THE MAGNITUDE OF J. P. MORGAN

On the night of Thursday, October 24, 1907, nearly every important banker in New York was meeting in J. P. Morgan’s exquisite private library, located next to his house at the northeast corner of Madison Avenue and Thirty-sixth Street. In the magnificent East Room, with its three tiers of inlaid wood and glass cabinets containing the printed masterpieces of the world, the bankers sought a way to end the financial panic that held Wall Street, and thus the country, in its grip.

Liquidity—the easy flow of money between creditor and borrower—had vanished from the marketplace. Depositors by the thousands were withdrawing their assets from sound and unsound banks alike, forcing the banks to call in loans as fast as they could and to husband their dwindling reserves. That afternoon the call money rate paid by speculators (the cost of borrowing money overnight) had reached 125 percent. The Stock Exchange had managed to stay open until the usual closing hour only because Morgan had flatly forbidden it to close early and had raised twenty-five million dollars in a quarter of an hour to see it through. The American financial system appeared on the brink of collapse.

Everyone knew that something had to be done that very night to restore confidence. “If people will keep their money in the banks,” Morgan had told reporters that week, “everything will be all right.” He was correct, of course; getting people to cooperate was the trick.

As the other bankers met in the East Room, Morgan sat alone in the equally magnificent West Room, which was his office. Its deep red flocked wallpaper bore the arms of the Chigi family of Renaissance Rome. Masterpieces of the Italian Renaissance hung on the walls in profusion. Sitting in an easy chair before the fire, Morgan played game after game of solitaire, a pastime that he found peculiarly soothing. Now and then one of the other bankers would come in and suggest a plan.

“No, that will not work,” he would say, and the banker would return to the East Room to help devise another.

After this had happened several times, Belle da Costa Greene, Morgan’s librarian, asked him, “Why don’t you tell them what to do, Mr. Morgan?”

“I don’t know what to do myself,” Morgan replied with characteristic forthrightness, “but sometime someone will come in with a plan that I know will work, and then I will tell them what to do.” He went back to his solitaire, putting the ten on the jack, the nine on the ten. Constrained by the rules of the game, he sought to bring order to the cards out of the chaos created by the shuffle.

Bringing order out of chaos, within the rules of the game, had been the abiding passion of Morgan’s life. A genius for doing exactly that, combined with a formidable personality, total self-assurance, and a powerful physical presence, had brought him to this moment. Now both Wall Street and Washington looked to him to rescue the situation. He had never held public or military office of any sort, but at this moment John Pierpont Morgan was, perhaps, the most powerful man in the country, and the future prosperity of America lay in his hands. He sat, he played his cards, he waited.

In retrospect, it might appear that Morgan’s whole life had been leading up to this moment. He had been born in Hartford, Connecticut, on April 17, 1837. Unlike so many who rose to great wealth in nineteenth-century America, Morgan was born affluent. His paternal grandfather had moved to Hartford in 1817 and prospered. As the city grew—it was then on the fastest route between New York and Boston—he invested in real estate, steamboat lines, and railroads. Later he was one of the founders of the Aetna Fire Insurance Company.

Morgan’s father, Junius Spencer Morgan, was a partner in a dry-goods firm in Hartford for several years, before moving to Boston and becoming a partner of James M. Beebe & Company, which was heavily involved in conducting and financing the burgeoning Atlantic cotton trade. By 1854 his financial reputation had grown to the point where he was invited to join George Peabody’s banking house in London, one of the City’s leading private banks. Peabody was an American who had lived in London for many years and was widely known on both sides of the ocean for his business integrity and his philanthropies. When Peabody retired in the early 1860s, Morgan’s father took over the firm, which he renamed J. S. Morgan and Company.

From his earliest days J. P. Morgan was exposed to two elements that were to dominate and characterize his life: international banking at its highest levels and the idea held by Peabody and his own father that personal integrity was indispensable to success in that field. At the end of his life Morgan was questioned by a congressional committee about the workings of Wall Street. “Is not commercial credit based primarily upon money or property?” the committee’s counsel asked.

“No, sir,” Morgan replied. “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.”

