by Jean Strouse
If Morgan had dreaded appearing before the campaign finance committee, he dreaded the “Money Trust” ordeal even more. Belle described him to Berenson at the end of October as “very blue … due to that underbred, disgusting and scoundrelly friend of yours, Sam Untermyer … it’s like a nasty little Italian flea attacking a mountain lion … it takes all my physical and mental strength to keep JP cheered up and optimistic.” She read to him, sat with him while he played solitaire, and sometimes just perched “quietly on a little stool at his knee while he sits and thinks and shakes his great head in anger.”
To no one’s surprise, the Republican split gave the election to the Democrats in November. Wilson carried forty of forty-eight states, and 42 percent of the popular vote—to Roosevelt’s 27 percent, Taft’s 23 percent, and 6 percent (nearly a million votes) for the Socialist Eugene Debs. The first Democrat to occupy the White House since Cleveland would have Democratic majorities in both houses of Congress.
The Pujo Committee resumed its hearings in mid-November.§
Stetson had assured Untermyer that his clients would cooperate with the committee and supply the documents requested, but would disclose no information about the affairs of their clients. Moreover, they would not agree that the country’s financial system needed a thorough overhaul—on the contrary, the bankers thought it had never before been “as sound and good as it is to-day, and that improvements have been and are being worked out steadily and naturally through practical experience.” Stetson asked that the examination of Morgan be completed as quickly as possible, since the old man was planning to go abroad.
On Tuesday, December, 17, Jack wired Grenfell: “Going Washington today with Flitch who in splendid form, entirely ready for the very probable difficulties which may occur. He has never been better so am not at all apprehensive.” “Flitch” in fact had a cold, and was exhausted when his party—which included Davison, Lamont, Jack, Louisa, and fifteen lawyers—reached the capital by special train that night.
Louisa was watching him closely for signs of strain. He stayed up late playing solitaire in his room at the Willard Hotel. “Spent a.m. in uncertainty,” Louisa wrote in her diary the next day: “Finally went at 2 p.m. to House Office Building to Rooms of Money Trust Committee.” She and Jack rode to Capitol Hill with their father. The lawyers and other partners followed in separate cars. Untermyer expedited his examination of the statistician, Scudder, in order to call Morgan at 3:00. “The financier showed weariness as he took the stand,” reported The New York Times on the nineteenth: “He did not have that spruce look that characterized him when he appeared before the Senate committee investigating campaign funds last October. At times his voice was low, but his answers could be heard distinctly.”
For half an hour, Untermyer elicited general facts about the Morgan bank from his witness. At 3:30, when the congressmen were called to the House, Chairman Pujo adjourned the hearing until the following morning.
At 9:00 A.M. on Thursday, before a packed hall, Untermyer began by asking Morgan about his control of railroads. He established that the voting trustees for the Southern Railway were Morgan, Baker, and Lanier, and that these men were also the road’s principal bankers. Would it not be better for interstate railroad corporations to sell their securities in open competition, asked Untermyer, than be tied to one banking house, “however just its methods?”
Morgan said, “I should not think so.” He explained that the securities issued by railroads did not always “prove good.”
Untermyer: “But the banking house assumes no legal responsibility for the value of the bonds, does it?”
Morgan: “No sir, but it assumes something else that is still more important, and that is the moral responsibility which has to be defended as long as you live.”
Untermyer sarcastically submitted that “moral responsibility never materializes into money, does it?”—meaning money for the bankers.
Morgan took him to mean money for investors: “Yes, because the company is reorganized, bonds are issued, and people get their money and interest.”
Untermyer observed that bankers never lose money—the first thing provided for in reorganizations was banker profit.
Morgan: “Not always—only if the reorganization goes through.”
Untermyer asked him to name one instance in which a banker who advanced money on defaulted securities failed to get his money back in the reorganization.
