J. P. Morgan
Based on Wikipedia: J. P. Morgan
In the autumn of 1863, while Union soldiers bled at Chickamauga and Chattanooga, a twenty-six-year-old banker in New York executed one of the most audacious trades of the Civil War. J. P. Morgan and a partner quietly transferred over a million dollars in gold to England, deliberately spiking the price, then sold their holdings at the peak. The profit was enormous. The ethics were questionable. And the young man who pulled it off would spend the next fifty years becoming the most powerful private citizen in American history.
This is the story of how one person came to control so much of the American economy that when financial panic struck in 1907, the United States government had no choice but to ask him—a private banker—to save the country.
The Heir Apparent
John Pierpont Morgan was born in 1837 in Hartford, Connecticut, into a family that was already wealthy and would soon become wealthier. His grandfather Joseph Morgan had co-founded Aetna, the insurance giant. His father Junius was a partner at Hartford's largest dry goods wholesaler. His mother Juliet was the daughter of a poet, and his uncle James Lord Pierpont would later compose a song you've almost certainly heard: "Jingle Bells."
Young Morgan—who insisted on being called "Pierpont," never "John"—received an education designed to prepare him for global finance. He studied in New England, passed the entrance exam for Boston's English High School (which specialized in mathematics for commerce), then was sent abroad. First to Switzerland, where he gained fluency in French. Then to the University of Göttingen in Germany, where he completed a degree in art history in just six months while becoming passable in German.
But there was a shadow over this golden trajectory. In April 1852, when Morgan was fifteen, he was struck by rheumatic fever. This inflammatory disease, caused by untreated strep throat, can damage the heart and joints. Morgan's symptoms would worsen throughout his life, eventually leaving him in such pain that walking became agony. The illness also likely contributed to the severe skin condition that would later disfigure his famous nose—a feature so prominent and so red that it became the subject of cruel jokes and careful photographic editing throughout his later career.
His father sent him to the Azores—a Portuguese archipelago in the middle of the Atlantic—to recover. He spent nearly a year there, convalescing in the mild ocean air, before returning to his studies.
Learning the Trade
In August 1857, Morgan arrived in London to join his father, who had become a partner in George Peabody & Company, a prominent merchant banking firm. What followed was a fourteen-year apprenticeship in the peculiar art of nineteenth-century international finance.
His timing was terrible. Within months of his arrival, the Panic of 1857 swept through the financial world. Banks failed. Investors fled American securities. Peabody's firm, heavily focused on United States business, nearly collapsed when its American correspondent banks suspended operations. The firm's creditors, including the powerful Baring Brothers bank, demanded immediate payment.
George Peabody responded with remarkable audacity: he essentially dared his rivals to destroy him, then turned to the Bank of England for an emergency loan. The gambit worked. The firm survived, though its reputation was badly damaged.
Morgan, watching from his junior position, was learning lessons that would define his career. He saw that in a crisis, boldness could trump caution. He observed that the relationships between banks—the webs of credit and obligation that connected London to New York to New Orleans—were both fragile and essential. And he began to understand that whoever controlled those relationships controlled everything.
He was sent to work at Duncan Sherman, the Peabody firm's New York affiliate. There, he cut his teeth on the mundane but essential work of international banking: collecting and transmitting payments, executing stock trades, running credit checks on businesses that wanted to borrow money. More importantly, he began learning about railroads—the massive, complex, capital-hungry enterprises that were transforming America and would become his specialty.
The Young Man in New Orleans
In early 1859, Morgan embarked on a tour of the American South. The purpose was educational: to visit the firm's business partners in Georgia, Alabama, and Louisiana, and to understand the cotton trade that was the economic foundation of the region.
He spent most of his time in New Orleans, then one of America's largest cities and its leading cotton export hub. The Mississippi River connected the cotton plantations of the interior to the port's busy wharves, where bales were loaded onto ships bound for the textile mills of England. This was the engine of Southern wealth, and it ran on slave labor.
Morgan also made a side trip to Cuba, where he acquired a lifelong taste for Cuban cigars. And he got into trouble.
Without authorization from his employers, he spotted an opportunity in the coffee market and made a trade. It was profitable, but when word got back to Duncan Sherman, he received a stern reprimand. Independent speculation was not part of his job description. He was there to learn, not to gamble with the firm's reputation.
Morgan considered it his first truly independent transaction. His bosses considered it insubordination. Both interpretations contained truth.
War and Profit
In April 1861, Confederate forces fired on Fort Sumter, and the American Civil War began. For Morgan, the conflict was primarily a business problem.
He opened his own firm, J. Pierpont Morgan & Company, operating out of a single room at 53 Exchange Place in Manhattan. When the war created the possibility of military service, he paid three hundred dollars for a substitute to serve in his place—a perfectly legal practice, though one that later generations would view with contempt.
The war transformed his business. Cotton, which had been central to transatlantic trade, became impossible to obtain from the Confederate states. Iron imports for railroads collapsed. But new opportunities emerged. The Union government needed to finance its war effort, and that meant issuing bonds—lots of them.
