Morgan

by Jean Strouse

  He had expected the town to be dreary, and found himself “most agreeably disappointed.” Carlsbad was situated in a narrow, winding valley surrounded by thick woods, with hot springs jetting out of the rocks. A spa physician named Ganz (“by no means a goose so far as his profession is concerned”) found nothing wrong with Morgan’s lungs, but diagnosed a “torpid” liver. He prescribed long walks and several glasses of Carlsbad water a day.

  The other spa guests included pretty girls, handsome ladies, several Russians, some French, “Jews almost without number and of course many Germans,” Pierpont told Fanny. Soon he was feeling “as well as a lark” and losing weight: no two scales agreed, but the fit of his clothes showed that “the circumference is not as great as when I was in New York. I can button my shoes with less difficulty, which to say the least is a satisfaction.” His head was “clearer & freer from all pressure than for many years past.… I don’t believe I ever felt better, only one thing is needful & that I shant tell for fear it might make you feel too important.” Full of “impatient longings to see you and the children,” he urged his wife in letter after letter to “Kiss Louisa & Jack for their paternal relative – I fear they may forget they have one.”

  After four weeks at Carlsbad, the Morgan quartet went on to Vienna, where Pierpont and Junius spent their evenings in the public gardens listening to Strauss waltzes over coffee and cigars, and their afternoons looking at art. Pierpont pronounced the paintings in the Belvedere Palace “very mediocre,” but approved of Prince Lichtenstein’s Raphaels, Correggios, Murillos, and Guidos. As usual, his tastes ran to the imperial and the Napoleonic. He wandered among Maria Theresa’s paintings and tapestries in Schönbrunn Palace—Bonaparte had stayed there while negotiating with Austria after the Battle of Wagram in 1809, and Napoleon II had died in one of the palace rooms. Touring the private apartments of Emperor Franz Joseph, Pierpont pronounced them “in no way superior to those of less prominent mortals.” In the Church of St. Augustine, he studied urns and sarcophagi containing two hundred and fifty years of Hapsburg family remains, and paused before the body of Franz Joseph’s brother, Ferdinand Maximilian Joseph, named Emperor of Mexico in 1864 and executed by followers of Benito Juárez in 1867: “One’s mind could not but be filled with the saddest thoughts as one stands by a tomb where so many hopes lie withered,” he told his wife.

  In Munich he visited the Neue Pinakothek (he called it the Gallery of Modern Pictures) to study a “great picture of the destruction of Jerusalem” by Wilhelm von Kaulbach, “which I have so long desired to see.” Kaulbach (1804–1874), a painter of huge, dramatically lit scenes in the German Romantic style, dominated the Bavarian academy in the 1850s and 1860s, and was enormously popular in America. He had been court painter to Ludwig I when he completed the idealizing Destruction of Jerusalem in 1846; Ludwig built the Neue Pinakothek expressly to house this 20- by 23-foot canvas, the most expensive nineteenth-century painting yet commissioned.

  Calling on Kaulbach in his Munich studio, the Morgans found him working on “a beautiful picture of ‘Charity’ for Mr. Probasco of Cincinnati,” Pierpont reported to Fanny, and about to start another—of the meeting of Queen Elizabeth and Mary, Queen of Scots—for George Peabody Wetmore in New York: “Father was very much taken with his paintings, & finally contracted with him for a beautiful one of which he had just finished the cartoon. It will certainly be a great acquisition.” Junius gave Pierpont the cartoon—Vogelgesang (The Bird Song), based on a Schiller poem—in 1873. It depicts a pretty shepherdess, barefoot and bare-breasted, lying in the grass beside a pond; she is listening to a wandering minstrel and leaning into his embrace, though pretending to push him away.

  After Munich, the Morgan party went through Paris to London. Pierpont returned to New York early in September.

