John Pierpont Morgan, an iconic figure in American finance, was born April 17, 1837, in Hartford, Connecticut. Both of his parents’ families had arrived in the colonies before the American Revolution. His mother, Juliet, was the daughter of a reverend in Boston, Massachusetts. His father, Junius, was a successful merchant and banker.
Morgan began his Wall Street career at age twenty as an unpaid clerk at Duncan, Sherman, & Co., an investment bank with close ties to his father’s firm, Peabody & Co. In 1871, he partnered with Anthony Drexel, a banker from Philadelphia, to found Drexel, Morgan, and Co. Over several decades, Drexel and Morgan built one of the most powerful investment banks in the world. After Anthony Drexel died, in 1893, the firm was renamed J.P. Morgan and Co.
Drexel, Morgan & Co. was especially involved in the railroad industry and helped finance the completion of the Northern Pacific Railroad. The firm specialized in reorganizing troubled industries, buying up competing companies and combining their resources in a single corporation in a practice that came to be known as “Morganization.” The Northern Pacific, Erie, and Reading railroads, among others, all were Morganized. Toward the end of the nineteenth century, Morgan turned his attention to other industries and led the consolidations that resulted in General Electric and US Steel.
In an era that lacked a central bank, Morgan sometimes served as a de facto “lender of last resort.” In 1893, the country experienced a panic sparked by a series of railroad failures and a run on gold. Two years later, with the economy still struggling and gold reserves dwindling, Morgan organized an international syndicate of bankers to buy gold and sell it to the US government in exchange for US government bonds. During the Panic of 1907, Morgan assembled a group of bankers to provide a $10 million loan to the Trust Company of America, as well as loans to other troubled institutions and $35 million in loans to the New York Stock Exchange, quelling the panic. (The Treasury provided an additional $25 million, and John D. Rockefeller an additional $10 million.)
Morgan had close ties to Sen. Nelson Aldrich, who chaired the National Monetary Commission, which was formed to study reforms to the financial system after the Panic of 1907. He helped set up meetings for Aldrich and other commission members with bankers in Europe, and he is likely the person who arranged for Aldrich to use the Jekyll Island Club in Georgia to host a secret meeting in 1910.
Many politicians and members of the public were suspicious of Morgan’s influence over the financial system, and in 1912, he was called before the Pujo Committee, a congressional committee investigating the “despotic and perilous” power of a small group of financiers. Morgan’s Northern Securities Corporation was also the first target of Theodore Roosevelt’s trust busting, in 1902.Morgan was an avid collector of art, gems, and books, and he was a major benefactor of several museums. He died while traveling in Rome on March 31, 1913, and was survived by his second wife, Frances (Fanny), and four children. (His first wife, Amelia, died just four months after their marriage.) His son, J.P. (Jack) Morgan, Jr., took over J.P. Morgan & Co. and continued the firm’s dominance into the twentieth century.
Written by the Federal Reserve Bank of Richmond. See disclaimer.