»ti*M*i»»!a5: YALE UNIVERSITY LIBRARY THE LIFE STORY OF J. PIERPONT MORGAN J. PIERPONT MORGAN THE LIFE STORY OF J. PIERPONT MORGAN A BIOGRAPHY BY CARL HOVEY ILLUSTRATED mew f oris STURGIS & WALTON COMPANY 1911 Copyright 1911 By STURGIS & WALTON COMPANY Set up and electrotyped. Published October, 1911 PREFACE The biography of a living man is a special sort of thing to write or to read, and requires a little explanation from the author. Un doubtedly the reader needs to know whether the thread of argument, which forms the more or less unconscious basis of every work of biographical writing, came, in this in stance, from the subject himself duly posing for the public and expounding his character according to his own notions, or whether it proceeded independently from the writer's mind. The fact that this life takes Mr. Morgan neither angrily nor bitterly, nor extrav agantly nor pathetically, nor according to any of the obvious methods of the Sunday special articles (in which, up to now, his life has been exclusively set forth) but under takes to describe him seriously and intelli gently, will undoubtedly convince some sim ple souls that this tone was in some sense inspired. It is the natural inference, be- PREFACE cause to speak or write sensibly of the actions of any one of our magnified Captains of Industry (such in their power as the in ventor of the phrase never dreamed of) is distinctly contrary to usage and custom. You must attack them or toady — ^there is supposed to be no middle ground. The rea son for this state of things may be stated in five words: — ^these men personify political issues; and having stated it, let us leave it, and proceed to contemplate a fact much more important to writers and readers of biog raphies. The fact, or rather, the proposi tion, is this, — in order to depict a man as he really is one must set forth his own aims and objects, and show how he attains them, or how near he comes to attaining them, how he goes to work, and how he feels about his work. The opinions of others matter little, their theories little. It is idle to measure him with the ideal of some other world, or time. Suppose a Quaker to write the life of Napoleon, — as a Quaker, of course; seen through the peculiar green glass ideal of the hater of war, the man of war would come out sickly and unhuman. Almost anyone will admit that. But not everyone will admit PREFACE that it is possible to describe a Morgan with out looking at him through the orange glass of the Socialist, or the glasses of whatever color of the dirty democrat, or the silken toady, the hater of the money power, the adorer of the rich and successful, and so on. The author faced these difficulties, and found them difficulties. As for the book, let it be said at once that it was conceived and written independently by the author ; there was never the least influence or dictation from without. The material was gathered because the subject was interesting and the opportunities lay close at hand. And the argument, above referred to, grew of itself out of a close study of this material, and much questioning. It seems to be pointing to the conclusion that Mr. Morgan's life has been one of usefulness and benefit to in dustry and to the country. This effect was unintentional, was not preconceived. But it was the perfectly inevitable result of aim ing at truth and avoiding caricature. New York, 1911. ^' ^' CONTENTS I Childhood and Youth .... II Banking During the Civil War . Ill The Railroad Wreckers . IV The First Morgan Syndicate V The Rescue op Vanderbilt . VI Railroad Chaos and Ruin VII The Beginning of Feudal Finance VIII The Treasury Crisis op 1895 . IX The Relief of the Government . X United States Steel .... XI The Spirit op Combination . XII A Period op Reaction .... XIII World Banking XIV The Panic of 1907 XV The Man Himself 3 34 52 67 8396 121 146172194224252 278 293311 ILLUSTRATIONS J. Pierpont Morgan Frontispiece FACING PAGE Junius Spencer Morgan 14 The Morgan Homestead in Hartford .... 22 J. Pierpont Morgan at the age of Forty ... 88 Charles M. Schwab, Henry C. Frick, Elbert H. Gary and J. A. Farrell 210 Wall Street in the Panic of 1907 296 Mr. Morgan's Yacht the Corsair 318 Mr. Morgan's House on Madison Avenue, New York City 340 The Library in Thirty-sixth Street, adjoining the residence at the corner of Madison Avenue . 340 THE LIFE STORY OF J. PIERPONT MORGAN THE LIFE STORY OF J. PIERPONT MORGAN CHAPTER I CHILDHOOD AND YOUTH SINCE the year 1865, the American Re public has been a business nation, and its strongest individuals have been business men, and the strongest of them all is the sub ject of this biography. "What is a business man? According to a recent and very straightforward definition ''the business man is not a monster ; but he is a person who desires to advance his own interests. That is his occupation and, as it were, his reli gion." If we may accept this definition as accurate and generally true, then it clears the ground of certain sentunentalisms. The business man is not a statesman, or an altru ist, or a philanthropist, at bottom; we only bungle our conclusions when we apply to him the measure of their ideals and objects in- 4 J. PIERPONT MORGAN stead of using the measure of his own. It is often possible for a business man to help the public gratis, and come forward at