The Great Pierpont Morgan

by Allen, Frederick Lewis;

  There is a story—probably apocryphal but nevertheless suggestive of Morgan’s purchasing methods—to the effect that once two men who owned a steel mill decided, as they approached Morgan’s office, that they would be willing to take five million dollars for it but might as well begin by asking for ten; whereupon Morgan said to them abruptly as they entered, “Now, I don’t want to hear any talk from you men; I know all about your plant and what it’s worth; I haven’t time for any haggling; I’m going to give you twenty million dollars—now take it or leave it.” Often art dealers got much more money from him than they had dreamed of getting. On more than one occasion, finding that some object of art that appealed to him was part of a large and varied collection, he said to himself, “What’s the use of bothering about one little piece when I might get them all?” and promptly made a large offer for the whole collection. Nor did he like to waste time. Once he was just getting into his automobile to take the steamer for Europe when a dealer came along and told him that such-and-such a collection was for sale. It was a collection which Morgan knew all about. “Very well,” said he, “if you are authorized to negotiate for it, you may buy it for me”—and drove off without another word.

  The Rigbys, in their entertaining book on collectors and collecting, produce two other equally characteristic anecdotes. One is to the effect that George S. Hellman once brought Morgan a Vermeer to look at, and found to his surprise that “the great Dutchman’s name was strange to the Morgan ear.” Thereupon Hellman delivered a brief lecture on Vermeer, his place in the history of art, and the value set upon his work in recent sales.

  “Morgan gazed at the picture; abruptly asked the price.

  “‘One hundred thousand dollars,’ said the dealer.

  “‘I’ll take it,’ snapped Morgan, and the deal was concluded.”

  The Rigbys’ other story is to the effect that after Morgan had bought the famous Garland Collection of Chinese porcelain, he remarked to Duveen, the dealer who had acted for him, “I understand that Mr. Garland did not complete the collection.” That was true, said Duveen. “Then,” said Morgan, “I shall be glad if you will complete it for me”—an instruction which, in view of the expense of Chinese porcelains, was enough to take a dealer’s breath away.

  He showered the Metropolitan Museum with gifts in great variety; in 1906, for example, when he bought the great Hoentschel collection of eighteenth-century French decorative art and also of Gothic decorative art, he gave the eighteenth-century part of it to the museum outright, and announced that he would deposit the entire Gothic part of it on loan. He filled his new Library with beautiful things, he filled Prince’s Gate, he loaned treasures in quantity to this museum and that, yet still the works of art piled up in storage—and he could not stop, had no idea of stopping. Edward P. Mitchell, editor of the New York Sun, sketched him briefly as he sat in the West Room of his Library about 1910, an old man, yet still burning with the collector’s fever:

  The lesser monarchs of finance, of insurance, of transportation, of individual enterprise, each in his domain as haughty as Lucifer, were glad to stand in the corridor waiting their turns like applicants for minor clerkships in the ante-room of an important official, while he sat at his desk in his library room within, looking through a pile of newly bound volumes which the binder had sent for his inspection, giving a three-seconds glance at some treasure of printed or manuscript literature which was to go instanter to the shelf or safe in that incomparable storehouse, probably never to be seen again by the eyes then contemplating the acquisition.

  Mitchell ended his description with the comment, “It was his possession now and Mr. Morgan was pleased.” That was true; but that, I think, was not all. He was engaged in assembling a big thing—as big in its way as the Steel Corporation—every bit of which was to him beautiful; and he must make it bigger still, the very biggest aggregation of lovely things that there was or ever could be.

  6

  After breakfast at No. 219, and perhaps a business conference or two or a call from an art dealer, Pierpont Morgan would proceed downtown in a horse-drawn box cab which he hired from the New York Cab Company; or, in his very latest years, in a large automobile. Arriving at the Drexel Building—which occupied the site of the present Morgan headquarters at Broad and Wall—he would establish himself at a corner desk on the Broad Street side of the ground-floor banking rooms; there was a glassed-in place behind him which was occupied by secretaries. He dressed severely in a dark suit, with a wing collar and an Ascot tie which filled almost completely the V of shirt front at the neck; he had a taste for fancy waistcoats, which people liked to give him for Christmas, but those were for the Corsair or for traveling; he wore to the office an old-fashioned square-topped derby hat, or in summer a wide-brimmed Panama. At intervals he would retire from his desk in the front office to a back room which was in the adjoining Mills Building; he had another desk in this room, and his partner Charles Steele had one, and there was a pleasant open fire; here he could work more comfortably and quietly, out of sight of people who came to ask for him. There was, of course, a stream of these, some of whom had no idea of being granted an audience but came in merely in order to be seen going in and out of the building; there was even one occasion on which a broker carefully dropped on the steps of 23 Wall Street an unsigned buying order for securities, in the hope that passers-by might pick it up and the report might go about that the great House of Morgan was interested in the stock.

