N’Gunu Tiny is CEO and Chairman of Emerald Group, an international investment company focusing on financial inclusion in the developing world.
Mr Tiny finds inspiration from significant figures from the past and present. One such person is JP Morgan. Here’s why.
Who was JP Morgan?
John Pierpoint (JP) Morgan is one of history’s best-known bankers. He dominated the world of corporate finance on Wall Street throughout what became known as the Gilded Age.
The Gilded Age is a term used to describe a specific era in American history dating from the 1870s to around 1900. During these years, the United States leapt forward in economic growth, particularly in the Western and Northern states.
US wages were massively higher than in Europe, which led to many people moving to America from European countries. This immigration brought with it people of many different skills. Between 1860 and 1890, the country experienced extraordinary industrialisation, which boosted wages by 60%. This was the time in which JP Morgan operated.
He headed up the bank that would eventually morph into today’s JP Morgan and Co; the ad was a significant part of the industrialisation of the US and its consolidation.
JP Morgan was integral in forming modern America.
During a long career on Wall Street, JP Morgan formed several massively important multinationals. These include US Steel, General Electric and International Harvester. He also had controlling level interests in the Pullman Car Company, Wester Union, and 21 railroads.
JP Morgan’s position and influence over the financial sector in the US, he was an integral part of many of the market forces and policies put in place. For example, when the US monetary system was heading for collapse in the 1907 Banker’s Panic, JP Morgan organised a group of financiers to save it.
This financial crisis started in October 1907 when the NYSE fell by around 50% from its peak earlier in the year. This was down to a failed attempt to corner the market on United Copper Company stock. Panic ensued with runs on all kinds of trusts and banks. Eventually, the panic spread throughout the country and led to businesses and banks going into bankruptcy.
JP Morgan pledged a substantial amount of his own money to shore up the failing system. Crucially, he also exerted his influence to encourage other bankers and financiers to do the same. This eventually led to the creation of the Federal Reserve System a year later.
Modernisation and innovation were the watchwords of the influential banker.
JP Morgan’s quiet insistence on modernisation and improvement of the financial sector ultimately transformed the entire trajectory of the American economy. Unsurprisingly, he is known by many as the ‘greatest banker’ ever to work in America.
Morgan started his career in banking in 1857 at London-based merchant bankers Peabody, Morgan & Co, which was launched by his father and Mr Peabody three years earlier.
By 1858, JP Morgan was in New York as part of the American representatives of George Peabody & Company, known as Duncan, Sherman & Company. While Morgan avoided serving in the Civil War, he did make a small fortune from refinancing rifles.
Between 1860 and 1864, he acted as an agent in New York for his father’s firm called JS Morgan & Co. His next step was to partner with the Drexel family of Philadelphia to form New York based Drexel, Morgan & Company. This was the moment Anthony J Drexel began to act as Morgan’s mentor.
When Drexel died in 1895, the firm was rebranded to JP Morgan & Company. While JP Morgan went on to have many different partners over the years, the firm was always under his firm control. He was adept at taking on troubled businesses and turning them around. In fact, he was so good at this the entire process of doing so became known as “Morganisation”.
His reputation grew with every business he transformed, and in turn, so did investor interest in him.
Controlling interests in major corporations during the Gilded Age
Like other significant financiers in this period of American history, Morgan focused on railroads. At the time, they represented the most prominent business concerns in the country. In 1869 he took over control of the Albany and Susquehanna Railroad from Jim Fisk and transformed the industry across the whole country over the next few years.
He also played a significant role in the growth of the US Steel industry. Early on, he set his sights on buying Andrew Carnegie’s steel business to merge it with several others. To achieve this, he financed the Federal Steel Company and integrated this with Carnegie Steel Company ad a few others in 1901. This formed the United States Steel Corporation. US Steel was the very first business in the world to be worth more than $1 billion.
Morgan has left an indelible mark on America and the world. His sense of civic responsibility and devotion to the arts, religion, and strengthening the country’s economy has left a far greater legacy than so many others.
He wasn’t always successful with his ventures, however. Most well known of these failed enterprises involved inventor Nikola Tesla and a trans-Atlantic wireless communications system that never happened due to Tesla’s erratic nature. Having sunk $150,000 into the idea (worth more than $4.6 million today), Morgan cut his losses in 1906.
But his successes far outweighed any failures. Between 1890 and 1913, JP Morgan was responsible for 42 major corporations, including but not limited to:
- US Steel Corporation
- American Bridge Company
- Boomer coal & Coke
- The Atlantic Coast Line
- Chicago and Western Indiana Railroad
- General Electric
- Federal Steel Company
- International Mercantile Marine
- United Dry Goods.
Fine art, gems and philanthropic endeavours
As with all of the great men of finance and business that I admire, Morgan was also a huge collector of art, books, antiques and object d’arts. He played a significant role in establishing the Metropolitan Museum of Art, where much of his collection resides.
Morgan was also a benefactor of many leading institutions, including:
- The New York Trade Schools.
- Lying-in Hospital of the City of New York.
- The American Museum of Natural History
- Harvard University and its med school
- The British Museum
- Trinity College.
He was also one of the most important gem collectors, ending his life with a collection of more than 1,000 American gemstones.
When he died in 1913, JP Morgan was 75 years old and left behind an estate worth $25.2 billion today (based on a share of GDP). His art collection was valued at more than $50 million.
His son, also called JP Morgan, never reached his father’s heights in terms of influence. Today, Morgan is considered one of the men who built America, and no one can ever deny the breadth of his knowledge, influence and positive impact on the world.
