by Jean Strouse
Samuel Untermyer told the press: “Whatever may be one’s view of the perils to our financial and economic system of the concentration of the control of credit, the fact remains, and is generally recognized, that Mr. Morgan was animated by high purpose and that he never knowingly abused his almost incredible power.”
Morgan’s famous remark before the Pujo Committee—that credit in the conduct of the world’s business was based primarily on character and trust—came directly out of his own experience and applied above all to himself. By 1912, however, it was too late for a private banker to wield so much public power, and it was too late for Morgan to change.
* There was no Third French Empire: The Marseillaise called for war on tyranny in 1792, during the French Revolution.
† Those assessments were low. The federal government had no inheritance tax in 1913, but New York State did: the tax on Morgan’s estate in 1916 came to about $3 million. On the art collections, he himself thought he had spent $50 million to $60 million. Not everything he had bought turned out to be “right,” but a rough calculation of his costs and the prices paid for some of the art objects shortly after his death puts the value in 1913 somewhere between $60 million and $80 million—which would mean that the collections were worth more than all the rest of his estate. An approximate equivalent to 1913’s $70 million in the 1990s would be $1 billion, but the increase in the value of art cannot be gauged by a consumer price index; many of the objects Morgan bought for thousands of dollars would now be worth millions.
Chapter 2
PIERPONTS AND MORGANS
Unlike most of the Americans who made large fortunes in the last third of the nineteenth century, Morgan traced his lineage back to the early settlement of New England. Both sides of his family had arrived before the Revolution. Two hundred years of American heritage, however, was about all the intellectual, ecclesiastical Pierponts and the enterprising, managerial Morgans had in common.
Descended from French Pierreponts who crossed the English Channel with the Norman conquest, John Pierpont emigrated to Boston from London in 1640. His son, James, a Harvard graduate and pastor of the Congregationalist First Church of Christ in New Haven, was a founder of Yale College, where he taught moral philosophy and wrote a book on Congregational Churches in Connecticut. James’s daughter, Sarah, married the young theologian Jonathan Edwards, and their daughters brought other eminent men into the family: Mary married the merchant Timothy Dwight, and gave birth to another Timothy (author, Congregational clergyman, president of Yale) and Theodore (lawyer and leading Federalist); Esther Edwards married the Reverend Aaron Burr, a founder of Princeton—it was their son who served as Thomas Jefferson’s Vice President, shot Alexander Hamilton, and stood trial for treason.
Down the Pierpont line came two more generations before the birth, in 1785, of Pierpont Morgan’s grandfather, John, in Litchfield County, Connecticut. He graduated from Yale in 1804, when his distant cousin Timothy Dwight was president, then went to work in South Carolina as private tutor to the children of a wealthy planter. Appalled at the contrast between slavery and the extravagant style of plantation life, he told a friend that “the vinegar of poverty renders disgustful to the taste every other pleasure and embitters even the cup of Friendship.” This incipient reformer came back north to study law, and was admitted to the Essex County (Massachusetts) Bar in 1812, but spent all his time writing poetry. Soon he gave up law to try the retail dry goods business. His firm went bankrupt in 1816.
Mr. Pierpont married his fourth cousin, Mary Sheldon Lord, in 1810, and the couple had three children while he continued to search for a calling. He pawned the family silver in 1816 to publish a volume of poetry called The Airs of Palestine. More notable for its nationalist sentiment and romantic animation of nature than for literary quality, the book nonetheless captured the imagination of a young country in need of homegrown cultural heroes. John Pierpont was briefly hailed as America’s leading poet.
Next he took up the study of theology, first in Baltimore, then at Harvard’s new Divinity School, where Unitarianism reigned. Unitarians, in the liberal wing of Congregationalism, rejected the Calvinist doctrines of predestination and original sin; they believed instead in free will, spiritual democracy, and the possibility of universal salvation. Making no distinction between religious and secular concerns, they urged all men to act in the interests of individual freedom and social reform. The historian Sydney Ahlstrom has characterized the denomination as “perfectabilitarian.”
