the life story of j. pierpont morgan - a biography (1912)

7/27/2019 The Life Story of J. Pierpont Morgan - A Biography (1912)

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CORNELLUNIVERSITYLIBRARY

BOUGHT WITH THE INCOMEOF THE SAGE ENDOWMENTFUND GIVEN IN 1891 BYHENRY WILLIAMS SAGE


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Cornell UniversityLibrary

CT275.M84 H84Life story of J:..P!SfBSBLM8WiiiiAl'''

3 1924 032 366 332


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Cornell UniversityLibrary

The original of tliis bool< is intine Cornell University Library.

There are no known copyright restrictions inthe United States on the use of the text.

http://www.archive.org/details/cu31924032366332


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THE LIFE STORY OFJ. PIERPONT MORGAN


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J. PIERPONT MORGAN


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THE LIFE STORYOFPIERPONT MORGAN

A BIOGRAPHY

BYCARL HOVEY

ILLUSTRATED

flew !9cr?sSTURGIS & WALTONCOMPANY


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Copyright lOIIBy STURGIS & WALTON COMPANY

Set np and electrotyped. Publiihed October, MilReprinted May, 1912


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PEEFACEThe biograpliy of a living man is a special

sort of thing to write or to read, and requiresa little explanation from the author. Un-doubtedly the reader needs to know whetherthe thread of argument, which forms themore or less unconscious basis of every workof biographical writing, came, in this in-stance, from the subject himself duly posingfor the public and expounding his characteraccording to his own notions, or whether itproceeded independently from the writer'smind.The fact that this life takes Mr. Morganneither angrily nor bitterly, nor extrav-agantly nor pathetically, nor according toany of the obvious methods of the Simdayspecial articles (in which, up to now, his lifehas been exclusively set forth) but under-takes to describe him seriously and intelli-gently, vnll undoubtedly convince some sim-ple souls that this tone was in some senseinspired. It is the natural inference, be-


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PREFACEcause to speak or write sensibly of theactions of any one of our magnified Captainsof Industry (such in their power as the in-ventor of the phrase never dreamed of) isdistinctly contrary to usage and custom.lYou must attack them or toady^there issupposed to be no middle ground. The rea-son for this state of things may be stated infive words:these men personify politicalissues; and having stated it, let us leave it,and proceed to contemplate a fact much moreimportant to writers and readers of biog-raphies. The fact, or rather, the proposi-tion, is this,^in order to depict a man as hereally is one must set forth his own aims andobjects, and show how he attains them, orhow near he comes to attaining them, how hegoes to work, and how he feels about hiswork. The opinions of others matter little,their theories little. It is idle to measurehim with the ideal of some other world, ortime. Suppose a Quaker to write the life ofNapoleon, as a Quaker, of course; seenthrough the peculiar green glass ideal of theHater of war, the man of war would come outsickly and unhuman. Almost anyone willadmit that. But not everyone wiU admit


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PKBFACEthat it is possible to describe a Morgan with-out looking at him through the orange glassof the Socialist, or the glasses of whatevercolor of the dirty democrat, or the silkentoady, the hater of the money power, theadorer of the rich and successful, and so on.The author faced these difficulties, andfound them difficulties. As for the book, letit be said at once that it was conceived andwritten independently by the author ; therewas never the least influence or dictationfrom without. The material was gatheredbecause the subject was interesting and theopportunities lay close at hand. And theargument, above referred to, grew of itselfout of a close study of this material, andmuch questioning. It seems to be pointingto the conclusion that Mr. Morgan's life hasbeen one of usefulness and benefit to in-dustry and to the country. This effect wasunintentional, was not preconceived. Butit was the perfectly inevitable result of aim-ing at truth and avoiding caricature.New York, 1911. ^" ^'


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CONTENTSIII

-fillIVVVIVII

smEiIXXI

[xiiXXIIIXXIVXV

Childhood and Youth ....Banking During the Civil Wak .The Raileoad Wkeckees . . .The First Morgan SyndicateThe Eescue of Vandeebilt . .Railroad Chaos and Ruin . .The Beginning of Feudal FinanceThe Treasury Crisis of 1895 .The Relief of the GovernmentUnited States Steel . . .The Spirit of Combination .A Period of Reaction . . .World Banking . . . . .The Panic of 1907 ....The Man Himself . . . >

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ILLUSTRATIONSJ. Pierpont Morgan Frontispiece

FACING PAGEJunius Spencer Morgan 14The Morgan Homestead in Hartford .... 22J. Pierpont Morgan at the age of Forty ... 88Charles M. Schwab, Henry C. Frick,Elbert H. Gary and J. A. FarreU 210WaU Street in the Panic of 1907 296Mr. Morgan's Yacht the Corsair 318Mr. Morgan's House on Madison Avenue, NewYork City 340The Library in Thirty-sixth Street, adjoining theresidence at the comer of Madison Avenue . 340


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THE LIFE STOEY OFJ. PIEEPONT MOEGAN"


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THE LIFE STORY OFJ. PIERPONT MORGAN

CHAPTER ICHILDHOOD AND YOUTH

SINCE the year 1865, the American Re-public has been a business nation, and

its strongest individuals have been businessmen, and the strongest of them all is the sub-ject of this biography. What is a businessman? According to a recent and verystraightforward definition "the businessman is not a monster ; but he is a person whodesires to advance his own interests. Thatis his occupation and, as it were, his reli-gion." If we may accept this definition asaccurate and generally true, then it clearsthe ground of certain sentimentalisms. Thebusiness man is not a statesman, or an altru-ist, or a philanthropist, at bottom; we onlybungle our conclusions when we apply to himthe measure of their ideals and objects in-


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4 J. PIERPONT MORGANstead of using the measure of his own. Itis often possible for a business man to helpthe public gratis, and come forward at thedramatic moment, as a noble and patrioticand disinterested citizen. The thing hasbeen done by Mr. Morgan, as everyoneknows, and followed by ink-spilling praises,and closely afterward by sardonic commentand reviling. They paint him too bright ortoo black, as demi-god in one breath and amonster in the next, and the wholesometruth, which is something less fantastic, re-mains untold.

It is reasonable to remember that thegreat business man is neither saint nor devil,and that in the long run he is governed bythe same practical motive of thrift as ninety-nine out of a hundred busy American citi-zens of this progressive day. He may ren-der an immense service for nothing, and gethis name written across the sky^which isperhaps the last thing he thought of^buthis most telling and characteristic service tothe public, if service it is, comes from pur-suing his own ends.Having guarded ourselves against the

usual foolish flights of fancy, let us admit at


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CHILDHOOD AND YOUTH 5once that there are real complications in thecase of Mr. Morgan. He has become thedominant business force in the country andthe strongest single financial power in thewhole world, and, as a matter of fact, he hasreached a point where no category will con-tain him. You cannot put Mr. Morgan inthe pigeon-hole of a class. He is a genius, aspirit, a very conspicuous instrument of theeconomic evolution of his time. You cannotcall him a mere money-maker, interested intemporary gains. He instinctively plansfor something permanent in the structure ofmoney-making activity; he has furnishedthe grooves in which all our industries shallbe run for a very long time to come.There are not two opinions on this point.

"Organiser" and "constructive force" arealmost hackneyed epithets as applied tohim. The accepted description of his workruns as follows: "He was never a stockgambler; never a bear. He never wreckeda property nor depressed values that gainmight follow. His work was always to re-construct, to repair, to build up. Instancesof his force and ability in this direction arethe Philadelphia and Reading, the West


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6 J. PIERPONT MORGANShore, the Erie, and the Northern Pacificrailways. In these instances and in othershe saved and rehabilitated property thatotherwise would have been ruined and ren-dered useless. His enemies may charge himwith many faultsand he undoubtedly hasmany^but they can never say that he de-stroyed a property. Nor has any propertywhich he has saved been exploited for gainon the stock market with his consent. Hiswork has been in actual construction, in theactual creation of properties. His railroadshave been working railroads, with rails andsteam and rolling stock; his factories havebeen smoking factories, aglow with life andworkers^not paper railroads and paperfactories that exist only in the imaginationof the stock jobbers."There is nothing of the charlatan sug-

gested here; J. P. Morgan is solid. Fur-thermore, his rehabilitation of a vast amountof doomed property is mightily suggestiveof broad public service. Other men havebuilt up industries from the beginning,chiefly for themselves, as Rockefeller con-structed the Standard Oil Trust. ButRockefeller soaked up his competitors like


