House of Morgan: An American Banking Dynasty and the Rise of Modern Finance, by Edwin P. Hoyt, Jr. Specifically, it will discuss the three most significant things and/or people in this book. The significance could be judged at the time of the events/persons in question or perhaps better, be seen through hindsight, i.e. its/their effect on modern finance. While there are many significant and important people and events depicted in “The House of Morgan,” three stand out as the most influential and significant as the book progresses. These three things are Miles Morgan and his immigration to America, Junius Spencer Morgan and his rise in financial banking, leaving his legacy to his son, J. Pierpont Morgan, and finally, the railroad in America, which neatly cemented the family’s success and rise to domination of American and worldwide finance and investment.
THE HOUSE OF MORGAN
The House of Morgan” tells the story of the Morgan family, one of the wealthiest families in American history. Their history in the United States began in the early 1600s, when Miles Morgan immigrated to America from Wales, and settled in the small town of Springfield, Massachusetts. His ancestors would eventually found the venerable J.P. Morgan and Company, and literally create the modern American banking and finance systems. Today, Morgan is still a name to be reckoned with in securities, banking, and investing. The Chase Manhattan Bank purchased J.P. Morgan in the year 2000 for $36 million dollars, but Morgan Stanley continues to be one of the most recognized and prestigious investment companies in the country today, and the Chase alliance created J.P. Morgan Chase, another powerful and influential worldwide banking company (Milestones).
One of the most significant events in the Morgan family history, eventually leading to their great amassing of wealth and their influence on America was the immigration of Miles Morgan to America in 1636. While the obvious importance is the fact that Miles brought the family to America, and began the family line for the dynasty to follow, there is more to Miles story than simply creating the foundation for the family to build on. Miles was a successful businessman and farmer, and because of this, he passed these traits down to his sons, who eventually fathered the Morgan who would begin the dynasty, Joseph Morgan III, his great-great-great grandson.
One of the things that makes Miles so important is that he began the long history of prosperity the Morgan family name came to represent. Miles was perceptive enough to dispose of his property before he died, so there would be no argument between his children when the will was read. He was also smart enough to amass quite a bit of property in Springfield, making him one of the more prosperous landowners in the town. As the author explains, “More important, he was shrewd enough to know that after his death there might be a contest over his holdings if he tried to leave his property by will” (Hoyt, Jr. 12). Thus, Miles set the stage for all the Morgans to follow. He was shrewd and prosperous in business, and he handed down those traits to those who followed. While other Morgans may have come to America later, Miles came first, established the family name, and put down roots for the family. His brothers also immigrated with him, but did not have the influence that Miles had in American history and business, but his sons did. By the time Joseph Morgan III grew to manhood, he had already come from a line of successful farmers, and he began to branch out into real estate, making many profitable purchases and sales. Then, he sealed the family’s monetary fate, when “In 1812 he joined the Washington Benevolence Society in Northampton, and set himself up as a money lender, or private banker. Here was the beginning of the great Morgan banking fortune” (Hoyt Jr. 24), and it was all because of Miles. Miles may not have been the most notable or remembered Morgan, but he was the first, and he created the aura of prosperity and accomplishment that drifted around them throughout their long and illustrious history.
The subsequent most important and influential person in the Morgan family was Junius Spencer Morgan, six generations removed from Miles, and son of Joseph III. One of the things that marks Junius as so special is he was the first Morgan to devote himself entirely to business, rather than tending the land while he developed business transactions. This exceedingly important influence would trickle down through the family from Junius’ time onward. Junius was the first to travel back to England, where the family had originally come from, and Junius was the Morgan to officially create the company that would prove to become the foundation of the House of Morgan, J.S. Morgan and Company, established in 1864 in London. At first, he collaborated with another American in London, George Peabody, in the firm George Peabody and Company, specializing in merchant banking, and later he created his own firm when the now wealthy Peabody retired. Junius enjoyed a good reputation in London, and his business prospered and grew.
