The House of Morgan

by Ron Chernow

  At first, Jack’s stay in London was meant to be temporary, but it took a few years before tangled personnel problems at J. S. Morgan and Company were straightened out. In 1897, Pierpont’s brother-in-law Walter Hayes Burns died and was replaced by Jack’s cousin Walter Spencer Morgan Burns. The senior Burns’s death left the London bank short of experienced hands. Young Walter’s sister Mary married Lewis Harcourt, the first Viscount Harcourt, spawning a branch of “British Morgans” who were lineal descendants of Junius Morgan. From this blue-blooded lineage would spring Lord William Harcourt, a postwar Morgan Grenfell chairman. A photograph of Pierpont at a house party at the Harcourt estate, Nuneham Park, in 1902 shows Mary Harcourt seated next to King Edward VII.

  During his London exile, which lasted until 1905, Jack often seemed embarrassed by his remoteness from Pierpont. To inquiries as to whether Pierpont would attend Edward VII’s coronation, he confessed sheepishly, “He is not easy to keep track of and I have almost given up.”3 (In the end, Teddy Roosevelt made Jack a special attaché to the Westminster Abbey coronation.) Once when Jack wished to join his father for a naval pageant at Spithead, he lamented that Pierpont “will probably not think of asking us.”4 He was often excluded from business deals and had to read about the U.S. Steel trust in the newspapers.

  Pierpont liked Jack but found him lacking in fire and grit, which only accentuated Jack’s insecurities. When Pierpont sailed from London in 1899, Jack wrote his mother how things couldn’t proceed in New York in Pierpont’s absence. He added, “I only hope it will never come to that with me. Probably it won’t owing to the fact that things always will move on without me.”5 The scope of Pierpont’s business ventures was too vast to allow for a son’s self-doubt to be of concern, and the problem was exacerbated by Jack’s not being as bright or as forceful as his father.

  Another son might have rebelled. Jack sulked and pined, waiting for approval. Like Junius, he worried perpetually about Pierpont’s work binges and “imprudent” appetite and was steadily watchful of him. He described with whimsical humor the sight of his father playing dominoes with Mary Burns: “It is too funny to see Father and Aunt Mary gravely sitting down to play that imbecile game.”6 He also saw his father’s vanity, noting how after one good deed he was “simply too pleased with himself.”7 Jack also spied Pierpont’s inner pain, his secret well of loneliness: “He is very well and jolly by bits but sometimes I see he feels as lonely as I do and he looks as glum as if he hadn’t a friend in the world.”8 Considering that Jack was also cheering up his mother—a partially deaf, sickly woman abandoned by Pierpont for months at a time—one finds admirable his capacity for evenhanded empathy and tender solicitude toward both parents.

  Jack’s fatalistic acceptance of the London years was eased somewhat by a show of generosity from Pierpont. When Jack arrived in 1898, his father gave him and his wife, Jessie, the use of 13 Princes Gate. Pierpont added 14 Princes Gate to the property and joined the two townhouses. The original house now had the magnificence of a great museum and was resplendent with oils by Velázquez, Rubens, Rembrandt, and Turner—export duties kept Pierpont from taking the collection to America. Jack also used Dover House, Junius’s country estate at Roe-hampton, with its jersey cattle and old-fashioned dairy. Ecstatic at this fatherly attention, Jack told his mother, “He has been dear to us ever since we landed, most thoughtful of everything and immensely interested in Jessie’s social career! I know he has much enjoyed our being in the house, for it must have been very lonely for him with no one there and we have not hampered him at all, or bothered him with responsibilities.”9 In 1901, Pierpont gave Jack a Christmas gift—an amount of money so large that he bought a portrait by Sir Joshua Reynolds with just part of it.

  Yet Jack and his family found life amid such splendor a shade overwhelming. Every evening—whether Pierpont was in Europe or not—the domestic staff would place periodicals and warm milk beside the master’s bed and adjust his reading lamp. And with the townhouse full of so many fragile masterpieces, the housekeeper just didn’t dust on days when she felt jittery. Jessie took pride that nothing was broken, but the Morgan children, who now numbered two boys and two girls, found the need for self-control in their play stifling. Later the children recalled family prayers, reading Thackeray and Trollope, strolling in Hyde Park—everything but fun at Princes Gate.