Unlike many, Morgan meant exactly what he said in this regard. In 1905 Morgan had purchased on the Erie Railroad’s behalf a controlling interest in the small Cincinnati, Hamilton and Dayton Railroad. After the firm had turned over the stock to the Erie, Morgan discovered that the figures on which the purchase had been based were fraudulent. Although under no legal obligation to do so, Morgan bought back the stock from the Erie at the price he had originally paid for it and then forced the CH&D into bankruptcy. The loss to J. P. Morgan and Company was about twelve million dollars, and 1905 was the only year, before the Great Depression of the 1930s, when the firm showed a loss.

Morgan never had any doubt what he wanted to do in life. Even as a boy living in Hartford he exhibited a love for the routines of business. At the age of twelve Morgan and his cousin Jim Goodwin organized a show that they called “The Grand Diorama of the Landing of Columbus.” Morgan kept precise accounts of all expenses and income from ticket sales and afterward prepared a balance sheet of the whole enterprise headed “Morgan & Goodwin, Grand Diorama Balance Sheet, April 20, 1849.” All his life he could read ledgers at a glance, spotting even trivial errors made by the trembling clerks who held them up for his inspection.

Morgan’s health was not robust in his childhood. At the age of fifteen he developed a bad case of inflammatory rheumatism, and his family sent him to the Azores, where he spent several months recovering. At the same time, he began to suffer from skin eruptions called acne rosacea that were to plague him through his life. His mother and maternal grandfather also suffered from this mysterious and disfiguring disease, which was the cause of Morgan’s famously large and unsightly nose. Physical exercise never interested him, and indeed, as his son-in-law noted, “he never seemed to give any heed to the ordinary rules for good health.” When his son converted a stable into a squash court and began to play there every morning before work, Morgan’s only comment was: “Rather he than I.”

Morgan was educated on both sides of the Atlantic, first attending school in Hartford and then, after his father’s move to Boston, the English High School there, a public school of very high standards. When his father moved to London, Morgan was sent to a private school in Vevey, Switzerland, and then he spent two years studying at the University of Göttingen in Germany. At Göttingen his mathematics professor thought enough of Morgan’s abilities to urge him to stay on, offering to make Morgan his assistant. But Morgan had no interest in the academic life other than as preparation for business.

Morgan’s family was a religious one in a religious age, and his maternal grandfather, for whom he was named, was a fiery abolitionist clergyman. Morgan seldom pondered theological questions or thought deeply about moral issues (although he faithfully attended and obviously enjoyed Episcopal Church conventions). Instead he accepted without question the tenets of mainstream nineteenth-century Christianity and tried, with no more success than most, to live by them. While he would have been more than welcome in any church in New York, he attended and for many years was the senior warden of St. George’s Episcopal Church on no-longer-fashionable Stuyvesant Square. It was a church well known for its work among the poor. The first paragraph of Morgan’s will, written by Morgan personally, was a thundering affirmation of his belief in Christianity and its power to redeem his soul.

In 1857 Morgan left the University of Göttingen and moved to New York, where he joined the distinguished Wall Street firm of Duncan, Sherman & Co. as a junior accountant. The following year he was sent to New Orleans to study the cotton and shipping business. Inspecting New Orleans’s teeming waterfront, he soon found an opportunity to buy a shipload of coffee at a bargain price. He paid for it with a sight draft on Duncan, Sherman, although he had no authorization whatever to incur such an obligation. By the time he received peremptory orders from New York to dispose of the coffee at once, he was able to reply that he had already sold the entire cargo at a profit and was forwarding the checks.

This confident self-assurance and willingness to commit himself at once was a characteristic that only increased as Morgan grew older and richer. When Harvard was seeking funds to enlarge its medical school, the university approached both Morgan and John D. Rockefeller. Rockefeller had a committee study the proposal for six months and only then contributed one million dollars. When Morgan received the delegation from Harvard, he said only, “I am pressed for time and can give you but a moment. Have you any plans to show me?”

The university representatives rolled out a set of blueprints, and Morgan looked them over for a second. “I will build that,” he said, stabbing at a building on the plans with his forefinger, “and that—and that. Good morning, gentlemen.” He had made a commitment quite as large as the far richer Rockefeller’s and had taken no more than thirty seconds to do it.

