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Zeus of Wall Street

In the early years of corporate America, J.P. Morgan was the undisputed king of U.S. Finance.
Thomas F. Gillen
From the Print Edition:
J.P. Morgan, Mar/Apr 00

(continued from page 2)

Morgan showed no emotion as he immediately responded, "Very likely, Andrew." To finance the creation of the new company, Morgan organized a syndicate of more than 300 firms. The deal was unprecedented, valuing the company, to be called U.S. Steel, at a market capitalization of more than $1 billion in 1901 dollars, the first billion-dollar corporation in history. By comparison, the rest of corporate America had a combined market value of $9 billion. Shortly after creating U.S. Steel, Morgan attempted to form a maritime trust to monopolize transatlantic shipping. Immigrants were pouring into America via steamships, and cross-Atlantic luxury travel was increasing. Morgan formed a trust called the International Mercantile Marine, or IMM, with the Belfast, Ireland-based White Star shipping line as its jewel. The trust controlled 120 steamships, more than any other private company. Britain's Cunard line was IMM's main competition. With the aid of government subsidies, Cunard built two luxurious ocean liners, which it named the Mauretania and the Lusitania. The ships were big and fast. To counter, IMM, with the approval of Morgan, also commissioned two ships: the Olympic and the Titanic. Morgan attended the christening of the Titanic in Belfast in 1911. His personal suite was on B deck, with a private promenade and such amenities as cigar holders in the bathroom. Morgan was scheduled for that fateful maiden voyage in April 1912, but as luck would have it, he had to cancel.

The Titanic's sinking weighed heavily on Morgan and may have contributed to his death. His health had been failing since the turn of the century, and the stress of the 1907 panic had taken its toll. After he had organized financing for the New York Stock Exchange, the panic continued for several weeks, during which time Morgan acted as the country's central banker, cutting deals to reorganize banks and brokerage firms. During the ordeal, he had a terrible cold and was finally convinced by his doctor of the need to cut down on his cigar smoking. Reluctantly he agreed, promising to smoke no more than 20 cigars a day.

For all his efforts, Morgan, like all Wall Street bankers, faced a growing public cynicism that he never understood. People feared Morgan, particularly politicians in Washington, and legislation was proposed to break up the trusts. By 1912, the financial power of Wall Street became the stuff of Congressional hearings. The most famous of these were led by Congressman Arsène Pujo, a Louisiana Democrat. Morgan, who was his prime target, was summoned to appear before a Congressional committee for questioning. Morgan took such public scrutiny personally.

Having to testify about his business decisions was contemptible to him, and he fared poorly under the lawmakers' grillings. The stress from the hearings left Morgan depressed and in poor health. (His son, Jack, would blame the ordeal for his father's death.) Once again, he turned to his favorite remedy, travel, escaping to Europe to recuperate. But instead he grew weaker, dying in the Grand Hotel in Rome on April 1, 1913, a few weeks short of his 76th birthday. At his death, Morgan's art collection was valued at $50 million (about $840 million today). His estate, not including the collection, was worth approximately $69 million (more than $1.2 billion today). More important, the company he created would, under his son Jack, soon become the most powerful private bank in the world, brokering deals between nations and playing a key behind-the-scenes role in the history of the twentieth century.

Thomas F. Gillen is an investment manager who is working on a novel about Thomas Edison. The author acknowledges Ron Chernow's award-winning 1990 history, The House of Morgan, as the primary source of information for this article.

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