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J.P. Morgan

John Pierpont Morgan – Biography

John Pierpont Morgan (April 17, 1837 — March 31, 1913) was an American financier, banker and art collector who dominated corporate finance and industrial consolidation during his time. In 1892 Morgan arranged the merger of Edison General Electric and Thomson-Houston Electric Company to form General Electric. After financing the creation of the Federal Steel Company he merged in 1901 with the Carnegie Steel Company and several other steel and iron businesses, including Consolidated Steel and Wire Company owned by William Edenborn, to form the United States Steel Corporation.

Morgan died in Rome, Italy, in his sleep in 1913 at the age of 75, leaving his fortune and business to his son, John Pierpont “Jack” Morgan, Jr., and bequeathing his mansion and large book collections to The Morgan Library & Museum in New York.

At the height of Morgan’s career during the early 1900’s, he and his partners had financial investments in many large corporations and were accused by critics of controlling the nation’s high finance. He directed the banking coalition that stopped the Panic of 1907. He was the leading financier of the Progressive Era, and his dedication to efficiency and modernization helped transform American business.

J. P. Morgan was born and raised in Hartford, Connecticut, to Junius Spencer Morgan (1813–1890) and Juliet Pierpont (1816–1884) of Boston, Massachusetts. Pierpont, as he preferred to be known, had a varied education due in part to interference by his father, Junius. In the fall of 1848, Pierpont transferred to the Hartford Public School and then to the Episcopal Academy in Cheshire, Connecticut, (now called Cheshire Academy), boarding with the principal. In September 1851, Morgan passed the entrance exam for the English High School of Boston, a school specializing in mathematics to prepare young men for careers in commerce.

In the spring of 1852, illness that was to become more common as his life progressed struck; rheumatic fever left him in so much pain that he could not walk. Junius sent Pierpont to the Azores (Portuguese islands in the Atlantic) in order for him to recover. After convalescing for almost a year, Pierpont returned to the English High School in Boston to resume his studies. After graduating, his father sent him to Bellerive, a school near the Swiss village of Vevey. When Morgan had attained fluency in French, his father sent him to the University of Göttingen in order to improve his German. Attaining a passable level of German within six months and also a degree in art history, Morgan traveled back to London via Wiesbaden, with his education complete.

John Pierpont Morgan (April 17, 1837 – March 31, 1913)

He was an American financier, banker, philanthropist and art collector who dominated corporate finance and industrial consolidation during his time. In 1892 Morgan arranged the merger of Edison General Electric and Thomson-Houston Electric Company to form General Electric. After financing the creation of the Federal Steel Company, he merged in 1901 with the Carnegie Steel Company and several other steel and iron businesses, including Consolidated Steel and Wire Company owned by William Edenborn, to form the United States Steel Corporation.

Morgan died in Rome, Italy, in his sleep in 1913 at the age of 75, leaving his fortune and business to his son, John Pierpont “Jack” Morgan, Jr., and bequeathing his mansion and large book collections to The Morgan Library & Museum in New York.

At the height of Morgan’s career during the early 1900s, he and his partners had financial investments in many large corporations and were accused by critics of controlling the nation’s high finance. He directed the banking coalition that stopped the Panic of 1907. He was the leading financier of the Progressive Era, and his dedication to efficiency and modernization helped transform American business. Morgan redefined conservatism in terms of financial prowess coupled with strong commitments to religion and high culture.

Childhood and education

J. P. Morgan was born and raised in Hartford, Connecticut, to Junius Spencer Morgan (1813–1890) and Juliet Pierpont (1816–1884) of Boston, Massachusetts. Pierpont, as he preferred to be known, had a varied education due in part to interference by his father, Junius. In the fall of 1848, Pierpont transferred to the Hartford Public School and then to the Episcopal Academy in Cheshire, Connecticut, (now called Cheshire Academy), boarding with the principal. In September 1851, Morgan passed the entrance exam for the English High School of Boston, a school specializing in mathematics to prepare young men for careers in commerce.

In the spring of 1852, illness that was to become more common as his life progressed struck; rheumatic fever left him in so much pain that he could not walk. Junius sent Pierpont to the Azores (Portuguese islands in the Atlantic) in order for him to recover. After convalescing for almost a year, Pierpont returned to the English High School in Boston to resume his studies. After graduating, his father sent him to Bellerive, a school near the Swiss village of Vevey. When Morgan had attained fluency in French, his father sent him to the University of Göttingen in order to improve his German. Attaining a passable level of German within six months and also a degree in art history, Morgan traveled back to London via Wiesbaden, with his education complete.

