The life story of J. Pierpont Morgan; a biography

Preface

The biography of a living man is a special sort of thing to write or to read, and requires a little explanation from the author. Undoubtedly the reader needs to know whether the thread of argument, which forms the more or less unconscious basis of every work of biographical writing, came, in this instance, from the subject himself duly posing for the public and expounding his character according to his own notions, or whether it proceeded independently from the writer's mind.

The fact that this life takes Mr. Morgan neither angrily nor bitterly, nor extravagantly nor pathetically, nor according to any of the obvious methods of the Sunday special articles (in which, up to now, his life has been exclusively set forth) but undertakes to describe him seriously and intelligently, will undoubtedly convince some simple souls that this tone was in some sense inspired. It is the natural inference, be-

PREFACE

cause to speak or write sensibly of the actions of any one of our magnified Captains of Industry (such in their power as the inventor of the phrase never dreamed of) is distinctly contrary to usage and custom. You must attack them or toady — there is supposed to be no middle ground. The reason for this state of things may be stated in five words: — ^these men personify political issues; and having stated it, let us leave it, and proceed to contemplate a fact much more important to writers and readers of biographies. The fact, or rather, the proposition, is this, — in order to depict a man as he really is one must set forth his own aims and objects, and show how he attains them, or how near he comes to attaining them, how he goes to work, and how he feels about his work. The opinions of others matter little, their theories little. It is idle to measure him with the ideal of some other world, or time. Suppose a Quaker to write the life of Napoleon, — as a Quaker, of course; seen through the peculiar green glass ideal of the hater of war, the man of war would come out sickly and unhuman. Almost anyone will admit that. But not everyone will admit

PREFACE

that it is possible to describe a Morgan without looking at him through the orange glass of the Socialist, or the glasses of whatever color of the dirty democrat, or the silken toady, the hater of the money power, the adorer of the rich and successful, and so on.

The author faced these difficulties, and found them difficulties. As for the book, let it be said at once that it was conceived and written independently by the author; there was never the least influence or dictation from without. The material was gathered because the subject was interesting and the opportunities lay close at hand. And the argument, above referred to, grew of itself out of a close study of this material, and much questioning. It seems to be pointing to the conclusion that Mr. Morgan's life has been one of usefulness and benefit to industry and to the country. This effect was unintentional, was not preconceived. But it was the perfectly inevitable result of aiming at truth and avoiding caricature.

Contents

CHAPTER PAGE

I Childhood and Youth 3

II Banking During the Civil War ... 34

Chapter I

SINCE the year 1865, the American Republic has been a business nation, and its strongest individuals have been business men, and the strongest of them all is the subject of this biography. What is a business man? According to a recent and very straightforward definition ''the business man is not a monster ; but he is a person who desires to advance his own interests. That is his occupation and, as it were, his religion." If we may accept this definition as accurate and generally true, then it clears the ground of certain sentimentalisms. The business man is not a statesman, or an altruist, or a philanthropist, at bottom; we only bungle our conclusions when we apply to him the measure of their ideals and objects instead of using the measure of his o^\ti. It is often possible for a business man to helj) the public gratis, and come forward at the dramatic moment, as a noble and patriotic and disinterested citizen. The thing has been done by Mr. Morgan, as everyone knows, and followed by ink-spilling praises, and closely afterward by sardonic comment and reviling. They paint him too bright or too black, as demi-god in one breath and a monster in the next, and the wholesome truth, which is something less fantastic, remains untold.

It is reasonable to remember that the great business man is neither saint nor devil, and that in the long run he is governed by the same practical motive of thrift as ninetynine out of a hundred busy American citizens of this progressive daj^ He may render an immense service for nothing, and get his name written across the sky — which is perhaps the last thing he thought of — but his most telling and characteristic service to the public, if service it is, comes from pursuing his o\vTa ends.

Having guarded ourselves against the usual foolish flights of fancy, let us admit at once that there are real complications in the case of Mr. Morgan. He has become the dominant business force in the country and the strongest single financial power in the whole world, and, as a matter of fact, he has reached a point where no category will contain him. You cannot put Mr. Morgan in the pigeon-hole of a class. He is a genius, a spirit, a very conspicuous instrument of the economic evolution of his time. You cannot call him a mere money-maker, interested in temporary gains. He instinctively plans for something permanent in the structure of money-making activity; he has furnished the grooves in which all our industries shall be run for a very long time to come.

