#139 J.P. Morgan

What I learned from reading The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance by Ron Chernow. [0:01] This book is about the rise, fall, and resurrection of an American banking empire—the House of Morgan. [1:56] What gave the House of Morgan its tantalizing mystery was its government links. Much like the Rothschilds it seemed insinuated into the power structure of many countries, especially the United States. [2:46] They practiced a brand of banking that has little resemblance to standard retail banking. [3:43] They have weathered wars and depressions, scandals and hearings, bomb blasts and attempted assassinations. [4:44] Contrary to the usual law of perspective, the Morgans seem to grow larger as they recede in time. [5:41] I was struck that the old Wall Street—elite, clubby, and dominated by small, mysterious partnerships—bore scant resemblance to the universe of faceless conglomerates springing up across the globe. [6:49] Only one firm, one family, one name rather gloriously spanned the entire century and a half that I wanted to cover: J. P. Morgan. [8:13] I am a firm believer that most people who do great things are doing them for the first time. —Marc Andreessen [12:22] He carried the scars of early poverty. Like many who have overcome early hardship by brute force, he was always at war with the world and counting his injuries. [14:22] My capital is ample but I have passed too many money panics unscathed, not to have seen how often large fortunes are swept away, and that even with my own I must use caution. [14:48] His annual savings were staggering. He spent only $3,000 of a total annual income of $300,000. [18:05] J. P’s dad’s advice: You are commencing upon your business career at an eventful time. Let what you now witness make an impression not to be eradicated. Slow and sure should be the motto of every young man. [18:40] Junius Morgan reminds me of Tywin Lannister. [21:19] Perhaps the contrast between his own steady nature and Pierpont’s unruly temper made Junius fret unduly about his boy. With granite will, he began to mold Pierpont. [23:03] The Rothschilds are mentioned 30 times in this book. They had an influence on how Junius wanted to set up the Morgan family. [25:08] Junius lectured Pierpont: Never, under any circumstances, do an action which could be called in question if known to the world. [25:55] The railroads were the Internet of their day: More than just isolated businesses, railroads were the scaffolding on which new worlds would be built. [27:41] Not for the last time, Pierpont contemplated retirement. He would assume tremendous responsibility, then feel oppressed. He never seemed to take great pleasure in his accomplishments. He craved a restful but elusive peace. [29:50] He made over $1 million, boasting to Junius: I don’t believe there is another concern in the country that can begin to show such a result. [31:19] He believed that he knew how the economy should be ordered and how people should behave. [32:24] He had trouble delegating authority and low regard for the intelligence of other people. “The longer I live the more apparent becomes the absence of brains.” [33:48] Under his stern facade, Junius adored Pierpont; the obsessive grooming was a tacit acknowledgement of his son’s gifts. [35:36] Pierpont was, by nature, a laconic man. He had no gift for sustained analysis; his genius was in the brief, sudden brainstorm. [38:40] Pierpont found Jack soft and rather passive, lacking the sort of gumption he had as a young man. [40:40] Pierpont was extremely attentive to details and took pride in the knowledge that he could perform any job in the bank. “I can sit down at any clerk’s desk, take up his work here he left it and go on with it. I don’t like being at any man’s mercy.” He never renounced the founder’s itch to know the most minute details of the business. [41:31] The years change, but the point always remains the same: Morgan benefits from financial crises. [42:14] Virtually every bankrupt railroad east of the Mississippi eventually passed through such reorganization, or morganization, as it was called. The companies’ combined revenues approached an amount equal to half of the U. S. government’s annual receipts. [45:22] He has the driving power of a locomotive. He suggested something brutish and uncontrollable, but also something of superhuman strength. [47:04] Carnegie celebrated too quickly. He later admitted to Morgan that he had sold out too cheap, by $100 million. Morgan replied, “Very likely, Andrew.” [52:15] McKinley’s assassination would be a turning point in Pierpont’s life, for it installed in the presidency Theodore Roosevelt. Book: The Hour of Fate: Theodore Roosevelt, J. P. Morgan, and the Battle to Transform American Capitalism [53:05] The 1907 panic was Pierpont’s last hurray. He suddenly functioned as America’s central bank. He saved several trust companies and a leading brokerage house, bailed out New York City, and rescued the Stock Exchange. [54:33] Contemporaries saw Morgan as the incarnation of pure will. [1:02:39] This was Pierpont in a nutshell: He represented bondholders and expressed their wrath against irresponsible management. [1:07:37] Andrew Carnegie after J. P. Morgan died: And to think he was not a rich man. ---- Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work. Get access to Founders Notes here. ---- “I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — Gareth Be like Gareth. Buy a book: All the books featured on Founders Podcast

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• 0:00David Senra?

  This book is about the rise, fall, and resurrection of an American banking empire: the House of Morgan. Until 1989, J.P. Morgan & Company solemnly presided over American finance from the short building at 23 Wall Street. Much of our story revolves around this chiseled, marbled building and the presidents and prime ministers, moguls and millionaires who marched up its steps. With the records now available, we can follow them inside the world's most secretive bank. In the popular mind, the two most familiar Morgans, J.P. Morgan Sr. and J.P. Morgan

• 0:39David Senra?