A corollary to Morgan’s quickness and decisiveness was a certain willfulness and a stubborn romantic streak that possibly can be traced back to his grandfather Pierpont, not only a preacher but a considerable poet and a fearless crusader for the causes he believed in. This trait often led Morgan to act impulsively when he had been touched in some human way. Morgan once went to considerable trouble to concoct a job for an elderly lady that would give her the sense that she was earning her keep and not just living on his charity. More important, when the great New York publishing house of Harper & Brothers was threatened with bankruptcy in the 1890s, it was Morgan who rescued it with loans of more than a million dollars, not because it made business sense but simply because he thought Harper’s too important to American culture to lose. It was years later and only after Morgan’s death that Harper’s managed to repay this debt.

Certainly his most impulsive and romantic act was to marry Amelia Sturges, better known as Mimi. Mimi was a beautiful woman from one of New York’s finest families, and Morgan fell in love with her soon after he moved to New York. But in the spring of 1861 she contracted tuberculosis, the Victorians’ dreaded, dark disease. She weakened rapidly, and Morgan insisted on abandoning business and marrying her in order to take her to a warmer climate, which was thought the only hope. Although she was too weak to stand, the wedding took place on October 7, 1861. Only four months later she died at Nice. Morgan was a widower at the age of twenty-four.

He recovered quickly and in September of the following year opened the firm of J. Pierpont Morgan and Company. (His father still headed the London firm of J. S. Morgan & Co.) The great boom engendered by the Civil War was in full swing by 1862 and a speculative frenzy had erupted in Wall Street. Huge amounts of money were being made, and as one contemporary described it, “New York never exhibited such wide-spread evidences of prosperity. Broadway was lined with carriages. … The pageant of Fifth Avenue … was bizarre, gorgeous, wonderful! … Vanity Fair was no longer a dream.” In 1864 Morgan, who turned only twenty-seven that year, had a taxable income of $53,286, fifty times a skilled worker’s annual wage.

Business conditions in New York during and immediately after the Civil War were fraught not only with opportunity but with peril too. The government and the courts were sunk in corruption, while the New York Stock Exchange and other Wall Street institutions were only beginning to acquire the power to enforce standards. Those years saw capitalism red in tooth and claw and there were hardly any rules at all beyond caveat emptor.

In two instances during the war Morgan became involved in dubious schemes with men of good family but, it turned out, bad character. Although there is no evidence that Morgan did anything illegal or, in a strict sense, dishonorable, these events have been used ever since by writers trying to tarnish his name. Oddly, for one who deeply believed that character was the only important consideration in a man, Morgan would admit that he was not always perceptive about it. “I am not a good judge of men,” he told his minister. “My first shot is sometimes right. My second never is.” Perhaps sensing this, Morgan, in 1864, took on a senior partner, Charles H. Dabney, and the firm’s name was changed to Dabney, Morgan and Company.

For a man with a love for both order and the concept of honor, the Civil War era was economic disorder incarnate, and these years could only have had a profound effect upon Morgan’s thinking as an investment banker. Having seen at first hand the deep corruption of the New York courts and legislature during the reign of Boss Tweed and the hog wallow of greed that was the Grant administration in Washington, Morgan would never conceive of government as a means of regulating business conduct. To Morgan, government was part of the problem. He thought, quite honestly, that it was up to men like himself, men of good breeding and character (in other words, those he thought of as gentlemen), to put American business on a sound and honorable basis and keep it there.

In this sense J. P. Morgan was a Tory. He believed his own class had a fiduciary obligation to run things for the benefit of all. By the time he died, this was a very old-fashioned idea. But in his younger days it was entirely understandable. And within the scope of his vision, Morgan was a reformer and progressive, seeking always to bring order out of chaos within the rules of the game as he saw them.

As the war ende.d, Morgan married a second time. His new wife, Frances Tracy, known as Fanny, was the daughter of a prosperous New York City lawyer. Together they had four children, three daughters and a son. While they often traveled separately and were apart for long periods, their marriage was solid and content.