Morgan: “I cannot recall it now, sir, but I am sure there are cases.” Many of his own reorganizations had in fact failed after their voting trusts expired. In some cases, he lost money. In others, he went back and reorganized the companies a second and third time. Because of his long-term commitment, most “Morganizations” eventually did yield profit to their investors and bankers—but their author was seventy-five years old, not adroit with old details, and not about to deliver a lecture on railroad finance.
Moving on to the recent consolidations of financial institutions in New York, Untermyer asked about the relations between J. P. Morgan & Co., Baker’s First National, and Stillman’s National City Bank. He had no idea that they referred to themselves as “the Trio.” The committee’s final report would show that the combined financial resources of the Trio banks amounted to over $630 million, and that the partners and officers of these banks and their affiliated trusts held directorships in companies with aggregate capital resources of $25 billion—a concentration of private wealth that staggered the national imagination.
At the hearing, Untermyer asked Morgan: “You have made many issues or purchases jointly with First National—Mr. Baker’s bank?”
Morgan: “Yes.”
Untermyer: “You and Mr. Baker have been old and close friends and associates for many years, have you not?”
Morgan: “For a great many years; yes.”
Untermyer: “Almost since you began business?”
Morgan: “Well, since 1873, at least.”
When Untermyer asked whether the two banks had not made joint purchases and issues, and invited each other to participate in offerings—implying insidious collusion—Morgan answered frankly: “I always offered them anything I had.”
Because the old man did not recall exactly who sat on which boards, Davison volunteered that Whitelaw Reid was not on the executive committee of the First National. Morgan agreed with Davison. Untermyer did not, and proposed to look the matter up.
Morgan: “I think I am right, Mr. Counsel.”
Untermyer: “Mr. Davison says you are right, does he not?”
Morgan: “Yes.”
Untermyer: “That is the reason you think so?”
Morgan: “I always believe anything Mr. Davison says.”
He had been spending six to eight months a year in Europe lately, while Davison effected most of the financial consolidations, and age had dimmed his once phenomenal memory. In addition, his partners and lawyers had finally convinced him that in the current political climate it would be better if he was not seen as playing a commanding role in the country’s economic affairs—that his adversaries would read only nefarious intent in the financial control the Trio had assiduously secured. Not at ease with shades of gray, Morgan proceeded to disavow every inference about his power, which led to a certain amount of unnecessary dissembling.
Untermyer asked: “You spend probably half the year abroad of late years?”
Morgan (although a truthful “Yes” would have helped explain his fogginess about details): “No, not generally; about four or five months.”
At another point, discussing Bob Bacon’s 1898 negotiations for the acquisition of anthracite coal roads, Untermyer asked: “Who was Robert Bacon?”
Morgan: “Who was Robert Bacon?”
Untermyer: “Yes.”
Morgan: “At what date?”
Untermyer: “1898.”
Morgan: “He may have been a partner of mine.”
This literal-minded answer—“may” referring to the date (Bacon had been Morgan’s
partner from 1894 to 1902, but held other positions after that)—seemed a superfluous dodge.
Untermyer then took Morgan in detail over the purchase of the Equitable Life Assurance Society in 1910. Baker and Stillman had each agreed to accept a quarter-interest in the company if Morgan asked them to, but he had not asked. “You may explain, if you care to, Mr. Morgan, why you bought from Messrs. Ryan and Harriman $51,000 par value of stock that paid only $3,710 a year, for approximately $3,000,000, that could yield you only one-eighth or one-ninth of 1 per cent.”
Morgan: “Because I thought it was a desirable thing for the situation to do that.”
Untermyer: “That is very general, Mr. Morgan, when you speak of the situation. Was not that stock safe enough in Mr. Ryan’s hands?”
Morgan: “I suppose it was. I thought it was greatly improved by being in the hands of myself and these two gentlemen [Baker and Stillman] provided I asked them to do so.”
Untermyer observed that the acquisition of stock paying one eighth of a percent did not make business sense when the current rate of return on money was 5 percent.