Junius was also the father of John Pierpont Morgan, probably the most well-known members of the Morgan family. Pierpont brought the London firm to New York and established the name and reputation when he became a representative of his father’s company, and this allowed the company to grow and prosper on a more global basis. Eventually he formed the investment firm of J. Pierpont Morgan and Company in New York, which became one of the largest and most prestigious firms in the world. By 1895, “Five years after his father’s death, Pierpont consolidates the family’s banking interests, assuming the role of senior partner in each of four related firms in New York, Philadelphia, London, and Paris” (Milestones). Pierpont is the man credited with really creating the House of Morgan, but again, it was his father, Junius, who was at the root of the success, and who laid the foundation for his son to build on. Pierpont learned from his father’s vast experience and expanded on it, just as Junius built on his father’s experience, who built on his ancestors’ experience. Each generation contributed to the next, and while there were some stutters and shudders in the march of the House of Morgan, for the most part, each generation succeeded in creating more wealth, more experience, and more money to add to the Morgan family dynastic fortune.
Author Hoyt, Jr. notes, “Almost all the great American fortunes were secured by exploitation, exploitation of a natural resource or a public demand (as with the Astors and New York City real estate), or both” (Hoyt, Jr. xvii), and many 20th century Americans believed this was the case of the Morgan family’s rise to wealth and prominence, too. In fact, what cemented their financial position in America was the birth of the railroads, especially the expansion of the railroads across the nation with the completion of the Transcontinental Railway in 1869. After the Civil War, railroads were a favorite speculation for investors from Great Britain. The author notes, “Railroads and United States government bonds were at this time the only securities the British investors really trusted; railroads were more highly regarded than state government securities because the railroads had not defaulted, and too many states had done so over the years” (Hoyt, Jr. 117).
Railroads made up a large portion of the massive Vanderbilt fortune, and Vanderbilt used the banking firm of Dabney, Morgan, and Company (a subsidiary of J.S. Morgan and Company) to traffic in rails for his burgeoning empire. “Pierpont, in 1866, became aware of the large potential of railroads for banking profit in several ways” (Hoyt, Jr. 118). These included opportunities to traffic in rails, lending money for expansion, and financing mortgage bonds at home and in foreign markets. Truly, the railroad led the way to the future, and Pierpont saw this early enough to really profit from the growing transportation boom. Not only did he trade with tycoon Commodore Cornelius Vanderbilt, he and his father in London created a relationship with steel magnate Andrew Carnegie, which also turned out to be extremely profitable. At one point, “Carnegie referred to Junius as the greatest banker in Europe” (Hoyt, Jr. 121). This stemmed partly from Pierpont’s level headed investment in the stable railroads, and partly from his ability to see speculation for what it was, disastrous to investment companies. While many companies went bust during the gold speculation of the late 1860s, the Morgans held on to their reputations as shrewd bankers by resisting gold speculation, and they came out of the period as one of the strongest firms in London and New York. Increasingly, Junius’ business in London was intertwined with the railroad business in America. When Pierpont bought into the Drexel family firm in Philadelphia in 1871, to form Drexel, Morgan and Company, in London his father was selling government bonds, railroad securities, and “earning good profit with very little risk by dealing in acceptances of bills against American firms for railroad rails” (Hoyt, Jr. 137). Thus, the railroad expansion simply added stability and profit to an already admired investment firm. Even more, when the Morgan firms handled the sale of a large portion of railroad stock for William Henry Vanderbilt, the Commodore’s son, their reputation was sealed, and a new era in international finance began. As the author concludes, “It meant an entirely new direction and consideration in the matter of railroad and other corporate finance, where ownership would be spread widely and bankers would become managers as well as financiers of railroads and other businesses. Here was the beginning for a marked change in the system of American capitalism” (Hoyt, Jr. 160).
While there were literally dozens of important and significant events and people that influenced the rise of the powerful and wealthy House of Morgan, these three seem to have been some of the most important in the final analysis. Take away any one of them, and the lives and fortunes of the Morgan family could have headed off in several other directions, and the Morgans might never have created the powerful and influential House that continues today in the form of J.P. Morgan Chase and Morgan Stanley. They survived the Wall Street crash of 1929, the panic of 1907, and helped create the Federal Reserve in 1913. J.P. Morgan Chase has undergone some shaky times in the past few years by funding fraudulent companies such as Enron, but their foundations are still strong, and their roots still go deep into American financial institutions.
Author not Available. “Milestones in J.P. Morgan History.” AP Online, 13 Sept. 2000.
Hoyt, Edwin P. Jr. The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance. New York: Dodd, Mead and Company, 1966.