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Pierpont Morgan
John Pierpont Morgan was a philanthropist and art collector as well as one
of the countrys seminal financiers. His influence is still felt today, nearly a century after his death
on March 31, 1913. A few of his notable achievements include:
Financing industry. Drexel, Morgan & Co., a J.P. Morgan & Co. predecessor firm, financed
Thomas Alva Edisons research into a practical electric light bulb, and then helped his company
incorporate. Edisons company later merged with Thomson-Houston Electric and became known
as General Electric.
Morgan was also instrumental in the mergers that created U.S. Steel and International Harvester.
The railroad industry in the late 19th century was noted for overcapacity and rate wars that
threatened the system and financial markets. J. Pierpont Morgan recognized the dangers and
negotiated a truce between the countrys two largest railroad competitors, New York Central and
Pennsylvania Railroad. By the 1880s, Morgan had become the most influential railroad financier
in the U.S.
Calming panicked markets. Morgan intervened to quell a number of financial crises, most
notably the Panic of 1907. As global markets crashed, he convened New York Citys chief
bankers to provide liquidity to the U.S. federal government, staving off a global economic
collapse.
In 1895, following the panic of 1893, J.P. Morgan & Co. formed a syndicate to sell $65 million in
gold bonds for the U.S. Treasury that helped rescue the United States from a severe two-year
economic depression.
J. Pierpont Morgan died on March 31, 1913, at the age of 75, in Rome, Italy. He left his fortune
and business to his son, John Jack Pierpont Morgan, Jr., and his house and book collection to
the Morgan Library of New York. On the morning of his funeral, the New York Stock Exchange
was closed until noon, an honor generally reserved for heads of state.
In 1901 a tremendous conflict opened between James J. Hill and Edward H. Harriman
for domination of the railroads west of the Mississippi and in the northern half of the
country. Morgan was allied with Hill, and in the course of this contest the price of
Northern Pacific stock shares jumped to astronomical heights. The compromise reached
was based on pooling all interests in the Northern Securities Company. When this
company was dissolved in 1904 as a consequence of successful prosecution under the
Sherman Antitrust Act, modern antitrust enforcement had been inaugurated.
Morgan founded the U.S. Steel Corporation in 1901. The culmination of a wave of
similar consolidations, it was the largest industrial concern of the time. U.S. Steel never
controlled the entire steel industry, and its share of the market has declined steadily.
Solving the Panic of 1907 represents Morgan's highest achievement; never again would
private power be vested with so large a public responsibility. When the panic hit, the
financial community of New York rallied around Morgan, and the Federal government
entrusted its funds to his disposition. He recruited brilliant lieutenants to investigate the
resources of the various New York banks and trust companies, determine which were
solvent, and act to save them. (There was no central bank, as the Federal Reserve
System was created only in 1913 as an after-math to the panic.) Morgan and his cohorts
were, for all practical purposes, the central bank.
An Assessment
Morgan was preeminently suited to the world in which he lived. During the years of his
power the American economy grew at a prodigious rate. Morgan was one of the "vital
few" who made it happen. He was a superb organizer in an economy that was replacing
competition with concentration. He chose extremely able associates but reserved the
crucial decisions for himself. He earned his economic reward by linking those who
needed capital with those who had it to invest, whether in Europe or America. The
success of his endeavor actually lessened the investment banker's significance, as
enterprises became internally financed and less dependent on external financing.
As an art collector, Morgan avidly sought paintings, sculpture, and tapestries. He made
the Metropolitan Museum of Art in New York the equal of any museum in the world,
although he contributed to others, too. "The Morgan collections represent the most
grandiose gesture ofnoblesse oblige the world has ever known," wrote Aline B. Saarinen
(1957). He was a man of genuine taste. His death in Rome on March 31, 1913, left a
void, for his was a personal, not an institutional, power and hence not readily
transferable.
http://www.encyclopedia.com/topic/J.P._Morgan.aspx
Synopsis
Born on April 17, 1837, in Hartford, Connecticut, J.P. Morgan would later become one
of the most famous financiers in business history. In 1871, Morgan began his own
private banking company, which later became known as J.P. Morgan & Co., one of the
leading financial firms in the country. Morgan died on March 31, 1913, in Rome, Italy.