  In 1901, Jack rented Aldenham Abbey, a three-hundred-acre country estate in Hertfordshire stocked with pheasant and Southdown sheep said to rival the king’s in quality. Jack had a British gentleman’s taste for solid country comforts. After buying the abbey in 1910, he restored its original name, Wall Hall. Landscaped by Humphrey Repton, the estate included a turreted house with fake ruins, a conservatory full of tropical plants, and a library that resembled a college chapel. In the Anglophile Morgan world, Pierpont’s Dover House staff would meet Jack’s Wall Hall crew for cricket matches. The Morgans counterbalanced this Britishness with American touches—for instance, by shipping New York State pippin apples to the London partners.

  For Jack, the London years were passed in a gilded cage. He had many friends from merchant-banking families and worked out at Sandow’s gym with Eric Hambro. As neighbors there were Earl Grey and Florence Nightingale; for occasional dinner companions, Rudyard Kipling, Henry James, Sir James Barrie, and Mark Twain. Most of all, he had Jessie, a beautiful round-faced woman with pale golden hair, a fair complexion, and smoky blue eyes. Although she had gone to England grudgingly, its society soon reminded her of Boston’s, and she became a confirmed Anglophile. She hoped that one of her two sons—Junius Spencer, Jr., born in 1892, or Henry Sturgis, born in London in 1900—would marry an American and the other a British woman; they both ended up marrying Americans.

  Jessie Morgan didn’t believe in an outside education for girls, and her daughters, Jane and Frances, were tutored at Wall Hall; they never set foot in a formal schoolroom. Jack held that a university education reduced a young woman’s femininity, so college was also out of the question. The girls weren’t allowed to talk to strangers on steamers or in public places and later saw their upbringing as a suffocating round of social duties.

  Jessie and Jack Morgan’s marriage was so all-encompassing and so absorbing as to exclude their own children at times. Jessie would not only rule Jack’s estates with crisp, managerial efficiency, but she would guide her husband, advise him, and support him emotionally. Having watched the chill descend upon his parents’ marriage and been conditioned by a confessional intimacy with his mother, Jack established a marriage that would be the exact opposite of his father’s; philandering, for instance, was one Morgan tradition he would not perpetuate.

  Jack’s London stay had immense advantages for the House of Morgan. England would be Jack’s second home, and he grew as tearfully patriotic as any British subject. In 1900, after watching Queen Victoria ride by, he said, “That wonderful little old woman in black and sables with the big spectacles means so much to so many—she represents in a current form so much of the past that it is very thrilling to see her driving through the crowd.”10 During the Boer War, he stood in a cheering throng before the Mansion House after Ladysmith, under siege by the Boers for four months, had been relieved by British troops. Amid a fanfare of silver trumpets, he heard the new King Edward VII proclaimed at Saint James’s Palace. He always loved British pageantry.

  Jack and Jessie were received into social circles that were closed to most American industrialists of the era. On February 21, 1898, Jack trooped along in sword and cocked hat as Jessie was presented in the throne room of Buckingham Palace. Bedecked in glittering jewels and black robes, Queen Victoria presided in solemn state while Jessie came forward in diamond tiara and obligatory ostrich feathers—the London Daily Mail later gushed in describing her beauty and her white satin train trimmed with blue velvet and pink roses. The Morgans also befriended the vivacious Lady Sybil Smith and her husband, Vivian Hugh Smith. Lady Sibyl took them to Windsor Castle to meet her mother, Lady Antrim, a la
dy-in-waiting, who gave them a private showing of the queen’s Holbein and Leonardo drawings. Almost without realizing it, Jack was forging connections that would provide the Morgans with a unique entrée into the society of British nobility and politicians.

  As a microcosm of the Anglo-American alliance, the House of Morgan would faithfully reflect its internal power shifts. If the New York office basked in London’s glory after the Civil War, the situation was reversed in the new century, with J. S. Morgan and Company participating in creasingly in issues that originated in New York. Much of the London capital came from Pierpont, who by the early 1900s was pocketing anywhere from one half to three-quarters of the annual profits booked at 22 Old Broad Street. The London house reflected some of Pierpont’s rambunctious spirit. Pierpont’s first biographer, Carl Hovey, wrote, “Inside the office there is always a marked amount of bustle and confusion, contrasting with the sedate atmosphere of the typical London institutions surrounding it.”11 Pierpont was just egalitarian enough to stop the practice of clerks bowing in his presence.

