Morgan

by Jean Strouse

  In New York that summer, with minimal guidance from “the Senior,” Perkins put together another big consolidation. The sons of Cyrus Hall McCormick, inventor of the reaper, had asked him to help end competitive warfare between farm-equipment makers in the Middle West—chiefly, Deering Harvester and McCormick Harvesting Machine. (The William Deering family had no relation to John Deere & Co., which made steel plows.) Morgan did not think the bank needed this business, but agreed by cable from Europe to take it on if the other partners approved. Perkins merged the two rivals into the International Harvester Company, for a $3 million fee, and reported: “The new company is to be organized by us; its name chosen by us; the state in which it shall be incorporated is left to us; the Board of Directors, the Officers, and the whole outfit left to us.”

  Morgan’s response was lukewarm: “Plan seems satisfactory and safe. Approve signing preliminary contract if you all agree.”

  Perkins had in fact engineered a coup. This combination controlled nearly 85 percent of the American reaper and harvester market, and began earning profits once it fully centralized operations in 1906. When a threat of antitrust prosecution arose in 1907, Roosevelt headed it off, convinced (partly in response to adroit lobbying from Perkins) that Harvester represented the “good” kind of trust.

  Roosevelt had appointed Jack first secretary of a Special American Embassy for the coronation of Edward VII, scheduled to take place at Westminster Abbey on June 26, 1902. Noting the younger Morgan’s taste for all things royal, Dawkins sighed to Steele, “How you Republican gentlemen like a King!”

  Jack was bitterly disappointed when a precoronation ball at Windsor Castle had to be canceled at the last minute because “the inconvenient old King of Saxony had to go and die.… [R]eally its hard to forgive,” he told his mother. “There has not been a ball at Windsor for something like 70 years.” The republican Anglophile was not impressed with the royal family’s organizing skills: no one seemed to be in charge of the coronation preparations, invitations were going to the wrong people, the King refused to delegate responsibility and kept making last-minute changes—Jack thought “what they need is a sort of British JPM to arrange all the details for them.”

  The American JPM arrived from Paris with Anne on June 20 to celebrate the crowning of his friend Edward Rex. Jack stopped grousing when a shocking piece of news interrupted the dress rehearsal at Westminster Abbey on June 24: court physicians had just performed an emergency royal appendectomy. The King was recovering, but the coronation had to be indefinitely postponed.

  The senior Morgan remained in London for a few days, then went off to Kiel to keep his long-standing appointment with Kaiser Wilhelm. Anne described the trip to her mother by mail. On Tuesday, July 1 their party (which probably included the Markoes and Adelaide) left Dover on Corsair in a cold fog, sailing north. That night they ran into a “nasty sea and rolled so hard we almost came up the other side. As a result the boat which had been put in apple pie order got soaked through & through,” and the passengers stayed in their cabins till noon. In calmer weather, Corsair steamed up the Elbe River and through the Nord-Ostsee Canal, arriving at Kiel around midnight.

  “The next morning Mr. Ballin of the Hamburg American appeared and Father received his orders to go in the [Kaiser’s new yacht] Hohenzollern for an audience at ten which he proceeded to do.” The American financier and the German Emperor had not previously met. Wilhelm was the smaller and slighter of the two, at five feet nine and 155 pounds. A birth injury had left him with a withered left arm—photographs and portraits invariably show him from the right, with his weak hand tucked into a pocket or behind his back—and the crushing right handshake with which he greeted guests seemed designed, like Morgan’s defiant glare, to override his deformity.‖ Wilhelm wore a heavily decorated military uniform, tall black boots, and his mustache waxed up into stiff points.

  The British royals were not alone in finding him pompous, intemperate, and obnoxious. His cousin the Russian Empress Alexandra loathed him, as did the aged Bismarck. His mother, whom he had repudiated and deprived of her palace and fortune, did not want him at her deathbed. Still, the German diplomat Count Eulenberg thought “his artlessness and disinterested friendliness give him a quite peculiarly fascinating charm, and he is one of those people who by their very nature arouse spontaneous sympathy.” Others said he brought out the best in people to whom he directed his attention, and had “magnetic power” in conversation.