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CHILDHOOD AND YOUTH 1a sponge, while Morgan puts them on theirfeet and teaches and enforces cooperationamong them all.A period of the fiercest industrial strifeseems coming to an end. The head is nowa long way from the foot of the financialbody, which is so firm and gigantic that onlythe strongest forces can cause it to quiver.Out of a generation in which lived Gould,Fisk, the Vanderbilts, Rockefeller, Prick,Carnegie, Yerkes, Harriman, Gates, Heinze,Morse, one has emerged to rule. Perhapsit is not for nothing that Mr. Morgan hassurvived.The concentration of wealth and financial

power that has taken place in Mr. Morgan'slife-time is thus described by the informingwriter already quoted:"In the old days of financiering, all men

controlled their own money and invested itin a business which they managed them-selves. With very few exceptions (let usput in that farming is the chief exception)all this has changed, the great bulk of themoney of the country now being investedin stocks and bonds, exchanged for insur-ance policies, or deposited in banksits


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8 jr. PIERPONT MORGANcontrol, as far as its profits are concerned,passing entirely out of the hands of itsowners. Ownership in the numerous stockcompanies which have been organised in acomparatively few years is distributedamong hundreds of thousands of persons,and thus the millions of the many havepassed into the control of the few."So the trite question: Who own the

United States? may not appear so impor-tant as the query : Who control the UnitedStates ? One hundred and ten of the coun-try 's largest corporations, with a capitalisa-tion of $7,300,000,000, are owned by 626,934stockholders. The average stockholdingsare 116 shares. The manufactories of theUnited States are owned by many individu-als, showing a fair diffusion of wealth, buttheir actual control is in the hands of a fewmen. In no other line has the control of thefew been so apparent as in the conduct of therailroads, for the very laws which were cre-ated to prohibit railroad combination havefostered it. Less than a dozen men abso-lutely control fifty-four companies, with acapital of $4,157,000,000 and a total numberof stockholders of 288,160. Of the fifty-six


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CHILDHOOD AND YOUTH 9great industrial companies, with a capital of$3,143,000,000 and an extended list of stock-holders, a few men are ia control."It will he seen, therefore, that the whole

tendency of the system is concentration.The great central power of this concentra-tion is the hank. Mr. Morgan, hy his re-cent merger, has accordingly placed himselfat the head of the greatest power in controlof all the great powers of wealth. It wassaid a few years ago that eight men virtuallycontrolled the hulk of the hanking resourcesof cash and credit in the country. To-dayone man is fast getting that power into hishands."

.

The merger mentioned in the paragraphabove is the consolidation by Mr. Morganlast January of the rich Guaranty, Morton,and Fifth Avenue trust companies of NewYork. The result is a towering institutionpossessing upward of $150,000,000 of re-sources, bearing the name of the GuarantyTrust Company. In addition, Morgan con-trols and directs the Astor Trust Company,the Banker's Trust Company, and the Lib-erty National Bank. His interests, directand indirect, in other banking institutions


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10 J. PIERPONT MORGANare so far reaching that although it wouldscarcely be a work of ease for the arch con-solidator to create a Money Trust whichshould control, absolutely, the cash andcredit of America, the possibility is one thatoccurs to many minds, and the Morgan dic-tatorship of money is already much more areality than a conception of the imagination.For it will be seen that Mr. Morgan is not

only the financial ruler by virtue of whathe already has^he is a monarch who canextend his kingdom to suit his ambition orhis need.Mr. Morgan rules money at the exact mo-

ment of history when money is the thing torule; when it is all important to financiersto be able to deny cash or credit to a would-be competitor's industry, to extend it to thetrusts and combinations that are establishedin the field.

It would be pretty and neat, though nottruthful, to say that his present position inthe seventy-fourth year of his life is onewhich he aimed at from the firstthat he isrealising his life 's ambition. But the readerwill agree, I think, as he reads this biogra-phy, that Mr. Morgan has not been the self-


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CHILDHOOD AND YOUTH 11conscious force that he seems. In fact, it isobvious that in the year 1857, when theyoung Morgan entered business in NewYork, no man could possibly have foreseenthe peculiar opportunities which the twen-tieth century would offer^the chance of anAmerican kingship was utterly invisible tothe most restless and conquering eye.His gigantic power is still new, and as yet

little rmderstood. He inspires his country-men with awe, and with another feeling,which is not exactly fear, but akin to itfeeling of uneasiness. They see him in theterrific national changes of the times.Let us describe the beginnings of this ex-

traordinary man.Mr. Morgan's earliest ancestor in this

country was Miles Morgan, who settled inMassachusetts in 1636. His paternal grand-father was Joseph Morgan, a successfulbusiness man of Hartford, Connecticut ; hismaternal grandfather was John Pierpont,the Boston preacher, poet, and reformer.Joseph Morgan was altogether less distin-guished than Pierpont, but, on the otherhand, he has the credit of founding theMorgan fortime, while the other, after a


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12 J. PIBRPONT MORGANstormy, brilliant, but disappointing career,died as the holder of an obscure governmentpost at Washington. His story is full ofinterest and pathos, and some of the traitsof his marked character appear to be quiteas real, if less definite, a bequest to hisgrandson as the fortune which came downfrom Joseph.Joseph Morgan fought in Washington's

army until the Revolution was over, andthen settled down to farming near the vil-lage of Hartford. He made money enoughto invest it in stage lines and eventually roseto the control of the chief roads of transpor-tation in the State. Hartford, during thefirst quarter of the nineteenth century, hada great prosperity as the centre of long-distance traffic ; the main line of stage fromNew York to Boston passed through thecity, running from Boston to Worcester,Springfield, Hartford, Middletown, NewHaven, and New York^three days eachway. Hartford also held the key to thetrade of the Connecticut River valley, north-ward nearly, or quite, to the border of Can-ada. Innumerable taverns were sprinkledalong the countryside, and Joseph Morgan


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CHILDHOOD AND YOUTH 13also dipped into this thriving business. Butin the fall of 1839 the first locomotivethe"Vesuvius" or the "Grood Friend" or someother quaintly named piece of machinerymade its slow way across the State, andHartford's business position was changed.The old customers were drawn away by themerchants of rival towns, the stage lineswent to seed year by year, and this thriftyancestor quickly bestirred himself in otherdirections.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 cashcapital, their resources being represented bythe notes of the principal "solid men" ofthe town, notes ranging in sums from fiveto ten thousand dollars each. The expecta-tion was that the profits from the insurancebusiness would render it unnecessary tocaU upon the note makers for cash to meetany fire losses, but a great fire in New Yorksuddenly gave a different aspect to things.There was a period of heavy losses, and theprospect of calling upon the note makers


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14 J. PIBEPONT MOEGAl^became so imminent that the notes wereoffered at a large discount to anyone whowas willing to assume their liability. Jo-seph Morgan bought these notes whereverhe could, acquiring a large number of them.Soon afterward the danger passed; the pre-miums received for insurance proved ampleto pay the losses ; the company began to ac-cumulate a capital stock, whose cash valuewas represented by the increasing profits ofthe business; and eventually the holders ofthe notes received stock in proportion tothe liability they had assumed. JosephMorgan made a fortune from his holdings.It was this fortune which eventually placedJ. P. Morgan's father, Junius SpencerMorgan, in the banking business,Joseph Morgan handed to his son, besidesfortune and the capacity for making more

money, a genial disposition ; he had the qual-ities of the old-time host iu the hotel busi-ness, and his son Junius was a famous andagreeable entertainer on a different, and ofcourse more sophisticated scale.Mr. Morgan's maternal grandfather, Pier-

pont, was a very well-known man in histime; the following passage from an un-


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JUNIUS SPENCER MORGANFATHER OF J. PIERPONT MORGAN


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CHILDHOOD AND YOUTH 15known hand (it is taken from an old copyof the Christian Examiner) shows the im-pression he made. The somewhat high-flown phraseology cannot quite spoil it as areal reflection of his soul

**Mr. Pierpont united within himself thecharacteristics of two very distinct persons.One was graceful, cultivated, delicate, fas-tidious to the last degree, careful of eti-quette, studious, dignified; with a certainloftiness of dignity, indeed, which strangerswere apt to find somewhat frigid, but genialand expansive with his friends, and beau-tifully 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 nosooner unearthed a new wrong than he at-tacked it with the fiery ardour of a naturewhose enthusiasm was but the hotter for therestraints which the habits and tastes of thescholar ordinarily imposed upon it. Heused all his weapons at once : logic, sarcasm,invective, poetryand sharpened them allwith a stern 'Thus saith the Lord!' Thiswas John Pierpont, the Reformer; and


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16 J. PIEEPONT MORGAN. . . few names rang wider througHoutthe careless, prosperous land than his."

Clearly an insurgent of those days ! Pier-pont failed as a lawyer, failed as a merchantas a clergyman he won fame, but gave hiscongregation no peace or rest, and in oneplace after another they turned upon him.His most important pulpit was m the HollisStreet Unitarian Church of Boston. "Hewas liable to open his Hollis Street pulpit,"says a writer, "any Sunday morning witheither or both temperance or slavery. Hepreached temperance to a congregation ofmen who drank rum, sold rum, made rum... of course he gave mortal offence."And again, "His fight lasted seven years,one man against many, poverty againstwealth, right against wrong." At last hewas formally placed on trial by an ecclesi-astical council for "preaching on excitingtopics," and for failing to conduct himself"with Christian meekness." The excitingtopics were "the meanness and crime whichhe saw about him in high places ' ' ! The im-mediate result of the trial was a vote of cen-sure, but Pierpont soon left the church foranother, far away.