Certainly Morgan was an enthusiastic and affectionate father. When his children were young, he would dress up as Santa Claus at Christmas, and his son remembered all his life a trip he took with his father to visit Thomas Edison at Menlo Park. (Morgan had invested three hundred thousand dollars in the Edison Electric Light Company even before Edison had perfected his great invention. Morgan’s house on Thirty-sixth Street was the first one in the world to be completely wired for electricity, and the Morgan family endured numerous sudden blackouts at the hands of the new and often erratic technology.)

In 1871 Dabney wanted to retire, and Morgan formed a new partnership with the Drexel firm of Philadelphia. The New York firm, known as Drexel, Morgan and Company, had its offices in the newly erected Drexel Building, at the corner of Wall and Broad streets. The offices of the Morgan bank have been there ever since, at the symbolic and actual center of American capitalism. With the new firm’s many connections with Philadelphia and with J. S. Morgan and Company in London, it was immediately profitable. Morgan’s share of those profits averaged close to half a million dollars a year, even in the depressed economy of the mid-seventies.

That same year he bought Cragston, an ample but unpretentious house on the west shore of the Hudson River. Nine years later he bought his house on Madison Avenue and Thirty-sixth Street. While the house was large and comfortable, it was nowhere near as grand as those being built by dozens of newly minted millionaires a mile uptown on Fifth Avenue. Although Morgan was used to the best of everything and insisted on both luxury and comfort, he had no interest in show for show’s sake. In an age when even modest middle-class households had two or three live-in servants, Morgan’s staff on Thirty-sixth Street was only twelve. (By way of contrast, the servants at the vast palace of Cornelius Vanderbilt II on Fifty-eighth Street numbered at least fifty-six.) In 1881 Morgan had the Corsair built for him, the first of three steam yachts by that name. The first was 165 feet long; the third, ordered in 1898, would be 302.

In 1879 Morgan made his first really big financial deal. William H. Vanderbilt owned no less than 87 percent of the New York Central Railroad and wanted to diversify his holdings. Morgan arranged to sell in England 150,000 shares of Central at $120 a share and managed to do it so quietly that there was no notice taken of it until the deal had been accomplished. Not only was the stock sale very successful, and profitable, but Morgan, holding the proxies of the new English shareholders, now sat on the Central’s board. He had become a power in the railroad business, and he intended to use this power to bring order out of the chaos that was American railroading.

The American railroad system had grown quickly and haphazardly over the previous fifty years. The larger trunk lines had mostly been assembled out of a myriad of small local roads and often had bizarrely complex corporate structures as a result. Railroads had been the first economic enterprises to be managed by people who did not own them, and there were few laws to compel railroad managers to act as fiduciaries for the stockholders. As a result the managers could, and all too frequently did, act as they pleased.

One of the more popular schemes was to build, or at least start to build, a line that would compete with an established railroad. The managers would often hire a construction firm that they owned and overcharge their own railroad while coercing the other into buying them out. The managers made a tidy profit whatever happened, and the shareholders of the two railroads were the losers. Morgan felt that these sorts of shenanigans were unspeakable.

By the mid-eighties, a time of great national prosperity, railroad profitability was rapidly declining as ferocious rate wars and overbuilding wracked the industry. Even the splendidly managed New York Central and the Pennsylvania Railroad were at each other’s throats, building competitive lines in each other’s territories. Morgan persuaded Vanderbilt to let him work out a peace settlement, and he invited the heads of the Pennsylvania and the Central to cruise the Hudson on Corsair. As the yacht sailed up and down the river, Morgan got the two railroad directors to thrash out an agreement ending the war between them.

Morgan’s prestige soared as a result of the deal, and much profitable business flowed to his firm as a result. Although he was a banker, not a railroader, Morgan was the most influential man in the railroad business in the last two decades of the century, doing much to rationalize corporate structures and routes. In those years he reorganized the Baltimore and Ohio, the Chesapeake and Ohio, the Erie, and many other major railroads.

