J.P. Morgan: How One Man Financed America [Transcript]

J.P. Morgan: How One Man Financed America is a fast-paced and informative portrait of America’s most prolific banker — a man so powerful that when he died, the NYSE paused all trading for half a day out of respect.
J.P. Morgan: How One Man Financed America

J.P. Morgan: How One Man Financed America is a fast-paced and informative portrait of America’s most prolific banker — a man so powerful that when he died, the NYSE paused all trading for half a day out of respect.

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Examine the success of any titan of industry, whether it be Carnegie and his mountains of steel, or Rockefeller and his sea of oil, and you will find a coveted green commodity fueling their industry … Money. And in the 1800s, one man controlled more of it than any other; John Pierpont Morgan. To understand the vast scope of Pierpont’s influence, we must first rewind to a time long before America was an economic powerhouse with a 21 trillion-dollar GDP. It’s all too easy to forget that America was once an emerging market; one that, not too long ago, was almost entirely dependent upon British capital. So, without further ado, let’s explore the story of how a combination of timing, genius, and connections made J.P. Morgan the most powerful man in the history of American finance.

Typically, we begin someone’s life story at birth, but the story of JP Morgan cannot be told without mentioning the influential family that brought him up. Pierpont’s grandfather, John Pierpont, was a radical and fiery preacher, and would introduce his grandson to the power of forceful speaking — a skill that would later pay dividends for the future captain of industry. But a far more towering and instrumental figure in Pierpont’s life, was his father; Junius Spencer Morgan.

Junius was a highly-respected businessman, in both the American and European banking industry. And he largely took it upon himself to shape his son into his own ‘cool’ and ‘collected’ image; grooming the young boy to inevitably join the family banking business. No other man comes close to having the same kind of impact on Pierpont’s life, than his beloved father. Although, their father-son relationship is probably best described as “tough love”. But, we’re getting ahead of ourselves.

John Pierpont Morgan was born into this privileged life on April 17th, 1837, with every advantage that could be given to prepare him for what was to come. But it wasn’t all sunshine and rainbows for the young Morgan. He was a sickly child. As an infant, he suffered from seizures, and as he grew older, was often plagued with rheumatic fever, scarlet fever, and painful migraines. But certainly his most visible medical complication was his acne rosacea – which severely inflamed and ruptured the blood vessels of his nose. Lacking treatment in the mid-1800s, his condition progressively worsened; transforming his nose from “unsightly” to a disfigured red and purple monstrosity. Although you certainly wouldn’t know that by looking at most pictures of JP Morgan, which is the way he wanted it to be. According to his great grandson, any time Morgan commissioned a portrait or photo of himself, he demanded that his gargantuan nose be touched-up, after-the-fact. Essentially, the 1800s equivalent of Photoshop.

Pierpont’s various medical problems required isolation, turning him into somewhat of a loner. Unable to play outside like most of the other kids, Pierpont stayed inside, where he spent his time studying and learning to read financial statements. In the rare moment that he wasn’t absorbing information, Pierpont found comfort in playing the card game, Solitaire — a pastime that became one of his life-long pleasures. Back in the classroom, Pierpont was a natural leader. He would often challenge his teachers, and, using logic, talk them down from punishing him. As he went through school, his leadership skills caught the eye of his seemingly impossible-to-please father, Junius, who would focus his energies on helping Pierpont cultivate his promising potential for the business world. Influenced by his father’s success, Pierpont became fascinated with successful men, and made a habit of collecting autographs from presidents and other famous figures. His fascination with powerful leaders led him to write a school essay on Napoleon Bonaparte. And although his parents tried to introduce him to American heroes, Pierpont was solely impressed with Napoleon, and heavily-inspired by the general’s insatiable appetite for global power — an idea that struck a chord with the future leader.

On October 1st, 1854, Pierpont’s father, Junius, was made partner at the London-based financial firm, George Peabody & Company. Soon after, the Morgan family relocated to London. But Pierpont, then just 17, wouldn’t be staying very long. Concerned about his son’s mood swings and hot temper, Junius sought to instill principles of discipline and responsibility. Wanting only the best for Pierpont, Junius sent him to the Institut Sillig, a Swiss boarding school on Lake Geneva, 600 miles away. It wouldn’t be his first time far apart from his family. When he was only 15, Junius sent Pierpont to the remote islands of the Azores to help him recover from rheumatic fever. Alone, all by himself, he’d spend an entire year recovering from his illness. Perhaps this was part of his father’s unique parenting plan to help “toughen” Pierpont; helping the boy to become independent.