  Jr., are rolled into a composite beast, J.P. Morgan, that somehow endured for more than a century. For admirers, these two J.P. Morgans typified the sound, old-fashioned banker whose word was his bond and who sealed his deals with a handshake. Detractors saw them as hypocritical tyrants who bullied companies, conspired with foreign powers, and coaxed Americans into war for profit. Nobody was ever neutral about the Morgans. The old House of Morgan spawned a thousand conspiracy theories. It catered to many prominent families, including the Astors, Guggenheims, DuPonts, and Vanderbilts.

• 1:22David Senra?

  It shunned dealing with lesser mortals, thus breeding popular suspicion. Since it financed many industrial giants, including U.S. Steel, General Electric, General Motors, DuPont, and AT&T, it entered into their councils and aroused fear of undue banker power. The early House of Morgan was something of a cross between a central bank and a private bank. It stopped panics, saved the gold standard, rescued New York City three times, and arbitrated financial disputes. What gave the House of Morgan its tantalizing mystery was its government links. Much like the old Rothschilds and Barings, it seemed insulated into the power structure

• 2:05David Senra?

  of many countries, especially the United States, England, and France, and to a lesser degree, Italy, Belgium, and Japan. As an instrument of US power abroad, its actions were often endowed with broad significance in terms of foreign policy. At a time when a parochial America looked inward, the banks' ties abroad, especially those with the British Crown, gave it an ambiguous character and raised questions about its national loyalties. The old Morgan partners were financial ambassadors whose daily business was often closely intertwined with the affairs of state. While people know the Morgan House by name, they are often mystified by their business.

• 2:49David Senra?

  They practice a brand of banking that has little resemblance to standard retail banking. These banks have no tellers, issue no consumer loans, and grant no mortgages. Rather, they perpetuate an ancient European tradition of wholesale banking, serving governments, large corporations, and rich individuals. As practitioners of high finance, they cultivate a discreet style. They avoid branches, seldom hang out signposts, and until recently, wouldn't advertise. Their strategy was to make clients feel accepted into a private club, as if a Morgan account were a membership card to aristocracy.

• 3:30David Senra?

  The story of the Morgan Banks is nothing less than the history of Anglo-American finance itself. For 150 years, they've stood at the center of every panic, boom, and crash on Wall Street. They have weathered wars and depressions, scandals and hearings, bomb blasts, and attempted assassinations. No other financial dynasty in modern times has so steadily maintained its preeminence. This book's thesis is that there will never be another bank as powerful, mysterious, or opulent as the old House of Morgan. What the Rothschilds represented in the 19th century and the Morgans in the 20th

• 4:13David Senra?

  won't be replicated by any firm in the next century. The banker no longer enjoys a monopoly on large pools of money. As world finance has matured, power has become dispersed among many institutions and financial centers. So our story looks back at a banking world fast vanishing from sight. One of vast estates, art collections, and ocean-going yachts of bankers who hobnobbed with the heads of state and fancied themselves royalty. Contrary to the usual law of perspective, the Morgans seem to grow larger as they recede in time. That was from the prologue of the book that I want to talk to you about today, which is

• 4:57David Senra?

  The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance. And it was written by Ron Chernow. And Ron was writing those words in 1989, but the copy of the book that I have in my hand is actually the 20th anniversary edition. And so it includes an additional foreword in the book where he is looking back at the creation of his first book 20 years after the fact. And there's a few things in that brief section that really jumped out to me that I want to bring to your attention. And so first, let me just read this. He's reflecting back on what he was trying to accomplish when he sat down to write his very first book.

• 5:39David Senra?

  So he says, "As I dipped into the rich literature of financial history, I was struck at the old Wall Street, elite, clubby, and dominated by small, mysterious partnerships, bore scant resemblance to the universe of faceless conglomerates springing up across the globe. It dawned on me," he's talking about what's happening in the 1980s, obviously, "it dawned on me that the hordes of financial novices might be ripe for a history that would chronicle how the old Wall Street evolved into the new. A straight history, I knew, would be a tedious task for readers and do small justice to the turbulent pageant of heroes and scoundrels I was unearthing."

• 6:20David Senra?

  So I posed the question, was there a single family or firm whose saga could serve as a prism through which to view the panoramic saga of Anglo-American finance? So he's going to arrive at the conclusion, yeah, the Morgans are the, essentially the story of the House of Morgan is the story of Anglo-American finance, right? There were relatively few dynasties in financial history, and hence few suitable candidates. Some names, such as the Rothschilds, had long since passed their zenith of glory, while others had a contemporary resonance with only shallow roots in the past.

• 7:01David Senra?

  Only one firm, one family and one name rather gloriously spanned the entire century and a half that I wanted to cover, J. P. Morgan. So that's what this is. I picked up this book, thinking it was a biography of J. P. Morgan. It's really not that. I'm going to focus mainly on J. P. Morgan and his father, but it is a 150-year history, a historical account of the family, the dynasty that built the banking empire, the Morgan banking empire. Now, a few sentences later, he says something that was really interesting to me, because Ron Chernow is, he's an extremely accomplished author. Let me just read this to you first, so I don't run over my points. He says, "I had no training in historical..."

• 7:46David Senra?

  He's talking about sitting down to write my first book. This was the state of mind. He's relatively young, he's about 40 years old, late 30s when he's writing the book, 40 when it's published, right? So he says, "I had no training in historical methods, nobody to steer me in the right direction, as I bumbled about in my early research." So he was just a freelance writer at that point, freelance writer for magazines. And when I read that one sentence by him, I was like, oh, that's really interesting. Because I always think of this quote from Marc Andreessen. That I see, that I think is true because I see over and over again as we, as I read these biographies and as we go through these lessons. And Mark said, "I'm a firm believer that most people who do great things are doing them for the first time." So, the book I hold in my hand has won all kinds of awards.

