The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance

by Ron Chernow

  As this new power accrued to the House of Morgan, making it the premier American bank, excruciating responsibility fell on Pierpont’s shoulders. Yet his office staff was slim, with only eighty employees. Pierpont didn’t even have a permanent secretary. Junius continued to warn his son against exhausting immersion in business. At the same time, his secretive merchant-banker’s sensibility was shocked when Pierpont appointed a clerk to open incoming mail. In the late 1880s, in a final volley of advice, Junius wrote that “no body, however strong & well he may be, can stand such strain upon his physical and mental powers as you have had for the last 2 years without paying sooner or later the penalty unless he gives them a real rest & gives it to them in season.”32 Yet Junius never saw how much his own unbending style and unrealistically high standards had contributed to Pierpont’s slavish dedication to work.

  BY the 1880s, as his health was fading, Junius Morgan slowly eased out of business. The Iron Duke of the Morgan saga had become the most influential American banker in London, a peer of Barings and Rothschilds, his firm participating in an international smorgasbord of loans—for the Egyptian national bank, Russian railways, Brazilian provincial governments, and Argentinean public works. Whatever his health problems, he gave an impression of rock-solid durability; the London Times declared him “a hale and vigorous man, for his years.”33

  In 1884, Junius’s wife, Juliet, died at the age of sixty-eight. Surrounded by her favorite collection of china dogs, she had been, as the Morgan family tactfully phrased it, “confused” in her later years and confined to an upstairs room much of the time. Thus, she had been unable to share in her husband’s life. After her death, Junius’s solitude was relieved by twice-weekly letters from Pierpont and visits from his grandchildren. J. P. Morgan, Jr., whom the family called Jack, worshiped his grandfather and particularly liked the English formality at 13 Princes Gate, including the way the servants treated him as “heir apparent.”34 Junius was as attached as ever to Pierpont. After a visit from him in the south of France, he wrote, “Pierpont & family left today—House very lonely—miss them dreadfully.”35

  These visits were Junius’s main pleasure at the end. A photograph of him taken in 1890 shows the firm mouth and steady gaze of earlier years. His hair was snow-white, his eyebrows white and tufty, and the top of his head was bald. He spent winters at the Villa Henriette in Monte Carlo, which had a beautiful view of the Mediterranean. Leading an orderly, bourgeois life, he dined with friends and took afternoon carriage drives. During one excursion on the afternoon of April 3, 1890, the horses were startled by an onrushing train. Junius jumped up to see whether his coachman could master the team. At that instant, the carriage ran against a heap of stones and flung him violently against a wall, breaking his wrist and causing a brain concussion. For five days, he lay unconscious. Then the flow of maxims ceased forever. Perhaps it was appropriate that Junius’s death was dealt by one stunning blow in his seventy-seventh year rather than by a dribbling away of strength,-in its obituary notice, the London Times remarked that he had hardly been ill in his life.36 Certainly there was mysterious symbolism in the fact that a train’s sudden roar, upsetting a pastoral landscape, had killed one of London’s foremost railroad bankers.

  Junius was buried in the Cedar Hill Cemetery in Hartford. As he had for Peabody, Pierpont devised a funeral suitable for an illustrious warrior-hero. Hartford shopkeepers along the funeral route closed their businesses for the occasion, while flags flew at half-mast over the state capitol. Pierpont’s inscription to Junius for the Morgan Memorial Building at the Wadsworth Atheneum said much about their common identification with London’s merchant-banking tradition: “In loving memory of Junius Spencer Morgan, a native of Massachusetts, a merchant of Hartford . . . afterwards a merchant of London.”37

  Did Pierpont resent his father’s domination? Or was his admiration as unmixed as he claimed? Whatever anger or ambivalence he felt was buried beneath gigantic monuments. He honored Junius like Hamlet’ mourning the dead king. For twelve years, he gathered up land around Hartford’s Wadsworth Atheneum in order to create the Morgan Memorial, a $1.4-million pink marble building in English Renaissance style that doubled the museum’s size. Years later—glancing impatiently at his pocket watch all the while—he surveyed blueprints and rapidly picked out three new buildings for the Harvard Medical School, again to certify a son’s love. And upon the red damask wall of the West Room of his own library, Junius’s portrait would hold pride of place, ringed by Umbrian Madonnas and infant Saviors—the powerful patriarch surrounded by loving children and ethereal females. After a small fire at his Madison Avenue townhouse, Pierpont was asked which treasure he would have rescued first. “My father’s portrait,” he said without hesitation.

