The Great Pierpont Morgan Read online

  It was very much of a one-man show that he ran at first. He was George Peabody & Co.’s American representative, selling bills of exchange on the London firm and acting generally as its agent in New York. At first he did not even have a clerk to help him; he sold bills all morning, posted his books in the afternoon, and spent half his evenings writing letters to George Peabody & Co. or to his father—the letters to his father being long, detailed, and candid reports of his business operations, his personal news, and the general state of affairs in America. He continued writing candid letters like these until his father’s death in 1890. Toward the end of his life, coming upon the entire file of them in the library at Dover House, the Morgan country place outside London, finding them full of intimately confidential data and unreserved expressions of opinion about people, and fearing that some biographer or historian might make such items public, he burned the entire collection!

  Meanwhile he had settled into the agreeable life of a young gentleman-about-town. He roomed comfortably with his somewhat older friend Joe Peabody, a nephew of George Peabody of London, in what was then the fashionable uptown district of Manhattan; they lived first on West Seventeenth Street and then on East Twenty-sixth Street. (In those pre-Civil War days the solid blocks of brownstone houses reached up Fifth Avenue only to about Thirty-seventh Street; northward of that point only a few scattered urban buildings had invaded the market-gardens of the Manhattan countryside. And although William B. Astor, the city’s wealthiest man, had built a house for himself as far north as Thirty-fourth Street—on the corner where the Empire State Building now stands—the chief center of polite society was still the neighborhood of Washington Square; and the center of entertainment was at Broadway and Fulton Street, far downtown, where stood Barnum’s celebrated American Museum. There was no such thing as a tall building in the whole town; the city skyline was broken, not by skyscrapers, but by church spires.) Pierpont’s account books for his earliest months in New York throw a glimmer or two of light upon his life as well as upon the prices of 1857–58: they contain such items as Lunch .30, Dinner 1.00, Omnibus .06, Paper .02; To Hartford 2.65, Supper .37, Collection .25, Tolls .20, Feed .35, Horse and buggy to Middletown 3., To New York 3.25; Cap 2., Gloves 1., Barber .12, London News .15, Lunch .28, Dinner at Everett House 1., Tickets to Philharmonic Concert 3., Church collections 1.25, Charity Five Points Mission 10., Seidlitz powders and sugar .37, Opera tickets 8., Adele 1., Sleighride 13.62.

  Gradually, young Morgan made a considerable acquaintance among the substantial families of the city; and he threw himself with as much gusto into Sunday-evening hymn singing at the Babcocks’, or country walks at the Osborns’ in the Highlands of the Hudson, as into evening gatherings of young people at the Sturgeses’, who owned what was said to have been the first grand piano in New York. He had a sizeable income from his family, good prospects, high spirits, and the sort of gusto that made every party of young people revolve about him.

  6

  One might have foreseen for him a wholly reasonable and orthodox marriage. A few years before, when he was at Göttingen, he had written to Jim Goodwin, who had expressed a tender interest in a Hartford girl who was studying to be an opera singer, a letter that was positively elderly in its counsels of prudence: “Your career in life like mine,” he had written, “depends on our own individual exertions, our courses though widely apart will both be in the mercantile sphere, and from this cause it becomes our duty to select for our wives those who, when we go home from our occupations, will ever be ready to make us happy and contented with our homes.” Pierpont might have seemed to be following his own sage advice when he soon fell in love with Amelia Sturges, a girl of impeccable Manhattan antecedents. Yet what happened next took him clean out of the pattern of frugal and ambitious calculation which he seemed to have been setting for himself up to this time.

  We must bear in mind, however, that in his inheritance, along with the blood of the shrewd Morgans, there was a more romantic and headlong strain: his maternal grandfather had been the Reverend John Pierpont, clergyman, poet, and man of reckless principle, who as pastor of the Hollis Street Church in Boston had been threatened with the loss of his pulpit if he would not stop preaching abolitionism and other indiscreet measures of social reform, and had defied the pillars of the parish, preached a last undaunted sermon, and then resigned.