• 8:31David Senra?

  But not only that, it was the very first book in a fantastic, what winds up being a fantastic career as a historian and a writer of biographies. Ron wrote biographies on George Washington, General Grant, Alexander Hamilton. So, you know the musical Hamilton that has become really, really popular in the past few years? That Lin-Manuel Miranda, I think is how you pronounce his name. He uses Ron's book on biography on Alexander Hamilton as the basis for the musical. And then also, this is the second Chernow book that I read because all the way back on Founders, number 16, you'll remember, I did his wonderful, his masterpiece, his biography on John D. Rockefeller.

• 9:15David Senra?

  So, again, it's one simple sentence, but it drew a lot of thoughts to mind. It's like, "Oh, that's really interesting. This is your first book and you did a damn good job at it." So, continuing on the next page. This is him now explicitly looking back on the creation of this book, which I find really interesting because we, you know, now, towards the end of his career, we see everything that he was going to accomplish. But as he's going through this, this is his first step in, you know, his dream of becoming a published author. So, he says, "My advance, if generous for a first book, could scarcely cover years of leisurely research. So, I had to cram a gigantic amount of work into a brief span.

• 9:58David Senra?

  Somehow, I managed to research and write an 800-page book in two and a half years." And I love what he says next here. "A feat I could never duplicate." I was sustained by the sheer excitement of my findings. The knowledge that I had luckily stumbled upon the foremost drama in financial history. And so this is something we see over and over again. That's just, you're just completely entranced with the idea of what you're working on, that you can accomplish a lot in a relatively short amount of time. So much so that when he's looking back, he's like, I couldn't do this today. I had also coasted on the pent up energy of a young writer who had finally secured his first book contract after many failed efforts. Whenever I think of the time spent on this book, I remember the headlong pace, the frantic

• 10:42David Senra?

  reading into the night, the exhausting attempt to squeeze the epic story of finance between two covers. It is therefore with a sense of miraculous good fortune that I now open the book and find lucid coherent prose that shows, at least to my eyes, little of the sweat and haste of its creation. Okay, so let's jump into the founding of the House of Morgan is actually founded by somebody that's not a Morgan, which was really surprising to me. So I'm going to focus on the characters I found most interesting. Most of what I'm going to talk to you about today, the vast majority comes from JP Morgan. I've said over and over again, as you read books about, especially about early business, early American business, let's say 1800s, early 1900s, there's two names that come

• 11:27David Senra?

  up over and over and over again. P T Barnum, which I covered a few weeks ago, and JP Morgan. So I'm going to focus a lot on JP Morgan because he's really best well-known, right? But I have to say, I found his father more interesting, but we're not there yet. But there's this guy named George Peabody. He's the founder of the House of Morgan. So banking partnerships at this time were very much like royalty. You were expected to pass it down to keep it in the family. George Peabody didn't have a family of his own, so he winds up taking on as a junior partner and eventually gives, when he retires, gives the firm to JP's dad. But I want to tell you a little bit about George Peabody first. Now, this chapter is called Scrooge, so that gives you an idea of who this person was.

• 12:10David Senra?

  So it says, Peabody's an American, but he winds up, the center of the global finance at this time is in London. So he leaves, he loves America, but he leaves and sets up his career. In London, okay, so it says Peabody, who had found the house of Morgan, carried the scars of early poverty and was quick to feel slights and perceive enemies. Like many who have overcome early hardship by brute force. Really great writing. I can't recommend the writing of Trenal enough. He was proud but insecure, always at war with the world and counting his injuries. He had only a few years of schooling. And when he was a teenager, his father died. Peabody had to work to support his widowed mother and six siblings. So this is a story we've seen over and over again. Extremely trying circumstances.

• 12:55David Senra?

  And somebody with brute force, through will, through ambition and dedication, pulls his family out of poverty. These generational inflection points that you and I talk about all the time. He remained haunted by his past. I have this direct quote from him. I have never forgotten and never can forget the great privations of my early years. And we're going to see how this shapes his irrational view of money. His Scrooge-like ability to hoard money and refuse to spend anything. He hoarded his I just ran over my own point here. He hoarded his money, worked incessantly and retained a lonely heir. Beneath a genial personality, Peabody was a solitary miser. He lived in furnished rooms

• 13:40David Senra?

  in a Regent Street hotel, worked nonstop. And during one 12-year period, he never took off two consecutive days and spent an average of 10 days per day at work. The result of this industriousness, the result of this singular focus. He winds up amassing a giant fortune. And he's also smart enough to learn from history. And so we're going to get into that here. Peabody amassed a $20 million fortune in the 1850s. That's bananas. As he financed everything from the silk trade with China to iron rail exports to America. He mostly hoarded his money in preparation for the next panic. So this is what I mean about learning from history. His insecurities only worsened as he had more to lose. My capital is ample, he said.

• 14:25David Senra?