After school, Pierpont began his career on Wall Street, aiming to profit from the lucrative, emerging American market. With the help of his father, Pierpont secured a starting position as an unpaid clerk with a small banking firm in New York. One of his chief responsibilities was providing overseas intelligence to his father in London; sending the latest American economic and political updates. For 33 years, Pierpont reserved Tuesday and Friday evenings to write to his father, who not only absorbed his son’s lengthy letters, but cherished them. With his new position on Wall Street, Pierpont gained invaluable first-hand experience in the business world. But his tireless ambition soon outgrew that small firm, and in 1861, started his own company, J Pierpont Morgan & Company.

One of the dividends of working in the banking industry was Pierpont’s introduction to New York’s elites, allowing him to mingle with those of high-society. It was at one of these gatherings when one young woman caught his interest and deposited a fierce love in his heart; Amelia Sturges. Amelia, or Mimi, as she was more commonly known, came from a banking family as well, and when Pierpont first met her, he was mesmerized. Over the next 3 years, Pierpont and Mimi were inseparable. And as his business grew, he used his new wealth to buy her a ring from Tiffany’s, planning to propose. But their lives would soon take a turn for the worst. Preparing for a wedding in a few months, Mimi approached Pierpont that summer with a lingering cough. And although Mimi said she was too sick for a wedding, Pierpont rushed to marry the woman of his dreams in October of 1861. By this time, she had become so frail that Morgan had to carry her down the stairs to her own wedding. Hoping that a warmer climate would cure her cough, Pierpont took his bride on an extended honeymoon to the Algiers. Concerned, Morgan hired the best doctors that money could buy. But as her condition deteriorated, physicians confirmed Morgan’s worst fear: Tuberculosis, a disease almost always a death sentence in those days. Sadly, it became evident that no amount of money could change her fate. Although J.P. Morgan was as attentive as could be, Mimi Morgan died on February 17th, just 4 months after their wedding.

Pierpont was heartbroken, and returned to New York a shell of who he once was. Coping with the pain of loss, Morgan threw himself wholeheartedly into his work. With long days and strict discipline, the next two years were consumed with growing his reputation as a trustworthy American banker. It was during this time, however, that America would go to war … with itself. North fighting South, the Civil War would soon reach Morgan when Congress passed the Conscription Act in March of 1863, drafting all able-bodied men between 20 to 45 to enlist in the Union Army. But John Pierpont Morgan was too far busy and important to dirty his hands with something as trivial as war. Following in the footsteps of other men of means like Andrew Carnegie and John D. Rockefeller, Morgan paid $300 to be removed from enlistment and instead have a substitute fight in his place. He would fondly refer to his stand-in as, “the other Pierpont Morgan”.

But Pierpont wouldn’t sit idle on the sidelines of battles — the business of war was too lucrative for such nonsense. As the battles raged on, Morgan found a way to profit from the carnage; trading Union bonds. He recognized that bond prices seesawed in value following the news of each battle’s outcome between the Union and Confederate Army – the ability to foresee the winner of a battle meant big profits. Along with Union bond speculation, Morgan also found other ways to monetize the war. In what would later become known as the Hall Carbine Affair, the 24-year-old Pierpont was approached with a unique business proposal from a New York lawyer named Simon Stevens. Stevens proposed that Morgan lend him $20,000 at 7 percent interest to purchase approximately five-thousand antiquated rifles, called Hall Carbines. Widely regarded as outdated, yet still serviceable, Stevens could purchase the rifles from the Union army at the bargain price of just three-dollars-and-fifty-cents apiece. Using Morgan’s loan, Stevens’ plan was to modernize the rifles, by upgrading their cartridges; which would improve their range and accuracy. After upgrading the weapons at the cost of only seventy-five cents more per rifle, Stevens would then flip the guns – selling them back to the army, and using the proceeds to repay Morgan’s loan with interest. The plan worked to a tee. Following the defeat of the Union army at the First Battle of Bull Run, the North suddenly found itself desperate for rifles. Reluctantly, the army agreed to repurchase the newly modified weapons at the steep price tag of $22 each — despite selling these same guns for just three-dollars-and-fifty-cents only about a month prior. Two years later, a Congressional committee overseeing government contracts labelled those involved in the Morgan-backed deal as being: “Worse than a traitor”.

