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The Magnitude of J. P. Morgan
It cannot be measured in dollars alone. It involved a kind of personal power no man of affairs will ever have again.
July/August 1989 | Volume 40, Issue 5
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.”
He raised $25 million in fifteen minutes to support the Stock Exchange in 1907.
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.
Unlike most of the other merchant princes, Morgan was born to affluence.
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.