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CHILDHOOD AND YOUTH 17The year 1861 saw Mm in Boston again,

and lie went to the front as chaplain of theTwenty-second Massachusetts Eegiment.The regiment went into camp on the northbank of the Potomac. It was shrewish fallweather, and the chaplain, now an old man,was unable to endure the cold. He was seenwalking about most of the night beating hisbody with his hands to keep his blood fromfreezing. He sent in an application to thecommander of the brigade for three days'leave, intending to look for some occupationin Washington. The officer had neverheard of him and sent back the paper witha message scrawled across the back, *'Whydoes he want three days'? Give him two."In a very depressed state of mind the oldman caUed upon Secretary Chase and mod-estly inquired if there was not some clericalwork he could do. The secretary, who knewhim well by reputation, shook his handwarmly, agreed to do anything he could forhim, and did, in fact, provide him with awork of compilation for the Governmentwhich occupied the elderly clergyman untilhis death.Of all the effort and struggle of this man's


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18 J. PIERPONT MORGANlife there only remains a school-book pieceof verse"Warren's Address"do you notrecall it?beginning,

Stand ! The groimd's your own, my bravesand a volume of poetry entitled "Airs fromPalestine," now unread. There are verses,however, which pulsate with the vigour ofprotest. Here is a specimen, the first stanzaof "A Word from a Petitioner," which hasan oddly contemporaneous sound:What ! our petitions spurned ! The prayerOf thousandstens of thousandscastUnheard 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 thenature of J. P. Morgan's grandfather.Threads of Pierpont's personality are dis-tinctly to be seen, however entangled, in thelater man; terribly strong feeling, wilful-ness, an aspiration for the beautiful, inboth.As soon as Jimius Spencer Morgan grew

up his father obtained a clerkship for himwith the banking house of Morris Ketcham.


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CHILDHOOD AND YOUTH 19The young man remained here several years,finally leaving to become a junior partner inthe dry-goods firm of Howe, Mather & Co.in his native town. During this period hemarried Juliet Pierpont, the clergyman'sdaughter, and their child, John PierpontMorgan, was born April 17, 1837. J. S.Morgan showed great business ability andwas soon invited to become a partner in thehouse of J. M. Beebe & Co., one of the largestretail stores in Boston. But a few yearslater he met George Peabody, the great Lon-don banker, and shortly after the meeting,he entered Peabody 's prosperous firm.Peabody was American born, and for a

long time was a merchant of Baltimore.After he became well established in. thebanking business in London, he becamewidely known on account of his Fourth ofJuly dinners, which he gave annually forthe purpose of creating good feeling betweenEngland and his own country. One of theseoccasions the Duke of Wellington honouredwith his presence and Queen "Victoria senther portrait and Prince Albert's to hang inthe dining hall. Peabody was the mostwidely known philanthropist of his day and


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20 J. PIEEPONT MOEGANgave millions for the housing of the poor inLondon and for the cause of education in theSouthern States of America. On his visitto Boston he was in reality seeking a part-ner to pave the way for his own retirementfrom business ; the name of Junius Morganwas strongly urged upon him by Morgan'sfriends^with the result which proved sofavourable to the Morgan fortunes. One ofthe stipulations in their agreement at thetime was that Junius Morgan should takeupon himself the entertainment of the firm'sAmerican and other friends, for which hewas to receive twenty-five thousand a yearas expense money-Young J. P. Morgan spent the first four-

teen years of his life in Hartford. Thehouse in which he was bom still stands. Itwas a small and unpretentious building ofred brick which stood on the village streetin the centre of a few acres of land. Someyears ago it was raised one story and a storewas set in under it, and now it is beingclosely crowded by business blocks in whatis the centre of Hartford. J. P. Morgan'sassociations are not with this house, how-ever, for his parents only lived here during


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CHILDHOOD AliJ) YOUTH 21the first year or two, then they moved to thelarge and comfortable house on FarmingtonAvenue which Joseph Morgan had had builtas a wedding present for his son. Roundit lay a farm of about one himdred acreswhich extended half a mile to the west to astream called Little River, At the age ofsix young Morgan was sent to the districtschool.As a boy he was a quiet, reticent person-

age ; one who went about his own affairs andwho was marked neither by especial bril-liancy nor especial dulness at his studies.He was cool, matter-of-fact, and stampedwith a determined quality and a kind ofdignity which left a lasting impression uponthe memory of some of his school-mateseven if it did not awe them very much at thetime. The first thing he gained at schoolwas a nicknamein this way. The rollof the class was being called and one by onethe 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

imcommon middle name. "Pierpont," herepeated, "John Pierpont Morgan."


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22 J. PIEEPONT MORGANThe teacher got it correctly, but not the

other boys. They saw fun in that mid-dle name. "Pierp"*'PipPip" Morgancame from the back of the room in a loudwhisper, and *'Pip" Morgan he was called,and nothing else, from that day on.

*'Pip" Morgan spent most of his sparetime fishing ia Hog Creek; once he builthimself a flat-bottomed, pointed skiff, inwhich he used to float about in the muddystream; the new boat was better than theraft, which served the other boys.At the age of twelve he was a well-grown,

chunky boy, and as he went on in his teenshe was large and well filled out for his age.But after a time his health began to suffer,he lost his ruggedness and constitution, andit was necessary for him to be constantlyunder a doctor's care.

After the family moved to Boston, heattended the English High School until hisgraduation in 1853. The next year he spentat Fayal in the Azores after which he con-tinued his education abroad, spending ayear at Vevay, Switzerland, and two yearsat the University of G-ottingen in Germany.Here he also received a treatment of mud


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QOiOu.Ha;


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CHILDHOOD AND YOUTH 23batlis wMch proved beneficial. Witli Mshealth much improved he left Gottingen toenter his father's banking house in London.A remark which his father made at thistime has come to us from one who knew theelder Morganand who treasures the re-mark as a choice example of life's littleironies. "1 don't know," said the Londonbanker, "what in the world I am going todo with Pierpont." The question seemsreally to have caused him imnecessary anx-iety. He was also concerned about hisson's abrupt and often antagonising man-ner, so much the opposite of his own. Hisfriends assured him that there was nothingto be done about this; his son's way wasnatural to him, really without intentionaloffence, a part of his constitution, and youcould not turn granite into wax. At thisperiod the yoimg man was becoming initi-ated into the technical mysteries of histrade. He was learning what bills at sixtydays on Paris or Amsterdam or Hamburgwere worth in francs, guilders, the marcbanco, and so on through all the delicately-balanced system of foreign exchanges, whichchanged from day to day.


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24 J. PIERPONT MORGAN!Aii anecdote shows how Ms father backed

him up and the faith of the older man inhis son's business judgment. Someone sug-gested to young J. P. that coffee was a''good speculation." Mr. Morgan decidedthat it was, too, and went out and boughtawhole shipload. When he told one of thepartners of Peabody & Co. what he haddone the other was shocked."Why, it's absurd," he said, "to buy aU

that coffee^where will you get the money?"Mr. Morgan stared at him angrily for a

moment and then walked out of the roomwithout saying a word. In a very shorttime he came back with a draft in his handand slapped it on the table before the Eng-lish banker. "There," he said sharply,"there it is."

It was a draft for the full amoimt of thelarge sum involved in the transaction signedby Junius Morgan.The year 1857 saw one of the most ter-

rible financial panics which ever visited theUnited States. At this time the house oiGeorge Peabody & Co. was doing its Ameri-can business with the firm of Duncan, Sher-man & Co. of New York. During this crisis


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CHILDHOOD AND YOUTH 25the American firm couldn't meet its mattir-ing credits in London, and its inability todo so greatly embarrassed Oeorge Peabody& Co. Under this strain the London firmwas obliged to appeal to the Bank of Eng-land for assistance, which it finally received.The outcome of it all was the sending ofyoung Pierpont to America, where he be-came cashier, and his father's representa-tive, with the firm of Duncan, Sherman &Co.Here he met Mr. Dabney, the man whomhe afterward selected as partner when he

went into business for himself. Dabneywas one of the most expert accountants inthe city, and it was from him that Mr.Morgan acquired his remarkable and accu-rate knowledge of bookkeeping, a knowl-edge invaluable to him, and the extent ofwhich, together with the resulting ability toanalyse accounts and statements of the mostiatrieate character, has excited the wonderof every man who has ever come in contactwith him. In the course of time JuniusMorgan wrote the American firm suggestingthat they give his son a partnership. Theydeclined. Here Mr. Morgan's career


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26 J. PIEEPONT MORGANreally began ; for, soon after, his father di-rected TiiTn to take an inexpensive office, andagreed to turn over to him, gradually, theentire 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. andMr. C. H. Dabney (for several years of thefirm of Duncan, SheriAan & Co.), have as-sociated together as bankers, under the firmof Dabney, Morgan & Co., Exchange Place."The second is: ''Messrs. Duncan, Sher-

man & Co. have transferred their Londonaccount, late with Messrs. George Peabody& Co., to the banking firm of Messrs. Pin-lay, Hodgson & Co., a concern of very oldand wealthy standing. The withdrawal ofMr. Peabody and his large capital and ex-perience will doubtless induce a number ofother changes in American accounts in Lon-don." As Junius Morgan continued thePeabody business, taking it direct fromGeorge Peabody's hands, this was revenge.But the firm of Duncan, Sherman & Co.was even then in sight of the failure whichafterward overcame it.


