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  The Great Pierpont Morgan

  Frederick Lewis Allen

  CONTENTS

  Preface

  I Judgment Day

  II The Materials of a Career

  III Groping for Direction

  IV Morgan the Peacemaker

  V No. 219

  VI Railroad Reorganizer—and Emperor?

  VII Gold for the Government

  VIII Triangulation

  IX Billion-dollar Adventure

  X Pomp and Circumstance

  XI The Limits of Triumph

  XII Rock of Defense

  XIII Envoi

  Sources and Obligations

  Index

  About the Author

  PREFACE

  I first encountered Pierpont Morgan’s personality some fourteen years ago, when I was working on an informal financial history called The Lords of Creation and read his testimony at the Pujo investigation—that testimony which is cited in the first chapter of this book, and again in the last few pages. Here, I thought, is an extraordinary man, strikingly different from the other financial and industrial princes of his day, and different, too, from the impression which he made upon the public mind. Ever since then I have played with the idea of writing about him at greater length. But not until 1947 could I find the time to begin it; and as soon as I went to work, the difficulty of the task became obvious.

  This difficulty lay in the nature of the evidence about him. In the first place, it was curiously scanty. He himself had been very reticent, unwilling to be interviewed or written about. This reticence continued in his son, who both worshipped him and was reluctant to have anything written about him; and it spread like a contagion among his family and associates. Furthermore, most financial reporting tends to be impersonal and to give few dramatic glimpses of men in action; and the contemporary financial chroniclers had walked with special circumspection when they approached 23 Wall Street. There were legends and anecdotes galore, but many of them were of uncertain veracity. Finally, what evidence had accumulated about Pierpont Morgan was strikingly divided between the one-sidedly laudatory and the one-sidedly derogatory.

  Pierpont Morgan’s son-in-law, Herbert L. Satterlee, had written a detailed biography of him, rich in evidence as to various personal matters; but it was grossly flattering, occasionally inaccurate on business matters, and quite lacking in any perspective upon his father-in-law’s financial operations and their significance. Accounts of Morgan, written and oral, by others who had been close to him seemed to me likewise to present him in an unbelievably benign aspect; these accounts could not be brushed aside and were often revealing, but could hardly be taken at their face value. And on the other side were a number of books, such as Lewis Corey’s The House of Morgan and Matthew Josephson’s The Robber Barons, which while helpful on the facts of many transactions seemed to me wholly unreliable as to Morgan’s motives and total impact upon the American economy; for they had apparently been written on the assumption that if a great capitalist did something which could be ascribed to any one of five motives, the duty of the historian was to ascribe it to the worst of the five, brushing aside all evidence which suggested laudable intentions and eagerly underlining any evidence which suggested base ones. Between the conscientiously flattering and the conscientiously hostile accounts of Morgan there was room enough to drive a ten-ton truck. (There were other books of a more judicial nature, notably Carl Hovey’s The Life Story of J. Pierpont Morgan and John K. Winkler’s lively Morgan the Magnificent, but they were confusing to work with, for it was sometimes hard to know when they were presenting verified facts and when they were embroidering gossip or legend.)

  Believing as I do that it ought to be possible to write about a man of note, whether he be a master of capital or a labor leader or a politician, without being wholly swayed by prejudice for or against the type of institution which he represented, and believing especially that it is a disservice to history to depict the conflicts between men of opposing social and economic ideas as conflicts between saints and sinners, when common sense should tell us that human beings are not thus compartmented, I have tried to steer a true course between the Morgan-praisers and the Morgan-dispraisers. Pierpont Morgan was a man with whom I would have disagreed strongly on most political and economic issues if I had been his contemporary. To me he represented a trend in the direction of economic affairs which had to be altered for the good of the country. But I am also convinced that he was a man great in character and force, whose immense influence was in many respects salutary. What I have tried to do, therefore, has been to show what sort of man he really was; how his ideas developed out of his background and the traditions of the group to which he belonged, and out of his experience; how both his ideas and his actions conflicted with those of others whose background and experience differed from his; and how they influenced, and were affected by, the course of American history.

  Owing to the nature of the evidence, this has not been easy. As to the facts in this book I have been scrupulously careful, rejecting unverifiable legend. As to the interpretation of Morgan’s impulses and ideas and view of affairs, that is my own. I have tried to ask myself, “From all the evidence available, and from whatever intuition I may have acquired about human nature, and especially about the impulses and ideas of men whose background and circumstances and position have in one way or another been comparable to Morgan’s, why do I think he acted as he did?” Obviously, some readers will feel that I have accepted too naïvely the testimony of his admirers; others, that I have followed too closely the reasoning of his detractors. All I can say is that the picture painted here represents the fairest judgment I know how to bring to bear upon an extraordinary man who has never yet been adequately depicted, in his true colors, against the background of the times upon which his influence was so prodigious.