  In the aftermath of the Civil War, as the ebullient culture of American enterprise turned to the enterprise of culture, scores of wealthy families began touring European cities—the Morgans had begun in the 1850s—and came home full of excitement about the visual arts. The United States, breathing what the critic Robert Hughes has called “thin aesthetic air,” had no tradition of royal collecting, no great public repositories such as the Louvre, the British Museum, or the Vatican, nothing like the major private collections of pictures, church treasure, decorative arts, manuscripts, and books that had been assembled by European dukes and merchant princes. Americans interested in the serious study of art still had to go abroad, but in a mood of aesthetic nationalism, affluent postwar families took it upon themselves to bring culture home.

  At first, most of them bought contemporary paintings of the Barbizon and Düsseldorf schools, and lionized storytelling artists such as Kaulbach. According to the art historian Nicholas Hall, “every important American collector active before 1914” started out with “at best a Corot, as often a Daubigny, or a Diaz.” A notable exception was James Jackson Jarves, guided by Ruskin and the Brownings, who bought Italian paintings of the thirteenth to the early fifteenth centuries.g Not until the 1890s did collectors such as Morgan, Isabella Stewart Gardner, Peter Widener, and Benjamin Altman move on to Old Masters.

  Jarves predicted in 1855 that private individuals would form America’s great public collections, and that the United States would soon “rival the ‘Old World’ in art treasures.” Henry James described the spirit in which the New World was taking possession of the Old in 1867: “I think that to be an American is an excellent preparation for culture,” he told a friend. “We have exquisite qualities as a race, and it seems to me that we are ahead of the European races in the fact that … we can deal freely with forms of civilization not our own, can pick and choose and assimilate and in short (aesthetically etc.) claim our property wherever we find it.”

  The New York Morgans had outgrown No. 227 Madison Avenue, and while Pierpont traveled in the summer of 1868, Fanny proposed by mail that they move to Englewood, New Jersey. He had no interest in leaving Manhattan. Although living in the suburbs might be pleasant, he replied, he could not be tied to train schedules or “compelled” to spend winters out of town—as things stood, “I get quite enough of that by Oct. or November.” Nor was he willing to sever his ties with friends, city associations, clubs, or church: “My attachment to Dr. Tyng is so strong & my satisfaction in the services at St. Georges so great that I should not willingly place myself in a locality where I should be prevented from going there.” Knowing how much his wife wanted a different kind of life, he pleaded external obligation and adopted a tone of regret: “So long therefore as I have means, and the necessity remains as great as now for my being in the city, I think we shall have to stay there, pleasant as it would be at Englewood.”

  Shortly after returning to New York that fall, he rented a large house two doors from the Sturgeses on 14th Street. It was “far more downtown than I like,” he told Fanny, but he had seen nothing better. At $5,000 a year, it seemed “not high as rents go.” They moved in November, just as Ulysses Grant won the presidential election. The Republican victory, with majorities in both houses of Congress, did not end the struggle over Reconstruction, but to the Morgans’ relief it inaugurated a period of relative fiscal calm. The Treasury tried to stabilize the nation’s money markets, and assumed some of the functions of a central bank.

  * The government set up a Bureau of Internal Revenue and taxed income for the first time, at 3 to 5 percent, in August 1861; the tax was phased out in 1872 and not imposed again until 1914.

  † In 1863 Alexander T. Stewart, the country’s leading dry goods distributor, reported an annual income of over $1.8 million, William B. Astor $838,525, and Cornelius Vanderbilt $680,728.

  ‡ Since America’s chief trading partner was England, and since the price of the British pound was pegged to gold, the price of gold in greenbacks was essentially the dollar price of £1 sterling. A pound at the beginning of the war was worth $4.86 in gold, but after 1862 the greenback price of gold fluctuated widely. It reached a peak in 1864, when a U.S. t
rader who wanted to buy £1 worth of gold had to pay $12 in greenbacks.

  § He and Ketchum had bought most of their hoard at around $146 to $147 an ounce. Gold was trading at 148¾ on Saturday, October 10, the day of their shipment. It rose steadily all week to a high of 156⅞, then settled back down to the 140s.