One of Morgan’s greatest assets in this process was his formidable physical presence and personality. He obtained agreement among diverse interests often because those interests were simply afraid not to agree. He looked and acted like a man of supreme authority and wisdom, and most people took this at face value. At six feet tall he was well above average height for his generation. His hearty appetite and lack of regular exercise soon gave him above-average bulk as well. But his most remarkable feature was his flashing, hazel-colored eyes. Edward Steichen, the photographer, said that meeting Morgan’s gaze was like confronting the headlights of an express train. As Frederick Lewis Alien paraphrased Steichen, “If one could step off the track, they were merely awe inspiring; if one could not, they were terrifying.”

Morgan spoke in a deep, booming voice and often appeared abrupt. He had early learned that most people will not challenge a show of aggression. But when he was challenged, he often backed down quickly. Lincoln Steffens as a young reporter had to ask Morgan to explain the meaning of a statement the firm had issued. He remembered the incident in his autobiography.

“‘Mean!’ [Morgan] exclaimed. His eyes glared, his great red nose seemed to me to flash and darken, flash and darken. Then he roared. ‘Mean! It means what it says. I wrote it myself and it says what I mean.’ …

“He sat back there, flashing and rumbling; then he clutched the arms of his chair, and I thought he was going to leap at me. I was so scared that I defied him.

”‘Oh, come now, Mr. Morgan,’ I said, ‘you may know a lot about figures and finance, but I’m a reporter, and I know as much as you do about English. And that statement isn’t English.’

“That was the way to treat him, I was told afterward. And it was in that case. He glared at me a moment more, the fire went out of his face, and he leaned forward over the bit of paper and said very meekly, ‘What’s the matter with it?’”

Unlike so many men who make a great fortune, Morgan was no slave to business and early developed the habit of taking frequent and often extended vacations, almost always in England or Europe. “I can do a year’s work in nine months,” he once said, “but not in twelve.”

After his father’s death in 1890 he began to collect art on a serious scale on these vacations, and it soon turned into what can only be described as an inspired mania. It was not just paintings that interested him but drawings, ceramics, books, manuscripts, jewelry, and sculpture. The lobbies of the hotels he stayed in were soon habitually jammed with art dealers and down-at-the-heel aristocrats hoping to turn family legacies into ready money. Morgan would look at these offerings and decide instantly whether to pay the asking price or refuse it. He never haggled.

So vast were Morgan’s art purchases that he is credited with raising the price of old masters generally. The day after he died, The New York Times headlined one of the pages of stories it carried ART DEALERS ALARMED.

Morgan was not an expert in art, and he bought so much so quickly that he occasionally got stung and often got overcharged. But he could tap the services of the greatest experts in the world, and he had a fine eye of his own. Certainly he knew what he liked. To J. P. Morgan, art was a gift from the past. He was not the least interested in modern art and indeed collected little done after the 1700s.

Also after his father’s death, Morgan reorganized his business connections. J. S. Morgan and Company in London became J. P. Morgan and Company, as did the firm in New York. The Drexel name was used only in Philadelphia. By the mid-189Os Morgan’s name was as famous as any in the world. On both sides of the Atlantic, Morgan walked as an equal with kings and presidents. On Wall Street merely to be seen walking with him down the steps of the Morgan bank was said to make a man’s career.

In addition to his houses on the Hudson and on Thirty-sixth Street, he maintained elaborate country and city households in England. He had a camp in the Adirondacks, a fishing box in Newport, and Corsair, the equal of any yacht in the world in size and luxury. With his great banking house, his imposing presence, and his swelling, almost imperial art collection, Morgan became the very symbol of Wall Street and its rising power, as it reached equality with London as a money center in the last years of the century.

Not only railroads but industrial concerns as well were being created and restructured by Morgan and others on Wall Street at the turn of the century, as the country entered the modern economic era characterized by corporations of national scope. When Morgan had first come to Wall Street, not a single industrial concern was listed on the New York Stock Exchange. But in the ensuing fifty years they came to dominate both Wall Street and the American economy. The shape of corporate America today is still largely the invention of the investment bankers of turn-of-the-century Wall Street.