These types of deals didn’t make Pierpont popular, however, especially with his father – for Junius lived by a conservative and non-speculative business philosophy; born from his first-hand experience during the Panic of 1857. “Slow and sure should be the motto of every man.”, he preached.

Despite his hectic deal-making schedule, Pierpont always made the time for religion, and devoutly attended Saint George’s church in Manhattan. On one of these Sunday mornings, Pierpont met Frances Louisa Tracy. Fanny, as was her nickname, wasn’t immediately interested in Pierpont, but over time, Morgan wore her down. By the end of 1864, the two were an item. Although he had waited 3 years to marry Mimi, he waited just a few months to marry Fanny on May 31st, 1865. 9 months and 10 days later, Fanny gave birth to Pierpont’s first daughter, Louisa. Two years later, his first son was born, J.P Morgan Junior.

At this time in America, wealth and prosperity was on everyone’s mind. The end of the Civil war pushed the country into a multi-decade boom, later dubbed as the Gilded Age; the Age of Enterprise. From 1870 to 1910, America’s population and per capita income more than doubled, as robber barons and business tycoons took the nation by storm. Names like Carnegie, Rockefeller, and Vanderbilt were on everyone’s lips, as entire industries were birthed seemingly overnight. But as the country grew, so did its need for capital. Backed by the old-world money that Pierpont’s father was working with back in London, JP Morgan was perfectly positioned on Wall Street. It was the epitome of being in the right place at the right time. The only problem was that JP Morgan was finished. At age 33, with the world ready to beat down his door, JP Morgan was tired. It looked like retirement was the only option for him to cure his weary body. But his father would have none of it. Junius had worked too hard in London to cultivate ties with America to let his son stop now. If health was the issue, then he would graciously allow his son some time off, but Pierpont would not be permitted to leave the banking business altogether. Junius Morgan arranged a new partnership for Pierpont. One of his contacts with substantial ties in London was a Philadelphia banker by the name of Anthony Drexel, a man who was 11 years Pierpont’s senior — a conscious decision by Junius to surround the young Morgan with older and wiser minds. Drexel’s American firms were already raking-in three-hundred-and-fifty-thousand a year, and had established trade partnerships overseas. Armed with five million dollars of seed capital from Junius, Pierpont and Drexel formed a new venture, creating Drexel, Morgan & Company in 1871. As per his father’s wishes, the younger Morgan agreed to join the partnership, under one condition: a desperately needed vacation. Pierpont wasn’t thrilled at the prospect of going back into the office: he was exhausted. In fact, throughout the financier’s life, he would regularly take vacations for several months each year, desperately needing to recharge. He often joked that he could accomplish 12 months of work in just 9 months time.

After returning from a 15-month vacation in Europe and Africa, JP Morgan purchased a 368-acre property in Highland Falls on the Hudson River, north of New York City. This sprawling estate, known as Cragston, would be where he escaped the noise of the city and raised his growing family; the Morgans added another two daughters in the next couple of years. Unsurprisingly, Pierpont cared about excellence in every area of his life. He was as precise with his gardens as his finances. It was well-known that he cultivated his own roses and took special care to only select the best flowers for his stately home. And just like pruning his plants on the weekend, he was careful to avoid weeds that threatened to sprout in his business. Back at his office on 23 Wall Street, he demanded that women only be allowed in the building once a year, on New Year’s Day, when the markets were closed. His partner had a female secretary who had to be stationed across the street, so as not to distract the busy businessman. That level of focus led to unheard of success in the banking business. While the country’s median annual income was just five-hundred-dollars a year, Morgan was regularly making over five-hundred-thousand a year.