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CHILDHOOD Al^D YOUTH 27;Besides Mr. Dabney, Mr. Morgan had for

a partner his cousin, James Goodwin, nowof Hartford. The office of the new firmwas on the second floor of Number 50 Ex-change Place, and even for the days when"model" office buildings were three storieshigh, could not have been called palatial.The big firms had their offices on Wall Streetor on William Street. There is nothing inMr. Morgan's career in these earlier dayswhich suggests that he had at that time theslightest comprehension of what his rela-tions as a banker and a constructive force,either in the world of railway affairs, or inindustrial development, was to be. Helooked upon himself then, as in fact he al-ways did until he was forced by imperativepressure to lead in the reorganisation ofbankrupt railroads, as a banker pure andsimple.In the summer of 1859 Mr. Morgan sailed

for Paris to see the lady who was soon tobecome his wife. She was Miss AmeliaSturges, the daughter of Jonathan Sturgesof New York. Miss Sturges was an in-valid ; in reality she was dying of consmnp-tion. Mr. Morgan persuaded her to marry


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28 J. PIERPONT MORGANhim, declaring that he would take her theworld over to find her health. He droppedbusiness entirely after his marriage and de-voted himself to the dying woman. Shelived only a few months after their wedding.He returned to New York and plungedinto his work again. He lived quietly, be-ginning the day with a horseback ride inCentral Park and often spending the even-ing at the house of one of his friends. Hisinterest in pictures, always strong, occupiedhim much at this time. He bought his firstoil painting at the Sanitary CommissionFair, held in a big, temporary structure onFourteenth Street. It was the portrait of ayoung and delicate looking woman, thework of an artist named Baker, and theprice was $1,500. The picture hung formany years over the mantel in the libraryof Morgan's home, at 42 West 21st Street.His first striking transaction occurred

after the breaking out of the war, and aboutthe time that Charleston, S. C, was block-aded. Gold was commanding a premium,but it was thought that Charleston wouldfall, and with it, the premium on gold.With this idea strongly in mind the impor-


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CHILDHOOD AlfD YOUTH 29ters who owed money abroad were puttingoff from day to day their remittances tomeet their maturing bills, hoping to cointheir remittances in gold later on at a muchlower price than the market then afforded.But gradually the truth dawned upon themthat Charleston was not going to fall.Meanwhile the price of exchange was begin-ning to force gold shipments to London,which made matters much worse, sinceevery shipment of gold tended to force upits price.The favorite place to watch this terrify-ing upward movement was the * 'gold room. 'This peculiar institution was a private en-terprise, kept by a man named Gallagher ina building at the corner of William Streetand Exchange Place. Anyone could deal inthe gold room after paying a fee of twenty-five dollars a year. It was open all day,whereas the Stock Exchange, which thenheld two sessions, closed its morning sessionat twelve and was open again for only ashort time in the afternoon. According tothe custom of that time, the presiding of&eerof the 'Change simply called down a list ofstocks, and the brokers, gathered in a kind


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30 J. PIEEPONT MORGANof pit, bought and sold their stock when theofficers reached its name. Gold was last onthe list, and the form of routine was alto-gether too slow and unwieldly on the regu-lar exchange to take care of the feverishbusiness in that commodity.To those in daily touch with the gold room

it became evident that a crisis was comingfast upon those importers with their de-layed remittances. The movement wassharpened by small shipments of gold, andit was very clear that if any large shipmenttook place the importers would throw uptheir hands in a panic and rush to buy goldto save their skins.

There was a young feUow among thewatchers whose sharp sight took this in; itwas E. B. Ketcham, of the banking house ofKetcham, Son & Co., and a friend of J. P.Morgan's. He went to Mr. Morgan, andthis is what took place:^'What's the condition of the exchange

market?" Ketcham inquired first.''Very anxious," replied Mr. Morgan.**How good is your exchange credithow

much exchange could you market?"


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CHILDHOOD AND YOUTH 31"Two or three millions," said Mr. Mor-

gan."I've got an idea, whicli I think worth

considering," went on the other: "Sup-pose we buy a couple of millions of gold andship it abroad on next Saturday's steamer.Tou haven't got the money to ship the gold,but our firm has. We'll make it a joint ac-count with Peabody & Co. and yourself.The result will be to advance the price ofgold several points and to give you a clear,exclusive exchange market to draw againston shipment, which will reimburse us withina week, with a big profit on the gold we pur-chased."The proposal thoroughly appealed to Mr.

Morgan's business judgment. As a resultthe two young men journeyed up to West-port, Conn., that afternoon, to talk the mat-ter over with the senior partner of theKetcham house. This was Morris Ketch-am, with whom Junius S. begun in business.The older man soon consented, saying : "Ifyou boys think you are right, go ahead."

It was very necessary to go ahead cau-tiously to prevent the plan from becoming


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32 J. PIERPONT MORGANknown. In shipping gold double eagleswere used^you had to go to a bulliondealer and buy the exchange for the ordi-nary run of gold, paying a slight premium.Thus either Morgan or Keteham had to ap-pear as a buyer of double eagles, the onlypossible use of which was to ship abroad.The bullion dealers got some inkling, but thepurchases were timed when other shipmentswere taking place, so far as could be done.[And the following Saturday saw the goldshipped, two millions of it.Almost immediately there was an advance

in the price, and yet, when the traders metin the gold room on Monday morning, thingswere unaccountably quiet. Mr. Morgan be-came impatient, even nervous. "What doyou think? What do you think?" he whis-pered to his partner in the deal. Theywaited. At the Stock Exchange was a manfrom Keteham & Co. under orders to buyenough gold to put it at a certain point.Both speculators knew the hour when goldwould be reached in the trading. But sud-denly the bidding broke out in the gold roomitself.

**I'll sell half a million," said a man,


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CHILDHOOD AND YOUTH 33"notwithstanding the large amount of ship-ment."

"I'll take that half nuUion and anotherhalf million at a half per cent, higher," an-swered Mr. Morgan's partner, promptly,and, after that, there were no more attemptsto hreak the price. The importers now feUinto line; they had put off their exchangeoperations so long that they were nowobliged to draw sight exchange and Mr.Morgan was the only one who could give it.In less than two weeks the money used inthe gold purchased was recouped by the saleof Mr. Morgan's exchange, and the transac-tion was closed up with a profit of a hun-dred and sixty thousand dollars^which wasconsidered big business iq those days.


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OHAPTEB IIBANKENG DUBING THE CIVIL VTAR

THERE is a thougMless saying, which isonly partly true, that Mr. Morgan isnot a self-made man. "With him, indeed,there was never anything resembling thefamous Rockefeller account book^nine dol-lars and eighty cents this month received,five sixty expended "for necessities,"^bal-ance, four-twenty toward the distant Palaceof Ambition^written out in a cramped,clear, boyish hand. From the first, he stoodat a certain height above the crowd, and be-gan life in New York easily, possessing allthe advantages and claims of a successfulbanker's idolised son.But although the name and business con-

nections of Junius Morgan furnished himwith a substantial pedestal, Pierpont Mor-gan has made it a mountain, and withdrawnto the very top with his allurement of theMidas touch. There capital seeks to follow,

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BAi^KING DURING CIVIL WAE 35and really competes for the notice of the all-powerful individual whose name carriesconviction and stands for success. TheMorgan name, coupled with an enterprise,is reckoned as much an asset as stores ofgold. And this enchantment is his ownwork. By virtue of all that separates hiscommonplace, if comfortable, inherited po-sition from his Cyclopean influence and au-thority to-day, Mr. Morgan is "self-made."His growth was slow; it occupied all of

fifty years, counting from the year he beganas a banker's clerk in '57. He went on do-ing harder and harder things, and as his lifehas been built up in that way, the conse-quence is that when we go back to the periodto be dealt with in the present chapterthatof the Civil War, and shortly after^we goback to an astute and terribly efficient per-sonality, but nothing like the Morgan ofto-day. Not outwardly. With aU his un-conscious egoism, he subordinated himself,first to his father, and afterwards to theDrexels, and he was middle-aged before hebecame quite his own master and was ut-terly free.As a young man he was as restive as a