Morgan: “I am not talking about it as a question of money.”
Untermyer again asked why Morgan bought it.
Morgan: “For the very reason that I thought it was the thing to do, as I said.”
Untermyer: “But that does not explain anything.”
Morgan: “That is the only reason I can give.”
Untermyer: “It was the thing to do for whom?”
Morgan: “That is the only reason I can give. That is the only reason I have, in other words. I am not trying to keep anything back, you understand.”
Untermyer: “I understand. In other words, you have no reason at all.”
Morgan: “That is the way you look at it. I think it is a very good reason.… Some of these days you will agree with me.”
Untermyer: “You can never tell what may happen. Some of these days”—he turned it around—“you may agree with me, Mr. Morgan.”
Morgan: “Very well. That may be. If I do, I shall wait for a good reason.”
After this droll exchange, Morgan repeated that he had not bought the Equitable to make money, but wanted the stock “where it could not be divided up into small lots.” Harriman had died, Ryan had sold half his shares, and there was no telling who would take control of the company, with assets now worth $500 million: “Those are the things I had in mind. I am trying to show you some of the things that went through my mind.”
A few minutes later, when Untermyer again asked about the eighth-of-a-percent return, Morgan said: “My friend, if I should attempt to tell you where the money is in every transaction I make, I would have a very hard time of it.”
Untermyer: “You would not be able to do it?”
Morgan: “I have given you, from my heart, the exact facts.”
Untermyer: “I know you have, Mr. Morgan, and I am trying to find out the real reason for this thing.”
Morgan was actually trying to show “some of the things that went through” his mind—an effort he rarely made. He had wanted to keep the Equitable safe from market-disrupting takeover attempts, which was all the reason he needed. That there might be a difference between “good” and “real” reasons for his actions was a modernist concept entirely alien to his sensibility.
He was as certain that he had been doing the country great service all his life as Untermyer was certain that the Money Trust was up to no good, and the gulf between their positions came out plainly on the subject of monopoly concentration. What to Untermyer represented an oligarchical “system, vicious and dangerous beyond conception” had for Morgan evolved as a practical solution to a range of economic problems.
The consolidation and amalgamation of railroad systems, industries, and banks “does not look to any concentration?” asked the lawyer in open disbelief.
“No sir.”
A dubious Untermyer: “It looks, I suppose to the dispersal of interests rather than to concentration?”
Morgan: “On no; it deals with things as they exist.”
When the questioning ended on Thursday afternoon, December 19, Morgan walked up to the rostrum, shook hands with the members of the committee, thanked them for their courtesy, and said it had been a pleasure to offer his testimony. His party returned to New York by train, arriving in time for dinner. “Father made a magnificent showing,” Louisa wrote in her diary that night: “Untermyer nowhere!”
Congratulations poured in to 23 Wall Street and 219. Jack told Herman Harjes that his father had “in no way suffered from the strain, because he feels that he has done a good thing, and we hope now he will sail on January 7th and get a good holiday in Egypt, which he has earned mighty well.”
Belle described her Chief as feeling very much better and looking “about seventy years younger” than when he left for Washington. Fanny returned from Europe on December 24 to find “All well, Pierpont especially so.” On Christmas morning, reported Belle, he marched into the library singing “O Come All Ye Faithful” at the top of his lungs—“throwing his hat and cane into the nearest receptacle (a porphyry sarcophagus) and putting both arms around me and kissing me on both cheeks.” He asked her to go to Egypt with him, she told BB. When she said they should not both be away from the library at once, he invited Louisa. He sent his usual Christmas greetings to friends, including Bishops Lawrence and Doane, Ladies Sackville, Johnstone, and Dawkins, and Margot Asquith, the wife of the Prime Minister, at No. 10 Downing Street.