John Pierpont turned out to be well suited to the moral climate of Harvard and the Unitarian cloth. He studied privately with William Ellery Channing, and boarded with the Divinity School’s founder, Henry Ware. On being ordained in 1819, he was appointed minister of Boston’s Hollis Street Church, at a salary of $2,200 a year. Finally at thirty-four, in poetry and the pulpit, he had found his life’s work.
The Reverend John Pierpont was six feet tall, with intense blue eyes and a flaming red nose caused by a mild version of the rhinophyma that afflicted his grandson. He preached with such conviction that audiences noticed only his passionate intensity: “his eyes fairly blazed and made you forget his nose and everything else.”
He and Mary now had six children—William, Mary, Juliet, John Jr., James, and Caroline—and not enough money to go around. The Reverend Pierpont supplemented his clerical salary by writing and lecturing. He also took up a roster of radical causes, including temperance, the abolition of slavery, prison reform, the education of girls (not including his own), the disbanding of the state militia, and phrenology—the study of mental faculties based on the physiognomy of the skull. His dedication to his ideals bordered on the fanatical, and when his temperance lectures brought him into conflict with wealthy rum merchants who rented storage space in his church basement, his employers arranged for him to take a sabbatical in Europe and the Middle East to ease the antagonisms at the church.
His family stayed in Boston. Mrs. Pierpont suffered from mysterious ailments—a combination of emotional instability and “an irritating cutaneous affection” (possibly scabies), which her husband described as a “careless and utterly desperate [disease] … that must have worn out the patience of Job, and soured the temper of any one short of an angel.” The angel in his house was unable to perform the duties of mother and wife, he went on, “and when, at times, she has appeared irritable, I have marveled not that she was so, but that she was not more so.”
Nonetheless, he left her for a year in 1835–36. She took in boarders for income. The younger children were still in school, but Mr. Pierpont hoped the two older girls, Mary and Juliet, would “do all to aid you that lies in their power.”
Juliet had other things on her mind besides helping her mother run a boardinghouse. She had been engaged for a year to a young merchant from Hartford, Connecticut, named Junius Spencer Morgan. Early in 1836, Junius wrote to the traveling Reverend Pierpont to say that he had just joined a wholesale dry goods firm in Hartford called Howe, Mather & Co., and could now offer his fiancée the prospect of a good living and a home. He named the first of May as their wedding date, “as I think the quicker these things are settled after we are ready the better. I hope this arrangement will meet your approval, & regret exceedingly that I cannot receive her from a Father’s hand, but I hope her parents will never have cause to repent of her choice.”
Little is known about the young Juliet Pierpont except that she helped take care of her mother and chose a man whose interests and abilities could not have been more unlike her father’s. Junius later referred to the “beautiful countenance of her early years,” but from her father she inherited the skin disease rosacea, which runs in families, tends to be more common in women but more severe in men, and is sometimes, as it was with her son, a precursor of rhinophyma.
The man she was about to marry was by all accounts “a perfect beauty.” With prominent cheekbones and eyes full of intelligent light, Junius Morgan looked as though he could charm a salon or command
an army with equal ease. An American journalist who visited the Morgan estate outside London some years later surveyed its attractive decor and described his host as “the most beautiful thing in the house … a man used to giving orders and having them obeyed; taking decisions quickly and taking the right ones.” Junius at twenty-one had mastered the material world from which Dr. Pierpont had turned away in distaste and defeat.