He was hailed as a master of finance at the time of his death, and continues to be
considered one of the country's leading businessmen.
Famous Financier
Financier, art collector and philanthropist John Pierpont Morgan, best known as J.P.
Morgan, was born on April 17, 1837, in Hartford, Connecticut. The son of a banker,
Morgan went into the family business and became one of the most famous financiers in
history. After working for his father, he started his own private banking company in
1871, which later became known as J.P. Morgan & Co.
His company became one of the leading financial firms in the country. It was so
powerful that even the U.S. government looked to the firm for help with the depression
of 1895. The company also assisted in thwarting the 1907 financial crisis.
During his career, his wealth, power, and influence attracted a lot of media and
government scrutiny. During the late 1800s and even after the turn of the century, much
of the country's industries were in the hands of a few powerful business leaders,
especially Morgan. He was criticized for creating monopolies by making it difficult for
any business to compete against his. Morgan dominated two industries in particular -he helped consolidate railroad industry in the East and formed the United States Steel
Corporation in 1901.
A crucial material in the extensive growth of the nation, U.S. Steel became the world's
largest steel manufacturer. The government, concerned that Morgan had created a
monopoly in the steel industry, filed suit against the company in 1911. The following
year, Morgan and his partners became the subject of a congressional investigation by the
Pujo Committee in 1912.
Personal Life
Morgan had many interests beyond the world of banking. He enjoyed sailing and
participated in a number of America's Cup yacht races. He was an ardent art collector,
creating one of the most significant collections of his time. He later donated his art
collection to the Metropolitan Museum of Art, and his collection of written works to the
Morgan Libraryboth in New York City.
Morgan's first marriage to Amelia Sturges was brief. She died a few months after their
1860 wedding. Five years later, Morgan married Frances Tracy. The couple had four
children: John Pierpont Jr., Louisa, Juliet and Anne.
Morgan died on March 31, 1913, in Rome, Italy. At the time of his death, he was hailed
as a master of finance. Today, Morgan is considered one ofAmerica's leading
businessmen, and is credited for helping to shape the nation into what it is today.
http://www.biography.com/people/jp-morgan-9414735#personal-life
One of the most powerful bankers of his era, J.P. (John Pierpont)
Morgan (1837-1913) financed railroads and helped organize U.S.
Steel, General Electric and other major corporations. The Connecticut
native followed his wealthy father into the banking business in the late
1850s, and in 1871 formed a partnership with Philadelphia banker
Anthony Drexel. In 1895, their firm was reorganized as J.P. Morgan &
Company, a predecessor of the modern-day financial giant JPMorgan
Chase. Morgan used his influence to help stabilize American financial
markets during several economic crises, including the panic of 1907.
However, he faced criticism that he had too much power and was
accused of manipulating the nations financial system for his own gain.
The Gilded Age titan spent a significant portion of his wealth amassing
a vast art collection.
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J.P. MORGAN: EARLY YEARS AND FAMILY
John Pierpont Morgan was born into a distinguished New England
family on April 17, 1837, in Hartford, Connecticut. One of his maternal
relatives, James Pierpont (1659-1714), was a founder of Yale
University; his paternal grandfather was a founder of the Aetna
Insurance Company; and his father, Junius Spencer Morgan (1813-90),
ran a successful Hartford dry-goods company before becoming a
partner in a London-based merchant banking firm. After graduating
from high school in Boston in 1854, Pierpont, as he was known,
studied in Europe, where he learned French and German, then
returned to New York in 1857 to begin his finance career.