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36 J. PIERPONT MOEGANyouthful athlete who has not yet tried hisstrength and powers at a meet; intensephysical and mental energy, an abrupt andsure way of going after things, whether itwas the little matter of playing petits che-vaux in the kursaal at a franc a play whenhe was at Feligh's School at Vevay, Switzer-land, or some complex piece of bankiagwhich came to his hand at the beginning ofhis career, when he was clerk for Duncan,Sherman & Co.The year he came to New York was the

year of a terrible crisis in Wall Street;beginning with the crash of the Ohio Lifeand Trust Company in midsummer, 1857,nine hundred failures were repdrted. Atone time the great London firm of Pea-body & Co., in which the fortune of Mor-gan's father was bound up, was known tobe in extremis; it was perfectly solvent,but, like other firms, it had for the time tolie out of its money and could not meet itsengagements. It was predicted that thefall of Peabody & Co. would start a generalpanic in London. But the suspension ofthe Banking Act enabled the Bank of Eng-land to advance Mr. Peabody one million


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BANKING DURING CIVIL WAR 37ipounds, wliicli saved the situation in thatquarter. In New York, however, there wasno such relief. The banks took alarm andconvulsively stopped short their customaryadvances; commercial houses went downby dozens; and then the public caught thepanic and, turning upon the banks, began arun for their deposits. The banks, in turn,found they could no more conduct theirbusiness without credit or faith than theircustomers, the merchants, could, and a gen-eral suspension of specie payment had tofoUow.The very means which the bankers took

to prepare against a run produced a rimand closed their doors, A week before theywere forced to suspend, they announcedthat they would change their policy and meetthe panic by its natural remedya reason-able expansion of credit; and it was thepubKcation of their returns in the weekfollowing, showing in all the plainness ofprint that instead of expanding they werecarrying the refusal of credit still further,which brought the public down with a howlupon their doors.As an object lesson this panic of 1857


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38 J. PIEEPONT MOEGANwas clean-cut and decided. And it wasMorgan's initiation into tlie wild and tragicpossibilities of a financial hurricane. Hewas a clerk, twenty years old, at the time,but he studied and thought out every phaseof the situation, and there are men nowliving, bankers of an elder day, who recallhis eager and persistent questioning as tothe why and wherefore of the steps theytook then. In spite of his youth he did notseem tempted to criticise; he wanted an-swers to his questions, but kept his conclu-sions to himself.The storm passed and business went

cahnly and solidly ahead for three yearsmore. Moses Taylor taught the bankersof New York the invaluable advantagesof cooperation by means of a ClearingHouse association. Commodore Vander-bilt had his fleet of sixty ships. TrenorW- Park constructed a short route toCalifornia, by means of a railroad fortymiles long across the Isthmus of Panama.A. A. Low, father of Seth Low, was build-ing up foreign commerce, sending packetships to China and the Far East; and therewas a rapid development of ocean steam-


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BANKING DUEING CIVIL WAR 39ship service between Boston, New York, andLiverpool and Continental ports. At thattime the greater part of our foreign ex-change represented exports of cotton, andthe phrase "Cotton is King" was invented.There were few banking houses in NewYork doing an international business and,almost without exception, every one of thatday is now known only by tradition. Dun-can, Sherman & Co., by whom young Mor-gan was employed, was borne safely out ofthe panic on the broad shoulders of Pea-body & Co., but disappeared in the years ofdepression which followed the still greaterpanic of '73.The railway mania had not yet begun ; in

the East, the Pennsylvania, and, to someextent, the Baltimore & Ohio, were begin-ning to feel their way toward the develop-ment of the Middle West, but the roadswere disjointed, straggling, tentative ex-periments, and the varieties of gauge andthe grotesque differences in the make ofcars made it impossible to carry throughfreight from Chicago, then a young city,making her own future, or from Cincinnati,to the East, without dozens of changes of


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40 J. PIERPONT MOEGAi^traffic and continuous expense and delay.The Harlem railroad was about bankrupt;the New Haven system was undreamed of,the railroad consisting entirely of a linestretching from the Bronx River to NewHaven, sixty-two miles away.Mr. Morgan's cousin, E. D. Morgan, who

became Grovernor of New York just beforethe War, and who was afterwards UnitedStates Senator, was directing the unfortu-nate Hudson River Railroad, as, earlier,Sam Sloan had done. Many thought thatthis railroad was a monument of folly, rep-resenting a mad investment of capital, sinceit was not conceivable that a line runningalong the banks of the Hudson could suc-cessfully compete with water navigation.With these developments Mr. Morganhad little practical concern for the moment.

His face was turned toward Europe and theexchange market in financial centres acrossthe water. A banker, such as he was, wasjust as necessary to the movement of for-eign commerce as the ships which carriedthe trade. Foreign exchange, in a sentence,is an evidence of indebtedness representedby a negotiable paper; its object is to re-


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BANKING DURING CIVIL WAR 41move the burden of shipping coin. Whenwe export cotton, a credit is opened withthe English buyer, who arranges with hisbanker to accept drafts of the Americandealer, and notifies the American cottondealer to draw his sixty-day bill on the Lon-don bank, with shipping documents at-tached. The New York banker buys thisbill of the dealer, thus supplying him, with-out trouble and at a small charge, the neces-sary cash to pay the farmer who raised thecotton. The dealer in exchange brings to-gether a customer in London, or it may bein Batavia, Siam, or the coast of Africa,and a seller in the United States; the twopractically stand in front of his desk andreceive what is justly due them, althoughthey may actually be ten thousand milesapart. It was this kind of business whichoccupied Mr. Morgan throughout his earlycareer, and he learned it thoroughly in allits manifold ramifications. He kept stead-ily at it when the War broke out.Salmon P. Chase, Lincoln's Secretary of

the Treasury, came to New York after thedefeat at Bull Run and appealed to thebankers of the Clearing House Association


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BANKING DURING CIVIL WAR 43were people in every group who thoughtthey saw the nation crumbling to pieces.Mr. Morgan was a Republican in politicsand had plenty of faith in the survival of theUnion. Although he played no importantpart in financing Government loans, he en-gaged to secure gold from Europe, havingestablished his own banking firm early inthe War, and beyond this he kept the houseof Peabody & Co. thoroughly informed, notmerely about the work of the army, but alsoconcerning the financial condition of thecoimtry, our sources of strength, our abilityto meet any taxation, and the certainty thatno ruinous issues of Government bondswould ever be made. All of which had itseffect and reached a tangible result, in thefollowing way.Charles Francis Adams, then Minister

from the United States to Great Britain,had protested vigorously against the con-struction of ships designed, as he said, forservice as Confederate cruisers, and par-ticularly against permitting these ships tosail from British waters upon their pri-vateering cruises. As Minister, he hadgone so far as to say that this would be re-


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44 J. PIERPONT MORGANgarded by the Washington Governmentas an unfriendly act, an act of purposedunfriendliness. The British Government,imable to answer the logic that wasin Adams's protest, set up a demand thathe should deliver to it a million pounds ingold as a protection fund out of which anypossible damages could be paid. The Brit-ish insisted that the money should be turnedover within five daysan apparentlyimpossible condition, inasmuch as Adamscould not communicate with the UnitedStates in less than two weeks, and ofcourse could not personally command sogreat an amount of gold as that. He sawthat he was in a trap, since he could notdeny England's right to have a money se-curity against possible damages.In this intensely serious predicamentAdams sought help from the Londonbankers, but it was not forthcoming. Atlast, however, he received in secret a rep-resentative of Peabody & Co., who broughtthe information that the American firm wasready to advance him five million dollars ingold, and would do it immediately, upon thesole condition that the transaction should


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BANKING DUEING CIVIL WAE 45be absolutely confidential. No one else, ex-cept President Lincoln and Secretary Sew-ard, was to know one word about it. Theonly security asked was Mr. Adams's re-ceipt, signed as American minister. Thegold was, within a day, delivered ; and GreatBritaiQ was compelled to place an embargoupon all of the suspected privateers.The late Frederick D. Tappan once said

that he was impressed in the early days ofthe Civil War, by the absolute faith and thespirit that is nowadays called optimismwhich the young son of Jimius Morgan wasat that time revealing. He remarked thatalthough Mr. Morgan was then, as always,a man of few words, yet it was impressiveto hear him express his firm belief, not onlyin the ultimate success of the United States,but also in the irresistible resources of thecountry, which he was certain would proveample to meet any imaginable cost to pressthe fighting to the end.''We are going some day to show our-

selves to be the richest country in theworld in natural resources," said Mr. Mor-gan, with his sharp, staccato emphasis. ''ItwiU be necessary to go to work, and to work