Career – Early years/life

J. P. Morgan in his earlier years.

Morgan went into banking in 1857 at his father’s London branch, moving to New York City in 1858 where he worked at the banking house of Duncan, Sherman & Company, the American representatives of George Peabody & Company. From 1860 to 1864, as J. Pierpont Morgan & Company, he acted as agent in New York for his father’s firm. By 1864–1872, he was a member of the firm of Dabney, Morgan, and Company. In 1871, he partnered with the Drexels of Philadelphia to form the New York firm of Drexel, Morgan & Company. Anthony J. Drexel became Pierpont’s mentor at the request of Junius Morgan.

J.P. Morgan & Company

After the 1893 death of Anthony Drexel, the firm was rechristened “J. P. Morgan & Company” in 1895, and retained close ties with Drexel & Company of Philadelphia,Morgan, Harjes & Company of Paris, and J.S. Morgan & Company (after 1910 Morgan, Grenfell & Company), of London. By 1900, it was one of the most powerful banking houses of the world, carrying through many deals especially reorganizations and consolidations. Morgan had many partners over the years, such as George W. Perkins, but remained firmly in charge.

Modernizing management

Morgan’s process of taking over troubled businesses to reorganize them was known as “Morganization.” Morgan reorganized business structures and management in order to return them to profitability. His reputation as a banker and financier also helped bring interest from investors to the businesses he took over.

Newspapers

In 1896, Adolph Simon Ochs, who owned the Chattanooga Times, secured financing from Morgan to purchase the financially struggling New York Times. It became the standard for American journalism by cutting prices, investing in news gathering, and insisting on the highest quality of writing and reporting.

Treasury gold

In 1895, at the depths of the Panic of 1893, the Federal Treasury was nearly out of gold. President Grover Cleveland accepted Morgan’s offer to join with the Rothschilds and supply the U.S. Treasury with 3.5 million ounces of gold to restore the treasury surplus in exchange for a 30-year bond issue. The episode saved the Treasury but hurt Cleveland with the agrarian wing of the Democratic Party and became an issue in the election of 1896, when banks came under a withering attack from William Jennings Bryan. Morgan and Wall Street bankers donated heavily to Republican William McKinley, who was elected in 1896 and reelected in 1900.

Steel

After the death of his father in 1890, Morgan took control of J. S. Morgan & Co. which was renamed Morgan, Grenfell & Company in 1910. Morgan began talks with Charles M. Schwab, president of Carnegie Co., and businessman Andrew Carnegie in 1900. The goal was to buy out Carnegie’s steel business and merge it with several other steel, coal, mining and shipping firms to create the United States Steel Corporation. His goal was almost completed in late 1900 while negotiating a deal with Robert D. Tobin and Theodore Price III, but was then retracted immediately. In 1901 U.S. Steel was as the first billion-dollar company in the world with an authorized capitalization of $1.4 billion—much larger than any other industrial firm, and comparable in size to the largest railroads.

U.S. Steel aimed to achieve greater economies of scale, reduce transportation and resource costs, expand product lines, and improve distribution.   It was also planned to allow the United States to compete globally with Britain and Germany. U.S. Steel’s size was claimed by Charles M. Schwab and others to allow the company to pursue distant international markets-globalization.  U.S. Steel was regarded as a monopoly by critics, as the business was attempting to dominate not only steel but also the construction of bridges, ships, railroad cars and rails, wire, nails, and a host of other products. With U.S. Steel, Morgan had captured two-thirds of the steel market, and Schwab was confident that the company would soon hold a 75 percent market share.   However, after 1901 the businesses’ market share dropped. Schwab resigned from U.S. Steel in 1903 to form Bethlehem Steel, which became the second largest U.S. producer on the strength of such innovations as the wide flange “H” beam—precursor to the I-beam—widely used in construction.

Morgan’s role in the economy was denounced as overpowering in this hostile political cartoon

Labor policy was a contentious issue. U.S. Steel was non-union and experienced steel producers, led by Schwab, wanted to keep it that way with aggressive tactics to identify and root out trouble makers. The lawyers and bankers who had organized the merger, notably Morgan and the CEO Elbert “Judge” Gary were more concerned with long-run profits, stability, good public relations, and avoiding trouble. The bankers’ views generally prevailed, and the result was a paternalistic labor policy. U.S. Steel was finally unionized in the late 1930’s.

http://en.wikipedia.org/wiki/J._P._Morgan

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