There are not two opinions on this point. ^'Organiser" and ''constructive force" are almost hackneyed epithets as applied to him. The accepted description of his work runs as follows: ''He was never a stock gambler; never a bear. He never wrecked a property nor depressed values that gain might follow. His work was always to reconstruct, to repair, to build up. Instances of his force and ability in this direction are the Philadelphia and Reading, the West

Shore, the Erie, and the Northern Pacific railways. In these instances and in others he saved and rehabilitated property that otherwise would have been ruined and rendered useless. His enemies may charge him with many faults — and he undoubtedly has many — but they can never say that he destroyed a property. Nor has any property which he has saved been exploited for gain on the stock market with his consent. His work has been in actual construction, in the actual creation of properties. His railroads have been working railroads, with rails and steam and rolling stock; his factories have been smoking factories, aglow with life and workers — not paper railroads and paper factories that exist only in the imagination of the stock jobbers. ''

There is nothing of the charlatan suggested here; J. P. Morgan is solid. Furthermore, his rehabilitation of a vast amount of doomed property is mightily suggestive of broad public service. Other men have built up industries from the beginning, chiefly for themselves, as Rockefeller constructed the Standard Oil Trust. But Rockefeller soaked up his competitors like a sponge, while Morgan puts them on their feet and teaches and enforces cooperation among them all.

A period of the fiercest industrial strife seems coming to an end. The head is now a long way from the foot of the financial body, which is so firm and gigantic that only the strongest forces can cause it to quiver. Out of a generation in which lived Gould, Fisk, the Vanderbilts, Eockefeller, Frick, Carnegie, Yerkes, Harriman, Gates, Heinze, Morse, one has emerged to rule. Perhaps it is not for nothing that Mr. Morgan has survived.

The concentration of wealth and financial power that has taken place in Mr. Morgan's life-time is thus described by the informing writer already quoted:

"In the old days of financiering, all men controlled their own money and invested it in a business which they managed themselves. With very few exceptions (let us put in that farming is the chief exception) all this has changed, the great bulk of the money of the country now being invested in stocks and bonds, exchanged for insurance policies, or deposited in banks — its control, as far as its profits are concerned, passing entirely out of the hands of its owners. Ownership in the numerous stock companies which have been organised in a comparatively few years is distributed among hundreds of thousands of persons, and thus the millions of the many have passed into the control of the few.

''So the trite question: Who own the United States'? may not appear so important as the query : Who control the United States ? One hundred and ten of the comitry's largest corporations, with a capitalisation of $7,300,000,000, are owned by 626,934 stockholders. The average stockholdings are 116 shares. The manufactories of the United States are owned by many individuals, showing a fair diffusion of wealth, but their actual control is in the hands of a few men. In no other line has the control of the few been so apparent as in the conduct of the railroads, for the very laws which were created to prohibit railroad combination have fostered it. Less than a dozen men absolutely control fifty-four companies, with a capital of $4,157,000,000 and a total number of stockholders of 288,160. Of the fifty-six great industrial companies, with a capital of $3,143,000,000 and an extended list of stockholders, a few men are in control.

''It will he seen, therefore, that the whole tendency of the system is concentration. The great central power of this concentration is the hank. Mr. Morgan, hy his recent merger, has accordingly placed himself at the head of the greatest power in control of all the great potvers of wealth. It was said a few years ago that eight men virtually controlled the hidh of the hanking resources of cash and credit in the country. To-day one man is fast getting that power into his hands.'*

The merger mentioned in the paragraph above is the consolidation by Mr. Morgan last January of the rich Guaranty, Morton, and Fifth Avenue trust companies of New York. The result is a towering institution possessing upward of $150,000,000 of resources, bearing the name of the Guaranty Trust Company. In addition, Morgan controls and directs the Astor Trust Company, the Banker's Trust Company, and the Liberty National Bank. His interests, direct and indirect, in other banlving institutions are so far reaching that although it would scarcely be a work of ease for the arch consolidator to create a Money Trust which should control, absolutely, the cash and credit of America, the possibility is one that occurs to many minds, and the Morgan dictatorship of money is already much more a reality than a conception of the imagination.

For it will be seen that Mr. Morgan is not only the financial ruler by virtue of what he already has — he is a monarch who can extend his kingdom to suit his ambition or his need.

Mr. Morgan rules money at the exact moment of history when money is the thing to rule; when it is all important to financiers to be able to deny cash or credit to a wouldbe competitor's industry, to extend it to the trusts and combinations that are established in the field.

It would be pretty and neat, though not truthful, to say that his present position in the seventy-fourth year of his life is one which he aimed at from the first — that he is realising his life 's ambition. But the reader will agree, I think, as he reads this biography, that Mr. Morgan has not been the selfconscious force that he seems. In fact, it is obvious that in the year 1857, when the young Morgan entered business in New York, no man could possibly have foreseen the peculiar opportunities which the twentieth century would offer — the chance of an American kingship was utterly invisible to the most restless and conquering eye.