The Morgans, trading through the New York office, made substantial profits buying and selling Union bonds. The value of these bonds fluctuated with military fortunes: when the Union won, bonds rose; when the Confederacy seemed ascendant, they fell. The Battle of Antietam in September 1862—the bloodiest single day in American military history—marked a turning point. Though tactically inconclusive, it was enough of a Union success to halt the Confederate invasion of Maryland. For bond traders, it was excellent news.
Morgan also speculated in gold. When the government suspended payments in gold coin in 1862, the price of gold began to float, rising and falling based on perceptions of the war's outcome. This created opportunities for speculation. In October 1863, Morgan and a partner named Edward Ketchum executed their controversial gold transfer to England, forcing up the price and profiting from the spike.
Critics called it market manipulation—an attempt to corner the gold market at a moment of national crisis. Defenders noted that the economic consequences were ultimately minor. What no one disputed was that Morgan had demonstrated a willingness to pursue profit with cold efficiency, regardless of how it might appear.
The Carbine Affair
And then there were the guns.
In August 1861, Morgan lent twenty thousand dollars to Simon Stevens, a politically connected New York attorney. Stevens used the money to purchase five thousand carbines—short-barreled rifles designed for cavalry use—for resale to the Union Army.
Here's where the story gets murky, and ugly.
These particular carbines had been designed by John Hall and manufactured decades earlier. The government had already purchased them, found them obsolete, and sold them as surplus to an arms dealer named Arthur Eastman for three dollars and fifty cents apiece. Stevens, using Morgan's money, bought them from Eastman for eleven dollars and fifty cents each. He then sold them to General John Frémont, commander of the Department of the West, for twenty-two dollars each.
In other words: the same rifles were sold to the government three times. The final price was more than six times what the government had just received for selling them as surplus.
It gets worse. An earlier version of this carbine design had a known defect: it was prone to explosive failure, potentially blowing off the user's thumb. Whether the specific rifles in this transaction had this problem is disputed, but the general reputation of Hall carbines was not good.
An 1863 congressional investigation condemned the profiteers as "worse than traitors in arms." Morgan's name was attached to the scandal for decades.
What did Morgan actually know? During the thirty-eight days he held the loan, he technically owned the carbines and took responsibility for having their barrels replaced with rifled ones before shipment. When Stevens approached him for another loan, Morgan refused, demanded repayment of the original twenty thousand, and tried to distance himself from the transaction.
Defenders argue that Stevens used Morgan's name and money without fully disclosing the nature of the scheme. Critics note that Morgan presented the government with a bill before delivering the rifles he was holding as collateral, suggesting he understood exactly what was happening. A thorough examination of the evidence suggests it is "implausible" that Morgan didn't know what he was profiting from.
Morgan was never formally censured. But the Hall Carbine Affair became a permanent stain on his reputation—evidence, for those inclined to see it that way, that his fortune was built on exploitation from the very beginning.
Building the Empire
After the war, Morgan's career entered a new phase. In 1864, his father's mentor George Peabody retired, and Junius Morgan took over the London banking house, now renamed J. S. Morgan & Company. The younger Morgan became the primary link between his father's European capital and American business opportunities.
The focus was still largely on commodities. Between 1863 and 1873, the firm traded globally in iron rails, American cotton, Philippine tobacco, Brazilian coffee, and—perhaps most surprisingly—Peruvian guano.
Guano, if you haven't encountered the term, is accumulated bird droppings. On certain Pacific islands where seabirds had nested for millennia, the deposits were hundreds of feet deep. This material turned out to be extraordinarily valuable as fertilizer and as a source of nitrates for gunpowder. In the mid-nineteenth century, it was one of the most sought-after commodities on Earth, and Morgan secured an exclusive contract with the Peruvian government to export it.
But the real prize was railroads. American rail construction had halted during the Civil War but resumed with enormous energy afterward. Railroad companies needed vast amounts of capital to lay track across the continent, and that capital had to come from somewhere. Morgan positioned himself as the essential intermediary between European investors, who had the money, and American railroad companies, who needed it.
In 1871, the Philadelphia financier Anthony Drexel became Morgan's mentor and partner, forming Drexel Morgan & Company. This new firm would become the most powerful investment bank in America.
Their approach was revolutionary. Previous financiers had simply provided capital to railroads and hoped for the best. Morgan didn't just lend money—he took control. When a railroad fell into financial trouble, he would reorganize it, replacing management, restructuring debt, and imposing efficiency measures. This process became known as "Morganization."
It was private equity before that term existed. And it was extraordinarily profitable.
The Wider Web
By the turn of the twentieth century, Morgan's influence extended far beyond railroads. He and his partners held controlling interests in twenty-one railroad companies, but also in the Pullman Car Company (which manufactured luxury rail cars), Western Union (which dominated the telegraph industry), and Aetna (the insurance company his grandfather had co-founded decades earlier).
He orchestrated the consolidation of American industry on a scale never before seen. In 1892, he merged Edison General Electric with its main competitor to create General Electric, which remains one of the world's largest companies. In 1902, he created International Harvester, dominating the agricultural equipment industry. Most dramatically, in 1901, he formed United States Steel by combining several major steel producers into the first billion-dollar corporation in history.