But it was more than his financial genius that made him so successful; it was also his intimidating image, which was only exacerbated by his bulbous and deformed nose. His fierce gaze was described as like staring into the light of an oncoming train. He towered over men, standing an impressive six-foot-two, a full 8 inches over the average man’s height at the time. Morgan used his daunting appearance to bend his opponents to his will, especially those in the railroad industry. Unlike most businesses with relatively low barriers to entry, starting a railroad could cost anywhere from seventeen to thirty-five million dollars. Fortunately for Drexel, Morgan & Company, there were just a handful of banks that could finance projects of such magnitude. But despite the high startup costs, the railroad industry had overexpanded; with several companies offering lines that competed with one another, all trying to service Americas’ never-ending growth. During this time, it was common for one person to control the interests of an entire industry. Carnegie was forging more steel than all of Great Britain. Rockefeller was refining as much as 90% of America’s oil. But the rails, on the other hand, were quite the opposite. Whereas other industries were largely monopolized, many railroad owners dealt with cut-throat competitors. It wasn’t uncommon to have multiple companies lay rail lines along the same route to compete with one another, driving down margins. But whereas others saw over-expansion, Morgan saw opportunity. Instead of passively owning stock in railroad companies, Morgan would play an active role in the corporate management of rails he invested in. By taking a position in a company, and joining its board of directors, Morgan could reshuffle the company’s leadership and then direct the company the way he saw fit. The practice grew so popular that it later became known as “Morganization”, although today, we know it as activist investing. It was said that, despite serving as a director on many boards, the true chairman was always wherever Pierpont sat. On one rare occasion, when a railroad president challenged his leadership, JP Morgan responded: “Never forget, your railroads belong to my clients.”

Over time, Pierpont gained an unparalleled reputation as an honest and forthright dealmaker. And at a time when government regulatory agencies didn’t exist, he was known as “the sheriff” in the Wild West of trains. Having Morgan on your board was a deterrent; one that would cause corporate raiders and robber barons to think twice about attempting a hostile takeover. Brokering larger and larger deals, Morgan perfected the art of consolidation, as his growing reputation helped to attract even more business for his firm. So when two railroad giants threatened to take down the rail industry and crash the entire American economy, it’s no surprise that Morgan’s power was called into action. But the scale of this deal required Pierpont to set the stage in a way that had never been tried before … the stakes could not have been higher.

If you’ve ever heard the phrase “work hard, play hard”, it was lived out with JP Morgan. Although he spent long hours in the office, he exercised just as much effort in his leisure time. In 1882, JP Morgan joined the New York Yacht Club, and purchased a 185 foot iron yacht, which he called the Corsair. He often used the vessel to commute to and from work in the city, so that he wouldn’t be tied down by the rail schedule. In luxurious fashion, Pierpont also hosted extravagant parties, as he cruised up and down the Hudson. Although the Corsair was mainly used for pleasure, its staterooms would serve as the eccentric boardroom for Morgan’s next meeting.

Two of the largest railroads in the country, The Pennsylvania and The New York Central, were battling each other at every turn, with their margins growing thinner by the day. But what these companies didn’t realize was how their territorial wars were affecting the American economy. British investors, who had sunk $1.5 billion into the industry, nervously watched as the railroads edged ever closer to bankruptcy. Before long, the British were quickly pulling money out of US rail stocks, at the concerning rate of $25 million a year. This was particularly dangerous, considering railroad companies consisted of over two-thirds of America’s publicly traded companies at the time. If the two railroads collapsed, the domino effect could have a catastrophic impact on the infant American economy.

JP Morgan devised a daring plan that required agreements on both sides of the tracks, but neither rail president looked ready to concede. So Morgan invited both of them to come aboard the Corsair, where they sailed the Hudson river, debating the details of Morgan’s ambitious proposal. In his typical unconventional and controlling style, Morgan refused to dock until both parties agreed to his terms – effectively holding the railroad presidents hostage. In the end, they wearily agreed to stay out of each other’s territories. This landmark victory became known as the Corsair Pact. For Morgan’s help in brokering the transaction, he was generously rewarded with a $100,000 commission, along with a million-dollar profit on his rail bonds.

