned valuable iron and coal deposits. Morgan controlled U.S. Steel and he decided it had to buy the TCI stock from Moore and Schley. Judge Gary, head of US Steel, agreed, but would there be antitrust implications that could cause grave trouble for US Steel, which was already dominant in the steel industry? Morgan sent Gary to see President Theodore Roosevelt, who promised legal immunity for the deal. U.S. Steel thereupon paid $30 million for the TCI stock and Moore and Schley was saved. The announcement had an immediate effect; by November 7, 1907, the panic was over. Vowing to never let it happen again, and realizing that in a future crisis there was not likely to be another Morgan, banking and political leaders, led by Senator Nelson Aldrich devised a plan that became the Federal Reserve System in 1913.[5]


While conservatives in the Progressive Era hailed Morgan for his civic responsibility, his strengthening of the national economy, and his devotion to the arts and religion, the left wing felt threatened by his enormous economic power. Enemies of all big banks attacked Morgan for the terms of his loan of gold to the federal Treasury in the 1895 crisis, for his financial resolution of the Panic of 1907, and for bringing on the financial ills of the New York, New Haven & Hartford RR. In 1912, the Pujo Committee, a subcommittee of the House Banking and Currency committee, alleged that the partners of J.P. Morgan & Co. along with the directors of First National and National City Bank controlled aggregate resources of $22 billion.

Personal life

Morgan was a lifelong member of the Episcopal Church and by 1890 was one of its most influential lay leaders.

In 1861, he married Amelia Sturges (1835–1862). After her death the next year, he married Frances Louise Tracy (1842–1924) on May 3, 1863 and had four children.

Morgan was physically large with massive shoulders, piercing eyes and a purple nose, because of a childhood skin disease, rosacea. His deformed nose was due to a disease called rhinophyma, Seemingly he dared people to meet him squarely and not shrink from the sight, asserting the force of his character over the ugliness of his face.[6]

Morgan died while traveling abroad in Rome. At the time of his death, he had an estate worth $80 million (approximately $1.2 billion today). His son, J. P. Morgan, Jr. inherited the banking business, but was never as influential.

Art and book collector

Morgan was a notable collector of books, pictures, and, other art objects, many loaned or given to the Metropolitan Museum of Art (of which he was president and was a major force in its establishment), and many housed in his London house and in his private library on 36th Street in New York City. J. P. Morgan, Jr. made the Pierpont Morgan Library a public institution in 1924 as a memorial to his father.[7] Morgan was a major benefactor of the American Museum of Natural History, the Metropolitan Museum of Art, Groton School, Harvard Medical School, the Lying-in Hospital of the City of New York and the New York trade schools.


  • Atwood, Albert W. and Erickson, Erling A. "Morgan, John Pierpont, (Apr. 17, 1837 - Mar. 31, 1913)," in Dictionary of American Biography, Volume 7 (1934)
  • Auchincloss, Louis. J.P. Morgan : The Financier as Collector Harry N. Abrams, Inc. (1990) art collector
  • Brands, H.W. Masters of Enterprise: Giants of American Business from John Jacob Astor and J. P. Morgan to Bill Gates and Oprah Winfrey (1999), pp 64–79, by a leading scholar
  • Bryman Jeremy, J. P. Morgan: Banker to a Growing Nation : Morgan Reynolds Publishing (2001) ISBN 1-883846-60-9
  • Carosso, Vincent P. The Morgans: Private International Bankers, 1854-1913. Harvard U. Press, 1987. 888 pp. ISBN 978-0674587298
  • Carosso, Vincent P. Investment Banking in America: A History (1970)
  • Chernow, Ron. The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance, (2001), a major biography excerpt and text search
  • Garraty, John A. Right-Hand Man: The Life of George W. Perkins. (1960)
  • Geisst; Charles R. Wall Street: A History from Its Beginnings to the Fall of Enron. (2004). online edition
  • Moody, John. The Masters of Capital: A Chronicle of Wall Street (1921) online edition
  • Morris, Charles R. The Tycoons: How Andrew Carnegie, John D. Rockefeller, Jay Gould, and J. P. Morgan Invented the American Supereconomy (2005)
  • Strouse, Jean. Morgan: American Financier. (1999). 796 pp. a major biography excerpt and text search


  1. Garraty, (1960)
  2. Chernow (2001) ch 4
  3. It is now called United States Lines. Thomas R. Navin and Marian V. Sears, "A Study in Merger: Formation of the International Mercantile Marine Company," Business History Review, Vol. 28, No. 4 (Dec., 1954), pp. 291-328 in JSTOR
  4. John A. Garraty, "The United States Steel Corporation Versus Labor: the Early Years," Labor History 1960 1(1): 3-38
  5. The episode politically embarrassed Roosevelt for years. Garraty, 1960 ch. 11
  6. Strouse 1999, pp 265-66
  7. Auchincloss (1990)