These weren't just business transactions. They were the reorganization of the American economy. Where dozens of competing companies had existed, Morgan created unified monopolies or near-monopolies. His defenders called this efficiency. His critics called it the death of competition.
Morgan's power came to be understood as something genuinely unprecedented. He wasn't just wealthy—plenty of people were wealthy. He wasn't just influential—plenty of bankers had influence. What made Morgan unique was his position at the center of a vast web of interlocking corporate boards and financial relationships. Through his various partnerships and holdings, he exercised effective control over a significant fraction of American capitalism.
Saving the Nation
In October 1907, this strange concentration of power became something like a public utility.
The Panic of 1907 began with the failure of an attempt to corner the copper market. This might seem like a minor event, but it triggered a cascade of bank failures. Depositors, terrified that their banks might collapse, lined up to withdraw their money. Banks, facing these runs, called in loans and refused new credit. Businesses couldn't get the financing they needed to operate. The entire American financial system began to seize up.
The United States in 1907 had no central bank. The Federal Reserve would not be created until 1913. There was no government institution with the authority or the resources to stop a financial panic.
So the government turned to Morgan.
At seventy years old, suffering from the accumulated effects of his childhood illness, Morgan took command of the crisis response. From his private library in Manhattan, he organized a coalition of financiers to provide emergency funding to banks and trust companies on the verge of collapse. He decided which institutions would be saved and which would be allowed to fail. He forced rival bankers to contribute to the rescue effort, sometimes reportedly locking them in his library until they agreed.
It worked. The panic subsided. The American monetary system survived.
But the implications were unsettling. The richest country on Earth had just been saved from financial catastrophe by a private citizen, operating from his personal residence, using his own money and the money of people who owed him favors. What would happen next time, if there was no J. P. Morgan willing or able to step in?
The Panic of 1907 directly inspired the creation of the Federal Reserve System in 1913—a government institution designed to do what Morgan had done privately. Congress decided that no individual should ever again have that kind of power over the national economy.
The Man Himself
What was Morgan actually like?
He was physically imposing—tall and broad-shouldered, with a fierce gaze that contemporaries found intimidating. The rhinophyma that disfigured his nose (a condition sometimes associated with rosacea, causing the nose to become enlarged and bulbous) made him self-conscious; he reportedly destroyed unauthorized photographs and was careful about how he was depicted.
He was deeply religious, an Episcopalian who attended church regularly and supported various religious causes. His father had written to him as a young man: "Remember that there is an Eye above that is ever upon you and that for every act, word, and deed you will one day be called to give account." This seems to have made a genuine impression, though critics might note that Morgan's religious devotion coexisted comfortably with his ruthless business practices.
He was a passionate art collector, spending enormous sums to acquire paintings, sculptures, rare books, and decorative objects from around the world. Much of this collection eventually went to the Metropolitan Museum of Art in New York, where it remains a core part of the institution's holdings.
He worked relentlessly, but he also lived lavishly. He owned yachts, maintained residences on multiple continents, and traveled frequently to Europe. He smoked Cuban cigars constantly, a habit acquired during that early trip to Cuba in 1859.
He died in Rome on March 31, 1913, at the age of seventy-five, passing away in his sleep while traveling abroad. His fortune was estimated at eighty million dollars—equivalent to roughly two billion dollars today. This was less than many expected; the joke went around that Morgan wasn't even a rich man, just a "rich man's son" who knew how to deploy capital effectively.
The fortune and the business passed to his son, J. P. Morgan Jr., who would run the firm through World War One and the 1929 crash. The bank itself, through various mergers and transformations, eventually became JPMorgan Chase, today one of the largest financial institutions on Earth.
The Contradiction
Morgan presents a puzzle for anyone trying to render moral judgment on the past.
On one hand, he transformed American capitalism, creating the institutional structures—the large consolidated corporations, the investment banking practices, the systems of corporate governance—that would dominate the twentieth century economy. He genuinely believed that he was bringing order out of chaos, replacing wasteful competition with efficient organization. When the country needed saving in 1907, he saved it.
On the other hand, his methods were often ruthless. The Hall Carbine Affair suggests a willingness to profit from questionable dealings early in his career. His consolidation of industries eliminated competition and concentrated economic power in the hands of a small number of wealthy men. He paid to avoid military service during the Civil War while profiting from arms deals and bond speculation. The world he helped create was one of stark inequality, where financiers wielded more power than governments.
Perhaps the fairest assessment is that Morgan was fully a creature of his era—the Gilded Age, when American capitalism operated with few constraints and enormous rewards flowed to those positioned to seize them. He played the game as it existed, and he played it better than almost anyone else. Whether the game itself was just is a different question, and not one that can be answered by examining any individual player.
What's undeniable is the scale of his influence. Adrian Wooldridge, the historian, called Morgan "America's greatest banker." Given that American banking would become the dominant force in global finance for the next century, this means something. For better or worse, the modern financial world bears his fingerprints.