THE LAST PARTNERSHIPS Inside the Great Wall Street Money Dynasties phần 6 pot

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ONE OF THE truisms of nineteenth￾century banking was that investment capital needed to be imported

from Europe. The firms that were the most successful all had a British

connection or links to other Continental banking affiliates that ensured

a flow of investor funds into the United States. The most successful

banking operation of the nineteenth century—that of J. P. Morgan &

Co.—began in Britain and gravitated toward the United States, bring￾ing with it access to cash and connections sorely needed to help

develop the growing American economic infrastructure.

The story of the Morgans’ rise to financial power is less flamboyant

than that of August Belmont and is more calculated and opportunistic.

After Junius Spencer Morgan inherited the banking operation of

Peabody in London, his son John Pierpont Morgan developed a parallel

career in the United States. Within twenty years, he was the most widely

respected, and feared, banker in the country. How such a remarkable

accession to power was accomplished in such a short time makes the rise

of the Seligmans or Goldman Sachs seem somewhat mundane by com￾parison. Needless to say, Pierpont had a head start on his eventual com￾petition and did not exactly have to begin from scratch, but the actual

power he was able to attain, and pass to his son Jack, was still breathtak￾ing. Like all of his counterparts, Pierpont Morgan was opportunistic and

detail-oriented to a fault, but it was his political instincts that differenti￾ated him from the rest. The same political instincts would eventually fail

his son Jack and his partners later in the twentieth century.

CORNER OF BROAD AND

WALL: J. P. MORGAN

AND MORGAN STANLEY

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The rise of the House of Morgan was quite different from that of

the other prominent banking houses in the nineteenth century. The

founder of the dynasty, Junius Spencer Morgan, was neither an immi￾grant nor penniless when he began his career. Born in Massachusetts

in 1813 to Joseph Morgan and Sarah Spencer Morgan, Junius spent

most of his early life in and around Connecticut and western Massa￾chusetts. Joseph Morgan was a businessman with varied interests. He

owned a tavern, coffeehouse, and hotel, and was one of the founders

of the Aetna Insurance Company in Hartford. Junius did not attend

college but was apprenticed to a Boston businessman when he was

sixteen. After a short stint in Boston, Joseph bought him a partnership

in a New York private bank that became known as Morgan Ketchum

& Co. But Junius was not destined to become a banker early in his

life. A year and a half later, he left the firm to return to Hartford to

enter the dry goods business with a local firm. Shortly thereafter, he

married Juliet Pierpont and settled down to become a leader in the

city’s business community. It appeared that his fate was to become a

fixture in the local business community and live out his days involved

in New England affairs.

Junius remained in Hartford for the next fifteen years, becoming a

prominent figure in local business. His firm, Howe, Mather & Co.,

was one of Hartford’s most prosperous, and Morgan earned a very

comfortable living. During the Panic of 1837, the crucible for so

many Wall Street firms, he was sent to the South to maintain relations

with merchants with whom his firm did business and to ensure that all

money owed to Howe, Mather was paid in timely fashion. He also

began to expand his own activities in Hartford, being invited to serve

as a director of the Hartford Fire Insurance Co. and the New Haven

and Hartford Railroad Company. In both cases, he owed the oppor￾tunities to his father, who was a major shareholder in each.1 Very early

in Junius’s career, a precedent was established that would character￾ize the business philosophy of the Morgans for years to come. Old

relationships would be remembered in business, and family members

would be expected to carry the gauntlet of the business into the

future. Unlike some of the Jewish-American banking houses, how￾ever, there were not that many family members in the Morgan

dynasty, so the son always carried the gauntlet.

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Joseph Morgan passed on all that he knew about business practices

to Junius. While living in Hartford, Junius and his wife had five chil￾dren, the first of whom was born just before the Panic of 1837. That

son, John Pierpont Morgan, would be the child to whom Junius would

pass his business knowledge and connections. Joseph died in the

summer of 1847, leaving a large estate valued at more than $1 million,

most of which was inherited by his wife and son. Junius continued to

be extremely successful in business, and the firm for which he worked

in Hartford officially changed its name to Mather Morgan & Co. But

still hungry for more success, Junius kept his eyes open for a business

with international connections as well. In 1850, Morgan branched out

by going into partnership with James M. Beebe, a Boston dry goods

merchant. Part of the partnership’s business was importing goods

from Europe, and Junius began to travel to London frequently on

business. On one of the trips he met George Peabody, the expatriate

American whose banking house was one of the most prominent in

London. Peabody began business as a merchant but soon discovered

that banking was more profitable. He became so successful that,

despite being an American, he was held up to English schoolboys as

one of the country’s most successful businessmen, worth imitating. A

biographer wrote that he developed banking almost as a sideline to

buying and selling goods but soon discovered that “he became a

banker as well as a great merchant, and ultimately much more of a

banker than a merchant.”2 Never married, Peabody had no heirs and

was actively looking for an American partner with whom he could

share his business. After extensive meetings in London, Peabody

offered Morgan a partnership in his bank. The partnership agreement

was to take effect in 1854, allowing Morgan time to settle affairs in

Boston and find a place to live in London. That partnership agree￾ment officially began the history of the House of Morgan.

Morgan’s deal with Peabody was advantageous, for it allowed him a

share of potential profits that was far in excess of his own contribution

to the firm’s capital. The mid-1850s proved difficult for business in

general because of war in Europe, the Sepoy Mutiny in India, and the

Panic of 1857 in the United States. All would test the abilities of inter￾national traders like Peabody & Co. to the fullest. Panic in the Ameri￾can securities markets would affect Peabody the most, since the firm’s

Corner of Broad and Wall: J. P. Morgan and Morgan Stanley

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