A few years later on April 8th, 1890, Morgan’s father, Junius, tragically passed away in a carriage accident. And while his father’s death was awful news, it wasn’t entirely negative, as Pierpont inherited the lion’s share of his fortune, totaling 15 million dollars. Although painful for Pierpont, it was also, perhaps, liberating. With his father gone, Morgan was now free to invest and spend how he wanted, finally enabling him to step-out from his father’s overcasting shadow. Overnight, JP Morgan’s wealth more than doubled. His first order of business was to immediately purchase an even bigger yacht, which he very creatively named the Corsair II. When asked about the cost of building such a mega-yacht, legend has it that the banker answered; “If you have to ask, you can’t afford it.” Few prices in life were too high for JP Morgan. The opulent new Corsair II spared no expense; boasting real fireplaces, unique fine china, oak panelling, full-size tubs, and central heating. The yacht would cost him $100,000 a year in maintenance alone. Despite the steep price, Morgan considered it well worth the investment, allowing for a true escape from the office and the bombardment of telegrams. And although Morgan had plenty of cash to keep himself afloat, the market would soon poke holes in his business. Enter The Gold Panic of 1893.

At the time, the U.S. dollar was tied to the gold standard; which allowed for anyone to convert their paper money into physical gold. Because notes like the twenty or hundred-dollar bill were essentially thought of as “vouchers” for gold, the government always kept a minimum reserve of one-hundred-million dollars worth of gold coin and bullion. It wasn’t a legal mandate, but keeping it above that line meant the public still trusted the government. But in February of 1893, the government’s reserves plunged well below the hundred-million mark, as European investors exchanged their U.S. currency for the precious metal. The run on gold sparked widespread panic, as people began to ask themselves; “If the U.S. government ran out of gold, would paper money really be worth anything?” And as the country’s reserves drained-out in a steady flow, banks and businesses began to fold around the country, seemingly in unison.

With millions now unemployed, major corporations turned to the same institutions that helped them in the first place: the bankers of Wall Street. But the bankers had their hands full, especially JP Morgan. His darling industry, the rails, were collapsing — with 192 lines declaring bankruptcy in one year alone. Eventually, a third of all train tracks in America would be shuttered, impacting the entire economy from coast-to-coast. The people of the time would call this period “The Great Depression”, a name that wouldn’t be redefined until 1929. Soon, JP Morgan would once again prove why he was known as “The American Napoleon”, as he turned his mighty will to the problem at hand. His reputation as a great consolidator would prove him to be the right man for the job. Intuitively, he knew that merging the railroads was their only chance at survival, a move which left many wondering if the banker held too much power over this great American industry. But when railroads came to him for help, he would refuse — unless, he was given full control. This wasn’t the time for waiting around — as all great businessmen know, this was a time for decisive action.

After taking control of a rail line, Morgan used his financial wizardry to strengthen the company’s balance sheet; refinancing its debt and issuing new shares to raise more capital, among other strategies in his financial playbook. Over time, Morgan slowly pulled the brakes on the out-of-control railroad industry. And for his efforts, Drexel, Morgan and Company was rewarded with a secure hold on all future business with major rail lines, not to mention some very handsome commissions.

Out of this 20-month financial feat, JP Morgan walked out with more than just money, he also gained new notoriety and fame. His increasingly impressive reputation took him farther than he had gone before, eventually landing him in front of the highest office in the land.

Although Pierpont was able to halt the railroad catastrophe, America’s Treasury was still in crisis mode. Gold was the foundation of the entire US economy. And that foundation was quickly crumbling. In response, JP Morgan came up with a plan to restore America’s gold reserves, which he sent directly to President Grover Cleveland. Confident that his plan would work, Morgan retreated to his library to play solitaire, waiting for the eventual “Yes” from the President. Within an hour, the reply came back … “No.” President Cleveland instead opted to do what the government had always done in the past; sell bonds to the American public. But Pierpont knew that issuing bonds would take too long, when the government would default on its debts within 3 weeks. Without delay, JP Morgan rushed from New York to Washington, determined to meet with the President, a man he considered his equal. If the President was the king of the land, then Morgan was unquestionably the emperor of finance. At first, the President denied seeing him, to which Pierpont replied with an intense, intimidating tone: “I have come down to Washington to see the President – and I’m going to stay here until I see him.” By this time, the situation was growing worse by the hour, as the government was running the serious risk of going bankrupt – leaking $2 million a day from its gold reserves and showing no signs of slowing.