  But I have passed too many money panics unscathed, not to have seen how often large capitals are swept away. And that even with my own, I must use caution. So I've seen plenty of rich people at the beginning of financial panics, at the end be poor people. And I'm not going to let that happen to me. It's essentially what he's saying there. This is again, in the 1850s, as a reminder, this is bananas. His annual savings were staggering. He spent only about $3,000 of a total annual income of $300,000. So now we get to the part of the story where enters Junius Morgan, JP's dad. Peabody had a definite requirements for his successor. He wanted a sociable American

• 15:10David Senra?

  with a family and experience in foreign trade. So Junius is going to fit that bill. Junius starts working in banking at 15 years old. The trilogue doesn't cover his grandfather that much, but his grandfather was also, he was one of the founders of Aetna Insurance Company. That company's still around today. They did $60 billion in sales last, in revenue last year. And that was his father. So I would love to find a book. I can't find much information about him at all to learn more about him because I find that remarkable. And then his father fought with George Washington in the American Revolution. This family is really, really wild. Alright, so Junius starts working in banking at 15. He dedicates his entire life to that. When we meet Junius in the story, he's already adult. JP, he's

• 15:55David Senra?

  already has, JP's already alive. His son's already alive. He takes him to London with him to meet Peabody because they're beginning the talks of Junius to be Peabody's successor. Okay, so it says, Junius Spencer Morgan, so Junius Spencer Morgan had been with J. M. Beeb Morgan for three years. So this is the banking firm he was with before he works with Peabody. Okay. In May 1853, he visited London with his family, bringing along his high spirited but sickly son, John Pierpont. So here we, there's JP, right? Who was then recovering from rheumatic fever. So that's another thing to know about JP Morgan. He's essentially sick his entire life.

• 16:39David Senra?

  Not as sick as he was when he was younger. I'll go into more detail about this, but he constantly bedridden. They couldn't, he just had a large array of symptoms at any given time, and they could never really figure out what was wrong with him. Pierpont was boyishly thrilled with his first exposure to British culture. Something else to know about the Morgan family is they looked upon Britain and Old Europe with almost, they idolized it. They were in love with everything old. They were in love with the way they conducted their business affairs. For the entire history of the Morgan banks, it would be split between London and Morgan.

• 17:21David Senra?

  And the story of the Morgan family is also the story of the transition from the financial capital of the world going from London to New York. But even when their main business was still occupied in Newark, they spent a lot of time, a lot of their time in Europe. And so in this part of the book, we see something, a trait that Junius has for his entire life in that he's extremely iron-willed and hard on JP. And he's constantly lecturing, he's constantly teaching him. And I don't think he's doing this, he's doing this because of the, he wants his family to be great. His goal, Junius's goal, was to have the Morgan name associated with names like the Rothschilds. Okay, so this is Junius lecturing JP on the lessons from the panic of 1857.

• 18:06David Senra?

  He says, "He began to lecture his son, often at where he some length, on the need for conservative business practice. The 1857 panic would be the text of many sermons. You are commencing upon your business career at an eventful time," he wrote. "Let what you now witness make an impression not to be eradicated. Slow and sure should be the motto of every young man." So you know what jumped out to me as I'm reading? You know, the book is full of these stories, of these lessons that he's teaching his son. Junius reminds me a lot, if you've ever seen the show or read the books of Game of Thrones, he reminds me a lot of Tywin Lannister.

• 18:48David Senra?

  Tywin Lannister is probably my favorite character in that entire saga. And it's the way he prioritized, in Tywin's case, that what happens with me is not important, what happens with you is not important, what happens with your children is not important, because we will all die, but our name lives forever. And so, all of our actions should bring glory and should strengthen the Lannister name. Junius felt the same way about the Morgan name. So, he's not teaching his son, constantly teaching his son, to just be a jerk, or to be hard on him, just to be hard on him. He is educating his son. He saw his primary goal is to prepare him to continue on what he saw as an inevitable dynasty. And you'll see over and over again, JP says, "I'm not a self-made man.

• 19:33David Senra?

  My father was integral in the success that I had." So, moving on, the note I left myself on this page was, JP may be the most famous Morgan, but while his father was alive, he definitely held control, and that was indisputable. The Morgans always believed in absolute monarchy. While Junius Morgan lived, he ruled the family and the business, and his sons, and his partners. Until Junius died, his massive shadow dominated his son's life. He employed iron discipline. He had a stone facade. Once or twice, I'd seen him angry, and he showed his anger by a sudden restraint of speech and of manner. That was as far as Junius betrayed emotion.

• 20:16David Senra?

  So, that's something he talks about his son all the time, you know, keep your feelings. They're very laconic. They're not going to tell others outside the family what they're thinking and what they're feeling. You get the feeling, you get the idea, as you read this book, that they very much viewed as it's us versus the world. Okay, so this is the start of the Morgan family. The Joseph they're about to mention is Junius's father, JP's grandfather. So, the person I just told you about, he was involved in a lot of different things, but one of the things that still stands today is the founding of Adnan Insurance, okay? So, this is when Joseph died in 1847. He left an estate of more than $1 million. Four years later, Junius cashed in his stake.

• 20:57David Senra?

  He was working at this banking firm, still a young man, for an estimated $600,000. So, roughly, let's see, early 1850s.

• 21:06David Senra?

  The Morgan family, you know, has a good amount of money to work with, almost $2 million. So it says he moved to Boston to hunt bigger game. So a little bit about his son. JP's childhood was marred by constant headaches, scarlet fever, and other ailments. Perhaps this contrast between his own steady nature and Pierpont's unruly temper made Junius fret unduly about his boy. With granite will, he began to mold Pierpont, instructing him to associate with those of his grammar school classmates as of are the right stamp and whose influence over you will be good. In 1852, JP spent several months recuperating in the Azores. He had some kind of, this is a rheumatic fever.