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46 J. PIERPONT MOEGANhard, to mm our resources into money, topay the cost of the War, just as soon as itis ended."To realise what this means it is neces-

sary to recall the fact that as late as Sep-tember, 1864, the London Times consideredthat the holders of the Erlanger Confeder-ate bonds were better off than the holders ofFederal securities.Mr. Morgan was not in the way of doing

Government business at this time; he keptstrictly to his own path, and politics hedisliked with a constitutional malaise. Theconditions required a very cautious and far-seeing management; almost incalculablefactors and abrupt changes entered into thedaily business. The bankers and the Gov-ernment were both involved in a web of dif-ficulties, which Congress sought to reUeyeby legislation, some of which only aggra-vated the trouble. Senator John Shermansecured the passage of an act making green-backs legal tender upon the Government"fiat," and this and the creation of the na-tional banking system in '63 proved instantlyhelpful, supplying the country which, hav-ing no fractional currency, had been mak-


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BANKING DURING CIVIL WAR 47ing use of postage stamps and various to-kens, with ample money. On the otherhand, the suspension of specie payment, thescarcity of gold as measured by papermoney, put gold at a premium and led tofevered speculation in the latter preciouscommodity. Speculation in gold was at-tacked as a national evil ; the stock exchangerefused to allow it, but the gold speculatorsgot together in the Gold Room and did agreater volume of business than ever.Then.Congress outdid itself by passing, inJune, 1864, the famous Gold Act, whichmade it a crime to buy or sell gold. Butthis action did utter violence to the businessjudgment of the bankers throughout thecountry; they were ready to discouragegold speculation, but to forbid it was ab-surd, because if gold could not be offeredin the open market at any time no one wouldknow what it was worth, and every one whopossessed any would simply lock it up andhoa'rd it.The New York bankers, J. P. Morgan

among them, characterised this proceed-ing on the part of Congress in the followingway:


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48 J. PIEEPONT MORGAN"It is one of the most extraordinary

and visionary acts of legislation everpassed in this country, or in any othercountry. So far from aiding the Govern-ment in its design to put down speculationamong brokers and speculators, it hashad, and will continue to have, an entirelydifferent effect. The rate in Wall Streetimmediately advanced to 200, 205, 210, and,in fact, to 225. This Gold Act is only onemore instance of utter lawlessness on thepart of Congress to interfere with theordinary business transactions of a commer-cial city. The cause of the rise in gold doesnot, did not, arise in Wall Street. Thecause was the unwise issue of several hun-dred millions of paper currency at Wash-ington and in the enormous importationsfollowing the imcalled for inflation."The agitation and alarm spread rapidly,

and as the facts were all with WaU Streetin this instance, Congress was put to thehumiliation of repealing the law within afew weeks. The effect of the experimenton Mr. Morgan's mind was lasting.We have related in the first chapter howMr. Morgan went into business for himself


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BANKING DUEING CIVIL WAE 49at 53 Exchange Place under the firmname of J. P. Morgan & Co., and how thefirm was afterwards changed to Dabney,Morgan & Co. An account of his firstmarriage was also given. In the year 1865he married again, and his second wife, thepresent Mrs. Morgan, was Miss FrancesLouise Tracy, daughter of Charles Tracy,a lawyer in New York. The Morgans wentto live at No. 227 Madison Avenue. Theyhved rather quietly, and Morgan himselfwas seldom seen in public places. Thenumber of his acquaintances was compara-tively limited and he had few close friend-ships outside of his own family. He hadthree sisters living, all younger than him-self; Sarah Spencer Morgan, who marriedGeorge Hale Morgan in 1866 ; Mary LymanMorgan, who married Walter HaynesBums in '67; and Juliet Pierpont Morgan,who afterwards became the wife of the Rev.John B. Morgan. His only brother, Ju-nius, died at the age of twelve. To his sis-tersMrs. Burns and Mrs. John B. Morganare stUl living^he was, and always hasbeen, very personally devoted.At the time of his second marriage he


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50 J. PlERPONT MOEGANwas stout in appearance, in good health,and wore a moustache. At least once inevery year he crossed to London to discussthe details of the banking business with hisfather, who was now head of the Londonhouse, which had been Peabody & Co. Inthe year 1866 his daughter Louisa PierpontMorgan, now Mrs. Herbert Satterlee, wasborn, and in 1867, his son John PierpontMorgan, Jr., now known as Jack Morgan,and pointed to as his father's successor.

Quietly industrious, prosperous, invin-cibly energetic, yet fully content to pourthe full stream of his energies into ordi-nary business affairs, Mr. Morgan wasnearing thirty, without having given morethan a hint of his true powers. From thistime on, however, he slowly began to takehis place in the bigness and vastness of thesweeping development of the country; likea spring flood, a fresh stream of businessenterprises burst forth when Lee surren-dered, and in all the years that followedMr. Morgan is found progressing in thevery centre of the current, bringing his per-sonality more and more to bear upon its


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BANKING- DURING CIVIL WAE 51direction, and emphasising the growingtendency to cooperation which was destinedeventually to characterise the total move-ment.


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CHAPTER IIITHE EAILKOAD 'WEECKERS

THE railway mania struck the countryin '66, and it was in '69 that Morganfirst "got into" railroads. The achieve-ment which first attracted attention tohim as a man of original capacity for deal-ing with very difficult railway problems,in such a way as to save railway propertiesfrom the predatory hands which, for someyears after the close of the Civil War, hadbeen occupied in wrecking railway proper-ties to make fortunes in the process, wasthe sensational Albany & Susquehanna Eail-way fight for control.

It was primitive warfare VTith modernweapons.

It involved a direct challenge to battlewith two of the ablest and most unscrupu-lous of the men who had come to WallStreet, bent upon reckless manipulation.Mr. Morgan was of about the same

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THE RAILEOAD iWRECKEKS 53age as Jay Gould and a little younger than"Admiral" Jim Fisk, alias the "Prince ofErie." Morgan had been occupied for tenyears exclusively with the kind of bank-ing which private bankers were accustomedto follow. He had gained in that time areputation for very conservative manage-ment and as a banker exceedingly sensitiveto credit. It was then said of him that,except as a matter of record, it was not es-sential to put any promise or statement ofhis in writing.On the other hand, Gould and Fisk hadgained notoriety for their brilliant daring,for their unscrupulous methods, and forthe swiftness and ability with which theywere able to wreck railroad properties.Furthermore, Gould was even then the besthated and the most greatly feared man inthe Wall Street district. Black Friday andthe Gold Corner were synonymous with hisname. He was known to control two orthree judges and to have reliable friends atcourt in New York and New Jersey. In theinformal partnership between the two men,Fisk was always the one who did the fightingout in the public view, while Gould stood


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54 J. PIERPONT MORGANback and pulled wires. The former had agenius for publicity and self-advertisement;with his stout figure and florid complexion,his elaborate costumes and enormous dia-monds ; coachmen in glittering livery, showydrags, and gay women, he was the greatestnewspaper character of his day. As boss ofthe Fall River Line of steamboats he feltentitled to wear an Admiral's uniform, andafter he had set up the Erie offices in theGrand Opera House, strange and bizarreevents took place; ballet girls and cham-pagne were mixed up with railroad busi-ness in a wild conglomeration in which theErie's money was poured out in a goldenflood. Pisk was murdered, finally, by a manwith whom he had had a quarrel over thefunds of a sugar refinery.The Albany & Susquehanna Railroadwould have been a valuable prize for theErie. It runs from the eastern extremityof the New York Central at Albany, to ajunction with the Erie at Binghamton. Atthat time the Erie aspired to compete withthe Central for New England business andhad determined to monopolise the coal tradebetween that section and Pennsylvania; it


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THE EAILROAD WRECKERS 55only wanted the connecting link of 142 milesto make its position solid. Jay Goiild se-cured a block of shares in the A. & S., andthen began his characteristic strategy. Hecaused the road to be thrown into bank-ruptcy and had Fisk named as receiver.President Ramsey and the directors of theA. & S. saw what was going to happen tothem and their roadthey were about tobe swallowed up.Yery much frightened, Mr. Ramsey went

to Samuel Sloan, who was the fixst presidentof the Hudson River Railroad, some tenyears before Commodore Vanderbilt boughtitand begged to know what he shoulddo."Why don't you see J. P. Morgan?"Sloan said. "Call him into consultation.He is not afraid of Jay Grould, and he canfight him without ever delivering a foulblow. If your road is to be saved to you,Morgan, I am sure, is the man who cando it."Acting upon this advice Mr. Ramsey and

the directors visited Mr. Morgan. He wasthen only thirty-three years of age. Butthey were impressed immediately by the al-


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56 J. PIERPONT MORGANmost intuitive accuracy of his judgment.He said to them"I want a statement of your exact con-

dition. I want a brief report which willtell me all that Gould and Fisk have done.I will examine these reports. Then Iwill let you know what I think about thematter."

iWithin two or three days Mr. Morganbrought the directors together again. Hesaid to them:"In my opinion this matter will have

to be fought out in the courts. I feelcertain that it can be successfully foughtthere. Shall I go ahead?"Mr. Morgan was told to go ahead,! as

tersely as he had asked whether he shouldor not. He then retained as counsel his fa-ther-in-law, Charles E. Tracy, and SamuelHand of Albany. They were sure of get-ting justice at the hands of Judge EufusW. Peckham of the Supreme Court, who wassitting at Albany. Fisk and Gould wererepresented by David Dudley Field, andwhenever they wanted anything, from aninjunction to a receivership, they went toJudge Barnard, sitting in New York.