Morgan initially was widely commended for leading Wall Street out of
the 1907 financial crisis; however, in the ensuing years the portly
banker with the handlebar mustache and gruff manner faced increasing
criticism from muckraking journalists, progressive politicians and others
that he had too much power and could manipulate the financial system
for his own gain. In 1912, Morgan was called to testify before a
congressional committee chaired by U.S. Representative Arsene Pujo
(1861-1939) of Louisiana that was investigating the existence of a
money trust, a small cabal of elite Wall Street financiers, including
Morgan, who allegedly colluded to control American banking and
industry. The Pujo Committee hearings helped bring about the creation
of the Federal Reserve System in December 1913 and spurred
passage of the Clayton Antitrust Act of 1914.
http://www.history.com/topics/john-pierpont-morgan
http://www.history.com/topics/john-pierpont-morgan/videos/the-rise-of-j-p-morgan
http://www.history.com/topics/john-pierpont-morgan/videos/the-men-who-builtamerica-from-rich-to-richer
http://www.history.com/topics/john-pierpont-morgan/videos/the-men-who-builtamerica-traits-of-a-titan
When John Pierpont Morgan arrived on Wall Street, it was a disorganized jumble of
competing interests and one of the many financial centers in a country still
struggling with the remnants of colonialism. When he left Wall Street, it was a tightly
knit group of big businesses that were leading one of the fastest growing
economies in the world. Much of the progress that Wall Street experienced at the
close of the twentieth century and the beginning of the twenty-first was due to the
influence of J.P. Morgan and the skill with which he wielded it.
During his life, Morgan played many roles: banker, financier, robber baron and hero.
In this article we'll take a look at the life of Wall Street's most famous banker.
The Family Business
When J.P. Morgan was born on April 17, 1837, in Hartford, Conn., there was very
little doubt that his future lay in banking. His father, Junius Spencer Morgan, was a
partner in a bank run by another American, George Peabody.
Morgan was brought up knowing he would take his father's place, shuttling from the
U.S. to Britain, peddling U.S. bonds to London investors. Most of these bonds were
state and federal offerings and, at this period in history, a much higher risk than
government bonds from European nations. (To learn more about European and
American investments, see American Options Investors: Should You Go Euro?)
Upon his retirement, George Peabody left the bank completely in the hands of
Junius, even removing his name from it. In 1864, J.S. Morgan & Co., the first
Morgan bank, made its debut. By this time, J.P. Morgan had finished his European
education and was learning his future trade as his father's New York agent while his
father tended the more important London end of the business.
Taking the Helm
Morgan began to take over his father's responsibilities following the DrexelMorgan merger. The Drexel-Morgan merger extended the scope of business,
strengthened international ties, and added to the capital that the bank was able to
loan.
As his father faded to the background, Morgan took an increasing role
in underwriting companies for public offerings. He took a great interest in the
railroad, holding shares, handling offerings, financing, and even placing Morgan
employees on the company boards. With the importance of the railroad growing
throughout the continent, Morgan picked an excellent time to expand both his
bank's wealth and his personal power. (Keep reading about this in How The Wild
West Markets Were Tamed.)
At the cusp of the twentieth century Morgan, Wall Street and the U.S. government
were becoming increasingly worried over the U.S.'s status as a debtor nation. Wall
Street had a firm belief that a stable currency was needed before the U.S. could
crawl out of the hole. It was Morgan that Wall Street sent to the White House to
discuss matters with the president. This led the American people to believe that
Morgan was the kingpin of Wall Street, and also gave a focus for their wrath over
the adoption of the gold standard - seen as a death knell for farmers in a largely
agrarian nation. He was the robber king among the robber barons. (To learn more
about debtor nations, read What Is The Balance Of Payments?)
The Great Reorganizing
Morgan, Cornelius Vanderbilt, John D. Rockefeller and all the other robber barons
shared two beliefs: cutthroat competition was ruinous, and combination and size
could reduce competition while increasing efficiency. Morgan used his personal
power and reputation to encourage the formation of trusts and mergers within
industries where he saw ruinous competition.