• 21:49David Senra?

  The illness left one leg shorter than the other. For the rest of his life, assorted ailments would confine Pierpont to bed for several days each month. Early on, Pierpont figured in his father's business plan. Junius knew that the Houses of Behring and Rothschild operated largely as family enterprises, grooming sons to inherit their respective businesses. So that's the blueprint that he's going to follow. When Pierpont was just 21, Junius told him, "He was the only one the family could look to for counsel and direction should I be taken from them. I wish to impress upon you the necessity of preparation for such responsibilities." That's the end of the quote, and then this is what the author says. "These were weighty injunctions for a young man."

• 22:34David Senra?

  So essentially JP's dad's saying, hey, this family will be great, and you have to have your shit together. So his father gets him involved in banking right away, sets him up in New York while he's in London. And this is the first company JP starts. And it says, "An important part of Pierpont's duties in New York was supplying his father with political and financial intelligence. Merchant banks required news about government financings or the credit of client companies and placed a premium on such information." Continues talking about the Rothschilds. I just want to bring that up because the Rothschilds are mentioned 30 times in this book. They very clearly had a heavy influence on how Junius wanted to set up the Morgan. Essentially, he wanted to copy a lot of what they were doing.

• 23:20David Senra?

  For the next 33 years, Junius and Pierpont had an intense relationship despite their geographical distance. They managed to spend an enormous amount of time together. He pumped the poor boy full of endless advice and was full of maxims. No aspect of Pierpont's life was too trivial to be overlooked. This gives you an idea. In the next sentence, he's giving his son advice on how fast you should eat your food. "You are altogether too rapid in disposition of your meals," he told him. "You can have no health if you go on this way." So I want to give you some historical context about the time in which JP's starting out his career. So it says, "The father and son team of Junius and Pierpont Morgan came on

• 24:04David Senra?

  the world banking scene at a time of phenomenal expansion of banking power. It coincided with the rise of railroads and heavy industry, new businesses requiring capital far beyond the resources of even the wealthiest individuals or families. Despite these tremendous needs for capital, financial markets were provincial and limited in scope." So there's their opportunity, right? "The bankers allocated the economy's scarce credit. There were no government agencies to regulate security issues." So they're kind of filling into this vacuum. "No less than to industry, bankers dictated terms to sovereign states and countries." That'll change in the life of JP Morgan, right before he dies, actually.

• 24:45David Senra?

  "The bankers acquired such power because many governments in wartime lacked the sophisticated tax machinery to sustain the fighting. Merchant banks," that's what JP and his father are doing, "functioned as their treasury departments or central banks before economic management was established as government responsibility." Some more advice that Junius has for JP. Junius is about 50 years old when he's giving this advice to his son. He said he was extremely selective about the business he did, and he learned the need for caution. "As he lectured Pierpont, 'Never, under any circumstances, do an action which could be called into question if known to the world.'" So in this section, we see a little bit of JP's optimism about the future of

• 25:29David Senra?

  America and how important railroads were to this time in economic history. So it says, "There was plenty to fight about in the rough and tumble of the post-war railroad boom. Everybody had a sense of immense enterprise ahead. We are going someday to show ourselves to be the richest country in the world in natural resources, Pierpont predicted. The railroads would unlock the resources in the American wilderness. Perhaps no business has ever blossomed so spectacularly. More than just isolated businesses, railroads were the scaffolding on which new worlds would be built." So it's kind of like the internet of its day, right?

• 26:10David Senra?

  So anytime you read about this time in history, I think you're always struck how different it was than maybe today is, where companies were very much so willing to get violent. And we see in this, JP was too. So it says, "In those early days, corporate warfare was no mere euphemism." So there's a ton of other characters in the book that I'm going to omit from the podcast, as you can imagine, 800-page book. But I do want to tell you a little about this. Essentially, two different companies have their own hired gangs and they're going to have a fight. So it says, "Corporate warfare was no mere euphemism, and the Ramsey and Gould forces sometimes slugged it out directly, rather than filing lawsuits and obtaining injunctions.

• 26:54David Senra?

  Thugs scraped off New York streets and were operating as Gould stooges. They were piled onto a train heading east, their army numbering about 800 men. The Ramsey forces loaded about 450 fighters onto a train heading west. The two trains crashed head-on. Their headlights were smashed. One locomotive was partially derailed. Eight or 10 people were shot. The governor had to summon the state militia to stop the bloodshed." So there's no wars, as far as I know, with JP Morgan, but he did put his hands on people. Pierpont hurled Jim Fisk down a flight of stairs. So that's, I think that's behavior that Junius would not have endorsed.

• 27:38David Senra?

  So there's several examples in this book. I'm not sure if JP Morgan ever wanted to be a banker, which is really interesting to think about because he's probably the most famous banker in history. Right? So as I read this section to you, I just want to put this thought in the back of your mind. Like, I wonder if this is due, what's happening in JP's life, if this is due to the amount of pressure that his father put on him. So it says, "Pierpont was a troubled young man. He continued to be bedeviled by headaches, feigning spells, and skin flare-ups. Not for the last time, Pierpont contemplated retirement. As if unable to stop his own ambition, he would assume tremendous responsibility and then would feel oppressed.

• 28:21David Senra?