  ‖ Junius dated this letter “January 31, 1863,” but from internal evidence it appears to have been written in 1864. At the beginning of a new year it often takes weeks to change the force of habit and write the date correctly.

  a The letter to Seymour turned out to be a copy. The manuscript of “The Bear Hunt” is at the Pierpont Morgan Library.

  b In London he set up a $2.5 million fund to build public housing for the “industrious poor,” later called the Peabody Estates. Queen Victoria offered him a baronetcy to acknowledge England’s gratitude; when he declined the honor on the grounds of his U.S. citizenship, she wrote a personal letter thanking him for his “princely munificence,” and sent him a portrait miniature of herself. Peabody gave $150,000 to Harvard for a museum of archaeology and ethnology, $150,000 to Yale for a museum and chair in natural history, $140,000 for a museum of science in Salem, Massachusetts, and smaller sums to other U.S. institutes, libraries, and historical societies. After the Civil War he set up a Peabody Southern Education Fund, with $2 million to provide free public schools and improved teacher training in the South. His hometown of South Danvers, Massachusetts, was renamed Peabody in 1868. Also that year, his figure in bronze, by the sculptor William Wetmore Story (an old friend of the Morgans from Hartford), was placed behind London’s Royal Exchange. When Peabody died in 1869, the British gave him a funeral at Westminster Abbey, and sent his remains to the United States on the ironclad HMS Monarch.

  c This Christian Herter was the grandfather of the Massachusetts governor and Secretary of State Christian A. Herter.

  d The division of profits was reconfigured so that Dabney and Pierpont took 39 percent each, Jim Goodwin 12 percent, George 10 percent.

  e Two months later, Republican moderates joined the Radicals to bring charges against Johnson for “high crimes and misdemeanors in office.” He was the only president subjected to impeachment proceedings until December 1998. The Senate acquitted him by one vote.

  f “By the time of the Civil War,” writes John Kenneth Galbraith, “the American monetary system was, without rival, the most confusing in the long history of commerce and associated cupidity.” Before the advent of greenbacks in 1862, the main form of paper money in the United States had been notes issued by state-chartered banks. In 1860 there were seven thousand different kinds of banknotes in circulation—and five thousand counterfeit issues—with no central regulation or control. The wartime National Banking Act of 1863 had tried to straighten out some of the confusion. It set up a system of nationally chartered banks that loaned money to the government in exchange for U.S. bonds, then issued notes worth up to 90 percent of the value of the bonds. That system created a uniform currency of national banknotes; it also provided some insurance against bank failures—the bonds could be sold to redeem a defaulting institution’s notes—and it boosted the market for wartime government bonds. In 1865 Congress killed off the state notes by taxing them 10 percent. National banknotes remained an important form of currency until the Federal Reserve System was set up in 1913, but they had two major drawbacks. Since most of the issuing banks were in the Northeast, the notes tended to concentrate there, creating shortages in the South and West. And the issuing of national notes based on the banks’ holdings of U.S. bonds meant that this currency was pegged to the federal debt rather than to economic demand.

  g Jarves’s taste for works by Simone Martini, Pollaiuolo, and Sassetta, though widely shared by European connoisseurs, ran far ahead of his compatriots’. Critics assailed the collection when it went on exhibition in New York, the Boston Athenaeum turned it down, and Yale acquired it in 1871 for $22,000—less than a quarter of the $100,000 Jarves thought it was worth. A Yale undergraduate said in the college paper at the time that “one hour’s study of Bierstadt’s Yosemite Valley would for me be worth more than all this collection.”

  Chapter 8

  NEW DIRECTIONS

  Between the Civil War and the end of the century—a period that came to be known in Mark Twain’s sardonic phrase as “the Gilded Age”—Americans added thousands of track miles to the largest rail network in the world, settled the western half of the continent, harvested natural resources, developed immense domestic markets, and hugely increased the country’s industrial productivity. John D. Rockefeller built a giant oil monopoly, Andrew Carnegie put together an empire in steel, Philip Armour and Gustavus Swift revolutionized the meatpacking business. Boston bankers financed Bell’s telephone. New Yorkers raised capital for Edison’s electric light. All these economic and technological changes dwarfed traditional politics—no President of real stature occupied the White House between Lincoln and Theodore Roosevelt—and radically altered the nature and pace of American life.