  At some time between twelve and three o’clock, “the Senior,” as they called him in the office, would make a tour to look at the books. First to the stock desk, then to the security department, then to the general books, beginning with the cash position and going on to the ledgers which showed the balances of all depositors. It was a nervous moment for the clerks, for his searchlight gaze seemed to be able to take in a whole page of figures in an instant and catch any irregularity; if a clerk had put down a 4 per cent bond as 4½ his eye would pick up the error without fail. His manner was ordinarily quiet and kindly, but if he found something that he disapproved of, he would shout out something like “Who gave that order, Kinnicut?” in a loud deep voice—and if he caught a mistake that he attributed to sheer carelessness he would thunder. He often took his sandwich lunch in the back room as late as two or even three o’clock; by four or thereabouts the box cab would be waiting outside the door—often to remain there hopefully for an hour or two; finally he would be through for the day and would be off in the cab, to proceed to his beloved Library or to drop off at a friend’s house for a call on the way home.

  7

  That his mien could be frightening—as Steffens has so well made clear—is undeniable. When people first met him the one thing they saw was his nose; trying not to look at it, they met his blazing eyes, and were speechless. One woman who came to know him very well said that for the first few weeks of her acquaintance with him she was terrified; only gradually did she come to realize that behind his alarming front were courtesy and kindness. Edward Steichen, who took the great photograph of him which appears as the frontispiece of this book, says that meeting his gaze was a little like confronting the headlights of an express train bearing down on one. If one could step off the track, they were merely awe inspiring; if one could not, they were terrifying.

  His gestures were abrupt. In the office he would snatch up a piece of paper as if pouncing on it with a claw; he would glance at it and either lay it down or crumple it up so suddenly that one who did not know him would have thought him angry. Yet to people who did not catch him off guard, or who did not seem to him to be trying to take advantage of him, he was truly courteous; it is characteristic that while almost everybody who has written about him has applied to him the word “brusque,” people who worked with him daily emphasize the graciousness of his manners and say that everybody in the Morgan organization worshiped him.

  He was given to sudden acts of good will. There was, for example, the time when a reception was being held at
the Metropolitan Museum, with ladies and gentlemen in evening dress filing up in a long line to meet the president of the museum. In the line was a young woman in plain attire with a baby in her arms; and some of those about Morgan, overtaken by the contemptible sense of the proprieties which afflicts small-minded people, wondered whether she should not be asked to step out of line. Not so Morgan; he greeted her affably and then, as she went on, whispered to Robert W. De Forest, who stood beside him: “Quick—get that baby’s name, so that I can make it a life fellow of the museum.”

  “That will cost you a thousand dollars,” said De Forest.

  “So much the better,” said Morgan. Nor did he forget. The woman proved to be the wife of a new museum attendant; at the next meeting of the museum board, her baby was formally elected a life fellow, and Morgan footed the bill.

  There are many other stories of friendly acts: of his lending a million dollars to a wealthy friend who had had great losses during the grim days of 1893, and, when the friend asked what collateral he would want, saying, “You may need your collateral with the banks—I am lending you the money on your business record and on what I know your character to be”; of his getting word of the business failure of a man who had been a companion of his earliest years in New York, and at once writing to him, “Why didn’t you let me know?”; of his taking great pains to concoct a job for an elderly lady which would give her a sense that she was earning her way.

  In his life of Henry P. Davison, Thomas W. Lamont tells of an incident that happened on the very first day when he reported for work as a partner—January 2, 1911. The Carnegie Trust Company in New York was in trouble, and by a process of contagion, runs had started on two other small banks in poor neighborhoods in uptown Manhattan. Representatives of these two banks came to see Lamont and another Morgan partner, William H. Porter, to see if the House of Morgan could be persuaded to stand behind the banks in their emergency. An examination of the last balance sheets of the banks indicated that this would be risky, and the young partners were inclined to say no; but Porter called up Morgan, who was at his Library, to get his advice. Whereupon—according to Lamont—Morgan, learning that the two banks had some thirty thousand depositors and that they were mostly poor Eastsiders, said, somewhat to Porter’s amazement: “Well, some way must be found, to help those poor people. We mustn’t let them lose all they have in the world. Suppose that, at worst, we were to guarantee the payment of these deposits in full. You say the total is only six million dollars? That means that the firm can’t lose more than six million dollars, doesn’t it?” The firm thereupon backed the two banks, and—partly because of the fact that its great prestige restored confidence in them—escaped with a limited loss which according to Lamont amounted in the end to about $190,000.

  That anecdote has always roused in me considerable skepticism. I have found it hard to believe that in the banking world anybody would think or talk in those terms; and I still think that in reporting the dialogue Lamont sentimentalized the language used. Yet whatever words Morgan actually chose, the incident did happen. And it was characteristic. No competition was involved. Nobody could be trying to get the better of Morgan. And under such circumstances he could astonish people with his openhandedness.