  Although the Morgans were the darlings of the British establishment, the relationship would always be fraught with tension—less a love affair than a tense jockeying for power. The British could never figure out whether Pierpont and Company were allies or the first wave of a barbarian horde. Wall Street was gaining on the City in the fight for financial supremacy, with the Morgans overtaking the Barings and Rothschilds. “In London, the resuscitated Barings are the only people nearly in the same rank with us,” said Sir Clinton Dawkins, a new partner of f. S. Morgan and Company, in 1901. “In the US they are nowhere now, a mere cipher, and the US is going to dominate in most ways.”12 To combat the Yankee upstarts, Barings and Rothschilds, the great nineteenth-century rivals, became less antagonistic toward each other.

  During the Boer War, the British government, its gold depleted, turned to Rothschilds in London and Morgans in New York to raise Exchequer bonds. When Pierpont initially balked, the British treasury brought in Barings as well, adding to his displeasure. Sir Clinton Dawkins called the chancellor, Hicks-Beach, “notoriously stupid and most unbusinesslike.”13 The Boer War financing of 1900 had disquieting effects in the City. J. S. Morgan’s new office manager, Edward C. Grenfell, noted dismay in London when half of the issue was scheduled for New York. Where Junius had accommodated the Rothschilds, Pierpont defied them, secretly demanding a higher commission on the issue—blackmail to which Britain reluctantly acceded. On the 1902 issue, the Rothschilds unsuccessfully tried to freeze Morgan from the syndicate. From then on, Grenfell, with grim triumph, would note in his journal the mounting ascendancy of the House of Morgan over the House of Rothschild.

  With the 1901 creation of U.S. Steel, British financiers were unnerved by Pierpont’s daring. The New York Times said they were “appalled by the magnitude of the American Steel combination,” and the London Chronicle termed the trust “little less than a menace to the commerce of the civilized world.”14 Among other things, formation of the trust heralded an export boom of U.S. products to Europe, which would sharpen commercial rivalry between the two.

  Around this time, too, Pierpont took a controversial interest in proposals to electrify underground and surface rail lines in London. New tube lines were being built as inner-city congestion required new building in London’s outskirts. Pierpont competed to finance an underground line running from Hammersmith through Piccadilly, and into the City. By taking over tube financing, Pierpont also hoped to generate business for two companies in which he had a stake—British Thomson-Houston and Siemens Brothers. Eventually he lost the underground financing to a syndicate headed by Chicago tycoon Charles Tyson Yerkes, the Traction King, best known as the model for Theodore Dreiser’s ruthless Frank Cowperwood, protagonist of The Financier, The Titan, and The Stoic. Despite his rare loss, Pierpont’s involvement kindled fears that he would steamroller the English economy, and the London County Council warned that the metropolis was being handed over to the two Americans.

  There was now enormous British ambivalence toward Pierpont. On the streets of London, peddlers sold penny sheets entitled “License to Stay on the Earth” and signed “J. Pierpont Morgan.”15 A 1901 cartoon in the New York World showed Pierpont asking John Bull, the personified Englishman, “What else have you for sale?”16 Yet however much the British were distressed by Pierpont’s bravado, they relied upon him in American financial matters. In 1901, to safeguard their American investments, London financiers insured his life at Lloyd’s for $2 million, placing him, as Jack said, “in the same category with Queen Victoria and other rulers on this side of the Atlantic.”17

  No Morgan move could have aroused more primordial British fears than the one Pierpont made in 1902—the formation of a shipping trust to monopolize the North Atlantic. This was a natural extension of America’s new export orientation. Soon after he had formed U.S. Steel, Pierpont was asked by a shipping executive whether it was possible to put North Atlantic steamships under common ownership. “It ought to be,” he replied.18 The shipping scene was then reminiscent of an earlier railroad era—too many ships and destructive rate wars. The Germans threatened British naval superiority, while Americans believed they should profit more from the immigrant traffic, as well as the new vogue among rich Americans for making luxurious transatlantic crossings.