  An American magazine had recently listed Pierpont and Junius as among America’s richest men. Now Pierpont inherited an estate of $12.4 million, and his personal fortune doubled overnight. Ten million dollars would stay in the bank. He was bequeathed control of a banking empire and assumed his father’s position in the City. Like his father, he stood astride that flow of capital from Britain to America and would profit as it reversed direction in the new century.

  After Junius’s death, some shackle was lifted from Pierpont’s spirit. A new grandiosity flowered and he self-consciously became J. Pierpont Morgan, mogul, pirate, patron of the arts. Before Junius’s death, Pierpont’s collections were modest; in 1888, he had bought his first literary manuscript, a Thackeray. Now he embarked on a buying spree that would eventually produce the world’s largest art collection in private hands. To trumpet the new J. P. Morgan, he also enlisted his friend J. Frederic Tams to design Corsair II. Tams was given blank Drexel, Morgan checks and told to forget about expense; the only restriction was that the boat be able to turn around in the Hudson River near Cragston. A dark, sleek ship with a glamorous black hull and yellow smokestack, this new Corsair measured over two hundred and forty-one feet in length and aggressively laid claim to the title of the largest pleasure vessel afloat. In time, the mere appearance of the Corsair II in foreign harbors would alarm the populace, as if warning of an impending invasion of American capital.

  THE men in the Morgan family might have been far happier had not each of three consecutive generations produced only one son to survive to adulthood. In merchant-banking families, the whole weight of the dynasty was at once placed on the male infants. Unlike publicly traded companies, which have a corporate life of their own, private merchant-bank partnerships often relied upon the name, capital, and reputation of a single family. If the male heir(s) refused to go into the family business, it might have to be wound up. Thus, Morgan expectations were lodged first by Junius in Pierpont, then by Pierpont in Jack. In both cases, business pressures would tremendously intensify the typical father-son tensions.

  From the outset, Pierpont’s relationship with Jack differed from his own with Junius. If Pierpont suffered from Junius’s sometimes smothering attention, Jack suffered the curse of neglect. He craved the love of a father who seemed too remote and too self-absorbed to attend to his boyish needs. Between Jack and his father there would always be some distance, some nameless discomfort, that was very different from the intense, manly mutual fascination between Junius and Pierpont. Both Pierpont and Jack were shy and clumsy and steeped in New England formality. It was difficult for the delicate, insecure Jack to cope with the great flashing, roaring engine of a famous father.

  Unlike Pierpont, who had been a wild, headstrong boy requiring a firm hand, Jack needed a father to buck up his faltering courage—which Pierpont didn’t do. Jack was gentle and sedentary, lacking fire. He attended Saint Paul’s School in Concord, New Hampshire, where rich adolescent boys were exposed to Spartan Yankee routines. They had to write weekly letters home but couldn’t receive presents and had to seek pocket money from the rector. Where Pierpont wrote boyhood essays in praise of Napoléon, Jack seemed more protective of the weak. Explaining why one teacher was his favorite, he confessed: “
I suppose that it is partly because I feel sorrier for him than any of the others—the boys do plague him so.”38 In 1880, at thirteen, he cried upon reading Dom-bey and Son, Dickens’s novel about a stern magnate father and his sensitive son. Like his own father, Jack suffered migraine headaches that lasted for days. Big, awkward, and docile, Jack liked well-bred boys, not ruffians, and already sounded middle-aged at twelve, telling Fanny he refrained from marbles because “it doesn’t pay for the wear and tear and chapping of the knuckles.”39

  Jack lacked the nerve to contest his terrifying, distant father. Where Pierpont had the fortitude to confront Junius, Jack silently hoped for approval and leaned on his mother for emotional support. He found his father a man of violent and mercurial moods. His anxiety grew especially acute about money, a subject invested with many family taboos. Like the young Pierpont, Jack kept strict accounts of his expenses. We find him recording ten cents for a library fine at school and charging expenses against his “Christmas money” or “grandpa money.”40 Whenever the subjects of Pierpont and money coincided, Jack trembled: “You see I don’t mean to do anything about money that Papa wouldn’t like,” he told his mother. “Papa hates so to have me come to him about money matters that I did not mean in any way to hint that he ought to pay the bill.”41 Such sentiments abound in his boyhood letters.