As Frederick Lewis Alien, Morgan’s best biographer, explained it, “In a real sense it was he and the other fabricators of giant industries, and the lawyers and the legislative draftsmen inventing new corporate devices, who were the radicals of the day, changing the face of America; it was those who objected to the results who were conservatives seeking to preserve the individual opportunities and the folkways of an earlier time. You might question the direction in which Morgan was moving; but that he was moving fast, and with a purpose which seemed to him to be to the country’s benefit, is certain. In this, the major sphere of his life, he was not a brake, he was an engine.”

To give just one instance of the new business environment that the bankers created, it was they, not government, who, in the last two decades of the century, required that publicly held corporations employ independent accountants to certify their books and issue annual and quarterly reports.

Among Morgan’s successful stock underwritings were General Electric, International Harvester, and, of course, U.S. Steel, launched in 1901. It was the largest corporate enterprise the world had ever seen. The companies being combined to create U.S. Steel controlled 60 percent of the American steel market. The new firm was capitalized at no less than $1.4 billion, while all the manufacturing capacity of the United States was capitalized at only $9 billion. Even The Wall Street Journal confessed to “uneasiness over the magnitude of the affair” and wondered if the new corporation would mark “the high tide of industrial capitalism.”

It did not, of course, but more and more people were becoming alarmed at the power of corporations that wielded such immense capital, and they were less and less willing to depend on the honor of men like Morgan to protect the interests of the country as a whole. Morgan, although he accepted the inevitable, never understood it.

In 1902 he was stunned when the government announced it was suing under the Sherman Antitrust Act—long thought a dead letter—to break up Morgan’s new Northern Securities Company. He hurried to Washington, wondering why Theodore Roosevelt, as one gentleman to another, had not informed him ahead of time so that a satisfactory agreement could be reached quietly.

“If we have done anything wrong,” Morgan told the President, encapsulating fully his idea of how the world should work, “send your man to my man and they can fix it up.”

“That can’t be done,” Roosevelt said.

“We don’t want to fix it up,” the Attorney General explained, “we want to stop it.” Both business and government had left the nineteenth century and entered the twentieth. In some ways Morgan never would.

Still, five years later, in 1907, when the financial crisis hit, Teddy Roosevelt was nowhere to be found. Instead, far beyond the reach of telegraph or telephone, he was happily slaughtering bears somewhere deep in the Louisiana canebrakes. Even if he had been available, there was, probably, little he could have done, for the United States government lacked the needed instrument to deal with the crisis: an effective central bank.

It is the business of a central bank to monitor commercial banks, regulate the money supply, and act in times of panic as the lender of last resort. A central bank, in other words, is supposed to prevent precisely the sort of liquidity crisis that Morgan and the other New York bankers were trying to deal with in late October of 1907.

Because banks mostly hold deposits that can be withdrawn on demand and lend these deposits out on term loans, they are all, in one sense, perpetually insolvent. If the depositors come to doubt the soundness of a bank and begin to withdraw their deposits, they can drain a bank of cash very quickly, and the bank will be forced to close. A central bank, taking a basically sound bank’s loan portfolio as security, can provide it with the cash needed to meet the demand, printing the money, if necessary.

But Morgan and his allies could not print money, and that was exactly the problem. Because the United States lacked a central bank, its money supply was what economists call “inelastic” and could not be adjusted to

meet varying demand. With depositors by the thousands withdrawing money from the banking system and hiding it in mattresses, the panic had caused a huge increase in the demand for money. Late on that Thursday night when this story began, as Morgan played solitaire, the bankers in the other room sought a way to provide it.

Since they could not print it, they developed a plan to do the next best thing. The major banks were members of the New York Clearing House, an institution founded in 1853 to facilitate transactions among New York banks. All checks written on member banks were brought to the Clearing House, allowing banks to settle accounts among themselves quickly and easily. To do this, they all maintained large balances at the Clearing House. The bankers now decided to allow the the settling Of accounts to be made by Clearing House Notes, which were to pay 6 percent interest, rather than cash. This freed the banks to lend out their Clearing House balances.

A similar plan had been used before in times of economic crisis, and Morgan was confident that it would work. Before the panic was over, the banks would hold as much as eighty-four million dollars in Clearing House Notes, a major increase in the money supply of that time.