Junius’s first American ancestor was Miles, a Welshman who sailed to Boston in 1636. (Morgans were so abundant in Wales that many women never changed their names: Miles’s grandmother, Bridget, was the daughter of one Anthony Morgan and the widow of another—her full name was Bridget Morgan Morgan Morgan.) When twenty-year-old Miles reached Boston, he joined a party headed by Colonel William Pynchon and set off to explore the Connecticut River Valley. At a place they named Springfield, Miles staked claim to land that stayed in his family for two centuries. Though he was the youngest member of the party, he quickly became second in command. He farmed his land, raised cattle, bought more acres, took on civic and religious office, and had nine children—the youngest, Nathaniel, when he was fifty-five. Nathaniel’s grandson, Joseph, fought as a captain in the Revolutionary War and fathered another Joseph, the paternal grandfather of Pierpont Morgan.
Born in 1780, this Joseph moved from Springfield and yeoman farming into the wider world of commerce and capital that opened up with the nineteenth century. In 1807 he married Sarah Spencer of Middletown, with whom he had three children: Mary, Lucy, and Junius Spencer, born in West Springfield—now Holyoke—in April 1813. Beauty was not among the attributes of the Morgan women; Junius got his handsome features from his father.
Joseph was working the family land and dealing in real estate when his father died at the end of 1813, leaving him property worth $15,000.* Two years later he spent $10,000 on a stagecoach line and tavern, then in 1817 moved his family down the Connecticut River to Hartford, where he acquired another tavern—the Exchange Coffee House—that served as a meeting place for travelers, politicians, and the local gentry. The Morgans lived at the Exchange Tavern until 1829, when Joseph traded it up for the fifty-room City Hotel. He sent his son to boarding school at Middletown, and his daughters to the Emma Willard School in Troy, New York.
A new urban culture was taking shape in early-nineteenth-century America, with taverns and hotels at its center, and Joseph turned out to have instincts perfectly suited to the transition from country to town. His early innkeeping enterprises were small enough to be owned and managed by him, but with his accumulating capital he moved into every important aspect of the country’s market revolution: he helped organize banks to finance Hartford’s economic boom, and was a founder of the Aetna Insurance Company; he invested in steamships, railroads, bridges, and canals—large-scale enterprises that reached beyond the physical boundaries of Hartford, were financed by selling shares of stock, and operated by hired managers. Most of Joseph’s ventures succeeded. He bought one hundred shares of stock in the Hartford & New Haven Railroad when the books opened in 1835, and noted in his diary on December 14, 1839: “Locomotive first came to [Hartford] Engine House on N. Haven Rail Road.” The Aetna’s stock, worth $150,000 in 1819, grew to $4 million by 1881.
Politically, Joseph supported the nationalist programs of John Quincy Adams and Henry Clay, ideological descendants of Alexander Hamilton. As the country’s first Treasury Secretary, Hamilton had set out to free the newly independent states from economic dependence on England. He sought to build a national economy by structuring into the new state as much favoritism for business as he could; and in 1791, aiming to rationalize the country’s financial markets and facilitate the growth of interregional trade, he set up a central bank—the First Bank of the United States. His efforts met with fierce opposition, especially in the agrarian South.
Americans brought to their political philosophy a deep-seated fear of big government and concentrated wealth. The Jeffersonian republicans who challenged Hamilton’s vision of the future looked to an economy based not on a strong federal government and national commercial markets but on decentralization, individual freedom, and agriculture. They believed that a relatively weak government would foster local autonomy and egalitarian democracy; the country’s natural economic order would be ruled not by aristocratic elites in distant cities but by the self-sufficient farmer on his rural acre. “Those who labor in the earth are the chosen people of God, if ever he had a chosen people,” Jefferson wrote in 1781: “… generally speaking the proportion which the aggregate of the other classes of citizens bears in any state to that of its husbandmen, is the proportion of its unsound to its healthy parts, and is a good enough barometer whereby to measure its degree of corruption.”
Carrying the commercial/industrialist position forward into the 1820s, Kentucky Congressman Henry Clay proposed an American System in which tariffs would protect U.S. industry against competition from European manufacturers, federal funds would maintain and improve public roads and canals, and a central bank would provide the country with a stable supply of money and credit. John Quincy Adams, President from 1824 to 1828, adopted Clay’s system and made its author his Secretary of State.