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THE RAILEOAD WRECKERS 57A stockholders' meeting of the railroad

was called to meet in Albany on a certainday. Two or three days before the datenamed, Mr. Morgan, with his lawyers,Tracy and Hand, worked miremittingly inthe preparation of papers which must bepresented to the Court in order to have afair coimt made of the votes cast at thestockholders' election. They expected thatrisk and Gould would make some counterlegal move.The night before the election^ Mr. Handleft Mr. Morgan at work in his room

in the Delavan House making copies ofthe affidavits which were to be used on theapplication to be made by Mr. Hand be-fore Judge Peckham the next morning.Mr. Hand excused himself for a few min-utes to go down to the boat which wasleaving for New York, in order to seea friend off. Hours passed and he did notreturn and Mr. Morgan began to fearfotd play; but, in the early morning, Mr.Hand rushed in and told how he had goneon board the boat and had been accidentallycarried off. He had begged the captain toput him ashore but could not prevail upon


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58 J. PIEEPONT MOEGANhim to do so. Finally lie got the captain tosell him one of the life boats. When it waspaid for, the engines were slowed down, theboat was put over the side and he droppedinto it and rowed to the shore. He saw thelights of a station some way off and afterstumbling over the railroad tracks arrivedat the village of Hudson just in time toclimb on board a train that was leaving forAlbany. He got on the platform of acar and was about to enter it when hesaw Jim Fisk inside with a carload ofBowery toughs. As he was known by sightto Fisk, he realised what would happen tohim if he went inside the car and he rodeall the way to Albany on the platform.With this advance knowledge that Fisk

would try to capture the stockholders'meeting the next day and create a rough-house, Mr. Morgan not only perfectedthe legal steps necessary for a fair electionbut also made preparations to receive thedelegation from the East Side in an appro-priate manner.When the hour for the election came,Mr. Morgan was standing at the head ofthe stairs leading to the meeting room,


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THE EAILEOAD WRECKEES 59with President Eamsey, of the A. & S.Just before the meeting was to be calledto order, Jim Fisk went up the stairs anda crowd of his followers were just aboutto enter the door from the street. Eamseyreached Fisk first and threw him down theentire flight of stairs into the middle of hisadvancing retainers. Fisk told Eamsey af-terwards that he was the kind of man heliked to meetWhen Fisk struck the pavement at thefoot of the stairs the "boys" he hadbrought with him ran off without stoppingto pick him up, but an angry policemangrabbed him by the collar, jerked him tohis feet, and dragged him off to the policestation. The officer merely shoved himthrough the door, however, and immediatelydisappeared. There being no one to makea complaint, Fisk was soon released. The''policeman" who arrested him was one ofthe company's hands, dressed up for the oc-casion.Fisk let the stockholders' meeting go Mr.

Morgan's way. He wasn't the kind of manto stand on a mere technicality, and he de-cided promptly that if he couldn't run the


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60 J. PIERPONT MORGANmeeting lie would at least run tlie road ; verysoon a ragged army of Fisk men went fly-ing over the rails of the Susquehanna in anErie locomotive and two work cars, with or-ders to capture every piece of rolling stockon the line. The Susquehanna sent out itsgang to meet them and ripped up rails withreckless zeal. The service went to pieces,both sides undertaking to run trains andstruggling for the right of way. On the ar-rival of the afternoon train at the peacefulvillage of Afton, under Erie management,"it was obliged to stop, as three rails hadbeen removed by Superintendent Van Val-kenburg (Susquehanna). The citizensflagged the train for the safety of those onboard or a great loss of life would have en-sued." These villagers were very bitteranti-Fisk men, but were not quite ready forbloodshedas yet.

Superintendent Van Valkenburg orderedall trains to stop where they were and anextra car was sent out with 150 men, undercommand of Master Mechanic Blackball,and accompanied by Henry Smith, legaladviser (!). The train arrived at Bam-bridge, Chenango County, late in the even-


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THE EAILROAD iWREOKERS 61ing, and laid over for further orders.Meanwhile the Erie raiders were advancingwith an engine and car with about twentymen. They came leisurely up the road, dis-possessing the A. & S. men and putting Eriemen in their places.BlaekhaU was in readiness. The Erie

car came cautiously along the road, butnot so cautiously as to avoid the trap whichhad been set for them. The Erie loco-motive was suddenly thrown from thetrack by means of a new patent frog. Atthe same time the Susquehanna train, whichwas lying on a side track, ran down be-hind the raiders and cut off their retreat.So aU were captured and kept as prisonersby Mechanic Blackball and the legal Smith.But these were preliminary skirmishes

leading up to the big encounter.The Erie had 500 men at the timnel a

few mUes from Binghamton, and held thestation nearby. And the Albany party heldthe other end of the tunnel with about thesame number. Just at dusk on an Augustafternoon the Erie captain determined totake the disputed tunnel. He put some twohundred products of the Bowery and neigh-


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62 J, PIERPONT MORGANbouring streets on two cars, and, coupling ona locomotive, sent the train through the tun-nel. The train passed through the darknessin safety, but as it turned a curve at themouth a train with the Ramsey-Morgan menon board was seen approachingon the sametrack. The Erie whistle shrieked for downbrakes, but the other train never slackenedits speed. The engines crashed togethergloriously, and the collision was the signalfor the fight. The men spilled out upon thetrack and fell upon one another with sticksand stones and revolvers and matchless pro-fanity. After a time they got too muclimixed in the darkness to fight any more andboth sides drew back, taking with them thewounded and the drunken, and encampedbeside the rails.From this time the thinly settled comi-try through which the A. & S. ran was ina state of war. The Metropolitan daihessent their correspondents and the wholeState looked on in wonder. While Piskand Ramsey were fighting in the field,Gould and Morgan were shooting at eachother with injunctions; twenty-two suitswere begun in connection with this fight.


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THE RAILROAD WRECKERS 63Finding that Gould could best him in theuse of such weapons and was continuallyaided by the so-called Erie judges at hisback, Mr. Morgan made an adroit movewhich threw the case into the hands of Gov-ernor Hoffman, of the State of New York,and drew his opponents before judges whotook the up-State view of the attemptedseizure. The Governor had already threat-ened to run the road with the soldiers if thetwo parties did not end their differences.Morgan trapped Gould and Eisk into send-ing a written note to the Governor, statingthat it was impossible for the contendingparties to agree, that the railroad could notbe run as matters stood, and requesting theState to appoint an official to take chargein the interest of public peace. The Gov-ernor appointed A. Bleecker Banks, of Al-bany, and close upon this action there fol-lowed a momentary calm.Mr. Morgan held a stockholders' meeting

and a Board of Directors was elected.This new board empowered Mr. Morgan tolease the property. The meeting took placelate in the day, and he at once rushed to NewYork to have the lease drawn and to com-


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64 J. PIEEPONT MORGANplete the arrangement before Gould could tiehim fast with legal proceedings. He fin-ished the work that night and was back inAlbany the next day with the lease, and be-fore the Gould-Fisk party could get in mo-tion the road was placed forever beyondtheir reach. The whole property was leasedto the Delaware & Hudson Canal Companythrough LeGrand B. Cannon, who wasthen president of that system.The stock of the Albany & Susque-

hanna, which had been selling around 18,jumped up 100 points; the stockholdersreceived a guaranteed rental of 7 percent, on their stock, which was afterwardsincreased to 9 per cent. ; and the employees,many of whom would have lost their posi-tions imder a receivership, were enabled tokeep their jobs. Mr. Morgan's construct-ive work in the railroad field had begun.

