This article is about the financier. For the bank and financial services company, see
JPMorgan Chase.
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 during his time. In 1892 Morgan arranged the merger of
Edison General Electric and Thompson-Houston Electric Company to form General Electric.
After financing the creation of the Federal Steel Company he merged the Carnegie Steel
Company and several other steel and iron businesses to form the United States Steel
Corporation in 1901. He bequeathed much of his large art collection to the Metropolitan Museum of Art in New York City and to the
Wadsworth Atheneum of Hartford,
Connecticut. At the height of Morgan's career during the early 1900s, he and his partners had financial investments in many large
corporations. By 1901, he was one of the wealthiest men in the world. He died in Rome,
Italy, in 1913 at the age of 75, leaving his fortune and business to his son, Jack Pierpont Morgan.
Early life and education
J.P. Morgan was born in Hartford, Connecticut to Junius Spencer Morgan (1813—1890) and Juliet Pierpont (1816—1884) of Boston, Massachusetts. Pierpont, as he preferred to be known, had a varied education due in part
to interference by his father, Junius. In the fall of 1848, Pierpont transferred to the Hartford Public
School and then to the Episcopal Academy in Cheshire, boarding with the
principal. In September 1851, Morgan passed the entrance exam for English High
School of Boston, a school specialising in mathematics to prepare young men for careers in commerce.
In the spring of 1852, illness that was to become more common as his life progressed struck; rheumatic fever left him in so much pain that he could not walk. Junius booked passage for Pierpont
straight away on the ship Io, owned by Charles Dabney, to the Azores in order for him to recover. After convalescing for almost a year, Pierpont returned to the school in
Boston to resume his studies. After graduating, his father sent him to Bellerive, a school
near the Swiss village of Vevey. When Morgan had attained fluency in French, his father sent him
to the University of Göttingen in order to improve his German.
Attaining a passable level of German within six months, Morgan traveled back to London via Wiesbaden, his education complete.
Career
Early years
J.P. Morgan in his earlier years.
Morgan entered banking in his father's London branch in 1857, moving to New York City
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 1864-72, 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. During the American
Civil War, Morgan was approached to finance the purchase of antiquated rifles being sold by the army for $3.50 each.
Morgan's partner re-machined them and sold the rifles back to the army for $22 each. The military knew it was buying back its own
guns, so the so-called 'scandal' turned out to be more about government inefficiency than any chicanery by Morgan (who never even
saw the guns and acted only as a lender). Morgan himself, like many wealthy persons, including future Democratic president Grover
Cleveland, avoided military service by paying $300 for a substitute.[1]
After the 1893 death of Tony Drexel, the firm was rechristened J. P. Morgan
& Company in 1895, 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.[2]
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. He was heavily
involved with railroad tycoon James J. Hill and the Great Northern Railway.
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.
Morgan's process of taking over troubled businesses to reorganize them was known as "Morganization".[3] Morgan reorganized business structures and management in order to return them to
profitability. His reputation as a banker and financier also helped bring interest from investors to the businesses he took
over.[4]
In 1895, at the depths of the Panic of 1893, the Federal Treasury was nearly out of
gold. President Grover Cleveland arranged for Morgan to create a private syndicate on
Wall Street to supply the U.S. 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 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. [5]
In 1902, J. P. Morgan & Co. purchased the Leyland line of Atlantic steamships and other
British lines, creating an Atlantic shipping combine, the International Mercantile Marine Company, which eventually became the owner of
White Star Line, builder and operator of RMS
Titanic.
Later years
After the death of his father in 1890, Morgan took control of J. S. Morgan &
Co (re-named Morgan, Grenfell & Company in 1910). Morgan began talks with Charles
M. Schwab, president of Carnegie Co., and businessman Andrew Carnegie in 1900
with the intention of buying Carnegie's business and several other steel and iron businesses to consolidate them to create the
United States Steel Corporation.[6] Carnegie agreed to sell the business to Morgan for $480 million.[6] The deal was closed without lawyers and without a written contract. News of
the industrial consolidation arrived to newspapers in mid-January 1901. U.S. Steel was founded later that year and was the first
billion-dollar company in the world with an authorized capitalization of $1.4
billion.[6][7]
U.S. Steel aimed to achieve greater economies of scale, reduce transportation and
resource costs, expand product lines, and improve distribution.[6] It was also planned to allow the United States to compete globally with Britain and Germany. U.S. Steel's size was
claimed by Schwab and others to allow the company to pursue distant international markets-globalization.[6] U.S.