the dramatic moment, as a noble and patriotic and disinterested citizen. The thing has been done by Mr. Morgan, as everyone knows, and followed by ink-spilling praises, and closely afterward by sardonic comment and reviling. They paint him too bright or too black, as demi-god in one breath and a monster in the next, and the wholesome truth, which is something less fantastic, re mains untold. It is reasonable to remember that the great business man is neither saint nor devil, and that in the long run he is governed by the same practical motive of thrift as ninety- nine out of a hundred busy American citi zens of this progressive day. He may ren der an immense service for nothing, and get his name written across the sky — which is perhaps the last thing he thought of — ^but his most telling and characteristic service to the public, if service it is, comes from pur suing his own ends. Having guarded ourselves against the usual foolish flights of fancy, let us admit at CHILDHOOD AND YOUTH 5 once that there are real complications in the case of Mr. Morgan. He has become the dominant business force in the country and the strongest single financial power in the whole world, and, as a matter of fact, he has reached a point where no category will con tain him. You cannot put Mr. Morgan in the pigeon-hole of a class. He is a genius, a spirit, a very conspicuous instrument of the economic evolution of his time. You cannot call him a mere money-maker, interested in temporary gains. He instinctively plans for something permanent in the structure of money-making activity; he has furnished the grooves in which all our industries shall be run for a very long time to come. There are not two opinions on this point. "Organiser" and "constructive force" are almost hackneyed epithets as applied to him. The accepted description of his work runs as follows: "He was never a stock gambler; never a bear. He never wrecked a property nor depressed values that gain might follow. His work was always to re construct, to repair, to build up. Instances of his force and ability in this direction are the Philadelphia and Reading, the West 6 J. PIERPONT MORGAN Shore, the Erie, and the Northern Pacific railways. In these instances and in others he saved and rehabilitated property that otherwise would have been ruined and ren dered useless. His enemies may charge him with many faults — and he undoubtedly has many — ^but they can never say that he de stroyed a property. Nor has any property which he has saved been exploited for gain on the stock market with his consent. His work has been in actual construction, in the actual creation of properties. His railroads have been working railroads, with rails and steam and rolling stock; his factories have been smoking factories, aglow with life and workers — ^not paper railroads and paper factories that exist only in the imagination of the stock jobbers." There is nothing of the charlatan sug gested here; J. P. Morgan is solid. Fur thermore, his rehabilitation of a vast amount of doomed property is mightily suggestive of broad public service. Other men have built up industries from the beginning, chiefly for themselves, as Rockefeller con structed the Standard Oil Trust. But Rockefeller soaked up his competitors like CHILDHOOD AND YOUTH 7 a sponge, while Morgan puts them on their feet and teaches and enforces cooperation among them all. A period of the fiercest industrial strife seems coming to an end. The head is now a long way from the foot of the financial body, which is so firm and gigantic that only the strongest forces can cause it to quiver. Out of a generation in which lived Gould, Fisk, the Vanderbilts, Rockefeller, Frick, Carnegie, Yerkes, Harriman, Gates, Heinze, Morse, one has emerged to rule. Perhaps it is not for nothing that Mr. Morgan has survived. The concentration of wealth and financial power that has taken place in Mr. Morgan's life-time is thus described by the informing writer already quoted: "In the old days of financiering, all men controlled their own money and invested it in a business which they managed them selves. With very few exceptions (let us put in that farming is the chief exception) all this has changed, the great bulk of the money of the country now being invested in stocks and bonds, exchanged for insur ance policies, or deposited In banks — its 8 J. PIERPONT MORGAN control, as far as its profits are concerned, passing entirely out of the hands of its owners. Ownership in the numerous stock companies which have been organised in a comparatively few years is distributed among hundreds of thousands of persons, and thus the millions of the many have passed into the control of the few. "So the trite question: Who own the United States'? may not appear so impor tant as the query : Who control the United States ? One hundred and ten of the coun try 's largest corporations, with a capitalisa tion of $7,300,000,000, are owned by 626,934 stockholders. The average stockholdings are 116 shares. The manufactories of the United States are owned by many individu als, showing a fair diffusion of wealth, but their actual control is in the hands of a few men. In no other line has the control of the few been so apparent as in the conduct of the railroads, f 6r the very laws which were cre ated to prohibit railroad combination have