Although he will always be remembered for trying to create a steel monopoly in the
form of U.S. Steel, many of the other large players Morgan helped to create were
beneficial to the economy. General Electric (NYSE:GE) and International Harvester
(now Navistar International) (NYSE:NAV) helped the U.S. advance technologically
and helped the agricultural sector that Morgan was often accused of strangling
through his rail trusts. (Keep reading about these barons in The 5 Most Feared
Figures In Finance and Monopolies: Corporate Triumph And Treachery.)
J.P. Morgan's perceived power was much greater than the actual wealth he
controlled. The Morgan bank simply didn't have the size to underwrite public
offerings or handle bond issues without help from the growing financial sector.
Morgan's reputation, however, meant that any time his bank was part of
a syndicate, it was reported as if Morgan was personally steering the offering.
Morgan's growing prestige helped him in an age when the offering bank's
reputation mattered more than the stock fundamentals. This cemented the public's
perception of Morgan as a figurehead for all of Wall Street.
When things were bad, Morgan was accused of suppressing the economy. When
things were good, Morgan was thought to be lining his pockets. Morgan's personal
power came at a very high public price.
The Panic
J.P. Morgan was hated and respected in almost equal measure at the beginning of
the 1900s. In 1907, however, he tipped his hand and gave the government and the
general public a reason to fear. On March 25, 1907, the NYSE began to plummet
Death
Following the hearings, Morgan's health began to fail. He was an old man and his
many ailments had as much to do with his declining health as any stress put on him
by the committee. With his decline, however, the age of gentleman's business, or
baronial rule as seen by his detractors, was over on Wall Street. On March 31,
1913, the hero of the Panic of 1907 and the alleged kingpin of Wall Street died in a
hotel room in Rome. Today, we speak of entities, corporations and multinationals
dominating Wall Street. Never again will one man, neither the chairman of the Fed
nor the leader of a nation, wield so much power over the financial world. This, like
Morgan himself, has its good and bad points.
Not only did Morgan invest and loan to businesses, but he bailed out
organizations from their troubling predicaments. In 1895 he was a part of
providing the U.S. Treasury with 3.5 million ounces of gold in exchange for a
30-year bond. Also, he was a part of a major bailout of New York banks
during the Panic of 1907.
Morgans risks of investing and loaning money played a crucial role in
expanding the United States during the progressive era. Hes often seen as
one of the greedy robber barons, someone who uses their money to
suppress the poor from moving out of their unwanted social state. Morgan
was responsible for the increase in the wealth gap between the rich and the
poor; he exemplifies all the problems with capitalism. In my next post, I will
expose the shortcomings of these rhetorical arguments against Morgan.
J.P. Morgan financed the acquisition of Carnegie Steel (and subsidiaries) much the
way we still do it today:
Before you start pondering that statement too hard, I must stress that he did not
sell Carnegie on lies or cast a spell on him, and my description is just semantics.
But take a moment, and put yourself in J.P. Morgan's shoes. Its 1901, and your
essentially the most powerful banker in the world. Hell, you bailed out the US
Government not once, but twice. But even you don't have enough assets, with
partners, to come up with $400m in liquid cash to purchase Carnegie Steel. Nor,
frankly speaking, would you want to. He would have to essentially destabilize parts
of the economy (through the sale of some of his other companies assets), just to
And unlike today, he couldn't simply walk down the street and ask J.P. Morgan
Chase for a loan (haha sorry bad pun). Most banks simply did not have that kind of
capital to float to anyone, including J.P. Morgan. None of the banks were truly that
big, yet.
What J.P. Morgan did do, and what he was incredibly well known for, was the use
of creative financing. And he used it to create one of the largest trusts the world has
ever seen: US Steel Trust.
He knew Carnegie, to an extent, wanted out. The strikes over the years had
intensified, government prosecution against large companies was heating up and
frankly, he was getting older. He had enough liquid cash to live for hundreds of
years, without ever needing to see the money from the sale of the company. Most of
his fellow partners at Carnegie Steel were also well off. And at the end of the day,
Carnegie just wanted to know his company would be well cared for after his own
death.