  Morgan, reported Anne, was “most impressed by the Kaiser who, however, walked him up & down the deck for an hour and a half while he was talking.” She added the “however” because she knew exactly how little her father liked physical exertion, though he could hardly refuse to keep pace with his host. Striding up and down the broad Hohenzollern deck, Wilhelm held forth all morning on the International Mercantile Marine. He acknowledged that he had not thought it “unfair to make a little trouble” between Britain and the United States over ships: “We must all woo your great Republic,” he said, “and the English thought they had advanced so far in your regard over the Spanish War that it was fair to disturb [the] attachment.”

  Dawkins, reporting this conversation to Milner (he probably had it directly from Morgan), reflected: “I think that they understand these things in America. They keep a very close watch and a not unapprehensive watch on Germany in Washington where they seem to be well posted in foreign affairs in spite of (or because of) having no regular diplomatic service.”

  Morgan for the moment constituted the irregular diplomatic service. He left the imperial yacht at 11:30 A.M., and returned for lunch at one. Two other American representatives of the IMM, Clement Griscom and P.A.B. Widener, had come to this informal summit conference as well, and while Morgan continued his discussions with the Kaiser, Alfred Ballin took the Widener, Griscom, and Corsair parties to lunch at the Kiel Yacht Club. Traveling with the Griscoms, reported Anne to her mother, was “Mrs. Nat Goodwin Maxine Elliott!!!!!!” The exclamation points probably had to do with the actress’s celebrity, for if Anne suspected, as other people did, that her father was having an affair with this famous beauty, she would not have gushed about it to Fanny.

  Anne soon had an even more thrilling encounter. “At three o’clock the Kaiser, Von Bülow, his aide de camp and an admiral all came on board the Corsair and stayed an hour and a half, and no words can say how perfectly delightful he made himself. Of course we were all scared to death and didn’t know what to do, but he hates ceremony of any kind when he is off that way and insisted upon doing everything as if he was one of us. As to his looks, he isn’t a bit like his photographs or portraits there isn’t one of them that begins to be strong enough. His eyes are perfectly marvelous[,] very blue & they look you through and through. Well I tell you it was the shortest hour and a half I ever spent.”

  If the Kaiser had not thought it unfair to “make a little trouble” between Britain and the United States over ships, Morgan clearly did not think it unfair to put a little pressure on the British with this display of friendship between the American architects of the IMM and the German high command.

  The next morning the entire American contingent, traveling as the Emperor’s guests, left Kiel for a tour conducted by Ballin. “You must have seen some account of it in the papers,” wrote Anne to her mother, “but no description could half tell you how funny it was. All the party driving around Hamburg in about seven landaus—an enormous lunch of thirty at the smart restaurant & a really beautiful dinner and fête at the Ballins” in honor of the American Fourth of July, with speeches and fireworks. “Then the next morning a special steamer around the harbor—brass band on board & all the Hamburg line boats dressed with flags. Then the train to Berlin – another unending banquet there … and finally to bed.”

  In Berlin, Morgan called on Wilhelm von Bode, the director of the Kaiser Friedrich Museum, which Wilhelm II had dedicated to the memory of his father. Bode was an expert on Western European art from the medieval period throug
h the seventeenth century, especially early Italian sculpture and Dutch Baroque painting. For Prussia’s new imperial museum he was building encyclopedic collections of masterpieces from all over the world, like those at the Louvre and the Kunsthistoriches Museum in Vienna—also models for the patrons of the Metropolitan in New York. Bode took Morgan on a tour of the Berlin museum that July, with special attention to its early Raphael Madonnas, and agreed to provide his guest with occasional scholarly advice.

  On Sunday, July 6, continued Anne, “we were up and doing about 9:30 for Potsdam—did all three castles there & out all afternoon which had been mapped out by the Kaiser and came back to Berlin total wrecks.” There the tour ended, and Morgan’s party went back through Paris to London.

  Anne worried that this “wild jag” had tired her father, “though I know he has enjoyed it all very much and seems very well.”