  Jack’s letters to his mother form the most complete record of Morgan family life; unfortunately, no account from Fanny’s side remains. It is clear, however, that Jack was passionately attached to his mother. Sensitive to each other’s melancholy, they shared the great enigma of J. Pierpont Morgan and consoled each other for forty years. Later on, we shall see Jack Morgan as a bitter old man, yet here he was as an ardent boy, bursting with affection, telling his mother: “Dear, I love you as you know and just now I am full of comfort thinking I am going to see you in less than a week.”42 Even as a teenager, he felt protective toward Fanny and sometimes sounded more like parent than child. As Fanny became depressed and bedridden—there are many references to her invalidism in Jack’s letters—he tried to cheer her up. In 1889, he wrote, “As to your blues,--I can only say, what every one else does, do take care enough not to overtire yourself, and watch against them all you know how.”43 As a teenager, he was slightly puzzled when a friend’s mother described Fanny as “calm cold unenthusiastic.”44 Yet the episode suggests that Fanny may have been aloof in the outside world and showed her emotions only in private.

  While Pierpont had a smattering of university education at Göttingen, Jack was the first Morgan to obtain a college degree, graduating from Harvard in 1889. He had a broad, smooth face, with dark hair flattened on top, and a mustache. His Harvard years, which coincided with his father’s gentleman’s agreements, were free of rebellion. While Pierpont knocked heads with railroad satraps in New York, Jack loafed, smoked pipes, and took a gentleman’s C, spending his senior year studying the properties of seaweed. It was symptomatic of Jack’s humility and his insecurity that when he made an exciting discovery in his laboratory, he chalked it off it to luck.

  Like his mother, Jack enjoyed literature, but seemed unsettled by dark worldviews. Proper and squeamish, he was disturbed by Faust’s tragic ending and found La dame aux camélias depressing. There would be no tubercular Mimi or tear-stained adventures in Jack’s young life. Sailing to Europe in 1887, he wrote, “There is only one girl on board who could be called a belle and I have kept very clear of her because she struck me as being very common.”45 He flirted with no dangerous doctrines and was already impatient with meddlesome people who stirred up trouble. “I don’t know why so many people . . . seem to look upon business as if it were the general sewer in which all ambition and intelligence disappear. I must confess I don’t see any harm myself in making a little money, provided that it can be done honestly and reasonably.”46 He was also quite religious. Where other young men hotly debated the justice of the social order, Jack worried about whether gambling should be openly denounced from the pulpit.

  Jack has left a melancholy record of the emotional chasm that separated him from his father. He told one satiric story that also said much about Pierpont’s self-absorption. He had invited a Harvard classmate to visit him at Cragston, and the young man rode up on the Corsair with Pierpont. After introductions, Pierpont promptly buried himself in the newspaper. When they landed, he said to Jack about the classmate, “That is one of the nicest young fellows I’ve met.”47

  Pierpont apparently found Jack soft and rather passive, lacking the sort of gumption he had as a young man. In 1884 and 1885, he arranged for his son to take a hunting trip in the Rockies with William Rainsford, the rector of Saint George’s, who was a great sportsman. Jack shot a bighorn sheep and slept in a snowbound cabin—manly pursuits Pierpont hoped would toughen the young man up. Meanwhile, Jack’s intimate life remained confined to his mother.

  In 1889, Jack graduated from Harvard and met Jane Norton Grew, daughter of Boston banker and mill owner Henry Sturgis Grew. Descended from several prominent families, including the Sturgises and the Wigglesworths, Jessie, as Jane was called, had a proper Bostonian pedigree. Yet before approving the match, the Morgans and the Grews circled around each other and sniffed for a while. Jack passed along Jessie’s genealogy to the snobbish Pierpont and kept requesting a chance to discuss their possible marriage. Finally Pierpont consented to talk with his son during his next trip to Boston. In a letter both angry and wistful, Jack told Fanny what happened:

  On Saturday Papa telegraphed me he should be in Boston a few hours and hoped to see me. He was to arrive at 6:40 and go back at midnight, with a party of twelve for a Corsair dinner. I expected to be nearly an hour with him, instead of which his train was delayed and instead of seeing him I waited under a railroad bridge in the rain for an hour, and had the delightful opportunity of driving from the Station to the Club with him in the same carriage with Mr. Bowdoin [Pierpont’s partner] and Mr. Depew [then president of the New York Central]. As he had not sent me on a single one of your telegrams, and had not told me anything about Rainsford’s plans or even if he himself was certain to sail on Wednesday the visit was somewhat unsatisfactory. There certainly are some drawbacks to belonging to a busy man no matter how fine he may be as I believe you have sometimes found out.48