The morning after his arrival, Morgan was ushered-in to see the President and his several cabinet members. But the President and his men were not inclined to listen to the Wall Street banker. Luckily for Morgan, the treasurer received a call in that meeting that their reserves had dropped to $9 million. Pierpont saw his opportunity and jumped. He told the men in the room that he personally knew of a draft for $12 million that, if presented that day, would wipe out the US government by 3 o’clock that afternoon. Realizing their dire situation, President Cleveland turned and asked: “Have you anything to suggest, Mr. Morgan?” Morgan offered a syndicate of U.S. and European investors who could work together to invest gold back into the government’s coffers. Using an outdated loophole from an earlier Civil-War law, Morgan demonstrated how the Treasury could buy gold from Morgan’s private syndicate, building-up their dwindling reserves and plugging the leak. More importantly, the loophole enabled the President’s administration to bypass Congress, a convenient way for Cleveland to make an immediate decision. In spite of the negative publicity of the White House working with Wall Street, Cleveland signed the contract with Morgan’s syndicate. Within 22 minutes in New York City, and 2 hours in London, the private sale of the government’s gold-bonds were completely sold. Disaster now averted, Pierpont had successfully bailed out the United States government – rescuing the country from the brink of collapse and restoring faith in the American economy.

But his motivations were not entirely altruistic, as he pocketed a hefty commission for his services in facilitating the transaction – raising questions as to whether Morgan’s behavior resembled more a profiteer than a patriot. With this amount of influence, many were concerned whether one man like Morgan should hold so much power. There’s no clearer example of this than when JP Morgan was approached by Andrew Carnegie in 1901. Carnegie Steel was at its peak, netting $40 million a year, but Andrew Carnegie was ready to retire from the business world. So he wrote on a scrap of paper the amount he’d be willing to sell his business for, and had it delivered to Morgan’s office. Taking just one glance at the $480 million-dollar price tag, JP Morgan agreed on the spot, marking the largest business transaction in history, as well as minting Carnegie as the richest man in the world at the time. Later, when celebrating the deal, Carnegie remarked that he should’ve asked for an extra hundred million dollars. “If you had, I would’ve paid it.”, replied Morgan.

Using Carnegie Steel, Morgan formed the United States Steel Corporation and continued his consolidation-spree, effectively controlling 60 to 70 percent of the country’s total production. In doing so, he also created the world’s first billion-dollar company, U.S. Steel, then valued at $1.4 billion dollars; equal to a staggering 7 percent of America’s GDP. In addition to his iron-grip on the steel industry, Morgan’s newest venture, Northern Securities, had bought-up and controlled two of the largest railroad companies in the nation. This meant that Morgan owned one-third of all rail lines, at a time when 60% of America’s stock market capitalization consisted of railroad corporations.

People began to whisper and speculate that Morgan owned the United States. One of those who believed the whispers was the President himself; Theodore Roosevelt. Previous presidents, like Cleveland and McKinley, were very much in favour of the mega-corporations taking over the country — or, at least, they didn’t seem to mind. In stark contrast, Roosevelt was anti-monopoly, and believed that the size of government should grow with the size of American industry. Needless to say, Morgan and the president weren’t off to a great start. Using the Sherman Anti-Trust Act of 1890, Roosevelt worked hard to tear down companies like Northern Securities and U.S. Steel. At a time when there were no problems with politicians receiving bribes from big business, like free rail passes, President Roosevelt was resolutely against those old-world practices. Roosevelt saw JP Morgan as part of the problem with America’s bumpy economy. The President did not want giant corporations to go unchecked. Morgan and his Northern Securities would be Roosevelt’s example to the whole world. Without consulting his presidential cabinet, Roosevelt publicly declared that Northern Securities was being investigated for illegal acts under the antitrust law. And for the second time in his life, Morgan rushed over to the White House demanding to see the President. He claimed that he should have been given time to fix the problem and warned before this hasty move. “That is precisely what we did not want you to do”, replied Roosevelt.

Eventually, Northern Securities would be broken-up in 1904 as the Supreme Court overturned Morgan’s appeal. JP Morgan resented the government’s intrusion into big business. Upon hearing that President Roosevelt was travelling to go hunting in Africa one year, Pierpont remarked: “Good. I hope the first lion that meets him does his duty.”