  F. L. A.

  I

  JUDGMENT DAY

  1

  A few days before Christmas in the year 1912, John Pierpont Morgan, the most influential banker in the world and the mightiest personal force in American business life, was called to testify before an investigating committee in Washington. This group—a subdivision of the House Committee on Banking and Currency—was popularly known as the Pujo Committee, because its chairman was Arsène Pujo of Louisiana; and its aim was to demonstrate, through evidence brought out in its protracted hearings, that there existed in America a “money trust”—that a small group of New York bankers, headed by Pierpont Morgan, held such a grip on the money and credit resources of the country, and so dominated the big industrial and railroad corporations through “interlocking directorates,” that in effect the whole American economy lay under their control. Day after day the Pujo Committee had spread its evidence on the record, and now the inquiry was coming to its climax. Pierpont Morgan himself, the head and front of American banking power, was going to take the stand.

  He was an old man now, well along in his seventy-sixth year. His hair, which had been dark in his youth, and then steel gray, was white and thin. Even his big straggling mustache, which had remained black until old age approached, was graying. Now as always the first thing that caught the attention of anyone who saw him for the first time was his nose, for it was bulbous and flaming red as the result of a baffling skin disease that had fastened itself upon him progressively during his later years. Only when one had accustomed oneself to the sight of this hideous and dismaying feature did one note his extraordinary eyes, whose burning intensity had so often held men in awe of him. But those eyes were tired
now. The vital force in him was waning; though no one in the committee room could know it, he was within four months of his death. This was to be his last public appearance, his last accounting for his stewardship.

  2

  All his active life Morgan had spent a part of each year in Europe; now that he had virtually retired from business, his travels during this year 1912, while characteristically magnificent, had been exceptionally protracted.

  New Year’s Day of 1912 had found him already on the way from New York to Europe, dozing and playing solitaire in his private suite on a liner headed for Cherbourg. He had traveled by special train from Cherbourg to Paris, where he visited the American Ambassador; then had crossed to London to superintend the packing of part of his vast art collection for shipment to New York; and then, after a short stay at Monte Carlo, had proceeded to Egypt, where he had taken a party of friends up the Nile. They had traveled in his own river steamer, an all-steel vessel especially built to his order; and the party had included, characteristically, a bishop and several attractive ladies. One day in Cairo Morgan visited the gold bazaar, bought a liberal collection of bracelets, necklaces, and other gold ornaments, and on returning to the hotel spread them out on a table in his sitting room, crying to the ladies, “Now, help yourselves!”—which, after some hesitation, they did.

  From Egypt he had moved on to Rome, where he was granted a private audience with King Victor Emmanuel; to Aix-les-Bains, where he took the cure; to Venice, where he took part in the inauguration of the new Campanile, to whose construction he had subscribed; to London and Paris, where he purchased two fifteenth-century tapestries. Then he had boarded the Corsair, his private yacht, the finest in the world, to be the personal guest of the German Kaiser at the Kiel Regatta. A flying trip to Rome—where he turned the first sod for the building which he had enabled the American Academy to build—and he was ready to leave for the United States. During the rest of the year 1912 he had put in some weeks of business at his office, had taken a cruise of several weeks on the Corsair, had testified in Washington before a committee investigating campaign expenditures, had inspected an art gallery which he had presented to the city of Hartford, had promised to give Hartford a library too, and had attended the consecration of a new chapel for St. George’s Church in New York, of which he had long been senior warden.

  Not wholly a relaxing year for a man of seventy-five; and now Pierpont Morgan was in Washington again to face a new set of congressional inquisitors, with their elaborate charts designed to show how a network of influence and control reached from 23 Wall Street, the headquarters of J. P. Morgan and Co., by way of banks and trust companies and the directorates of industrial corporations, throughout the whole structure of American business.

  He had been very tired during the preceding days in New York, when his partners and the firm’s lawyers had tried to brief him on what he should say. They took a dark view of the impending proceedings, which they looked upon as insolent, crafty, and no doubt inspired by the lowest motives of personal ambition on the part of the congressional investigators; and Morgan himself was depressed. As his son-in-law later wrote, “His feeling about this examination in Washington was that the people down there were going to ‘make a show’ of him.… The more his counsel warned him about possible plots and pitfalls, the more annoyed and apprehensive he got. For him the trip down to Washington was not a pleasant one, and at the hotel after dinner he told the lawyers he needed a rest and devoted himself to his cards.” In moments of anxiety or crisis solitaire had always been his recourse; there was something that responded to his inner constructiveness in this creation of order out of haphazard disorder.

  The next morning he traveled to the Capitol in a big square-topped limousine and walked beside his daughter Louisa and his son Jack through the staring crowds to the committee room—an old-fashioned figure in a heavy velvet-collared overcoat and high silk hat, walking slowly, with a stick. The committee room was packed, and the crowd outside was kept in order by policemen. Presently the examination of the day’s chief witness began, following the traditional formula.