Harper’s editor George Harvey called at the library and reported that Morgan regarded Wilson’s presidency with “honest apprehension” but remained as “optimistic as ever” about the American future. As his guest prepared to leave, the old man rose from his chair “with difficulty, for he was then quite feeble,” and said, “ ‘When you see Mr. Wilson, tell him for me that if there should ever come a time when he thinks any influence or resources that I have can be used for the country, they are wholly at his disposal.…’ ”
The Metropolitan Museum was mounting an exhibition of twenty-nine paintings Morgan had recently brought to America from London. As he considered leaving several of his collections to the museum, he hoped that the city would fund the building of a new wing, but New York officials had made no move, and the Met had a policy of not accepting conditional bequests. In 1909, however, Benjamin Altman had offered his collection to the museum if it could be kept together in one gallery, with a curator he appointed and paid for, and Morgan as president of the Met had agreed in that case to bend the rules. When the Altman bequest finally came to the museum at Altman’s death in 1913, it was valued at $15 million. Robinson described it as “without question the most splendid gift that a citizen has ever made to the people of the city of New York.” According to the art critic Calvin Tomkins, Morgan’s collection was to Altman’s “as the ocean to an inland sea.” Had it belonged to someone else, Morgan would surely have found a way to secure it for the Met.
In November 1912, with no prospect of city funding, Morgan told Edward Robinson, now the museum’s director, that he had no intention of leaving his art to the Met: “He said that the value of these collections at the present time was about $50 million,” Robinson reported in a memo, “and he regarded this as much too large an asset to take out of his estate in case it might ever be needed.” The director added, “This is the first indication Mr. Morgan has ever made to me of his ultimate intentions with regard to his collections.”
In late December, after the Pujo hearings, Morgan brought up the subject again. Although the exhibition of his paintings would open in January, he asked Robinson not to have any of his other collections unpacked, on the theory that if the city found out they were on display it would not fund the new wing. When Robinson assured him that the Board of Estimate promised to appropriate funding soon, Morgan replied “with some vehemence” that whether or not the money was granted, nothing was to be done with any of his art until he issued further instructions.
He had just that December bought from Duveen, with an endorsement from Bernard Berenson, a Filippo Lippi altarpiece called St. Lawrence Enthroned with Saints. It was, Berenson wrote to Morgan, one of Filippo Lippi’s “suavest, sanest, completest, and most characteristic works,” with a “flower-like beauty so worthy of the master of Botticelli”; it ranked with “the hundred best pictures painted in Florence during its gloriously creative fifteenth century.” Described by Vasari, these panels of tempera on wood with gold ground had been painted in about 1440 for the chapel of the Alessandri family villa near Fiesole. Berenson, who had a contract with Duveen for 25 percent of the profit on works he authenticated for sale, pointed out the paintings’ “immense historical interest,” since Alessandro degli Alessandri had been “obviously … very friendly to the nascent power of the Medici.” He urged Morgan to “conceive how startingly rare it is to get hold of a work of art” that in the course of its four hundred seventy-two years had “changed hands only on falling into yours.”
Morgan paid $215,000 for the altarpiece. Belle told BB on December 31 that “JP wanted to send it to the Museum but I would not let him. So I am going to hang it in the Library as soon as he goes” abroad. It went to the museum.‖
Duveen and Berenson had also offered Morgan a small painting by Crivelli that fall—Belle told BB she would leave Morgan if he didn’t buy it. He didn’t buy it, and she didn’t leave. At the end of the year she reported that “a man named Lehman” had bought it for $450,000. She had just met his son, a Yale student, at the George Blumenthals’, and when she told him the painting had been refused by Morgan he seemed “crestfallen,” but cheered up after she explained that the shame was Morgan’s, not the picture’s. “He was,” she told BB, “merely a nice amiable Jewish little boy of no charm or interest.” He was Robert Lehman, who later became a vice president and trustee at the Met as well as head of Lehman Brothers. His collection forms the nucleus of the Met’s Lehman Wing.