Although the two did not see eye-to-eye, President Roosevelt, or Teddy, as he was also known, had to admit that Morgan possessed a talent for repairing entire economies. This talent would be tested again in 1907, when the stock market panicked after the failure of the United Copper Company, which pulled down the entire mining industry with it, along with two brokerage houses, and a bank — all within one weekend. As it happened, the stock market panicked again and a bank-run ensued. One of the strategies used for slowing the drain of capital from the nation’s banks was to have the tellers count money slowly, as customers rushed to withdraw their money; purposefully dragging-out each encounter with depositors. Perhaps this played a role in making the lines so long in the historic bank-run photos we know today. If the public continued pulling money out at the same time, the ramifications would be felt for years.

President Roosevelt would need to set his differences aside, as he knew there was only one man who could solve this problem: John Pierpont Morgan. His administration called for Morgan to step-in, extending twenty-five million dollars of government funds to be used at Pierpont’s disposal. Amidst the crisis, John D. Rockefeller offered half of his personal fortune to Morgan if it would help save the country from a depression. Just like the business conducted on his yacht, Morgan had to set the stage. He arranged for heads of the nation’s largest banks and trusts to meet in his private library to work together to solve the national crisis. Morgan reportedly laid out his plans for the bigger banks and trusts to invest in their smaller competitors. He then locked the door and played Solitaire, while the bankers negotiated amongst themselves. Reporters anxiously camped outside, waiting to hear the news.

By early morning, the leaders of the nation’s largest banks and trusts had come to a resolution, just like the Corsair Pact so many years before. Morgan helped organize the capital needed to bailout the failing banks. And by the end of the week, another crisis was averted. JP Morgan was hailed a hero. Walking down Wall Street, bystanders cheered. But this would be the very last time that one man, especially a Wall Street banker, held that much influence over an entire country. And even though Morgan was semi-retired and well into his mid-70s, he continued to face opposition for his unparalleled influence.

By 1912, Morgan was commanded to appear before the Pujo Committee, a Senate-led group that was investigating the extensive financial power held by a small handful of all-mighty bankers. And although the group was investigating numerous banks, it soon became evident that JP Morgan was the main target in the government’s crosshairs. But Pierpont remained adamant that he had done nothing wrong. When asked if he chased power, he claimed that power was never something that he wanted. Widely covered by the media, Morgan used the platform to show off his diplomatic superpowers. “Is not commercial credit primarily based upon money or property?” a lawyer on the sub-committee asked. “No, sir, the first thing is character.” Morgan cleverly replied. “Before money or property?” the lawyer countered. “Before money or anything else.” Morgan responded. Spectators roared with applause.

Ultimately, the committee’s findings revealed that Morgan single-handedly controlled more than twenty-two billion dollars of capital through his 112 corporations and 341 directorships; effectively equating to more than two-thirds of the country’s GDP. And although the senators were unable to find Morgan guilty of any illegal wrongdoings, the Pujo committee eventually paved the way for the establishment of the Federal Reserve and the permanent fixture of income taxes.

Despite being able to help America avoid multiple economic depressions, Morgan couldn’t seem to escape his own mental depression. Pierpont suffered from nervous breakdowns throughout his career, and grew increasingly anxious as he grew wealthier, arguably because he had more to worry about losing: not just for himself, but for his clients. Throughout his life, Morgan would confine himself to his bed, usually several days each month to recover from his various health complications. Despite being the toughest banker who ever lived, Pierpont was thin-skinned. Worsening his manic-depressive episodes was the public’s negative personification of the financier, portraying him as a greedy businessman. He certainly didn’t enjoy seeing newspaper cartoons portraying him as a devilish and greedy monster. Now, in his final years, he endured great personal struggles; dealing with tremendous criticism, all while trying to cement his legacy as America’s most successful and patriotic financier.

By this point, Pierpont lived to excess; draining massive amounts of sherry and port, while smoking dozens of cigars a day. He was said to eat a breakfast so large that it would kill a horse. It was certainly no aid to his health when he learned about the shipwreck of one of his investments; the Titanic – a vessel which he owned through his shipping trust. Interestingly, it was only a last-minute fluke that he and his multi-million dollar art collection weren’t on the fateful ship when it went down on April 14th, 1912.