The Secretary of the Treasury had come to New York in the emergency, and he made available ten million dollars in government funds for deposit in national banks. John D. Rockefeller made another ten million available. On Friday Morgan raised thirteen million dollars in additional call money for the Stock Exchange, and he let it be known that anyone selling short to take advantage of the panic would be “properly attended to.”

As the sound banks continued to meet their obligations and the Stock Exchange continued to function, the panic began to abate. To be sure, there were many financial brush fires that needed attention over the next ten days, but the worst was over.

Although many Wall Street bankers, such as George F. Baker and James Stillman, had contributed substantially, it was acknowledged that only Morgan could have held them together and forced them to act in the general good, often at the peril of their own solvency. One of Morgan’s partners, George W. Perkins, said, “If there ever was a general in charge of any fight for any people that did more intelligent, courageous work than Mr. Morgan did then, I do not know of it in history.” Even Theodore Roosevelt, so fond of railing against “malefactors of wealth,” now praised “those influential and splendid business men … who have acted with such wisdom and public spirit.”

After the crisis was over, many radicals and reformers, such as Upton Sinclair, accused Morgan of having fomented the panic for his own nefarious ends, and these calumnies have been echoed over the years by others. Morgan was too proud to defend himself against such outrageous charges, and it is a measure of the critics’ profound financial ignorance that they could think that there might be any truth to it. A man whose own prosperity depends on the continuing prosperity of Wall Street as a whole—as every investment banker’s does—would no more precipitate a general panic than a commander would infect his own troops with typhoid.

In the last years of his life Morgan spent less and less time on Wall Street and more at his library or abroad on his endless collecting trips. In 1913 he traveled to Egypt, a country he knew well, to inspect an expedition of the Metropolitan Museum of Art that he was funding. There he took ill. He returned to Rome, where better medical treatment was available, but it was to no avail, and he was ravaged by fever. Near the end, as the fever played tricks with his mind, he seemed to be remembering some schoolboy adventure. “I’ve got to go up the hill,” he told his son-in-law, pointing upward with his finger, and then sank into unconsciousness and death on March 31. In the first twelve hours after his death, 3,698 telegrams, from the Pope, from emperors and kings, from bankers and industrialists, from art dealers and curators, poured into the Grand Hotel in Rome, where he had died.

Two weeks later he was buried in Hartford, where he had been born nearly seventy-six years earlier into a world quite different from the one he lived to see and helped fundamentally to shape, and in which he prospered so mightily. In his will he left his wife and daughters very comfortably fixed and gave a year’s salary to every employee of J. P. Morgan and Company. To his son he bequeathed the bulk of his estate and the greatest art collection in private hands the world has ever known. He hoped a way could be found to make it available to the public. Today most of it is at the Metropolitan Museum and the Morgan Library in New York and the Wadsworth Atheneurn in Hartford.

Considering how very large Morgan loomed on the financial landscape in the first years of the twentieth century, many people were astonished at the relatively modest size of Morgan’s estate. It amounted to a little less than seventy million dollars plus his art collection, which was valued at an additional sixty million. To John D. Rockefeller—the country’s first billionaire—this was not even enough to make Morgan a rich man.

But Morgan had been born rich, and money for him was never a goal in itself. He could well afford to be ignorant of the cost of running his yacht (a standard that Morgan may or may not have coined), and that was quite enough for him. Nor, in a sense, had Morgan sought the immense power that was his, power of the sort money can never buy. That power, and thus Morgan’s unique place in American economic history, was his because of both the person he was—a banker of great skill, integrity, and total self-assurance—and the times in which he lived, as the nineteenth-century world of private banking and personally managed capital changed into the twentieth-century world of the national corporation.

In December 1913, eight months after Morgan’s death, President Wilson signed into law the Federal Reserve Act, establishing, at last, a true central bank for what had become a fully integrated national economy. Never again would the country have to call on a private banker to rescue its financial system in a crisis. And that is just as well, for never again could there be another J. P. Morgan.

John Steele Gordon writes regularly on the subject of business history for this magazine.