Jean Strouse, a freelance journalist, won the Bancroft Prize in American History and Diplomacy in 1981 for Alice James: A Biography (1980). Her articles and reviews have appeared in The New York Review of Books, Newsweek, The New Yorker, The New York Times Book Review, and Vogue. She spent fifteen years researching and writing her biography of John Pierpont Morgan.
The image of Morgan that emerges from the pages of this biography fits neither the laudatory view of his admirers, who considered him a hero of economic progress and defender of competitive free enterprise, nor the derogatory images of his critics, who saw him as an icon of predatory capitalist greed. Strouse’s even-handed, nonjudgmental approach provides a detailed—sometimes an excessively detailed—description of Morgan’s public and private actions, leaving her readers to judge Morgan for themselves.
Unlike many nineteenth century business leaders who began life in poverty, Morgan was born to wealth and carefully trained by his father for his future career. The son and grandson of successful New England merchants, he attended the public high schools of Hartford, Connecticut, and Boston. His father, Junius Spencer Morgan, who became the leading American banker in England and helped finance much of America’s trade with Europe, sent him to a Swiss school to learn French and then to the University of Göttingen for a year to perfect his German. Junius supported Pierpont (John Pierpont Morgan was referred to as Pierpont as opposed to John) during an unpaid two-year apprenticeship to a New York City merchant from 1857 to 1859. During the 1860’s and 1870’s, Pierpont served as his father’s representative in New York.
For Pierpont, the Civil War was just another business opportunity. He never considered serving in the army, paying a substitute $300 to take his place when he was drafted in 1863—Strouse records that this sum was exactly what Pierpont spent on cigars that year. Two of his business schemes would later be subjected to much criticism. In 1861, Pierpont financed the purchase of five thousand obsolete Hall carbines from a government arsenal for $17,000. The carbines were then slightly modified and resold to the army in the West for $110,000. Providing speculators with a loan of $20,000 for less than two months earned Morgan a commission of $5,440—a profit of more than 25 percent. When Congress learned of the deal, it stopped payment of half the money due Morgan’s borrowers, who did not get the last $58,000 until 1867, when the Supreme Court ruled the government was bound by its original contract. Strouse accepts the view that Morgan considered the transaction a normal commercial arrangement and saw no moral issue involved in profiteering during wartime. However, Strouse rejects the contention of Morgan’s apologists that he did not know he was selling the government its own arms, noting that he went to the arsenal with his clients when they took delivery of the carbines. In 1863, Pierpont was involved in a massive speculation that drove up the price of gold, earning him a profit of $66,000. Junius Morgan was furious when he heard of Pierpont’s actions. He was angry not because the scheme negatively affected the value of United States currency, but rather because he believed such risky speculation unbecoming to a banker entrusted with other people’s money.
Strouse describes in some detail the Morgans’ role in providing British funds to ease the capital shortage in the United States during the last third of the nineteenth century. Cautious British investors showed little interest in American manufacturing, preferring to purchase railroad and government bonds. By financing the creation of a national railroad network, however, these investors spurred an enormous expansion of American industry. Strouse points out that both Morgans saw themselves as morally responsible to the purchasers of their securities and identified with the interests of their clients. Investors desired stability and the steady payment of interest from the railroads, and they wanted the United States to stay on the gold standard so that currency changes would not depreciate the value of their investments. Pursuing the first objective would directly involve Pierpont Morgan in controlling railroads. Achieving the second goal, which conflicted with the desires of farmers and debtors for currency inflation, made Pierpont Morgan the most hated banker of his generation.
As Junius Morgan moved toward retirement in the late 1870’s, Pierpont took over leadership of both the American and English bank branches. Most of his time was devoted to railroad finance where, Strouse notes, his activities were designed to reduce or eliminate competition. In 1885, Morgan won investor plaudits for arranging a successful peace conference on his yacht between the presidents of the New York Central and the Pennsylvania—the two warring roads had been cutting prices and building parallel lines that threatened each other’s financial stability. During the 1880’s, Morgan arranged gentlemen’s agreements in which...
(The entire section is 2096 words.)