J.P. Morgan was one of the most influential bankers and financiers in late 19th/early 20th century America. He consolidated capital and financing for major industries like railroads and steel, helping to modernize the American economy. Morgan bailed out the U.S. economy during panics in 1873, 1893, and 1907 by arranging financing from other bankers. His consolidation of capital under his control and reputation for prudent, non-speculative investing helped build trust with investors and grow his financial empire significantly. Morgan remained a powerful figure in American finance until his death in 1913.

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Businesses that changed the World
J.P. Morgan
• As Cosimo de’ Medici had shown four centuries earlier,
reputation counts, and in the late nineteenth century, no
figure in American finance had a more towering reputation
than J. Pierpont Morgan.
• Without holding a government title, J.P. Morgan would
preside over a massive transfer of capital from Europe to
the U.S., and without ever manufacturing a thing, he would
help create the modern industrial economy.
• J.P. Morgan was a pillar of Episcopal Church, and a
generous supporter of good causes.
• Morgan spent # 1 million to build the Lying Inn maternity
hospital in New York City and gave $ 100,000 a year to it for
the rest of his life.

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Businesses that changed the World
J.P. Morgan
• Morgan was in many ways more a meritocrat than an
aristocrat. He was constantly searching for competent,
interesting, original people, and when he found them, he
would provide them the resources to do what they were
best at, whatever their background.
• Morgan was the great financier of his time, one of America’s
most public men. Presidents consulted him. On his
frequent European trips, he consorted with lords and ladies.
At home, he could barely walk across the street from his
office at 23 Wall street without causing at least a ripple of
speculation.

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Businesses that changed the World
J.P. Morgan
• As an adult, Morgan would make decisions that would move
markets and change the face of industry, but the mechanics
of the decisions remained a mystery even to his intimates.
• He helped save the U.S. and perhaps the global economy
three times – the panics of 1873 and 1893 and the Wall
Street crisis of 1907 – and all three bailouts further
enhanced his stature and reputation and made the world
more willing to trust its money with J.P. Morgan.
• To make that assurance Junius Spencer Morgan (Father of
J.P.) had first to train his Son in all the right attitude :
 The first lesson was : No speculative investments. And
Junius Morgan, who seems to have spared his Son no
criticism, taught it with a vengeance.

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Businesses that changed the World
J.P. Morgan
 “How could you be so reckless and crazy?” he’s said to
have once screamed at Pierpont when he ventured into five
shares of the Pacific Mall and Steamship Company. The
lesson was driven home when the Son held on the shares
against his father’s will and eventually had to sell them for a
loss.
 The second lesson flowed from the first: A man who was
prone to speculation could not be trusted with the capital of
others because, finally, trust was built on character and
reputation.

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Businesses that changed the World
J.P. Morgan
• And from these two lessons, everything else flowed as well:
To be trustworthy, you had to be prudent. To be prudent
meant exercising control. And to exercise control, you had
to concentrate capital.
• Put all three together, and you have the process that came
to be known as Morganization.
• The railroads were the first to be Morganized. They were
entering the period of their greatest growth as J.P. Morgan
turned 30, in 1867, and thus the time of their greatest need
for investment capital.
• To raise the money to finance the building of the railroads,
the Morgan Bank sold bonds, primarily to European
investors and mostly through its London offices.

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Businesses that changed the World
J.P. Morgan
• The influence of the Morgan Bank spread throughout the
railroad industry: By the start of the new century, Morgan
had some 5000 miles of rail under his financial control.
• Thus, too, the investors who had trusted in the Morgan
Bank were repaid for their faith: Concentrated control meant
that capital could be put to work reproducing itself, rather
than endlessly fending off competition. And thus the power
of the bank (and of Morgan) grew nearly exponentially.
• After a century after J.P. Morgan’s death, his imprint is still
over the New York Stock Exchange Big Board.
• In 1901, Morgan created the syndicate that paid Andrew
Carnegie $ 480 million for his steel company – Carnegie
himself got $ 240 million of the deal.

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Businesses that changed the World
J.P. Morgan
• Carnegie Steel, in turn, became the centerpiece of perhaps
the greatest of Morgan’s industrial creations: U.S. Steel, the
first billion-dollar corporation and an industry giant for
decades to come.
• While the deals multiplied, the name on the door simplified.
He had started his career in 1857 with Duncan, Sherman,
and Company in New York City; moved on to George
Peabody & Co. and from there to head the firm named for
his father: J.S. Morgan.
• In 1864, J.S. Morgan had folded into Dabney, Morgan, &
Co. and later Drexel, Morgan & Co. In 1985, the firm
became simply J.P. Morgan and Co.

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Businesses that changed the World
J.P. Morgan
• John Kenneth Galbraith has noted that panics settled upon
the American economy about every 20 years throughout the
19th century, just about the length of time it took for the
public to forget about the last one.
• The panic of 1873 had been ignited by the failure of a
leading Philadelphia bank, Jay Cooke and Company, but
Cooke himself had fallen victim to an overheated economy
and deteriorating conditions in Europe, which still exercised
a powerful influence over America’s financial life.
• Morgan had played the pivotal role in turning around the
1873 panic, arranging for a bond issue that allowed the
federal government to meet its financial obligations.

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Businesses that changed the World
J.P. Morgan
• Morgan’s team had been assessing financial institutions,
deciding which should be left to fail and which were strong
and well-managed enough to merit help.
• As the panic were on, Morgan himself began to wear down.
He’d scarcely eaten for three days and was suffering from a
terrible cold when the head of the Stock Exchange crossed
the street to Morgan’s office to tell him that the exchange
would have to close.
• Morgan shook his head in response: Shutting down the
stock exchange, he said, would lead to a widespread
depression.

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Businesses that changed the World
J.P. Morgan
• Instead, he gathered the leading bankers in New York
together in his library – the men who controlled the money
that Wall Street lived off of – and presented them with a stark
proposition: “We need $ 20 million in the next ten minutes,
Morgan said, “or the stock exchange will have to close
early.”
• For added emphasis, Morgan is said to have locked the
library doors, vowing no man would leave until all the money
was pledged.
• As news of the rescue circulated through the Stock
Exchange, Morgan could hear a roar across the street. The
mighty and feared Jupiter was being given an ovation by the
jubilant floor traders.

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Businesses that changed the World
J.P. Morgan
• A century that had begun with John Pierpont Morgan as the
absolute czar of American finance would end with Alan
Greenspan filling that role – the difference not only in degree
but in kind.
• Congress caught the spirit of a people who had decided
Jupiter’s time had passed. What had seemed a grand
benevolence suddenly had become a stranglehold on credit
and capital.
• In December 1912, already past his 75th birthday, J.P.
Morgan appeared before the panel. Not surprisingly, he
didn’t yield an inch. Less than four months later, he died.

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Businesses that changed the World
J.P. Morgan
• Mr. Morgan was born for leadership, for constructive work.
With his unmatched abilities, with his character and the
confidence he inspired, and with his power to organize and
command, it was inevitable that he should be the leader, the
builder-up in the domain on American finance.