His gigantic power is still new, and as yet little understood. He inspires his countrymen with awe, and with another feeling, which is not exactly fear, but akin to it — a feeling of uneasiness. They see him in the terrific national changes of the times.

Let us describe the beginnings of this extraordinary man.

Mr. Morgan's earliest ancestor in this country was Miles Morgan, who settled in Massachusetts in 1636. His paternal grandfather was Joseph Morgan, a successful business man of Hartford, Connecticut ; his maternal grandfather was John Pierpont, the Boston preacher, poet, and reformer. Joseph Morgan was altogether less distinguished than Pierpont, but, on the other hand, he has the credit of founding the Morgan fortune, while the other, after a stormy, brilliant, but disappointing career, died as the holder of an obscure government post at Washington. His story is full of interest and pathos, and some of the traits of his marked character appear to be quite as real, if less definite, a bequest to his grandson as the fortune which came down from Joseph.

Joseph Morgan fought in Washington's army until the Revolution was over, and then settled down to farming near the village of Hartford. He made money enough to invest it in stage lines and eventually rose to the control of the chief roads of transportation in the State. Hartford, during the first quarter of the nineteenth century, had a great prosperity as the centre of longdistance traffic ; the main line of stage from New York to Boston passed through the city, running from Boston to Worcester, Springfield, Hartford, Middletown, New Haven, and New York— three days each way. Hartford also held the key to the trade of the Connecticut River valley, northward nearly, or quite, to the border of Canada. Innumerable taverns were sprinkled along the countryside, and Joseph Morgan also dipped into this thriving business. But in the fall of 1839 the first locomotive— the "Vesuvius" or the ''Good Friend" or some other quaintly named piece of machinery — made its slow way across the State, and Hartford's business position was changed. The old customers were drawn away by the merchants of rival towns, the stage lines went to seed year by year, and this thrifty ancestor quickly bestirred himself in other directions.

He opened a large hotel in Hartford, the "City Hotel," and soon afterward began to figure as a capitalist in connection with the ^tna Fire Insurance Company of that city. At this time these companies had no cash capital, their resources being represented by the notes of the principal "solid men" of the town, notes ranging in sums from five to ten thousand dollars each. The expectation was that the profits from the insurance business would render it unnecessary to call upon the note makers for cash to meet any fire losses, but a great fire in New York suddenly gave a different aspect to things. There was a period of heavy losses, and the prospect of calling upon the note makers became so imminent that the notes were offered at a large discount to anyone who was willing to assume their liability. Joseph Morgan bought these notes wherever he could, acquiring a large number of them. Soon afterward the danger passed ; the premiums received for insurance proved ample to pay the losses ; the company began to accumulate a capital stock, whose cash value was represented by the increasing profits of the business; and eventually the holders of the notes received stock in proportion to the liability they had assiuned. Joseph Morgan made a fortune from his holdings. It was this fortune which eventually placed J. P. Morgan's father, Junius Spencer Morgan, in the banking business.

Joseph Morgan handed to his son, besides fortune and the capacity for making more money, a genial disposition ; he had the qualities of the old-time host in the hotel business, and his son Junius was a famous and agreeable entertainer on a different, and of course more sophisticated scale.

Mr. Morgan's maternal grandfather, Pierpont, was a ybtj well-knowai man in his time; the following passage from an unknown hand (it is taken from an old copy of the Christian Examiner) shows the impression he made. The somewhat highflown phraseology cannot quite spoil it as a real reflection of his soul :

*'Mr. Pierpont united within himself the characteristics of two very distinct persons. One was graceful, cultivated, delicate, fastidious to the last degree, careful of etiquette, studious, dignified; with a certain loftiness of dignity, indeed, which strangers were apt to find somewhat frigid, but genial and expansive with his friends, and beautifully tender and loving with children. This was the clergyman and the poet.