  In the spring of 1861, just as the Civil War was beginning, Amelia Sturges—or Mimi, as she was generally called—came down with tuberculosis. By autumn she was gravely ill. Pierpont decided that she must be taken to a warmer climate—and that he would marry her and take her there. His business? That could go hang; and anyhow his loyal cousin Jim Goodwin could be persuaded to come down from Hartford and look after the office for an indefinite time. Nothing—nothing in the world—mattered but Mimi.

  So on October 7, 1861, he and Mimi were married, though by that time she was so weak that she could not stand alone. A few close friends gathered in the front parlor of the Sturges house on East Fourteenth Street in New York; in the back parlor, behind folding doors, the minister took his place; then Pierpont carried Mimi downstairs in his arms to the back parlor, the folding doors were opened, and he held her upright during the brief wedding ceremony. Then he carried her to a carriage outside, drove with her to the pier, and took her abroad with him—first, by way of England, to Algiers, and then, in desperation when her strength continued to fail, across the Mediterranean to Nice.

  It was all to no avail. Mimi died only a little over four months after the wedding.

  A widower at the age of twenty-four, Pierpont Morgan returned to New York. Slowly he began to pick up the pieces of his life and put them together again. On the first of September of that year 1862 there appeared in the New York Times a modest advertisement to the effect that he was now ready to engage in business under the style of J. Pierpont Morgan & Co.

  III

  GROPING FOR DIRECTION

  1

  The New York to which young Morgan returned after his brief and tragic adventure in marriage was seething with Civil War business.

  For us of today, who instinctively think in terms of total war, it is hard to realize how very untotal was the conflict of 1861–65, at least in the industrial North. Morgan did not enlist because for some time his health had been a source of concern to him: he had been subject to dizzy spells, even fainting spells (these seemed to have some obscure relation to the state of his complexion, for when his skin was clear the dizzy spells were more severe). But even for many of the healthiest young business men of that time the question of enlisting hardly rose to the level of consciousness; of those who rose to the top in American business in later years, very few had ever put on a uniform. When the draft was instituted in 1863, Morgan took advantage of the curious regulation which permitted one to hire a substitute to take one’s place in the Army; but this too was a fully accepted practice. It is a striking fact that in the draft of July 1863—immediately after the critical Battle of Gettysburg—only a little over three per cent of those whose names were drawn actually became “draftees held to personal service”; the rest failed to report, or were exempted for physical disability or other reasons, or were exempted by paying a $300 “commutation,” or furnished substitutes!

  Meanwhile the industrial boom which led Charles A. Beard to call the Civil War the Second American Revolution was beginning its reckless course. The shifting fortunes of battle, the sharp expansion of manufacturing under the impact of war orders, and the westward push of trade toward the Pacific kept the speculative markets in turmoil. And under these circumstances the marts of the Wall Street district of New York seethed with energetic speculative activity. There was plenty of excitement for anybody in the gyrations of Erie stock, the gold dealings in Mr. Gilpin’s Exchange and Reading Rooms, and the wild attempts of the aldermen of New York City to make a killing in Harlem Railroad shares—so much excitement, in fact, that to many men in the street the news from the bloody battlefronts o
f the South was interesting chiefly for its possible effect upon the course of prices.

  During these wild years young Morgan, just starting in business for himself, got mixed up in two dubious enterprises which in recent years have been made much of by hostile writers. One was the Hall Carbine Affair. In the summer of 1861—just before he married Mimi—Morgan lent $20,000 to one Simon Stevens, who was engaged in selling to General Frémont, for $22 apiece, carbines of an outmoded style which had been bought by one Arthur M. Eastman from the War Department itself for only $3.50 apiece. The deal was a scandalous one, reflecting both gross incompetence on the part of the War Department and profiteering greed on the part of Stevens. More than forty years later the record of the episode was combed over by Gustavus Myers in his History of the Great American Fortunes and Morgan’s part in it was represented as that of a fellow-conspirator with Stevens; and this version of the story thereupon appeared in book after book and article after article. But a later and even more diligent piece of research by R. Gordon Wasson of J. P. Morgan & Co. has unearthed a wealth of detailed information from primary sources which puts a somewhat different light upon the matter.