  He never seemed to take great pleasure in his accomplishments. And for the rest of his life, he craved a restful but elusive peace." And JP is not even 50 years old when he's already contemplating retirement. He does so over and over again. All right. So this is JP on the help of his father, and then we see more about his restless, nervous personality. "Pierpont always acknowledged his debt to his father. He never pretended to be self-made. If I've been able to succeed in the station in life in which I've been cast, I attribute it more than anything to the endorsement of my father's friends. He was on the edge of a nervous breakdown. Under doctor's orders, he took a 15-month vacation."

• 29:02David Senra?

  Imagine a doctor ordering you. The prescription he gives you is that you have to take a vacation for 15 months. "At work, Pierpont could never relax and developed a powerful urge to escape. He would vacation three months each year. He seemed to feel better when he was actually traveling than when he was settled down anywhere." Okay, so now we see the effects of the panic of 1873. I just want you to keep in mind that JP is 36 years old at this time. So it says, "A cataclysmic experience for a generation of Americans," is how they were describing the panic of 1873. "The financial crash of 1873 has been a memorable landmark to the people it happened to, as was the panic, the Great Depression of October 1929." So they're drawing an analogy there.

• 29:46David Senra?

  "In much the same way that the Morgan Bank would in 1929, Pierpont managed a handy profit in the panic of 1873. He made over a million dollars, boasting to juniors, 'I don't believe there's another concern in the country that can begin to show such a result.'" "Morgan stood with miraculous suddenness at the apex of American government finance. Never again would Pierpont Morgan be an outsider, and before long, he would be the chief arbiter of the establishment. The House of Morgan's future approach to business was shaped in the gloomy days of 1873. Pierpont decided to limit his future dealings to elite companies.

• 30:29David Senra?

  He became the sort of tycoon who hated risk and wanted only sure things." I've come to, this is a quote from him, "I've come to the conclusion that neither my firm nor myself will have anything to do with the negotiations of securities or any undertakings not entirely completed." So essentially, just, "I want to know the business is sound before I invest in it." "And whose status, by experience, would not prove it entitled to credit in every respect unassailable." So now we're really digging into how he sets up his company, how he thinks about it. "This encapsulated future Morgan's strategy, dealing only with the strongest companies and shying away from speculative ventures.

• 31:10David Senra?

  The story of Pierpont Morgan is that of a young moralist turned despot, one who believed implicitly in the correctness of his views."

• 31:20David Senra?

  He believed quite arrogantly that he knew how the economy should be ordered and how people should behave. So that's another thing that I think many people might find surprising about JP Morgan. Although if you if you study any of the other kind of robber barons from this era, I don't think his views were that that different. They were not for free markets. They thought entire industry should be controlled by a handful of people that knew best. They thought competition was wasteful, and they really believed that their complete control of an industry was a benefit to consumers, even though it was also enriching them at the same time. So it says Pierpont developed a reputation for

• 32:03David Senra?

  snappishness and barking at people. He says he had a peculiar bruseness of manner. He wouldn't haggle and presented his bids for foreign exchange on a take it or leave it basis. He had a way of letting people cool their heels and knew all the silent tricks of authority. He quickly became accustomed to exercising leadership. He had trouble delegating authority and a low regard for the intelligence of other people. So what he says, "The longer I live, the more apparent becomes the absence of brains." And here we see one of the many paradoxes of the life of JP Morgan. Perhaps never in financial history has anybody else amassed so much power so reluctantly. JP Morgan was

• 32:48David Senra?

  more exhausted than exhilarated by success. He didn't enjoy responsibility and never learned to cope with it. Want to tell you more about the family dynamic. Pierpont's relationship with his father was the most important in his life. Junius was the sort of punishing father who built character by stinting on praise and setting exacting standards, keeping up psychic pressure and always making Pierpont prove himself. Tough and demanding, he produced a son who lashed himself into ever greater exertion, only to lapse into sickness, fatigue, or depression. Junius strengthened those already relentless impulses in Pierpont's nature, his overmastering

• 33:32David Senra?

  need to achieve, and his inordinate sense of responsibility, his hatred of disorder. So that's the way they think about pure competition. It's disorderly. Why, no, we need to get this under our thumb. We need to control this. We can make this better. We know better than you. That's definitely how they thought. Under his sometimes stern facade, Junius clearly adored Pierpont. The obsessive grooming was a tacit acknowledgement of his son's gifts. I thought this section was particularly interesting. This is JP's going to start wanting to quit again. So after, in this section, he's helping, Cornelius Vanderbilt just died. So he's helping the Vanderbilt family sell some of the stock in their company. So it says, then right after, he's like, all right, I'm out of here. Yet again, he contemplated giving up the business.

• 34:18David Senra?

  He's writing, he says, "I am pressed beyond measure. So far as my time is concerned, I have no leisure whatsoever. If it were simply my own affairs that were concerned, I would very soon settle the question and give it up. But with the large interests of others on my shoulders, it cannot be done. I often think it would be very desirable if I could have more time for outside matters." So he's saying that now, he says it in the future. He never does quit.

• 34:46David Senra?

  He's handing things over to his son, Jack, shortly before he dies, but he's still working. So one thing the Morgan family learned from previous bankers, and I would say like aristocracy in Old Europe, was you need to focus on privacy. You don't advertise, don't put your business in the street, don't tell people what you're thinking. The Morgans were very private. Pierpont was fanatic about his privacy and creating an enduring image of a top-hatted tycoon snarling and brandishing a stick at photographers. So keep that in mind, this desire for privacy as we continue in the story, because right before he dies, he's actually called to testify in Congress.