  Q. Where do you reside, Mr. Morgan?

  A. New York City.

  Q. Are you senior member of the partnership or firm of J. P. Morgan & Co., bankers, of New York City?

  A. I am, sir.…

  Q. Does your New York house do a general banking business?

  A. We try to, sir.

  Slowly the examination unfolded. It was as if—through the agency of the Pujo Committee—the American public were asking this man, at the close of his extraordinary life, “Tell us, before it is too late—have you really controlled American business? And if so, how is it done? And do you think it right that any man, in a republic which hopes to be a genuine democracy, should wield such authority?”

  3

  Samuel Untermyer, counsel for the Pujo Committee, a shrewd and well-prepared lawyer, conducted the examination. Morgan’s son and daughter and his partners and lawyers were uneasy lest the old man break down under Untermyer’s questioning. They need not have been. Morgan was a direct and co-operative if singularly determined witness. He took no refuge in the evasions or lapses of memory or vague circumlocutions which often afflict business executives when they confront congressional committees. He answered clearly and stoutly; when he could not remember a fact or figure he said he would be glad to have it looked up and produced for the committee later. And he spoke with completely satisfied assurance.

  When Untermyer, having established that some seventy-eight interstate corporations carried bank accounts with J. P. Morgan & Co., and that their deposits totaled over eighty-one million dollars, asked Morgan if he thought it was a wise thing to permit publicly owned corporations to make deposits with a private banker, he answered firmly, “I do, sir.” Untermyer further brought out that a great many railroad corporations had made J. P. Morgan & Co. their fiscal agent, so that the Morgan firm had become the designated channel through which these railroads must sell all their securities to the public, and thus had become also their sole source of investment funds; and Untermyer went on to ask, “Don’t you think it would be better for these great interstate railroad corporations if they were entirely free to sell their securities in open competition than that they should be tied to any banking house, however just might be its methods in the issue of such securities?” Morgan answered, “I should not think so.” When he was asked whether the fact that there were a few men (such as Morgan himself and his partners) who served on the boards of directors of many banks did not tend to prevent those banks from competing for deposits, his answer reflected a colossal confidence. “I should doubt it,” said he. “I have been in business for a great many years in New York and I do not compete for any deposits. I do not care whether they ever come. They come.”

  With all the ingenuity of a trained trial lawyer, Untermyer tried to get Morgan to admit that he exercised great power. Morgan would have none of it. He said he exercised no power at all. It was as if he were asserting that all the elaborate charts prepared by Untermyer’s aides were so much nonsense.

  The audience in the committee room was ready for this sort of denial; of course this organizer of huge corporations, this consolidator of banks, this master of the authority of money would be expected under such circumstances to minimize his own status; but presently Untermyer’s verbal rapier would find a weak spot. Morgan was denying too much. He was not only—against all reason—denying that he controlled the reorganized railroads for which he had named the voting trustees who named the directors; he was actually denying that if he himself were voting trustee for all the railroad systems of the United States, this would concentrate control of them in him. He was denying that there was any way in which one man could get a monopoly of money, or control of it.

  Yet as the questioning persisted, it became apparent that these denials on the old man’s part were not merely tactics in his battle of wits with Untermyer; they came from something deeper in his nature, some
thing that commanded the audience’s respect. Morgan was insisting that what ruled the financial world was not money, but character.

  “Is not commercial credit based primarily upon money or property?” asked Untermyer.

  “No, sir,” said Morgan; “the first thing is character.”

  “Before money or property?”

  “Before money or anything else. Money cannot buy it.… Because a man I do not trust could not get money from me on all the bonds in Christendom.”

  How could anybody hear those words—so dubiously applicable to the facts of the business world in general, yet clearly so valid to the old gentleman in the witness chair—without wondering what manner of man this was, what principles had ruled his long career, and by what conjunction of circumstances and events he had come to a place where people could honestly believe that he was the ruler of America?

  II

  THE MATERIALS OF A CAREER

  1

  Among the men who wielded far-reaching authority in American business at the beginning of the twentieth century, Morgan was unusual in his origins. John D. Rockefeller’s father had been a pitch man of uncertain repute—an itinerant salesman of patent medicines—and Rockefeller himself had begun his working life at sixteen as a $4-a-week clerk in a commission merchant’s office in Cleveland. Andrew Carnegie had been born in a weaver’s cottage at Dunfermline, Scotland, and after having been brought to the United States in his early childhood had gone to work at thirteen as a $1.20-a-week bobbin boy in a Pittsburgh cotton mill. Among the subsequently mighty bankers, George F. Baker, a country boy, had begun as a clerk in the New York State Banking Department at Albany; James Stillman’s father had been well-to-do but had suffered reverses, and young Stillman had entered business life at sixteen in a small position in the cotton business. And even the great railroad organizer, E. H. Harriman, though he had had wealthy friends and moderately prosperous relatives, had been unable to get to college and had been introduced to business by way of a job as a broker’s office boy at $5 a week. The prevailing pattern was of the sort prescribed by Horatio Alger: begin work as a boy, without benefit of higher education; work furiously, with a single eye to business; and thus rise to the top.