Innovation & Wealth › The Gilded Age › Robber barons and the great trusts
J. P. Morgan
1837–1913; Drexel, Morgan & Co. 1871· Innovator or entrepreneur· Innovators & entrepreneurs
Well documentedSolid records, texts or physical evidence.
The dominant American banker of his age, who financed railroads and industry and twice stepped in to rescue the US financial system.
See it on the Innovation & Wealth map →What happened
Son of a London-based American banker, Morgan sold US railroad and government bonds to European investors and reorganized bankrupt railroads, taking board seats to impose order, a practice dubbed 'Morganization.' He earned fees and stakes from deals such as General Electric (1892), U.S. Steel (1901) and International Harvester (1902). In 1895 his syndicate replenished the US Treasury's gold; in the Panic of 1907 he marshaled bankers to stop runs. His estate, about $80 million in 1913, was modest beside Rockefeller's.
Impact on society and the economy
He shifted industrial power from founders to bankers and showed both the stability and the danger of private control over credit; the Pujo hearings and the Federal Reserve followed.
Fortune, legacy and how we know
Legacy: the Morgan Library & Museum, JPMorgan Chase and Morgan Stanley. Sources: bank archives, his 1912 Pujo Committee testimony and Jean Strouse's biography Morgan: American Financier (1999).
Still debated
Did his consolidations stabilize industry or mainly stifle competition and enrich insiders? A remark attributed to Rockefeller, that Morgan 'wasn't even a rich man,' is unverified.
Inside this (1)
Connections (3)
▸J. P. Morgan financed Thomas Edison and General ElectricWell documented
The connection
Drexel, Morgan & Co. helped fund the Edison Electric Light Company in 1878, betting on electric lighting before it worked. Morgan's Madison Avenue mansion became one of the first homes lit by Edison's system, in 1882. Morgan's bank later helped merge Edison's companies into General Electric in 1892, sidelining Edison.
When and how
New York, 1878–92; Edison's lawyer Grosvenor Lowrey brought Edison and Morgan's partners together.
How we know
Corporate records, letters among Edison, Lowrey and Morgan partners, and accounts of the 1882 installation at Morgan's home.
Debates
Who drove the 1892 merger, Morgan's bank or Thomson-Houston's Charles Coffin, and whether Edison was pushed out or simply moved on, are debated.
▸J. P. Morgan created U.S. Steel, the first billion-dollar companyWell documented
The connection
Fearing a price war between Carnegie and Morgan-backed steel firms would wreck profits, Morgan bought Carnegie Steel in 1901 and merged it with Federal Steel and other steel and wire makers. His bank organized the stock issue, placed allies on the board and installed Elbert Gary as chairman.
When and how
New York, December 1900 to April 1901; Charles Schwab pitched the idea at a dinner, then Morgan, Gary and Carnegie negotiated.
How we know
Incorporation documents, the syndicate agreement, later federal investigations and participants' memoirs record Morgan's central role.
Debates
Whether Morgan aimed mainly at industrial stability or at underwriting profits for his syndicate is debated.
▸J. P. Morgan acted as a one-man central bank before Federal Reserve ActMostly agreed
The connection
In the Panic of 1907, with no central bank, 70-year-old J. P. Morgan gathered bankers in his New York library, decided which trust companies to save, and organized rescue pools. It worked, but it alarmed Congress: the nation's financial safety depended on one aging private banker. Reform began in 1908 and produced the Federal Reserve five years later.
When and how
New York, October–November 1907; Morgan, Treasury Secretary George Cortelyou, banker Benjamin Strong and others. Morgan died in March 1913, months before the Act.
How sure are we?
Press accounts, participants' memoirs, and the 1908 Aldrich–Vreeland Act, which created the National Monetary Commission in direct response to the panic.
Debates
Did Morgan act for the public good or his own gain? He had US Steel buy a rival cheaply mid-crisis. Fear of his 'money trust' shaped the Fed's decentralized design.