Knowing this and knowing the underlying business financials, especially when
combined with Federal and Consolidated Steel (other companies Morgan had
acquired), J.P. Morgan offered to buy the company for $480m. Charles Schwab
would later report the entire deal was secured essentially by the verbal agreement of
Carnegie and Morgan.
Morgan essentially borrowed just under half of the money to buy Carnegie Steel
- from Carnegie himself.
The remaining purchase amount went to Carnegie's partners, many of whom took
stock in the newly formed US Steel Trust (in lieu of bonds and/or cash). I don't
believe the exact financing structure has ever been made public (different set of
rules at the time), but I'd gamble the partners taking stock settled another 35% of
the financing structure, leaving Morgan with just under $87 million to raise. A
much more realistic number than $480m, and an amount he could produce
himself, if necessary. (Studying Morgan, however, I'm confident it was OPM - Other
Peoples Money.)
And at the end of the day, J.P. Morgan had to secure those bonds with gold before
their issuance. In theory at least. Don't, however, underestimate the fact that
Morgan practically controlled the entire US banking industry at this point. Frankly
speaking, he could have issued those bonds without a single bar sitting in his vaults,
and no one at the time would have dared stop him. Even the US Government
couldn't have stopped him. (Almost no banking regulations and no Federal Reserve
at the time. Morgan hadn't gotten around to doing that yet).
Carnegie knew this, and essentially had to take Morgan at his word. And
Morgan's word, built over years of finely tuned dealings and
sophisticated transactions, was for all practical purposes, better than
gold itself.
www.quora.com/How-did-J-P-Morgan-finance-480-mn-to-pay-AndrewCarnegie
https://books.google.com.ec/books?
id=lMIj2jtuAmUC&pg=PA59&lpg=PA59&dq=jp+morgan+relaciones+carnegi
e&source=bl&ots=o2bdfaAZj4&sig=yb7hauXHKZ6VqnS9rJK7SklQVxY&hl=es
&sa=X&sqi=2&ved=0CCUQ6AEwAmoVChMI5vT1mLDhyAIVCZUeCh3XrANM
#v=onepage&q=jp%20morgan%20relaciones%20carnegie&f=false
http://teslablog.iaa.es/los-personajes
Frederick Lewis Allen, The Great Pierpont Morgan (1949). Of considerably
less value are John Kennedy Winkler, Morgan the Magnificent: The Life of J.
Pierpont Morgan (1930), and Herbert Livingston Satterlee, J. Pierpont
Morgan: An Intimate Portrait (1939).
J.P. Morgan and Company, like many big businesses today, was
not satisfied with its already huge profits and success. J.P.
Morgan took what he could and soon realized through mergers
and acquisitions of new companies, he could corner and
manipulate the free market. We haven't seen a conglomerate of
this scale in our time since Microsoft was broken down by the
Department of Justice in 1998.
In business, in the late 1800's, the level of wealth one could
obtain reached never before seen heights. Two of the most
famous names in the business world in the early 1900's were J.P.
Morgan and John D. Rockefeller. These names were synonymous
with success. Each respectively sat atop a very well-structured
and tightly controlled empire he had worked tirelessly to create.
Rockefeller and Morgan clashed on many fronts in the business
world. They were powerful on their own, but combined,
untouchable. They agreed on this key idea regarding monetary
reform: the imporance of an increased "elasticity" of the money
supply. They agreed they would both benefit if they worked
together to push for and collaborated on this reform movement.
They could make exorbitant amounts of money from the
creation of a centralized system that was able to expand money
and credit as much as they wished. Decorated economist Murray
Rothbard explains in his book, A History of Money and Banking in
the United States, that Morgan and his fellow bankster John D.
Rockefeller realized, "the only way to establish a cartelized
economy, an economy that would ensure their continued
http://www.economicpolicyjournal.com/2012/05/jp-morgan-john-drockefeller-original.html