  Nakedly asserting American interests, Pierpont assembled a plan for an American-owned shipping trust that would transpose his “community of interest” principle—cooperation among competitors in a given industry—to a global plane. He created an Anglo-American fleet of over 120 steamships—the world’s largest under private ownership, dwarfing even the French merchant marine. From a political standpoint, his critical conquests were the Belfast shipyard of Harland and Wolff and the White Star line. In the new trust, Lord Pirrie of Harland and Wolff saw a captive market for his ships, but J. Bruce Ismay, whose father had co-founded White Star, balked at the deal. Pierpont offered White Star shareholders such a rich premium—ten times over the high 1900 earnings—that Ismay not only stayed on as White Star chairman but was coaxed by Pierpont into becoming president of the trust itself, to be called the International Mercantile Marine. Through the White Star purchase and his hiring of Ismay, Pierpont would become ensnared in the Titanic catastrophe ten years later.

  It was imperative that Pierpont bring the Germans, newly dominant in the North Atlantic, into his trust. Their jumbo transatlantic liners—multitiered wonders of wedding cake extravagance—were setting speed records for Atlantic crossings. An important architect of the shipping trust was Albert Ballin, whose Hamburg-Amerika Steamship Line, with hundreds of vessels, was the world’s largest shipping company. In a secret 1901 report, Ballin sketched out the scope of Morgan’s ambitions:

  It is no secret that Morgan is pursuing his far-reaching plans as the head of a syndicate which comprises a number of the most important and the most enterprising business men in the United States and that railway interests are particularly well represented in it. Morgan himself, during his stay in London a few months ago, stated to some British shipping men that, according to his estimates, nearly 70 percent of the goods which are shipped to Europe from the North Atlantic ports are carried to the latter by the railroads on Through Bills of Lading, and that their further transport is entrusted to foreign shipping companies. He and his friends, Morgan added, did not see any reason why the railroad companies should leave it to foreign-owned companies to carry those American goods across the Atlantic. It would be much more logical to bring about an amalgamation of the American railroad and shipping interests for the purpose of securing the whole profits for American capital.19

  In late 1901, Morgan struck a deal with Ballin for carving up the North Atlantic traffic: the Morgan syndicate wouldn’t inaugurate service to German harbors without express permission from the Germans, while they, in turn, vowed not to expand their service to Britain or Belgium. The partners in the shipping trust would also pool profits and jointly acquir
e the Holland-America Line.

  After meeting with Morgan in London, Ballin, the court Jew of his day, went to Kaiser Wilhelm’s Berlin hunting lodge and briefed him on the pact. At first, the kaiser feared American financial trickery. But Ballin pointed out that while the British companies were being swallowed whole, the Germans would remain independent partners. Impressed, the kaiser sat down on his bed and read the agreement, making changes and insisting on the inclusion of North German Lloyd in the cartel. Later, when the kaiser came aboard Corsair III at Kiel, Pierpont strolled the deck with him. But in inviting the kaiser to sit down, he committed a serious faux pas; Wilhelm, however, accepted the offer from the royal Morgan.

  As news of the German agreement leaked out, the public was shocked that consolidation had reared its head on a global scale. In an editorial entitled “Incredible,” the New York Times said, “If dispatches from Paris should tell us that Mr. Morgan had . . . cabled orders to his home office to take out all the telephones, discharging the stenographers and typewriters and smash the ticker, no man, woman, or child in New York would believe the yarn. Neither will intelligent persons accept as true the story about the terms of the agreement with the German lines.”20 The Times saw this restraint of competition as outmoded and inefficient—a line of reasoning now gaining new adherents as revulsion from the trust kings increased.

  The British were especially edgy about Pierpont’s shipping cartel. They feared that International Mercantile Marine ships might exclusively transport to Europe those goods that originated in the American interior and traveled on Morgan railroads to East Coast ports. Morgan partner George Perkins confirmed this when he exulted that the shipping trust would “practically result in stretching our railroad terminals across the Atlantic.”21 It seemed as if Pierpont Morgan were spinning a seamless web around the world.