  They were also making the country rich. The U.S. population more than doubled between 1870 and 1910, while estimates of national wealth increased fourfold, and consumer prices on average fell by 40 percent. Per capita income grew almost 3 percent a year between 1874 and 1879. A rapidly growing labor force helped drive this expansionary surge, as did a dramatic rise in “capital formation”—money withheld from consumption for long-term investment in machinery, factories, refineries, and mills. For the latter half of the nineteenth century the annual rate of increase in physical plant and equipment was 5.4 percent, almost twice the yearly increase in the size of the workforce (2.8 percent) and the supply of land (2.9 percent). During the seventies and eighties, roughly a quarter of the gross national product went into building industrial facilities.

  The task of organizing financial markets to mobilize vast amounts of money for long-term ventures fell to bankers such as the Morgans. Junius in 1857 had proudly described “the wonderful increase of capital in the United States,” and predicted that soon Wall Street would “no longer have to watch with solicitude the rate of [the Bank of England on] Threadneedle Street.” Still, it would be some time before Wall Street did not have to keep an eye on Threadneedle Street. Foreign investors owned about $1 billion worth of U.S. government securities by 1869, and the country would remain a net debtor until 1914. In the immediate post–Civil War years, without an American central bank, the financiers responsible for raising investment capital tried to maintain U.S. credit abroad, prevent panics, stabilize domestic markets, and devise ad hoc solutions to the problems created by all this turbulent growth.

  As the satiric sobriquet suggested, not everyone in the Gilded Age was getting rich. The period from the 1860s to the 1890s saw the longest price decline in U.S. history, and farmers’ crop income steadily fell as the cost of debt rose. Workers’ wages did not keep up with the growth of national wealth: between 1873 and 1910 money wages rose by just a third, and “real” wages only 20 percent. It was partly the armies of post–Civil War immigrants—14 million between 1885 and 1910—that kept wages from rising more rapidly. Largely Catholic and Jewish, from southern and eastern Europe, these newcomers were more distinctly “foreign” than earlier, northern European workers, and less easily integrated into the American melting pot. They settled in crowded cities where they hoped to find jobs, their dreams of prosperity dissipating in the struggle to survive.

  The stark discrepancy between booming national economic growth and the troubles in farm towns, factories, and slums raised familiar Jeffersonian-Hamiltonian questions about the nature of the American dream—agrarian or commercial?—that came up most urgently in the contractions following the panics of 1873, 1884, and 1893.

  After the successful laying of the Atlantic cable in 1866, the great commercial event of the early postwar years was the completion of the transcontinental railroad that Lincoln had imagined would finally make one nation of the disparate states. On May 10, 1869, the Centr
al Pacific line building eastward from California and Union Pacific tracks heading west across the Great Plains met at Promontory Point near Ogden, Utah. Two months later Mr. and Mrs. Pierpont Morgan set off across the country.

  Morgan had an avid personal interest in this excursion: though he traveled to Europe the way other New Yorkers went to Boston, he had never seen the western half of the United States. He had a professional interest as well: most of the money his bank was channeling from savers to users now went into railroads. As the roads created a national mass market by providing cheap, quick all-weather long-distance transport for enormous quantities of freight, they were also carving up the country’s wilderness, galvanizing its industrial imagination, stimulating technological innovation, spurring production of coal, iron, and steel, and fueling capital growth. In the 1860s they overshadowed all other American enterprise. The Pennsylvania Railroad was the largest private company in the world by 1865, with thirty thousand employees, 3,500 miles of main track, and a capital investment of $61 million.

  Railroads consumed money on an altogether colossal new scale. Textile mills, America’s largest manufacturers in the 1850s, rarely cost $1 million to build, whereas the four big east–west trunk lines—the Pennsylvania, Erie, New York Central, and Baltimore & Ohio—were initially capitalized at between $17 million and $35 million each. Building canals between 1815 and 1860 had cost $188 million, much of it raised through sales of state and municipal bonds, the rest from individuals and local institutions such as Joseph Morgan’s Hartford banks. Investment in private railroad securities amounted to $1.1 billion by 1859, not including the value of government land grants and loans.