fostered it. Less than a dozen men abso lutely control fifty-four companies, with a capital of $4,157,000,000 and a total number of stockholders of 288,160. Of the fifty-six CHILDHOOD AND YOUTH 9 great industrial companies, with a capital of $3,143,000,000 and an extended list of stock holders, a few men are in control. ''It will te seen, therefore, that the whole tendency of the system is concentration. The great central power of this concentra^ tion is the hank. Mr. Morgan, hy his re cent merger, has accordingly placed himself at the head of the greatest power in control of all the great powers of wealth. It was said a few years ago that eight men virtually controlled the hulk of the hanking resources of cash and credit in the country. To-day one man is fast getting that power into his hands." The merger mentioned in the paragraph above is the consolidation by Mr. Morgan last January of the rich Guaranty, Morton, and Fifth .Avenue trust companies of New York. The result is a towering institution possessing upward of $150,000,000 of re sources, bearing the name of the Guaranty Trust Company. In addition, Morgan con trols and directs the Astor Trust Company, the Banker's Trust Company, and the Lib erty National Bank. His interests, direct and indirect, in other banking institutions 10 J. PIERPONT MORGAN are so far reaching that although it would scarcely be a work of ease for the arch con- solidator to create a Money Trust which should control, absolutely, the cash and credit of America, the possibility is one that occurs to many minds, and the Morgan dic tatorship of money is already much more a reality than a conception of the imagination. For it will be seen that Mr. Morgan is not only the financial ruler by virtue of what he already has — he is a monarch who can extend his kingdom to suit his ambition or his need. Mr. Morgan rules money at the exact mo ment of history when money is the thing to rule; when it is all important to financiers to be able to deny cash or credit to a would- be competitor's industry, to extend it to the trusts and combinations that are established in the field. It would be pretty and neat, though not truthful, to say that his present position in the seventy-fourth year of his life is one which he aimed at from the first — that he is realising his life 's ambition. But the reader will agree, I think, as he reads this biogra phy, that Mr. Morgan has not been the self- CHILDHOOD AND YOUTH 11 conscious force that he seems. In fact, it is obvious that in the year 1857, when the young Morgan entered business in New York, no man could possibly have foreseen the peculiar opportunities which the twen tieth century would offer — the chance of an American kingship was utterly invisible to the most restless and conquering eye. His gigantic power is still new, and as yet little understood. He inspires his country men with awe, and with another feeling, which is not exactly fear, but akin to it — a feeling of uneasiness. They see him in the. terrific national changes of the times. Let us describe the beginnings of this ex traordinary man. Mr. Morgan's earliest ancestor in this country was Miles Morgan, who settled in Massachusetts in 1636. His paternal grand father was Joseph Morgan, a successful business man of Hartford, Connecticut ; his maternal grandfather was John Pierpont, the Boston preacher, poet, and reformer. Joseph Morgan was altogether less distin guished than Pierpont, but, on the other hand, he has the credit of founding the Morgan fortune, wMle the other, after a 12 J. PIERPONT MORGAN stormy, brilliant, but disappointing career, died as the holder of an obscure government post at Washington. His story is full of interest and pathos, and some of the traits of his marked character appear to be quite as real, if less definite, a bequest to his grandson as the fortune which came down from Joseph. Joseph Morgan fought in Washington's army until the Revolution was over, and then settled down to farming near the vil lage of Hartford. He made money enough to invest it in stage lines and eventually rose to the control of the chief roads of transpor tation in the State. Hartford, during the first quarter of the nineteenth century, had a great prosperity as the centre of long distance traffic ; the main line of stage from New York to Boston passed through the city, running from Boston to Worcester, Springfield, Hartford, Middletown, New Haven, and New York — ^three days each way. Hartford also held the key to the trade of the Connecticut River valley, north ward nearly, or quite, to the border of Can ada. Innumerable taverns were sprinkled along the countryside, and Joseph Morgan CHILDHOOD AND YOUTH 13 also dipped into this thriving business. But in the fall of 1839 the first locomotive— the "Vesuvius" or the "Good Friend" or some other quaintly named piece of machinery — made its slow way across the State, and Hartford's business position was changed. The old customers were drawn away by the merchants of rival towns, the stage lines went to seed year by year, and this thrifty ancestor quickly bestirred himself in other directions. He opened a large hotel in Hartford, the "City Hotel," and soon afterward began to figure as a capitalist in connection with the ^tna Fire Insurance Company of that city. At this time these companies had