''The other was the ardent knight, armed for battle, and seeking it far and near; . . . quick to discover injustice, he no sooner unearthed a new wrong than he attacked it with the ^evj ardour of a nature whose enthusiasm was but the hotter for the restraints which the habits and tastes of the scholar ordinarily imposed upon it. He used all his weapons at once : logic, sarcasm, invective, poetry — and sharpened them all with a stern 'Thus saith the Lord!' This was John Pierpont, the Reformer; and

. . . few names rang wider throughout the careless, prosperous land than his. ' '

Clearly an insurgent of those days ! Pierpont failed as a lawyer, failed as a merchant ; as a clerg}Tiian he won fame, but gave his congregation no peace or rest, and in one place after another they turned upon him. His most important pulpit was in the Hollis Street Unitarian Church of Boston. ''He was liable to open his Hollis Street pulpit," says a writer, "any Sunday morning with either or both temperance or slavery. He preached temperance to a congregation of men who drank rmn, sold rum, made rum . . . of course he gave mortal offence." And again, "His fight lasted seven years, one man against many, poverty against wealth, right against wrong." At last he was formally placed on trial by an ecclesiastical council for "preaching on exciting topics," and for failing to conduct himself "with Christian meekness." The exciting topics were "the meanness and crime which he saw about him in high places" ! The immediate result of the trial was a vote of censure, but Pierpont soon left the church for another, far away.

The year 1861 saw him in Boston again, and he went to the front as chaplain of the Twenty-second Massachusetts Regiment. The regiment went into camp on the north bank of the Potomac. It was shrewish fall weather, and the chaplain, now an old man, was unable to endure the cold. He was seen walking about most of the night beating his body with his hands to keep his blood from freezing. He sent in an application to the commander of the brigade for three days' leave, intending to look for some occupation in Washington. The officer had never heard of him and sent back the paper with a message scrawled across the back, *'Why does he want three days'? Give him two." In a very depressed state of mind the old man called upon Secretary Chase and modestly inquired if there was not some clerical work he could do. The secretary, who knew him well by reputation, shook his hand warmly, agreed to do anything he could for him, and did, in fact, provide him with a work of compilation for the Government which occupied the elderly clergyman until his death.

Of all the effort and struggle of this man's life there only remains a school-book piece of verse — '' Warren's Address" — do you not recall it? — beginning,

Stand ! The ground 's your own, my braves !

and a volume of poetry entitled ''Airs from Palestine," now unread. There are verses, however, which pulsate with the vigour of protest. Here is a specimen, the first stanza of "A Word from a Petitioner," which has an oddly contemporaneous sound:

"What ! our petitions spurned ! The prayer Of thousands — tens of thousands — cast

Unheard beneath your speaker's chair! But ye will hear us, first or last.

The thousands that, last year, ye scorned, Are millions now. Be warned ! Be warned !

Such were the strong feelings and the nature of J. P. Morgan's grandfather. Threads of Pierpont's personality are distinctly to be seen, however entangled, in the later man; terribly strong feeling, wilfulness, an aspiration for the beautiful, in both.

As soon as Junius Spencer Morgan grew up his father obtained a clerkship for him with the banking house of Morris Ketcham.

The young man remained here several years, finally leaving to become a junior partner in the dry-goods firm of Howe, Mather & Co. in his native town. During this period he married Juliet Pierpont, the clergyman's daughter, and their child, John Pierpont Morgan, was born April 17^ 1837. J. S. Morgan showed great business ability and was soon invited to become a partner in the house of J. M. Beebe & Co., one of the largest retail stores in Boston. But a few years later he met George Peabody, the great London banker, and shortly after the meeting, he entered Peabody 's jorosperous firm.

Peabody was American born, and for a long time was a merchant of Baltimore. After he became well established in the banking business in London, he became widely known on account of his Fourth of July dinners, which he gave annually for the purpose of creating good feeling between England and his own country. One of these occasions the Duke of Wellington honoured with his presence and Queen Victoria sent her portrait and Prince Albert's to hang in the dining hall. Peabody was the most widely known philanthropist of his day and gave millions for the housing of the poor in London and for the cause of education in the Southern States of America. On his visit to Boston he was in reality seeking a partner to pave the way for his own retirement from business ; the name of Junius Morgan was strongly urged upon him by Morgan's friends — with the result which proved so favourable to the Morgan fortunes. One of the stipulations in their agi'eement at the time was that Junius Morgan should take upon himself the entertainment of the firm 's American and other friends, for which he was to receive twenty-five thousand a year as expense money.

Young J. P. Morgan spent the first fourteen years of his life in Hartford. The house in which he was born still stands. It was a small and unpretentious building of red brick which stood on the village street in the centre of a few acres of land. Some years ago it was raised one story and a store was set in under it, and now it is being closely crowded by business blocks in what is the centre of Hartford. J. P. Morgan's associations are not with this house, however, for his parents only lived here during the fii'st year or two, then they moved to the large and comfortable house on Farmington Avenue which Joseph Morgan had had built as a wedding present for his son. Round it lay a farm of about one hundred acres which extended half a mile to the west to a stream called Little River. At the age of six young Morgan was sent to the district school.