Steel was regarded 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, and Schwab was confident that the company would soon hold a 75
percent market share.[6] However, since 1901 the
businesses' market share dropped, never reaching Schwab's dream of 75 percent market share.
Morgan also financed manufacturing and mining businesses and controlled banks,
insurance companies, shipping lines, and communications systems. Through his firm came
enormous funds from abroad to help develop American resources.
Enemies of banking attacked Morgan for the terms of his loan of gold to the federal
government 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 and
Hartford Railroad. In December 1912, Morgan testified before the Pujo Committee, a
subcommittee of the House Banking and Currency committee. The committee ultimately found that the partners of J.P. Morgan &
Co. along with the directors of First National and National City Bank controlled aggregate resources of $22.245 billion.
Louis Brandeis, the former U.S. Supreme Court Justice, compared this sum to the value of
all the property in the twenty-two states west of the Mississippi River.[8]
In 1900, Morgan financed inventor Nikola Tesla and his Wardenclyffe Tower with $150,000 for experiments in radio. However, in 1903, when the tower structure
was near completion, it was still not yet functional due to last-minute design changes that introduced an unintentional defect.
When Morgan wanted to know "Where can I put the meter?", Tesla had no answer. Tesla's vision of free power did not agree with
Morgan's worldview; nor would it pay for the maintenance of the transmission system. Construction costs eventually exceeded the
money provided by Morgan, and additional financiers were reluctant to come forth. By July 1904, Morgan (and the other investors)
finally decided they would not provide any additional financing. Morgan also encouraged other investors to avoid the project.
At the height of Morgan's career during the early 1900s, he and his partners controlled directly and indirectly assets worth
$1.3 billion. [9]
Personal life
Self-conscious about his
rosacea, Morgan hated being photographed.
Morgan was a lifelong member of the Protestant Episcopal
Church, and by 1890 was one of its most influential leaders.
In 1861, he married Amelia Sturges, known as Mimi (1835–1862). After her death the next year, he married Frances Louisa Tracy,
known as Fanny (1842–1924) on May 3, 1863. They had four children:
- Louisa Pierpont Morgan (1866–1946) who married Herbert Penny Livingston Satterlee <ref: J. Pierpont Morgan,
Satterlee, Herbert L., New York: The Macmillan Company, 1939> (1863–1947),
- Jack Pierpont Morgan (1867–1943),
- Juliet Morgan (1870–1952), and
- Anne Morgan (1873–1952).
He often had a tremendous physical effect on people; one man said that a visit from Morgan left him feeling "as if a gale had
blown through the house."[10]
Morgan was physically large with massive shoulders, piercing eyes and a purple nose, because of a childhood skin disease,
rosacea.[11] His
grotesquely deformed nose was due to a disease called rhinophyma, which is the end result of
acne rosacea. As the deformity worsens, pits, nodules, fissures, lobulations, and pedunculation contort the nose into grotesque
cosmetic problems. This condition inspired the taunt "Johny Morgan's nasal organ has a purple hue."[12] Surgeons could have shaved away the rhinophymous growth of sebaceous tissue
during Morgan's lifetime, but as a child Morgan suffered from infantile seizures, and it is suspected that he did not seek
surgery for his nose because he feared the seizures would return. His social and professional self-confidence were too well
established to be undermined by this affliction. It appeared as if 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.[13] He was known to dislike publicity and hated being photographed; as a result of his
self-consciousness of his rosacea, all of his professional portraits were retouched.
