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J.P. Morgan

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J.P. Morgan (John Pierpont Morgan)

Born: April 17, 1837, Hartford, Connecticut Died: March 31, 1913, Rome, Italy Role: Banker, railroad consolidator, financial system stabilizer; patriarch of J.P. Morgan & Co. Inheritance: $10 million from his father, Junius Spencer Morgan (J.S. Morgan & Co., London)

Markman's annotation frames Morgan as what Warren Buffett, George Soros, and Jamie Dimon would look like if combined into one larger-than-life figure. He was a banker, a railroad builder, a manager of great enterprises, and an informal central bank for the United States before the Federal Reserve existed.

"The greatest factor of his success was the confidence the financial world learned to have in his trustworthiness and singleness of purpose." — Times of London

Career Arc

Education and formation: Born into a banking family (father Junius ran J.S. Morgan & Co. in London). Attended a Boston high school and studied mathematics, history, and political economy at the University of Göttingen, Germany.

1860–1871: Returned to the U.S. as American agent for his father's London business. Demonstrated breathless financial confidence early — in 1859, on a whim in New Orleans, he bought an entire boatload of Brazilian coffee without a buyer and immediately resold it for a profit.

1871: Joined Anthony Drexel to form Drexel, Morgan & Co. In 1890, upon his father's death, Morgan inherited the London operations and the firm's global connections. When Drexel died in 1893, Morgan became the sole patriarch and renamed the firm J.P. Morgan & Co.

1895: The firm became effectively the first global American bank. That year it extended a loan to Mexico to restructure national debt; it also helped the British fund the Boer War in South Africa, and helped Thomas Edison form General Electric. By 1901, J.P. Morgan & Co. was worth $1.1 billion (≈$28 billion today).

Railroad consolidations: Morgan won control of many major railroads, including the New York Central and NY, New Haven & Hartford. He was a director of Western Union, Aetna Insurance, and General Electric. His method — "Re-Morganizing" — took bankrupt companies, reorganized them, cut excess costs, and restored their credit. Henry Clews: Morgan had "the driving power of a locomotive... they have been financial physicians, healing sick corporate bodies."

1901: Brought out U.S. Steel Corporation — consolidation of lesser companies, hiring James-R-Keene to distribute 750,000+ shares to the public.

1895–1896: The U.S. Treasury's gold reserves had been depleted; Morgan organized a banking syndicate to rebuild them.

The Panic of 1907: Morgan single-handedly stopped the 1907 financial panic by pledging his personal capital and rallying other bankers — the moment that proved the need for a central bank. He also took advantage of the panic to acquire Tennessee Iron & Coal, a competitor to his U.S. Steel conglomerate. His altruism had a commercial component.

Character and Legacy

In his private life he collected rare books and works of art. The NYSE stayed closed the morning of his funeral in 1913. He left his fortune and business to his only son, John Pierpont Morgan Jr.

His family tradition: Morgan grandfather Joseph leveraged a small inheritance into taverns, a stagecoach line, a hotel, and investments in banks, canals, railroads, and steamships. Every Morgan generation multiplied the inherited stake.

The Times of London: "The life of Mr. Morgan furnished perhaps the most conspicuous example the modern world has seen of the power which the mere possession of wealth may place in the hands of an individual without assistance from official position, title, or the inherited prestige of a historic name."

The abuse he suffered: impersonal, aimed not at him personally but at what critics saw as "an iniquitous social system, a monstrous outgrowth of what they considered social evils." In 50 years of public life, "so little was found to be said in criticism of his integrity or of any individual act of his career."

Regulatory Aftermath

The Glass-Steagall Act of 1933 forced banks to separate investment banking from commercial banking. Some partners of J.P. Morgan & Co. left to form Morgan Stanley. The two firms maintained a close relationship and shared their London cousin, Morgan, Grenfell. J.P. Morgan & Co. ultimately merged with Chase Manhattan Bank to form one of the top three banks in the United States.

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