This fight showed that a new force hadcome into the industrial world, a forcewhich made for sound upbuilding as op-posed to stock gambling and the get-rich-quick idea. The older generation of bank-ers, completely outdone by the piratical op-erations of the Gould-Fisk type of financier,


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THE RAILEOAD WRECKERS 65had always held aloof. Even CoimnodoreVanderbilt found them too much for him.Daniel Drew was bankrupted by his ownkind. But Mr. Morgan plunged boldly in,met them on their own ground, and won avictory for his policy. He gives us, in thisfar-away year, a glimpse of the future Mor-gan, who is called the ''inevitable;" Piskhad declared at the beginning of this fightthat he would have his way *'if it cost mil-lions of money and an imlimited number ofmen."Three years later Mr. Morgan was ap-proached by the Drexels of Philadelphia, avery rich and prosperous banking family,and asked to enter the New York branch ofthat house as a member of the firm. Theconnection insured him a position of influ-ence and power beyond anything he had yetreached. Consequently the firm of Dabney,Morgan & Co. was dissolved, and, in 1871,Drexel, Morgan & Co. began business. Aplot of ground was bought at the corner ofBroad and Wall Streets, and a white mar-ble building was erected at a cost of $1,000,-000^the same solid structure which, nolonger very white, but turned a dull grey


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CHAPTER lYTHE FIEST MOEGAN SYNDICATETHE year in which the firm of Drexel,Morgan & Company was formed, 1871,

saw the birth also of the underwriting syn-dicate, the device which alone makes possi-ble the far-flung and reasonably certain op-erations of modern business. Jay Cooke,the Philadelphia banker, thought of it first,but he gained the idea from watching theevolution of the French syndicats. Thefirst American syndicate was formed byCooke to sell a part of an issue of five hun-dred millions of Government bonds. Mr.Morgan was not a party in this enterprise,but his actions and those of his associatesleft no doubt in Cooke's mind that he wouldhave to let Mr. Morgan in upon the next oc-casion of the kind.The public was suspicious and doubtful

ia regard to the new financial instrument.It was hotly and eloquently urged by some

67


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68 J. PIEEPONT MOEGANthat the G-ovenunent should sell its o-wnbonds over the counter and pay its commis-sion to the public instead of to a combitia-tion of powerful bankers; the descendantsof that anti-syndicate faction are demand-ing the same thing to-day. Meanwhile,underwriting syndicates^which a politicalorator of the seventies compared to a devil-fish and described as a stony-hearted relicof inhumanity^have prospered and multi-plied and taken over to themselves thelaunching of all great business undertak-ings. Mr. Morgan's career as a world finan-cier began in a syndicate operation, and isnow culminating in a mighty domination ofthe whole field.The term underwriter implies the as-

sumption of risk, of many risks, in point offact, for, as used in finance it signifies theguaranteeing of a market for securities ata fixed price. There is always a contractunder which the banker is bound to take anissue of securities at a specified time andprice. If he can sell them to the public formore than he paid for them the profit is his;if they must be kept for a time, or disposedof at a loss, the loss is his. In case only a


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FIRST MORGAN SYNDICATE 69few millions are involved, a single bank mayfinance the whole affair, but when a veryla/rge piece of business is offered^morethan it is safe for an individual to handlea syndicate will be formed to divide the risk.Participation in a syndicate is a privilege

granted only to the firms whose influencewill reaUy widen the market and assist inassuring the success of the venture. Thehouse which goes into an underwritingscheme prepares a contract in which everydetail is arranged and specified, and thisagreement is sent to each of the participantsfor acceptance and signature. There areseldom any refusals if a strong house hasmade the proposal, for to decline in allot-ment would result in self-elimination fromthe list for all future time.When Morgan is forming one of his giantcombinations he puts his business friendsdown for the amounts which he thinks theyshould have;of the responsibility and ofthe profits. He doesn't ask them first. Ithas happened, notably in the case of theAtlantic Shipping Trust, that Mr. Morgan'sassociates had losses to make good insteadof profits to fold comfortably away. No


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70 J. PIEEPONT MORGANmatter. They go on leaving it all to him.It would not be a safe proceeding to popup with an objection to any arrangement liehas made. Once a capitalist went to Mr,Morgan on such an errand. He had foundhis name included in the syndicate backinga new scheme, and he ventured to suggest-quite casually^that the participation wasnot, in the present instance, altogether to Msmind. Mr. Morgan was sUent for a consid-erable space of time. It was so long beforehe said anything that the other began totalk about something else. But he foundthat Mr. Morgan was not listening^he wasthinkinghere was a man who had madefortunes out of the operations which he, J.P. Morgan, had originated. Lucky to havebeen let in ; lucky, indeed, where there wereothers who almost pleaded for the privilege.Now he proposed to get up on his high horseand choose! . . . Why, this was thevery deepest reflection upon the credit ofthe undertakingthe man was a contemp-tible bear at heart"You can stay out," said Mr. Morgan at

last, stonily, ''but do not think that you willshare with us again."


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FIRST MORGAN SYNDICATE 71When the paper is sent around for some

charity, perhaps a church benefaction, Mr.Morgan, from force of habit, writes downthe names of his friends, with the amountsopposite, which they are destined to con-tribute !The habit of running things grew on him

quite naturally; he became used to takinghis friends in charge, as if they were notquite of age^which recalls something whichhappened to the late Bishop Potter.Bishop Potter was spending a Sundayafternoon with Mr. Morgan at the latter 's

country place at Highland Palls. The vil-lage of Highland PaUs is a way station onthe West Shore Road, a few miles belowWest Point, and the fast trains pass it bywithout a stop on their first long jump awayfrom New York. This is not a matter ofmuch concern to the financier, who goesback and forth on his yacht; but on thisoccasion it troubled the Bishop. He wasloath to travel on Sunday, but had an im-portant engagement to keep in the city thatnight, and he remarked that he would haveto take a local train, which left a little whilebefore supper.


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12 J. PIERPONT MORGAN"Oh, no," said the financier, "there's a

train after that one. Of course, you'll stayto supper.""I don't see any train," objected the

Bishop, "and I really must get to town intime to conduct an evening service."

"There's an express," replied his host,disposing of the matter^"I'll have itstopped for you."An hour or so later, in the thick darknessof an autumn evening, Mr. Morgan took theBishop in his carriage down the steep roadto the railroad station. No lights shonefrom the building. The coachman got outand tried the door and rattled it. Then hecame back and reported that the agent hadgone home for the night.The sound of an approaching train washeard, faintly, but growing louder."Break in the door," ordered Mr. Mor-

gan, impatiently"get a big stone andsmash it!" He and his visitor got out ofthe carriage and looked on; finally the doorgave way. Mr. Morgan went inside, andafter scratching a number of matches, founda lantern and lit it. "All right. Bishop!"he called cheerfully, "come ahead," and he


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FIRST MORGAN SYNDICATE 73walked out to the middle of the track andwaved the light.

"With a horrid screeching and squeakingthe train stopped. It was a freight ; a very-long freight. Out of the cab leaned the sur-prised engineer, and from the caboose some-where in the far-away darkness the con-ductor came running up, very angry."What do you mean by stopping this

train?" he demanded fiercely.Mr. Morgan, still holding the lantern, told

him who he was."I don't care a whoop-in-blazes who you

are (the conductor's language here becomesunprintable) , you've got no business^why,"he choked, "there's an express train fol-lowin' us^you'U have a collision !"^butMr. Morgan paid no more attention to himor his remarks."All right, Bishop," he was saying gen-

%> ''you get right in the caboose and rideto New York."Which the Bishop did.Jay Cooke, the great Philadelphia banker,

held much the same position in the eyes ofhis countrymen a generation ago that Pier-pont Morgan holds to-day ; he was the same


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74 J. PIERPONT MORGANsort of final authority in matters financialand had proved the mainstay of the Grovem-ment during the whole of the Civil War.Cooke himself had a remarkable genius foradvertising ; he could Barnumise a bond is-sue and sell securities in a desert; and hebegan to take it for granted, after years ofuninterrupted success, that he had a mono-poly and would never have a rival on theAmerican continent. A few years after theWar, Congress passed an act authorisingthe refunding of five hundred millions thathad been borrowed to pay the cost of thestruggle ; the proposal was to save the pay-ment of interest by exchanging the 6 percent, bonds for fives. In '71 Jay Cookemanaged to place a portion of this new issue,the public entering into the scheme with agood deal of reluctance; most of the newbonds were placed abroad. Two years later.Secretary of the Treasury George S.well announced another bond sale andupon the bankers for proposals.Now the fat was in the fire. Frorl^press there came a stiff and angry opposttion ; Jay Cooke's rivals went down to Wasfi-^ington and carped at the syndicate idea, his


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PIKST MOEGAN SYNDICATE 75enemies getting the ear of President Grantand, furthermore, the firms of Morton, Bliss& Co., and Drexel, Morgan & Co., throughMorton and young Morgan, organised a newsyndicate to take the bonding business awayfrom Cooke. The Ways and Means Com-mittee held public hearings and became apolitical storm centre.Mr. Morgan's old e

the life story of j. pierpont morgan - a biography (1912)

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