• 35:29David Senra?

  And the people within the Morgan Company say they know that's what killed him. I find that claim to be dubious, but that's what they believe. All right, so a little bit more about his personality. Pierpont was by nature a laconic man. He had no gift for sustained analysis. His genius was in the brief, sudden brainstorm. As one lawyer said of him, "Morgan has one chief mental asset, a tremendous five minutes of concentration of thought."

• 35:56David Senra?

  They also avoided his father lecture him on avoiding lawsuits. Settle things between gentlemen is what they would say. Over the years, Pierpont would employ the sharpest lawyers, yet his preferred style was more British. Informal deals, handshakes over branding cigars, and cordial clubroom chats among bankers. The Morgans were never litigious. During one railroad battle, Junius wrote Pierpont, "I hope you will not be tempted into litigation. Life is too short for that." So now we've reached the point in the story where Junius is going to die and then Morgan is now placed as the head of the family. Junius was as attached as ever to Pierpont. After a visit from him, he wrote, "Pierpont and family left today. House very lonely.

• 36:41David Senra?

  I miss them dreadfully." This is how he died. Every afternoon, he would go out for a ride, so a horse-drawn carriage ride. The horses were startled by an onrushing train. Junius jumped up to see whether his coachmen could master the team. At that instant, the carriage ran against a heap of stones and flung him violently against a wall, causing a brain concussion. For five days, he lay unconscious. Then the flow of maxims ceased forever. Perhaps it was appropriate that Junius's death was dealt by one stunning blow in his 77th year, rather than by a dribbling away of strength. So we see a description of the family business here, and I think, I don't think this is

• 37:26David Senra?

  the route to go. I think it's pretty obvious. I don't think JP Morgan wanted to be a banker. I don't think his son wanted to be a banker. I think they felt, they did it under a sense of duty. But I do not consider JP Morgan to, yes, he's an historical figure, wealthy. Is he successful? I mean, if you're miserable the whole time, you don't like what you're doing, is that success? I don't think it is, right? The men in the Morgan family might have been far happier had not each of the three consecutive generations produced only one son to survive to adulthood. In merchant-banking families, the whole weight of the dynasty was at once placed on the male infants. Unlike publicly traded companies, private merchant-bank partnerships often relied upon

• 38:10David Senra?

  the name, capital, and reputation of a single family. Thus, Morgan expectations were lodged first by Junius in Pierpont and then Pierpont in Jack. In both cases, business pressures would tremendously intensify the typical father-son tensions. Unlike Pierpont, who had been a wild, headstrong boy requiring a firm hand, Jack needed a father to buck up his faltering courage, which Pierpont didn't do. Jack was gentle and sedentary, lacking fire. Pierpont found Jack soft and rather passive, lacking the sort of gumption that he had as a young man. The oral history that has come down through the Morgan family contends that Jack wanted

• 38:54David Senra?

  to be a doctor and became a banker only when his father made it a matter of family honor. See, this is what I'm talking about. In 1892, at the age of 25, Jack became a partner in Morgan's banks. So JP has partners, he's partners with the Drexels at this time, but this time in the story, in 1895, he consolidates power. So this is Jack entered the Morgan empire at a critical time. Tony Drexel had just died, leaving an estate to be said to be worth 25 and between 25 and 30 million dollars. Anthony Drexel Jr., another partner of JP, decided to retire and devote himself to society pleasures. I think that's what JP would have loved to do. Thus enabling Pierpont to strengthen his hold over the interlocking partnerships in New

• 39:38David Senra?

  York, Philadelphia, Paris, and London. In the 1895 reorganization, Drexel Morgan was re-cursing JP Morgan and Company. This is a little bit about how JP works. There are many stories of Pierpont's brusque impatience and his economy of self-expression. He had a short attention span. Few were privy to his thoughts, and he often had his own unstated agenda. A journalist named Clarence Barron tells the story of a young financier, this guy named Prince, who went to Pierpont for investment advice. Prince confessed, "I shook Mr. Morgan's hand and thanked him warmly for his great interest he was taking of me as a young man, and said I should never forget his advice.

• 40:21David Senra?

  But I knew at this time that he was doing all, everything he could to ruin me." So he's, again, he's got a great poker face. He's not going to tell you his true thoughts. He had long bewailed his inability to delegate authority. He said, "It is my nature and I cannot help it." Despite the scope of his vision, Pierpont was extremely attentive to details and took pride in the knowledge that he could perform any job in the bank. This is actually a good idea, being able to perform every job in your company, right? "I could sit down at the clerk's desk, take up his work where he left off, and go on with it." "I don't like being at any man's mercy." Another good advice. "He never entirely renounced the founder's itch to know the most minute details of the business." That's probably also good advice as well.

• 41:04David Senra?

