A “rags to riches” story, J.P. Morgan was not. The son of a successful banker, Morgan enjoyed the lap of luxury his entire life. Cautiously guided by his father, Morgan learned early on the inner makings of a successful businessman. J.P. Morgan’s first move to financial prominence began in 1871 when he opened a partnership with Anthony Drexel, forming Drexel, Morgan, and Company. Morgan’s conservative financial nature helped the firm survive economic downturns with ease. These financial downturns affected various industries, mainly railroads. It was Morgan’s belief that by forming large publicly owned corporations, the economy could be stabilized.
By combining prosperity and power, major companies could be merged into one industry. The first step in this process started when Morgan reorganized the railroads into one centralized system. By 1900, Morgan owned one-sixth of the nation's railroads and had constructed a system in which all six major railroads ran on a systematic network from New York City. Another instance of Morgan’s great undertakings occurred in the electrical industry. Early on, Morgan poured hoards of money in the funding of Thomas Edison’s experiments to create electricity and bring it to commercial use. Morgan underwrote the merging of Edison Electric with six other companies. After electricity has become a public commodity, Morgan sought to gain control of the industry. Morgan successfully merged Thomas-Houston and Edison Electric Company to form the General Electric Trust in 1892. General Electric became one of the world’s leading electrical monopolies. By investing heavily in such a fledgling industry, Morgan showed how modern of a businessman he really was. Morgan foresaw the importance of electricity and the advantage that impressive neon signs were serve in the future. Probably Morgan’s greatest business feat came in the steel industry. In 1901, Morgan successfully negotiated a merger with Charles Schwab in which he bought out the steel shares of Andrew Carnegie for $480 million. By doing so, Morgan was able to create United States Steel, the world’s first billion-dollar corporation. Due to this era of extreme consolidation of companies into large corporations, Morgan was able to assure the reliance of the economy on Wall Street and ultimately his finances. This extreme merging of companies into large conglomerates greatly changed the face of the economy.
By the early 1900’s, Morgan controlled 70 percent of the steel industry, one fifth of companies on the Stock Exchange, the three largest insurance companies, and various other banks besides his own. Morgan single handedly had changed the economy from competing manufacturers into large corporate monopolies. Small businesses had no chance at competing and order to succeed, people had to hope to obtain jobs at these corporations. The American government even relied on the finances of Morgan at times as well. During the Panic of 1907, Morgan organized a plan that secured international lines of credit in order to purchase stock in plummeting stocks of healthy corporations. Most namely, it was okayed by President Roosevelt for Morgan to purchase $30 million from his chief competitor, TCI steel. The deal stabilized the Panic and ultimately led to the notion of a stabilizing force in the economy. The end result was the creation of the Federal Reserve Bank.
Morgan was known around the not only for his financial successes but also for his contributions to society. Due to his wealth, Morgan was able to purchase ancient art relics of which included an original Guttenberg Bible and Babylonian tablets. Morgan helped in the creation of the Metropolitan Museum of Art and the Museum of Natural History in New York City. Morgan also served as one of fifteen social vice-presidents in the Hudson-Fulton Celebration Commission of 1909, which was a gift to the citizens of New York City.
J.P. Morgan’s business acquisitions and accumulation of wealth can still be seen even in today’s economy. Corporations still dominate the American economy and his bank, J.P. Morgan Chase, still remains the largest in the nation. To some, Morgan was the embodiment of successful business practices. To others, he was a money-hungry tycoon, hell-bent on capitalizing those in lesser financial positions. J.P. Morgan’s significance on the financial industry and American economy will never be forgotten.
By Kyle Darling
References:
By Kyle Darling
References:
Kessner, Thomas. Capital City: New York City and the Men Behind America's Rise to Economic Dominance, 1860-1900 (New York: Simon & Schuster, 2003), 207.
Gordon, John Steele. "The Magnitude of J.P. Morgan.” American Heritage Magazine Vol, 40(1989)
Jackson,Kenneth T. The Encyclopedia of New York City (New Haven, Ct.: Yale University Press, 1995), 627
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