John Pierpont Morgan
John Pierpont Morgan (1837 - 1931) is one of the more controversial figures in the history of America and the world of finance. Described as a sui generis, a colossus (McCallum, p. 2), "the organizer" (Miller, 2003), "banker of last resort" (Andrews, 1999), and "the man of the hour" (Corey, p. 348), John Pierpont Morgan has also been called a "robber baron" (Andrews, 1999). Thus, it is evident that J. P. Morgan was a man who was as much praised for his actions in saving the American economy during the 1895 and 1907 crises, as he was criticized and derided for what was seen as his calculated control of the financial world and American business. Viewed from the lens of financial history, however, there can be little doubt that no person, either before or since, has left "upon the great art of money getting so important an influence." (Flynn, p. 452) Indeed, Morgan's acumen in finance and business is clearly illustrated by the fact that the U.S. government had to set up a whole array of government institutions, from the Federal Reserve to the Securities and Exchange Commission and the Department of Transportation, to carry out the market stabilizing functions that Morgan had once assumed (Andrews, 1999). But perhaps, the biggest tes
The key to Morgan's success in amassing wealth and financial control lay in his ability to mobilize funds, overseas and at home, for the various trusts he controlled. In the absence of a central bank, these trusts quickly gained in clout as financiers and bankers aided and contributed to the consolidation of many smaller, innovative companies by merging them into industrial giants (Geisst, p. 124). Therefore, it is hardly surprising that J.P. Morgan & Co., First National, and National City Bank, a trio dominated by Morgan, held a total of 341 directorships in 112 companies with aggregate capital resources (in money of the day) of between $ 22-25 million in 1912 (Andrews, 1999; Wagenknecht, p.50). Thus, Morgan's path to success explains the colossal power he possessed in the financial and business circles of America. So much so, that even the U.S. government turned to him for help on several occasions. One such occasion was in 1985, when the U.S. Treasury was facing a rapidly melting gold reserve. Morgan responded promptly by organizing a syndicate, which supplied the U.S. government with $62 million dollars in gold. This timely action shored up the reserves to a safe limit of $100 million and probably saved the dollar (McCallum, p. 2; Wagenknecht, p. 55). This action, plus the indisputable power of his holdings, makes it evident that by 1907, J. P. Morgan was seen as the first among equals in American finance and industry. Therefore, it is hardly surprising that Wall Street, banks, trusts, and the government turned to him when banks began failing in 1907. Morgan died in Rome on August 31, 1931. When he died, he left behind a legacy in investment banking and finance that is revered till today. The debates on Morgan's motives may go on. But there is one fact that cannot be contested. And, that is, that he single-handedly saved America from one of its worst financial crises. Morgan's interest in consolidating the railroads, however, was not just for profit reasons. He was genuinely interested in achieving stabilization in the interests of the American economy. Therefore, he improved railroad properties and services, increased safety and efficiency, and decreased costs to operators, shippers, and the traveling public (Destler, p. 39; Moody, p. 134; Wagenknecht, p. 56). Morgan achieved this through providing the railways with enormous amounts of capital, which they needed for investment. More important, he put a stop to all price wars, thereby prevented likely bankruptcies, ensuring in the process that the capital was put to good use (Andrews, 1999). The key to understanding how one man could possibly act as the defacto central banker for as democratic, large and influential a country like the United States, lies in not so much analyzing the actual event, but in J. P. Morgan's personal history. For, only such an approach could possible explain how he possessed the financial power to avert the collapse of one of the richest banking systems in the world.
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Approximate Word count = 2730
Approximate Pages = 11 (250 words per page double spaced)
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