As a boy he was a quiet, reticent personage ; one who went about his own affairs and .-who was marked neither by especial brilliancy nor especial dulness at his studies.

He was cool, matter-of-fact, and stamped with a determined quality and a kind of dignity which left a lasting impression upon the memory of some of his school-mates even if it did not awe them very much at the time. The first thing he gained at school was a nickname — in this way. The roll of the class was being called and one by one the boys stood up and gave their names. It came Morgan's turn:

''John Pierpont Morgan,'' he announced. He was asked to say it again because of his uncommon middle name. "Pierpont," he repeated, ''John Pierpont Morgan."

The teacher got it correctly, but not the other boys. They saw fun in that middle name. *'Pierp" — ^^'Pip — Pip" Morgan came from the back of the room in a loud whisper, and "Pip" Morgan he was called, and nothing else, from that day on.

*'Pip" Morgan spent most of his spare time fishing in Hog Creek; once he built himself a flat-bottomed, pointed skiff, in which he used to float about in the muddy stream; the new boat was better than the raft, which served the other boys.

At the age of twelve he was a well-grown, chunky boy, and as he went on in his teens he was large and well filled out for his age. But after a time his health began to suffer, he lost his ruggedness and constitution, and it w^as necessary for him to be constantly under a doctor's care.

After the family moved to Boston, he attended the English High School until his graduation in 1853. The next year he spent at Fayal in the Azores after which he continued his education abroad, spending a year at Vevay, Switzerland, and two years at the University of Gottingen in Germany. Here he also received a treatment of mud baths wMch proved beneficial. With his health much improved he left Gottingen to enter his father's banking house in London. A remark which his father made at this time has come to us from one who knew the elder Morgan — and who treasures the remark as a choice example of life's little ironies. ^^I don't know," said the London banker, "what in the world I am going to do with Pierpont." The question seems reaUy to have caused him unnecessary anxiety. He was also concerned about his son's abrupt and often antagonising manner, so much the opposite of his own. His friends assured him that there was nothmg to be done about this; his son's way was natural to him, really without intentional offence, a part of his constitution, and you could not turn granite into wax. At this period the young man was becoming initiated into the technical mysteries of his trade. He was learning what bills at sixty days on Paris or Amsterdam or Hamburg were worth in francs, guilders, the marc banco, and so on through all the delicatelybalanced system of foreign exchanges, which changed from day to day.

[AJQ anecdote shows how his father backed him up and the faith of the older man in his son's business judgment. Someone suggested to young J. P. that coffee was a **good speculation." Mr. Morgan decided that it was, too, and went out and bought — a whole shipload. When he told one of the partners of Peabody & Co. what he had done the other was shocked.

**Why, it's absurd," he said, ''to buy all that coffee — where will you get the money?"

Mr. Morgan stared at him angrily for a moment and then walked out of the room without saying a word. In a very short time he came back with a draft in his hand and slapped it on the table before the English banker. "There," he said sharply, ''there it is."

It was a draft for the full amount of the large sum involved in the transaction signed by Junius Morgan.

The year 1857 saw one of the most terrible financial panics which ever visited the United States. At this time the house of George Peabody & Co. was doing its American business with the firm of Duncan, Sherman & Co. of New York. During this crisis the American firm couldn't meet its maturing credits in London, and its inability to do so greatly embarrassed George Peabody & Co. Under this strain the London firm was obliged to appeal to the Bank of England for assistance, which it finally received. The outcome of it all was the sending of young Pierpont to America, where he became cashier, and his father's representative, with the firm of Duncan, Sherman & Co.

Here he met Mr. Dabney, the man whom he afterward selected as partner when he went into business for himself. Dabney was one of the most expert accountants in the city, and it was from him that Mr. Morgan acquired his remarkable and accurate knowledge of bookkeeping, a knowledge invaluable to him, and the extent of which, together with the resulting ability to analyse accounts and statements of the most intricate character, has excited the wonder of every man who has ever come in contact with him. In the course of time Junius Morgan wrote the American firm suggesting that they give his son a partnership. They — declined. Here Mr. Morgan's career really began ; for, soon after, his father directed hini to take an inexj)ensive office, and agreed to turn over to him, gradually, the entire business of George Peabody & Co.

Two paragraphs, printed in the columns of the Bankers' Magazine of that time, speak for themselves. The first reads :

"Messrs. J. Pierpont Morgan & Co. and Mr. C. H. Dabney (for several years of the firm of Duncan, Sherman & Co.), have associated together as bankers, under the firm of Dabney, Morgan & Co., Exchange Place."