  That Morgan lent Stevens the $20,000 is beyond doubt. How much he knew at that moment about what Stevens was up to we shall probably never know; but there is no evidence that he had previously known the man, though Stevens’ sister had once been a schoolteacher of his at Hartford and Stevens’ brother was known to Junius Morgan in London. At the earliest moment when Morgan could detach himself from the operation, he did so. Within a month he was refusing to lend Stevens more money (Stevens got it elsewhere), and within six weeks he had been paid and was out of the business entirely. He did not share in Stevens’ profit; his commission for his services (aside from $156.04 interest on the loan) was $5,400—a rather small sum to have been subsequently described by Myers as “the real beginning of J. Pierpont Morgan’s business career.” The only reason why Morgan’s name figured in the scandal later was that—as a War Department Commission stated—“Morgan having loaned Stevens money, the carbines passed into the possession of Morgan as a security for the advance thus made, and were by him delivered to General Fremont, under the sale made by Stevens to him; and the bills against the government were made out in favor of Morgan.” Although the Hall Carbine scandal was promptly aired, being investigated by two congressional committees and by a special War Department commission, Morgan himself was never called before any of them nor personally censured by any of them; apparently they were convinced that his connection with the business was not only brief but incidental. Nevertheless it was an ugly thing to have been involved in, however inadvertently; Morgan, at the age of twenty-four, had at least been headstrong, injudicious, and a bad judge of the character of a well-connected but disreputable customer.

  The other episode—which has likewise been vigorously aired in recent years—took place after Mimi’s death, and involved a speculation in gold. During 1863 Morgan and a young man named Edward Ketchum bought gold quietly and in small amounts; then all at once they conspicuously shipped abroad half of what they had acquired, in order to lift the price and sell the remainder of their hoard at a handsome profit. The scheme worked, and according to some reports they divided a profit of $160,000. From one point of view this was a legitimate, if crafty, speculative coup. It was probably regarded in 1863 somewhat as, let us say, a successful short sale of securities was regarded in 1931, or as a gamble in wheat prices was regarded in 1947: it seemed reprehensible to people distant from the exchanges but quite acceptable to people engaged in the constant push-and-pull of speculative trade. Yet from another and larger point of view this gold deal was a shabby operation, since it was in effect an attempt to depreciate, at least temporarily, the national currency in time of acute emergency. It is quite possible that Junius Spencer Morgan, hearing of it, may have breathed more easily in the knowledge that his son would henceforward have an older and wiser head in the office with him. (At about this time Charles H. Dabney joined Pierpont as senior partner and the firm became Dabney, Morgan & Co.) For once again the young man had been a bad judge of character: his crony in this deal, Edward Ketchum, came of a highly respectable family but subsequently got into other speculations which turned out disastrously, and in the collapse of the Ketchum firm forged a large number of gold checks and thereupon went to prison.

  2

  Quite aside from these adventures, the war years were busy ones. Young Morgan had his hands full at times putting through sales of American securities on behalf of the Peabody firm’s anxious English clients, who doubted if the Union would survive and wanted to unload their American holdings. And what with a variety of other sorts of transactions, he prospered strikingly; his personal income for the year 1864 was no less than $53,286.

  A photograph of him taken in 1862, shortly after Mimi’s death, suggests how that tragedy had marked him: there is an intensity in his gaze such as no earlier picture had revealed, and it shows a much older-looking young man. His hair, parted on the left side, is longish and grows thickly above his ears after the fashion of the time; he has a small mustache now, and wears a high stiff collar.

  Gradually, as time went by, his spirits were restored. As early as the summer of 1863, when he organized a party of friends to tour the White Mountains by four-horse stage, stopping at the Profile House at Franconia for a week, he made all the arrangements for them and bossed the whole expedition as was his wont, and seemed to his companions to be enjoying himself fully. And just as the Civil War came to an end he married again.

  His bride in this second and more tranquil marriage was Frances Louisa Tracy, a pretty and sweet-natured girl whose family were people of substance in New York. Her father had come to New York from Utica and had become one of the leading lawyers of the city; and as he had several charming daughters, the Tracy house on Seventeenth Street had long been a favorite haunt of Pierpont’s. He and Fanny—as Frances Louisa was called—were married at St. George’s Church on May 31, 1865.