  Most revealing is how the letter ends—with Jack portraying himself and Fanny as common victims of Pierpont. A month later, anxious and trembling, Jack blurted out the facts of the situation with Jessie. Pierpont responded that in the spring he and Fanny would consider the matter. Frightened of his father, Jack was always relieved and grateful when he received sympathetic attention. After a subsequent meeting, he told his mother, “It would be hard for me to exaggerate my thankfulness for the way in which Papa received my confidences, and the satisfaction I feel in having spoken to him. It has made me less blue than I have been for months.”49 On December 11, 1890, Jack and Jessie were wed in Boston’s Arlington Street Church, a marriage that made the front page of the New York Times.

  The oral history that has come down through the Morgan family contends that Jack wanted to be a doctor and became a banker only when his father made it a matter of family honor.50 In 1892, at the age of twenty-five, Jack became a partner in the Morgan banks in New York, Philadelphia, and Paris. During a twenty-year business association, Jack would remain a close observer of his father, charting his manic-depressive moods and giving him more generous sympathy than he received in return, although the relationship would become somewhat more equal toward the end of Pierpont’s life.

  Jack entered the Morgan empire at a critical time. In June 1893, Tony Drexel died while visiting the Austro-Hungarian health resort of Karlsbad, leaving an estate said to be worth between $25 and $30 million. While giving Pierpont managerial control in New York, the Drexel family had retained control of Drexel and Company in Philadelphia and Drexel, Harjes in Paris. In October 1893, Anthony Drexel, Jr., decided to retire and devote himself to society pleasures, thus enabling Pierpont to
strengthen his hold over the interlocking partnerships in New York, Philadelphia, Paris, and London. At a dinner meeting at the Metropolitan Club—the sole time in Morgan history that the New York and Philadelphia partners sat in one room—he announced a new plan for centralized control.

  In the 1895 reorganization, Drexel, Morgan was rechristened J. P. Morgan and Company, while the Paris office became Morgan, Harjes. The Philadelphia house remained Drexel and Company, but the Drexel family passed from the scene, and Pierpont tapped Edward T. Stotesbury, son of a Philadelphia sugar refiner, to head the Philadelphia office. J. S. Morgan and Company in London would soon undergo a major reorganization of personnel. Among the four Morgan partnerships, the only common denominator would be Pierpont’s position as all-powerful senior partner; his associates, in contrast, might be partners in some, but not all the firms. Pierpont would take 35 percent of the profits of the combined houses. Power had now passed from London to New York, which would remain the command post of the Morgan empire. Despite its multinational veneer, the Morgan empire would be American-based, with partners at 23 Wall wielding disproportionate power. Where Junius had dispatched Pierpont to New York as the lesser financial center, so Pierpont would dispatch Jack to London, soon to be eclipsed by New York. On the eve of an unprecedented industrial boom in America, which would see the creation of vast trusts, the House of Morgan had opportunely shifted its center of gravity westward across the Atlantic.

  PIERPONT Morgan’s thunderous presence at 23 Wall Street could be observed by visitors as soon as they entered his glass-enclosed, wood-paneled offices. (The concept was copied from Junius’s office.) Seated in a swivel chair before a rolltop desk on the Broad Street side, a coal fire behind him in winter, he would rise, stroll over, and question his partners as he needed to. Lincoln Steffens recalled how he sat in a back room with glass sides and the door open. This sense of access was illusory, however, for his imperious stare could reduce interlopers to jelly. He unnerved those who overstayed a visit by simply writing and not looking up. Steffens recalled that “his partners did not go near him unless he sent for them; and then they looked alarmed and darted in like office boys.”51 Even his partners called him Mr. Morgan, or the Senior. So there he sat, displayed like a carnival waxwork, the man Bernard Baruch termed “the greatest financial genius this country has ever known.”52 He invited intimacy but then rebuffed it; his aura was so fearsome that crowds parted before him on the pavement. Once, when an Episcopal bishop visited Cragston, Pierpont was able to flag down a West Shore train in the middle of the night so the prelate could make his way back to Manhattan.