Morgan smoked dozens of cigars per day and favored large Havana cigars dubbed Hercules'
Clubs by observers.[14]
His house on Madison Avenue was the first electrically lit private residence in New York. His interest in the new technology
was a result of his financing Thomas Edison's Edison Electric Illuminating Company in 1878.[15]
An avid yachtsman, Morgan owned several sizable yachts. The well-known quote, "If you have to ask the price, you can't
afford it" is commonly attributed to Morgan in response to a question about the cost of maintaining a yacht, but the actual
wording of the original statement is a bit obscure.[16]
Morgan was scheduled to travel on the maiden voyage of RMS Titanic, but canceled
at the last minute.[17] The Titanic was owned and
operated by the White Star Line, and Morgan had his very own private suite and promenade deck on the ship.
Morgan died while traveling abroad in Rome. On March 31,
1913, just shy of his seventy-sixth birthday, Morgan died in his sleep at the Grand Hotel. Nearly
4,000 condolence letters were received there overnight and flags on Wall Street flew at
half-staff. The stock market was also closed for two hours when his body passed through
Wall Street. [18]
At the time of his death, he had an estate worth $68.3 million ($1.39 billion in today's dollars), of which about $30 million
represented his share in the New York and Philadelphia banks. The value of his art collection was estimated at $50
million.[19]
His remains were interred in the Cedar Hill Cemetery in his birthplace of Hartford,
Connecticut.
His son, J. P. Morgan, Jr., inherited the banking business.[20]
Art, book and gemstone 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, near Madison Avenue in New York City. His son,
J. P. Morgan, Jr., made the Pierpont
Morgan Library a public institution in 1924 as a memorial to his father and kept
Belle da Costa Greene, his father's private librarian, as its first
director.[21] Morgan was painted by many artists
including the Peruvian Baca Flor and the Swiss-born American Adolfo Müller-Ury, who
also painted a double portrait of Morgan with his favourite grandchild Mabel Satterlee that for some years stood on an easel in
the Satterlee mansion but has now disappeared.
The J.P. Morgan Library and Art Museum
By the turn of the century JP Morgan had become one of America's most important collectors of gems and had assembled the most
important gem collection in the U.S. as well as of American gemstones (over 1000 pieces). Tiffany & Co. actually assembled his first collection — which basically implied that their "chief
gemologist" George Frederick Kunz built the collection for JP Morgan — which was
exhibited at the World's Fair in Paris in 1889. The exhibit won two golden awards and drew the attention of important scholars,
lapidaries and the general public.[22]
George Frederick Kunz then continued to build a second, even finer, collection which was exhibited in Paris in 1900.
Collections have been donated to the American Museum of Natural
History in New York where they were known as the Morgan-Tiffany and the Morgan-Bement collections.[23] In 1911 Kunz named a newly found gem after his biggest customer:
morganite.
A number of U.S. gemstones from the Morgan collection, considered the best in the world.
Morgan was a benefactor of the American Museum of Natural History, the Metropolitan Museum of Art, Groton School,
Harvard University (especially its medical
school), Trinity College, the Lying-in
Hospital of the City of New York, and the New York trade schools.
Morgan was also a patron to photographer Edward S. Curtis, offering Curtis $75,000
in 1906, for a series on the Native Americans. Curtis eventually
published a 20-volume work entited "The North American Indian."[24] Curtis went on to produce a motion picture In The Land Of The head Hunters (1914), which was
later restored in 1974 and re-released as In The Land Of The War Canoes. Curtis was also famous for a 1911 Magic
Lantern slide show The Indian Picture Opera which used his photos
and original musical compositions by composer Henry F. Gilbert.[25]
Legacy
His son, J. P. Morgan, Jr. took over the business at his father's death, but was
never as influential. As required by the 1933 Glass-Steagall Act, the "House of
Morgan" became three entities: J.P. Morgan and Co. and its bank, Morgan Guaranty Trust; Morgan Stanley, an investment house; and
Morgan Grenfell in London, an overseas securities house.
The gemstone Morganite was named in his honor. [26]
Popular culture
In his satirical history of the United States, It All Started with Columbus,
Richard Armour commented that "Morgan, who was a direct sort of person, made his
money in money... He became immensely wealthy because of his financial interests, most of which were around eight or ten
percent... This Morgan is usually spoken of as 'J.P.' to distinguish him from Henry
Morgan, the pirate."