  Meeting them in London, Jack thought the trip had not done his father much good—“He is always imprudent in his eating habits and his liver has been somewhat upset which naturally makes him rather blue. Moreover he thinks he has lost some weight which always alarms him.”

  Neither fatigue from the trip nor alarm about his weight curtailed Morgan’s London social life. He gave lunch and dinner parties when he was not dining out, and took friends to see his Raphael altarpiece at the National Gallery and his Fragonards at the Guildhall. Dawkins, trying to get him to focus on the IMM, complained to Perkins in mid-July that “the Senior … refuses to attend to business. We never see him & it is difficult to get hold of him. He spends his time lunching with Kings or Kaisers or buying Raphaels.”

  The coronation of Edward VII had been rescheduled for August 9. Morgan rented a house along the procession route, planning to watch the spectacle from there with a party of friends, including the Markoes. Then he received an invitation to the service itself. At the end of July, the Satterlees arrived in London for the occasion with two-year-old Mabel. “Nan [Anne] and Father engaged up to the eyes,” Louisa reported to Fanny, who remained in New York. Jack and Jessie would attend the ceremony as part of the official American delegation, and at the last minute English friends secured a ticket for Anne.

  On the eve of the coronation, Morgan gave a small dinner at Princes Gate, and tried on the court suit he had “with much sorrow of mind induced himself to get,” reported Anne—black velvet breeches and jacket with silver buttons, silk stockings, pumps, and a silver-hilted sword. Bereft of the three-piece suit and wide wing collar he wore like a uniform, he “fussed like mad” over the breeches, recalled the Markoes’ daughter, Annette, and minded the sword, noted Anne, “worst … of all.”

  Early the next morning he once more decked himself out in velvet and silver while Anne’s maids arranged her hair. Father and daughter left Princes Gate before eight, and proceeded by carriage to Westminster Abbey. Crowds had been gathering along the route all night. The Satterlees, Markoes, and Morgan’s other guests watched from the house he had rented on Piccadilly—twenty to thirty people outside fainted in the August heat, reported Louisa. Inside the abbey Morgan took his seat in a gallery above the peeresses, with a clear view of the pageant; Anne was further back behind a choir screen, near Jessie and Jack.

  Edward arrived at eleven-thirty. He had reserved a box for his female friends (court wits called it the King’s Loose Box), including Sarah Bernhardt, Mrs. Arthur Paget, Lady Kilmorey, Feo Sturt, and his mistress, Alice Keppel. He later said that what impressed him most all day was “the simultaneous movement of the peeresses in putting on their coronets,” since “their white arms arching over their heads” looked like “a scene from a beautiful ballet.” Morgan was perfectly situated to appreciate the choreography.

  The Abbey released the crowned monarch at three. Morgan paid calls all afternoon, and the next day gave a lunch at Dover House, an afternoon reception, and a dinner. Louisa, out of practice after two years of marriage, told Fanny that “Father’s presence brings so much hurry and pressure it is really extraordinary!” Pierpont and Anne sailed for home on August 13, taking Dover House melons, peaches, and cream to supplement the White Star fare.

  For a change—and for exactly the reasons it aroused foreign alarm—Morgan’s shipping combine proved popular in the United States. Scientific American reported in July that “irrespective of the attitude of the American people toward trusts in general,” news of the IMM had been greeted with “a distinct feeling of pride and satisfaction.” Adding several hundred thousand tons to the U.S. merchant marine would give the country “a position of pre-eminence such as it has not enjoyed since the decadence of shipbuilding” after the Civil War.

  Popular favor never turned into political support for a federal subsidy, however, and the Northern Securities case haunted the IMM. The Roosevelt administration was still “anxious to help us,” cabled Steele from New York, but Attorney General Knox would not “make any suggestion” as to what form of organization would protect the new combine against antitrust prosecution. Though the bankers were sanguine about the ultimate outcome of Northern Securities—wrongly, as it turned out—they feared that organizing the IMM along similar lines would invite “attack” from the government and the press. Steele wired Morgan in August: “We are very anxious have benefit your views in every aspect business.”