Joseph Morgan stood firmly on the side of the Clay/Adams economic policies and against their outspoken critic, the popular 1812 war hero, Andrew Jackson. “Old Hickory” attacked the Adams administration as aristocratic and elitist, charging that it catered to the special privileges of plutocrats while ignoring the farmers and workers whom Jackson, following Jefferson, saw as the true constituents of a democratic government. In the 1828 presidential campaign, the general from Tennessee ran on his military record and plebeian origins, promising to stand up for ordinary Americans.†
Joseph lost a beaver hat betting against Jackson, who won 56 percent of the popular vote in 1828. Once in office, the anticentrist, broadly populist new President turned the “Monster” Second Bank of the United States into a symbol of the eastern moneyed interests that he would bring down. Early in 1832, as the next election campaign got under way, Joseph Morgan made a trip to Washington. He talked with the charismatic Henry Clay, listened to speeches about South Carolina’s threat to nullify the notorious Tariff of Abominations that helped the manufacturing North and hurt the agricultural South, and met the President: “Was introduced to Gen. Jackson found him very polite & dressed very well upon the whole he appeared better than I expected.”
Jackson easily defeated Clay that fall, with 219 electoral votes to his opponent’s 49. Joseph wrote in his diary: “Abroad the Political Horizon is overcast, disunion threatens us from the South, there is danger of the Manufacturers losing a protective tariff[.] Jackson is again re-elected President everything looks squally.”
The President immediately took up his promise to destroy the Second Bank of the United States. Hamilton’s charter for the First Bank had not been renewed in 1811, after an intense debate over whether a national bank violated the Constitution by giving too much power to the government; state-chartered banks resented having to compete with and be regulated by the federal institution. In 1816, however, the financial chaos created by the War of 1812 and the explosive growth of state banks led Congress to charter a Second Bank for twenty years. Headquartered in Philadelphia under the direction of an arrogant patrician named Nicholas Biddle between 1823 and 1832, the Second Bank proved no less controversial than the First.
Biddle’s bank—like its predecessor, a private corporation operating with quasi-governmental authority—served as a cautious, reasonably effective regulator of the growing economy. It issued banknotes, lent money, sold government bonds, held federal reserves, stabilized domestic and foreign exchange, tried to control the international balance of payments, disciplined state banks by requiring them to maintain adequate reserves—and made more enemies than friends. Its anti-inflationary credit restrictions helped lenders in the money centers of the East, and hurt borrowers—speculators as well as farmers, workers, shopkeepers, and mechanics in the South a
nd West. State bankers denounced it as a government-sponsored monopoly that stifled private enterprise. Wall Street resented its location outside New York. Southern states-rightists saw it as an unconstitutional usurpation of local authority. House Democratic leader James K. Polk said it had set itself up as a rival to the government and asked “whether we shall have the republic without the bank, or the bank without the republic.” The maladroit Biddle magnified the bank’s “Monster” image by telling Congress it could destroy state banks at will, even though he pointed out that it did not, and his payments to politicians and journalists confirmed his critics’ worst fears.
Early in 1832 Jackson vetoed a bill to renew the bank’s charter, warning of the evils that “might flow from such a concentration of power in the hands of a few men irresponsible to the people.” When Biddle came out for Henry Clay in the 1832 election, Jackson told Martin Van Buren: “The Bank … is trying to kill me, but I will kill it.” He had to get rid of two Treasury secretaries to do it, but over the next four years he effectively dismantled the bank.
While Joseph Morgan worried about the political and economic climate, he was preparing his son for a commercial career. As soon as Junius graduated from school at sixteen, he went to Boston to clerk for a merchant and banker named Alfred Welles. He stayed five years. By the time he completed his apprenticeship in 1834 he was twenty-one and engaged to Juliet Pierpont. Joseph secured him a partnership with a banker named Morris Ketchum at 40 Wall Street in New York; the new firm would be called Morgan, Ketchum & Co.