Bertolt Brecht the German writer based the figure of Pierpont Mauler the beef tycoon
in his play Saint Joan of the Stockyards on Morgan.
In the musical How to Succeed in Business Without Really
Trying, the character J. Pierrepont Finch is portrayed as a rising, powerful businessman; his character is possibly an
allegory of Morgan's. The character Mr. Bratt alludes to the nominal similarity in the beginning of the show: "Pierrepont. Say,
maybe that ought to be J. Pierrepont Finch."
J. P. Morgan appears in E. L. Doctorow's novel Ragtime, and in the broadway musical inspired by it of
the same name.
J.P. Morgan is mentioned, by name, by Oliver Warbucks in the
broadway musical, Annie.
A highly fictionalized version of J. P. Morgan appears in Matt Fraction and
Steven Sanders' graphic novel The Five Fists of
Science.
It has been said that Morgan canceled his suite on the Titanic for its maiden voyage because his French mistress retained him
in Paris. As a result, he missed the boarding in Cherbourg and was very angry. But he realized a few days later that his mistress had saved his
life.
J.P. Morgan may have been inspiration for The Simpsons character Mr. Burns.
See also
Notes
- ^ Zinn, Howard. A People's History of the United States. New York: Perennial, 2003. p.255
ISBN 0060528370
- ^ Garraty, (1960)
- ^ Timmons, Heather. "J.P. Morgan: Pierpont would not approve.",
BusinessWeek, Nov 18, 2002.
- ^ Morganization: How Bankrupt Railroads were Reorganized (HTML). Retrieved on 2007-01-05.
- ^ Chernow (2001) ch 4
- ^ a b c d e f Krass, Peter. "He Did It!(creation of U.S. Steel by J.P. Morgan)", Across the
Board (Professional Collection), May 2001.
- ^ "J. P. Morgan," Microsoft® Encarta® Online Encyclopedia 2006
- ^ Brandeis (1995), ch. 2
- ^ Carosso (1970) p. 42
- ^ John Pierpont Morgan and the American
Corporation, Biography of America
- ^ findagrave.com
- ^ Kennedy, David M., and Lizabeth Cohen. The American Pageant. Houghton
Mifflin Company: Boston, 2006. p541.
- ^ MORGAN: American Financier;by Jean Strouse;copyright 1999;pages
265-66
- ^ Chernow (2001)
- ^ Chernow (2001) Chapter 4
- ^ J.P. Morgan Yacht Quote
- ^ Chernow (2001) Chapter 8
- ^ Modern Marvels episode "The Stock
Exchange" originally aired on October 12, 1997
- ^ Chernow (2001) ch 8
- ^ Cedar Hill Cemetery, John Pierpont Morgan
- ^ Auchincloss (1990)
- ^ Morgan and his gem
collection, In George Frederick Kunz: Gems and Precious Stones of North America, New York, 1890, accessed online February 20,
2007
- ^ Morgan and his
gem collections, donation to AMNH, In George Frederick Kunz: History of Gems Found in North Carolina, Raleigh, 1907, accessed
online February 20, 2007
- ^ The North American Indian
- ^ The Indian Picture Opera - A Vanishing Race
- ^ Morganite, International Colored Gemstone Association, accessed online January 22,
2007
References
- 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) ISBN 0-8109-3610-0
- Brandeis, Louis D. Other People's Money and How the Bankers Use It. Ed. Melvin I.
Urofsky. New York: Bedford Books, 1995. ISBN 0-312-10314-X
- 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 Harvard University Press (1970)
- Chernow, Ron. The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance, (2001) ISBN
0-8021-3829-2
- Fraser, Steve. Every Man a Speculator: A History of Wall Street in American Life HarperCollins (2005)
- Garraty, John A. Right-Hand Man: The Life of George W. Perkins. (1960) ISBN 978-0313201868
- Geisst; Charles R. Wall Street: A History from Its Beginnings to the Fall of Enron. Oxford University Press. 2004.
online edition
- John Moody; The Masters of Capital: A Chronicle of Wall Street Yale University Press, (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) ISBN 978-0805081343
- Strouse, Jean. Morgan: American Financier. Random House, 1999. 796 pp. ISBN 978-0679462750
External links
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