no cash capital, their resources being represented by the notes of the principal "solid men" of the town, notes ranging in sums from five to ten thousand dollars each. The expecta tion was that the profits from the insurance business would render it unnecessary to call upon the note makers for cash to meet any fire losses, but a great fire in New York suddenly gave a different aspect to things. There was a period of heavy losses, and the prospect of calling upon the note makers 14 J. PIERPONT MORGAN became so imminent that the notes were offered at a large discount to anyone who was willing to assume their liability. Jo seph Morgan bought these notes wherever he could, acquiring a large number of them. Soon afterward the danger passed; the pre miums received for insurance proved ample to pay the losses ; the company began to ac cumulate a capital stock, whose cash value was represented by the increasing profits of the business; and eventually the holders of the notes received stock in proportion to the liability they had assumed. Joseph Morgan made a fortune from his holdings. It was this fortune which eventually placed J. P. Morgan's father, Junius Spencer Morgan, in the banking business. Joseph Morgan handed to his son, besides fortune and the capacity for making more money, a genial disposition ; he had the qual ities of the old-time host in the hotel busi ness, and his son Junius was a famous and agreeable entertainer on a different, and of course more sophisticated scale. Mr. Morgan's maternal grandfather, Pier pont, was a very well-known man in his time; the following passage from an un- JUNIUS SPENCER MORGAN FATHER OF J. PIERPONT MORGAN CHILDHOOD AND YOUTH 15 known hand (it is taken from an old copy of the Christian Examiner) shows the im pression he made. The somewhat high- flown phraseology cannot quite spoil it as a real reflection of his soul : "Mr. Pierpont united within himself the characteristics of two very distinct persons. One was graceful, cultivated, delicate, fas tidious to the last degree, careful of eti quette, studious, dignified; with a certain loftiness of dignity, indeed, which strangers were apt to find somewhat frigid, but genial and expansive with his friends, and beau tifully tender and loving with children. This was the clergyman and the poet. " The other was the ardent knight, armed for battle, and seeking it far and near; . . . quick to discover injustice, he no sooner unearthed a new wrong than he at tacked it with the fiery ardour of a nature whose enthusiasm was but the hotter for the restraints which the habits and tastes of the scholar ordinarily imposed upon it. He used all his weapons at once : logic, sarcasm, invective, poetry — and sharpened them all with a stern 'Thus saith the Lord!' This was John Pierpont, the Reformer; and 16 J. PIERPONT MORGAN . . . few names rang wider throughout the careless, prosperous land than his." Clearly an insurgent of those days ! Pier pont failed as a lawyer, failed as a merchant ; as a clergyman he won fame, but gave his congregation no peace or rest, and in one place after another they turned upon him. His most important pulpit was in the Hollis Street Unitarian Church of Boston. "He was liable to open his Hollis Street pulpit," says a writer, "any Sunday morning with either or both temperance or slavery. He preached temperance to a congregation of men who drank rum, sold rum, made rum . . . of course he gave mortal offence." And again, "His fight lasted seven years, one man against many, poverty against wealth, right against wrong." At last he was formally placed on trial by an ecclesi astical council for "preaching on exciting topics," and for failing to conduct himself "with Christian meekness." The exciting topics were "the meanness and crime which he saw about him in high places ' ' ! The im mediate result of the trial was a vote of cen sure, but Pierpont soon left the church for another, far away. CHILDHOOD AND YOUTH 17 The year 1861 saw him in Boston again, and he went to the front as chaplain of the Twenty-second Massachusetts Regiment. The regiment went into camp on the north bank of the Potomac. It was shrewish fall weather, and the chaplain, now an old man, was unable to endure the cold. He was seen walking about most of the night beating his body with his hands to keep his blood from freezing. He sent in an application to the commander of the brigade for three days' leave, intending to look for some occupation in Washington. The officer had never heard of him and sent back the paper with a message scrawled across the back, "Why does he want three days? Give him two." In a very depressed state of mind the old man called upon Secretary Chase and mod estly inquired if there was not some clerical work he could do. The secretary, who knew him well by reputation, shook his hand warmly, agreed to do anything he could for him, and did, in fact, provide him with a work of compilation for the Government which occupied the elderly clergyman until his death. Of all the effort and struggle of this man's 18 J. PIERPONT MORGAN life there only remains a school-book piece of verse — "Warren's Address" — do you not recall it? — ^beginning, Stand ! The ground's your own, my braves ! and a volume of poetry entitled "Airs from Palestine," now unread. There are verses, however, which