  With the gentle Fanny he now settled down to years of brownstone domesticity, first at 227 Madison Avenue and then at 243, in what were then the northernmost reaches of residential habitation in the city proper. The Murray Hill district was just being built up; Madison Avenue reached only to Forty-second Street, a few short blocks north of where the Morgans lived, and beyond that lay fields and farms; from the new brownstone houses rising along the Avenue one could look to the east, across vacant lots, to the masts of the shipping moving up and down the East River. Within the next decade Pierpont’s wife bore him four children: Louisa (who later became Mrs. Herbert L. Satterlee); John Pierpont (who succeeded him in 1913 as head of the family firm); Juliet Pierpont (who became Mrs. William P. Hamilton); and Annie Tracy (who, as Anne Morgan, was to become well known for her work in French war relief and other charities).

  A hulking, solid-shouldered young man with a strong, large-featured face and an emphatic mustache and striking hazel eyes, Morgan settled down into playing the orthodox role of active young business man, citizen, and churchman. Apparently he had now learned to select his customers and companions with ample circumspection. He was elected to the highly respectable Union Club. He became a member of the board of managers of St. Luke’s Hospital, was busy in the affairs of the Y.M.C.A., helped to organize both the Metropolitan Museum of Art and the Museum of Natural History, and became a vestryman of St. George’s Church in Stuyvesant Square. If you had a good cause to promote and wanted on your committee a young fellow with good connections, a wide acquaintance, unlimited energy, and a sort of innate force which made people tend to go his way, people would suggest that you consider young Morgan, the promising son of that Hartford man in London who had succeeded George Peabody and whose international banking firm was now called J. S. Morgan & Co. Yet as Pierpont turned thirty there was still little sign of the direction in which his character and peculiar talents would lead him.

  In the late summer of 1869, however, when he was th
irty-two, something happened which one can see now, in retrospect, as a sort of preface to his subsequent career.

  3

  The Northern victory in the Civil War had opened up to the industries of the expanding country, and to the railroads, an exciting prospect of growth—the industrial exploitation of a continent. Factories were booming, new inventions burgeoning, railroads pushing to the Pacific; and in the rush to take advantage of the new opportunities, ethical scruples were being tossed aside more heedlessly than at any other time in our history.

  It was during the decade following the Civil War that Daniel Drew, while treasurer of the Erie Railroad, secretly printed new shares of Erie stock by the thousands and threw them on the market whenever it suited his speculative purposes; that Jay Gould and Jim Fisk conspired to corner the gold supply of the country, that the Grant Administration was honeycombed with graft, that Boss Tweed’s corrupt regime ruled New York City, that the Crédit Mobilier scandals sullied the record of Western railroad financing, and that Gould and Fisk and Drew bribed legislators and judges with a cynicism and casualness unmatched before or since in the annals of American fraud.

  In the summer of 1869 Jay Gould, who was both a railroad executive and a stock-market gambler, and seldom hesitated to wreck a company which he controlled if this suited his speculative purposes, was the undisputed master of the Erie Railroad. Gould cast covetous eyes on a newly completed line between Albany and Binghamton, New York, that was called the Albany & Susquehanna; he wanted the line as a profitable adjunct to the Erie, offering it a useful connection with New England. So he sent agents with bags of money to buy up shares which had been subscribed to by towns along its right of way, and he further tried to displace the existing management and directors of the road by getting complaisant judges to issue a flock of injunctions against them. Gould was vigorously countered by President Ramsey of the Albany & Susquehanna, who with his friends induced other judges to issue counterinjunctions against Gould. So complete was the resulting judicial confusion that at one time in August the conflict between the two factions became a minor civil war, with officers of the law at the Binghamton end of the line making arrests in accordance with the dictates of Manhattan judges who took orders from Gould, and officers of the law at the Albany end carrying out the decrees of upstate judges who sided with Ramsey; and there was actually a time when hired thugs battled for the control of a tunnel along the way and two locomotives manned by the hirelings of the respective groups collided with a fine smash. Day after day the New York papers carried news stories about the progress of this feud, which they called “The Susquehanna War.” As the date of the annual stockholders’ meeting at Albany—September 7—approached, it was manifest that the Gould forces would try, by force or wile, to unseat the directors favorable to President Ramsey, and that the Ramsey forces must be ready for the fray.