Perhaps it was all too much for the 75 year-old titan. While traveling in Rome, on March 31st, 1913, Morgan passed away, shortly after midnight. His son J.P Morgan Junior, attributed his death to the Pujo committee – which caused his father so much distress. Out of respect, Wall Street not only flew its flags at half-mast but closed the New York Stock Exchange until noon. At the time of his death, his personal net worth was calculated to be around 80 million dollars, approximately half of which was in his art holdings alone. Andrew Carnegie commented on Morgan’s passing, upon hearing about his paltry fortune, which paled in comparison to other titans such as himself, remarking; “And to think that he wasn’t even a rich man.” Most captains of industry believed he was far richer than he actually was.

But Morgan’s legacy extends far beyond the weight of his wallet. After his passing, many of his paintings were donated to the Metropolitan Museum of Art, where they can still be viewed today. However, art only comprised around 5% of his various collections. He also boasted a portfolio of other invaluable items; such as Napoleon’s watch, Leonardo da Vinci’s notebooks, and a 5-page letter from George Washington, among many more countless treasures. His personal library was opened to the public in 1924, and it remains a testament to the amount of influence that one man can aggregate in his lifetime.

The principles that we take away from JP Morgan’s life are, of course, about influence and power. No matter who met him, everyone could appreciate Pierpont Morgan’s unrestrained and fierce honesty. Even Morgan’s arch rival, President Roosevelt, couldn’t help but praise the man: “Mr. Morgan was politically opposed to me, but whenever I was brought into contact with him, I was struck not only by his very great power, but by his sincerity and truthfulness.”

* * *

J.P. Morgan F.A.Q


How did J.P. Morgan Help America financially?

In addition to consolidating and controlling several railroads and industries, J.P. Morgan led in resupplying the U.S. Treasury’s gold reserve during the depression that followed the panic of 1893 and organized the financial community in averting a financial collapse after the market panic of 1907.

Who financed J.P. Morgan?

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. Carnegie agreed to sell the business to Morgan for $480 million.

How did J.P. Morgan acquire his wealth?

He made a fortune in railroads. In 1898, Morgan formed the Federal Steel Company. Again he merged with other steel companies, forming the huge United States Steel Corporation. He made another fortune in steel.

Is the Morgan family still rich?

The family’s 132 living descendants are worth billions — with the estimated net worth of several exceeding $1 billion — thanks to seven trusts established in 1934 by John D. Rockefeller Jr., the oil baron’s son, to protect and invest the family assets.

Why was J.P. Morgan hated?

Morgan used his influence to help stabilize American financial markets during several economic crises, including the panic of 1907. However, he faced criticism that he had too much power and was accused of manipulating the nation’s financial system for his own gain.

How did J.P. Morgan treat his workers?

J.P. Morgan did not treat workers well overall being the direct cause of falling wages and lack of regard for the health and safety of the workforces of his many companies, especially steel workers and miners, many of whom died while working at his facilities.

How much was J.P. Morgan worth in today’s money?

At the time of his death, his estate was worth $68.3 million. Half of that value was attributable to his share in New York and Philadelphia banks. His estate was worth the same as roughly $1.39 billion in modern dollars if calculated based on CPI.

Why J.P. Morgan is a robber baron?

He headed an interlocking series of trusts that controlled many of the major industries in the United States. And he created General Electric and helped form U.S. Steel, International Harvester and AT&T. Newspapers frequently attacked him as a robber baron.
J.P. Morgan was a Captain of Industry, because throughout his career he helped America financially in times of need. He helped struggling businesses and railroad companies, and throughout the process he also made millions. He soon became the wealthiest man of the time.

What was wrong with J.P. Morgan nose?

When he was a young man, the Wall Street tycoon was afflicted with acne rosacea, a skin condition that left his nose the color and texture of a strawberry. A constant traveler, Morgan had sought medical help in every section of the world.

What United States President was forced to borrow money from bank or JP Morgan?

In February 1895 President Grover Cleveland was forced to strike a deal with J.P. Morgan which saved the United States Gold Reserves. At the time the United States was in the midst of a terrible depression and Cleveland’s popularity was rapidly dwindling.


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