pulsate with the vigour of protest. Here is a specimen, the first stanza of "A Word from a Petitioner," which has an oddly contemporaneous sound: What ! our petitions spurned ! The prayer Of thousands — tens of thousands — cast Unheard beneath your speaker's chair! But ye urill hear us, first or last. The thousands that, last year, ye scorned, Are millions now. Be warned ! Be warned ! Such were the strong feelings and the nature of J. P. Morgan's grandfather. Threads of Pierpont 's personality are dis tinctly to be seen, however entangled, in the later man; terribly strong feeling, wilful ness, an aspiration for the beautiful, in both. As soon as Junius Spencer Morgan grew up his father obtained a clerkship for him with the banking house of Morris Ketcham. CHILDHOOD AND YOUTH 19 The young man remained here several years, finally leaving to become a junior partner m the dry-goods firm of Howe, Mather & Co. in his native town. During this period he married Juliet Pierpont, the clergyman's daughter, and their child, John Pierpont Morgan, was born April 17, 1837. J. S. Morgan showed great business ability and was soon invited to become a partner in the house of J. M. Beebe & Co., one of the largest retail stores in Boston. But a few years later he met George Peabody, the great Lon don banker, and shortly after the meeting, he entered Peabody 's prosperous firm. Peabody was American born, and for a long time was a merchant of Baltimore. After he became well established in the banking business in London, he became widely known on account of his Fourth of July dinners, which he gave annually for the purpose of creating good feeling between England and his own country. One of these occasions the Duke of Wellington honoured with his presence and Queen Victoria sent her portrait and Prince Albert's to hang in the dining hall. Peabody was the most widely known philanthropist of his day and 20 J. PIERPONT MORGAN gave millions for the housing of the poor in London and for the cause of education in the Southern States of America. On his visit to Boston he was in reality seeking a part ner to pave the way for his own retirement from business ; the name of Junius Morgan was strongly urged upon him by Morgan's friends — with the result which proved so favourable to the Morgan fortunes. One of the stipulations in their agreement at the time was that Junius Morgan should take upon himself the entertainment of the firm's American and other friends, for which he was to receive twenty-five thousand a year as expense money. Young J. P. Morgan spent the first four teen years of his life in Hartford. The house in which he was born still stands. It was a small and unpretentious building of red brick which stood on the village street in the centre of a few acres of land. Some years ago it was raised one story and a store was set in under it, and now it is being closely crowded by business blocks in what is the centre of Hartford. J. P. Morgan's associations are not with this house, how ever, for his parents only lived here during CHILDHOOD AND YOUTH 21 the first year or two, then they moved to the large and comfortable house on Farmington Avenue which Joseph Morgan had had built as a wedding present for his son. Round it lay a farm of about one hundred acres which extended half a mile to the west to a stream called Little River. At the age of six young Morgan was sent to the district school. As a boy he was a quiet, reticent person age ; one who went about his own affairs and who was marked neither by especial bril liancy nor especial dulness at his studies. He was cool, matter-of-fact, and stamped with a determined quality and a kind of dignity which left a lasting impression upon the memory of some of his school-mates even if it did not awe them very much at the time. The first thing he gained at school was a nickname — in this way. The roll of the class was being called and one by one the boys stood up and gave their names. It came Morgan's turn: "John Pierpont Morgan," he announced. He was asked to say it again because of his uncommon middle name. "Pierpont," he repeated, "John Pierpont Morgan." 22 J. PIERPONT MORGAN The teacher got it correctly, but not the other boys. They saw fun in that mid dle name. ' ' Pierp ' '— ' ' Pip— Pip ' ' Morgan came from the back of the room in a loud whisper, and "Pip" Morgan he was called, and nothing else, from that day on. "Pip" Morgan spent most of his spare- time fishing in Hog Creek; once he built himself a flat-bottomed, pointed skiff, in which he used to float about in the muddy stream; the new boat was better than the raft, which served the other boys. At the age of twelve he was a well-grown, chunky boy, and as he went on in his teens he was large and well filled out for his age. But after a time his health began to suffer, he lost his ruggedness and constitution, and it was necessary for him to be constantly under a doctor's care. After the family moved to Boston, he attended the English High School until his graduation in 1853. The next year he spent at Fayal in the Azores after which he con tinued his education abroad, spending a year at Vevay, Switzerland, and two years at the University of Gottingen in Germany. Here he also received a treatment of mud QOu.< X a-rj?^:^^ -.••v....-.-v-.v... -. . .- 3ar^^--'- ¦ ¦ - :. -v.- ¦" -.:¦¦¦¦=