  Morgan had put together U.S. Steel in twelve weeks. The negotiations over the IMM had dragged on for nearly two years. Impatient finally to set this deal in motion, he saw no point in equivocation: while he favored any measure “which will leave us less liable to attack, still everybody knows what we are trying to do, & nothing that we can do will ever hide it from them.”

  Objections to what Morgan was generally “trying to do” came from several quarters that summer. Gaspard Farrer at Barings, who had fatalistically accepted the shipping trust in the spring, told Hill in July that “our friend JPM” had “set a bad example in his big paper capitalizations of recent years & a worse one in exacting commissions for his firm on deals in which he is really the dominant factor on both sides of the table.” Still, Farrer added, “he is a leader among men & worth the whole lot of that miserable mean money grubbing clique of slanderers who are incessantly on the watch to ruin him.”

  William Nelson Cromwell, a partner in Sullivan and Cromwell, the New York law firm hired by the McCormicks to assess their harvester deal, said that Morgan recklessly inflated securities for his own profit, and warned his clients to take care lest “you be uchred [sic] out of your boots.”

  An American not worried about his boots gave himself a sixty-seventh-birthday party at the Metropolitan Club that December. He made up place cards with an engraved self-portrait, and wrote on one: “J. Pierpont Morgan. For financial advice apply without diffidence to Mark Twain.”

  The British government accepted the IMM over the summer of 1902, reluctantly concluding that it had no choice. Its minister in Washington, Sir Julian Paunceforte, warned in June—Dawkins told Milner—that without the Morgan trust an “avowedly hostile combine” would have been formed in the United States “to run our ships off the Atlantic and squeeze them … by cooperation with the railways, out of U.S. ports.” At the same time, the Liberal Party leader Sir Edward Grey advised (again paraphrased by Dawkins) that “we had better go into partnership with [Morgan] and through him with the American people.” In August, the leading Conservative opponents of the trust—Joseph Chamberlain, Lord Selborne, the head of the Admiralty, and Gerald Balfour, president of the Board of Trade—urged the government to “avoid unnecessary friction with the Morgan Combination, and in particular to abstain from action likely to stir up national animosities.” The Conservative Prime Minister, Lord Salisbury, resigned in early August, and was succeeded by his nephew, Arthur James Balfour. At the beginning of September, Dawkins went to Scotland for a weekend with the “brothers Balfour”—the new Prime Minister and the president of the Board of Trade—to draw up an agreement between the house of Morgan and His Majesty’s government.

  The
Morgan bank promised to protect British interests in the shipping trust for fifty years—on roughly the terms Morgan had promised Chamberlain and “Edward Rex.”a Gerald Balfour told the bankers as he prepared to present this “treaty” to the public at the end of September that he had “every desire make announcement in terms satisfactory to JPM.” He succeeded. The firm replied, “JPM & CED [Dawkins] much gratified by [Balfour’s] speech.… JPM has every confidence that HM Government will derive increasing satisfaction from establishing of community of interest on Atlantic between two countries.” Parliament approved the agreement. The IMM was finally incorporated as a New Jersey holding company in early October 1902—as Morgan helped Roosevelt settle the anthracite coal strike.

  The Anglo-American trust owned nearly one fifth of the scheduled tonnage in the North Atlantic trade. It controlled 136 ships and 1,074,884 gross register tons, and was allied with another 329 ships and 1,736,091 gross tons through the Germans. Operating forty-five routes between Europe and North America, and running freight carriers from England to South Africa, Australia, New Zealand, and the West Indies, it owned London office buildings, Liverpool repair shops, and docking facilities in major European and American ports. In 1902 it began to build five new piers on the Hudson River.

  Though the British government acceded to this spectacular assertion of American economic prowess, it held out in one crucial respect: it paid Cunard, White Star’s chief rival for transatlantic passenger service, not to join the combine. Cunard received a £2.4 million loan at low rates, and a subsidy of £150,000 a year to build the largest new passenger steamships in the world, the Lusitania and the Mauritania, with modern turbine engines and hulls built to the specifications of the Royal Navy. To match this challenge, White Star commissioned three expensive “big ships” of its own in 1907: the Olympic, the Britannic, and the Titanic.