J.P. Morgan And The House Of Morgan
( Originally Published 1939 )
SYNONYMOUS With Wall Street, and possibly the best known financial name throughout the world, is the name of Morgan. Given a thorough academic training in Germany by his father, the late J. Pierpont Morgan, who founded the firm of J. P. Morgan and Company, had a wide and varied experience in financial matters.
At the start, young Morgan joined with the Drexels, of Philadelphia, and created the firm of Drexel, Morgan and Company. During his apprenticeship, which training was to later make him the dominant figure of the financial world, he had a number of battles with Jay Gould, and his wily partners. As shrewd as they were, however, Gould found he was no match for this shrewd and fiery young financier, and after he had his wings clipped several times he withdrew from further battles. This naturally attracted a great deal of attention to the victorious young Morgan; and a number of the country's shrewdest financiers began to eye him with more respect. When the Drexel partners of the firm died, Morgan reorganized the firm under his own name.
In 1895, with the country suffering from the panics of the nine-ties, with its credit trembling, Morgan attracted nationwide attention to himself, when he undertook and did supply the United States government with sixty-two million dollars in gold. The Reserves of the treasury were at a dangerous point, and it was necessary to have this gold to restore the reserve to one hundred million.
Morgan aided James J. Hill in much of his railroad financing, and, together with Kuhn-Loeb, saved hundreds from bankruptcy, when they effected an equitable settlement with the shorts, when the unintentional corner occurred in Northern Pacific stock.
His son, the present J. Pierpont, became a member of the firm when he finished college and had served his apprenticeship in finance. Upon the death of his father, he became the head of the house. Within sixteen months after he had shouldered this vast financial burden, the world war started.
Almost immediately the financial department of the City of New York found itself confronted with a grave and desperate situation. Owing to the dislocation of the foreign exchanges, the city found itself unable to meet its obligations, maturing in Lon-don and Paris, aggregating eighty millions of dollars. The newly-elected head of the House of Morgan was called upon, and he immediately organized a successful bankers syndicate for one hundred million dollars in gold.
Through his aid the City of New York's credit was maintained intact.
Within a year following the outbreak of the war, the British government enlisted the Morgan house to undertake the work of coordinating and purchasing, in the United States, all of their important supplies of food-stuffs and munitions. The purchases which the firm made for the British and French governments aggregated several billions of dollars. In addition, they also under-took the financing of the Allies requirements for credits in this country, prior to our entry into the war.
The uninformed are usually harsh in their sentiments regarding the House of Morgan, but, in every time of peril this great financial institution has readily and eagerly rallied to the aid of the country.
Wall Street has known some colourful characters since its existence. In addition to the ones previously mentioned, Jay Cooke, a young financier, who gained a reputation for himself by selling over five hundred thousand dollars worth of bonds for the government during the Civil War, and who went bankrupt in 1873, is worthy of mention.
Another was Jim Keene, a natural gambler and a large operator; as well as Henry Villard, who specialized principally in railroad stocks. Cyrus W. Field, who laid the first cable across the Atlantic, joined with Russell Sage and Jay Gould in acquiring control of the New York Elevated roads. Field found the turbulent waters of Wall Street much rougher than the mountain waves of the Atlantic, and he was forced into bankruptcy, as was his son, the result of a bear campaign.
Jacob Little, who is regarded as the creator of the short sale, and the first original bear, also met his waterloo. His bearish tactics caused him to be violently disliked, and he was forced into bankruptcy four times. Each time, through his ingenuity and per-severance, he retrieved his losses and came back into the Street as bearish as ever. On one occasion, when he was short of Erie stock, and with his back to the wall, he extracted himself by purchasing Erie bonds and taking advantage of the convertible clause. A similar move was executed by Drew, Gould and Fiske, in their encounter with Vanderbilt, years later.
Among the most tragic incidents of the Street, during the early period, however, was the breaking of President Grant. After his retirement from office, his son entered into a partnership with a young man by the name of Ward. The latter inveigled the President to take a special partnership in the firm, and he invested his entire fortune. The firm failed, and, with it, the Marine National Bank. Ward was sentenced to jail and the former hero and idol of the people was left penniless. However, he was approached by the Century Magazine and spent the latter part of his life writing his memoirs, which met with a ready sale and provided him with an ample income.
This brief summary of the Street's well-known characters would be incomplete without mentioning one of the shrewdest, most daring and genial characters who ever fingered a ticker tape, William C. Durant.
From a broken-down carriage factory to the Czar of the auto-mobile industry, was the fame which was Durant's. He created General Motors, but was afterwards pushed from his throne.
Discouraged? No! He marshalled his forces and once more gained control. Once again he was dethroned.
He was later heard from, manufacturing an unknown car in New York, named Chevrolet. He enlisted the aid of Pierre S. du Pont, through the latter's secretary, John J. Raskob, and once more he mounted to the presidency of General Motors, carrying into the fold, Chevrolet. The depression of 1920-21 found General Motors very weak. The market continued to break. Durant tried in vain to support it. Foolishly he bought every share which was offered. Down, down, down, the market went, from 40 to 30, to 25, 20, 15, and finally 12. Durant threw in his entire. for-tune. He believed in the child he had created. But the forces of supply and demand were too strong for him. No man has sufficient money to buck them. On December 1st, he tendered his resignation for the third time, and left the Company he loved so well to the guidance of du Pont and Raskob.
He never gave up, however. At sixty years of age he was manufacturing another car, the Durant. Once more he mounted the lad-der of public esteem. Durant was never a bear trader, and for that reason he gained the reputation of being the bulwark of the bulls. Fortune after fortune has been his contribution to the bull markets, or rather in trying to stem bearish attacks for the benefit of the bulls. In 1929 it is said he lost over twenty millions of dollars. Today he is running a public market in Asbury Park, New Jersey, but, if the Great Architect spares him, the bulls may once more joyfully gather him in their fold.
Such has been the tale of success and failure of the hundreds who have dared, and will continue to ally themselves with the "Midas God of Gold."