  8

  He could also surprise them by his readiness to pay heavy tribute to the principle of fiduciary responsibility. There was one year in which the House of Morgan ran at a loss; the reason was that in 1905 Morgan had purchased, as agent for the Erie Railroad without commission, a controlling interest in a small railroad line known as the Cincinnati, Hamilton & Dayton, and then had discovered—after he had turned over the stock to the Erie—that the figures which had been shown him, and on the basis of which he had made the purchase, did not show the true financial condition of the line, which was actually in very bad straits. As one partner later said, “It was incredible to him that anyone would show him false figures.” Thereupon he at once bought back the line from the Erie at the same price that the Erie had paid for it—about twelve million dollars—and put it into receivership, at what proved to be a virtually total loss to J. P. Morgan & Co.—a loss of so many million dollars that it translated a year of lucrative business into a year of deficit. Morgan would not let it be said that his firm did not stand back of whatever responsibilities it had undertaken on behalf of other institutions, even if its only fault was that it had allowed itself to be deceived.

  He had a way of saying to partners entering his firm that he wanted its business done “up here” (raising his hand high in air) “not down there” (dropping his hand near the floor). It was as if an old king were instructing his young princes in the moral responsibilities attending the royal function. For kingly Morgan was—in the range of his possessions, in the splendor of his journeyings, in the bigness of his plans, in the weight of his presence. And kingly he was too in his limitations. His royal manner of living and of traveling insulated him from the great mass of men and women; and though he might by an impulsive act of kindness make connection with them, most of the time they were to him creatures apart. Legislation designed to give them a greater share in the fruits of the national economy seemed to him unsound—an affront to the thrift and sagacity upon which national prosperity must be founded. He believed it was the lot of such improvident or inexpert or unlucky people to go their way unaided except by private charity—charity to which he would be one of the first to contribute.

  When Morgan thought of industry, he thought of it not in terms of the thousands of workers whose sweat made its production possible, nor even in terms of the engineering advances which contributed to its efficiency, so much as of the investors whose money supported it, and of the officers and directors whose duty it was to protect and enrich the investors. For these officers and directors his standards were both stern and aristocratic: they had better be honest, and it was preferable that they be gentlemen. He would have liked to see the United States run by gentlemen. That these gentlemen, too, might be insulated from their fellow men, and might like to run things in whatever way proved most comfortable for themselves, and might have swollen ideas of their proper share of the fruits of industry, did not apparently occur to him; if you had suggested such an idea to him he would probably have replied promptly that certainly the politicians liked to run things to their own advantage. In short, though he was unswervingly loyal to the United States and believed in its government, his ideas were kingly, like his conduct of life; the idea of democracy evaded him.

  In a society sufficiently equalitarian to hate to see great luxury existing side by side with great poverty, such a way of life as Morgan’s is out of place. Even in his own lifetime it was out of place. But after his special kingly fashion, he played his part in the grand manner.

  XI

  THE LIMITS OF TRIUMPH

  1

  Triumph invites challenge; and Pierpont Morgan’s pre-eminence, heightened by his success in launching the biggest corporation the world had ever known, was to be put to a series of tests. The first challenge arrived promptly—and inopportunely.

  It was on March 3, 1901, that the newspapers carried the first announcement of the formation of the Steel Corporation. On April 4, convinced that the corporation was off to a promising start, Morgan had sailed for Europe, going first to London, then to Paris, and then to Aix-les-Bains in the hills of southeastern France. It was on Saturday, May 4, that his holiday ease was broken by the arrival from New York of a cablegram of disquieting import.

  The message told of a swift surprise attack upon him in a sector where he had felt secure. Morgan the peacemaker, who had come to believe that the only way to maintain peace among the American railroads was to see that they were held in “safe hands,” had almost lost control of the Northern Pacific Railroad in a raid without warning by a man whom he considered unsafe.

  The raider was Edward H. Harriman, a shrewd little man with sharp bespectacled eyes and a drooping mustache, a stockbroker turned railroad manager. Harriman had cr
ossed swords with Morgan in earlier years; back in 1887, as I have already recounted in Chapter VI, he had taken control of the Dubuque & Sioux City Railroad in Iowa by a trick that Morgan regarded as crafty. Some years later, when Jacob Schiff of the New York banking firm of Kuhn, Loeb & Company had been trying to reorganize the Union Pacific Railroad, and had found that somebody—he didn’t know who—was trying to upset his reorganization plan, Schiff had suspected Morgan and had called him up. Morgan had replied that he himself was not interested in the Union Pacific, but that he knew who was throwing the monkey wrenches into Schiff’s plans. “It’s that little fellow Harriman,” said Morgan. “You want to look out for him.” Schiff had thereupon conferred with Harriman, and had made with him a treaty of peace by which Harriman would have a part in the new Union Pacific management. So well did Harriman play his cards and so able did he prove himself at practical railroad management that presently he was not only running the whole Union Pacific Railroad, with Schiff as his firm backer and ally, but was brilliantly transforming a run-down property into an efficient, up-to-date, and highly profitable one. The little man with the spectacles was a genius, equally adept at rebuilding a railroad across the Rocky Mountains and at conducting a foray on the New York Stock Exchange. He was also a man of Napoleonic ambition, ready to challenge Morgan’s pervasive influence. His moment for attack came in the spring of 1901.