  "He examined the cash balance daily, boasted he could pay off all his debts in two hours, and had a dead eye for fake figures in scanning a ledger." "And he personally audited the books each New Year's Day." So something that, I want to move ahead real quick. There's a, let me read this sentence to you and tell you why it's such an important sentence. Pierpont Morgan's power flourished during the steep industrial recession that began in 1893. So there are several sentences like this in the book. The years change, but the point always remains the same. Morgan benefits from financial crisis. Oppressed by debt and overbuilding, more than a third of the country railways

• 41:48David Senra?

  fell into receivership. Pierpont now tried another approach to forming railway cartels. He would reorganize bankrupt roads and transfer control to himself. So there's a blurring of the line. Don't think of a banker as just somebody you go to for money. They round up, they'll pull up investors, they'll reorganize your company, but then they also sit on the board. They have a lot of control. Virtually every bankrupt, this is insane. Think about this question, uh, this question. Think about this sentence. "Virtually every bankrupt road east of the Mississippi eventually passed through such reorganization." It happened so frequently, the reorganization was called "morganization."

• 42:28David Senra?

  The company's combined revenues of the ones that he reorganized approached an amount equal to half of the US government's annual receipts. This is a consolidation of power that should be very hard to accomplish today. It's hard to exaggerate the power that Pierpont accrued. Railroads then comprised 60% of all issues on the New York Stock Exchange. Utility and industrial stocks were rated too speculative for insurance companies and saving institutions, putting railroads in a blue-chip category by themselves. Also, by issuing free passes to politicians, meaning you can just take a, you can travel all over the country for free, the railroads exercised a giant corrupting influence on state legislatures.

• 43:10David Senra?

  As his bank became a gigantic mill for bankrupt railroads, Pierpont routinely picked up $1 million fees.

• 43:19David Senra?

  To give you an idea of the kind of incestuous nature between business and government at this time and the power that Morgan had, there's another financial crisis and they're thinking about, the government is thinking about getting off of the gold standard to help alleviate that crisis. And JP does not want that to happen. He's not telling people he doesn't want that to happen. But before, he's writing, he's writing to one of his associates. He says, "We have a large interest dependent upon maintenance of sound currency." Okay, so it's in, it's in JP's interest that this doesn't happen. And, but he's sitting quite, very quiet in this meeting at the White House. He's with Treasury Secretary Carlisle and President Cleveland. So it says, um, he's sitting there quietly, he's not saying anything.

• 44:02David Senra?

  "Not until a clerk informed Carlisle that only $9 million in gold coin remained in the government vaults did Pierpont pipe up, saying that he knew of a $10 million draft about to be presented." So essentially the government would be bankrupt, right? So he says, "If that $10 million draft is presented, you can't meet it," Pierpont said. "It will be all over before 3 o'clock." What suggestion do you have, what suggestion have you to make, Mr. Morgan? replied the president. Pierpont laid out an audacious scheme. The Morgan and Rothschild houses in New York and London would gather 3.5 million ounces of gold, at least half from Europe, in exchange for about $65 million worth of 30-year gold bonds.

• 44:46David Senra?

  He also promised that gold obtained by the government wouldn't flow out again. They were essentially having a run on the bank. This was the showstopper that mystified the financial world. A promise to rig temporarily the gold market. There was, think about the amount of control, and he's saying this in front of the president, and the president thinks it's a wonderful thing. This was some, there was some question as to the legality of the proposed issue, and either Morgan or Carlyle dusted off an 1862 statue that granted the Lincoln administration emergency powers to buy gold during the Civil War. And right after this time, I thought this description of JP gives you an idea into who he was.

• 45:26David Senra?

  When Wall Street broker Henry Clu said of Morgan, "He was a, he was the driving power of a locomotive. He suggested something brutish and uncontrollable, but also something of superhuman strength." And in this short exchange, this is going to remind us that JP was not for free markets. He also saw competition as a destructive, inefficient force, an instinctively favored large-scale combination as the cure. Once, when the manager of Moet, the champagne and wine company, complained about industry problems, JP blithely suggested he buy up the entire champagne country.

• 46:09David Senra?

  I covered this section before in the two or three podcasts I did on Andrew Carnegie and I think and Henry Kelly Frick, but this is just a little bit about it from JP's perspective. This is when he buys out Carnegie. In forging US steel, Pierpont had to deal with two industrialists who represented very different aspects of American business, Andrew Carnegie and John D. Rockefeller. Both were hard-bitten individualists, scornful of bankers, who preferred to finance their operation from retained earnings. Pierpont considered both men too crude for his stuffly, refined tastes. They saw him as pompous and overbearing. So JP wants to know what Carnegie's price is.

• 46:50David Senra?

  Carnegie ruminated and then penciled in his selling price, $480 million on a scrap of paper. Somebody brings it to JP and this is his reaction. When Schwab delivered the slip of paper to Morgan, the banker stared at it and promptly said, "I accept this price." Carnegie celebrated too quickly. He later admitted to Morgan that he had sold out too cheaply, by at least $100 million. Morgan replied, "Very likely, Andrew." So if you've ever seen a picture of JP Morgan, you'll notice that he's got probably one of the most, one of the largest, most deformed noses that I've ever seen on a person. And it comes from this, this skin condition. It's almost like cauliflower ear, but on his nose.

• 47:34David Senra?

  He was very, very sensitive about his giant nose. And he has a conversation with somebody I just read the biography and covered a few weeks ago, Joseph Pulitzer. And we see his sensitivity. So it says, "After the newspapers, after the newspapers of Joseph Pulitzer attacked his business dealings, Pierpont complained to the newspaper man," meaning Pulitzer, "not about the allegations, but about the prominence of his nose in the paper's cartoons, which he thought were very unfair." And there's a lot of, I don't know if there, there's a lot of unintentional comedy in this, in this book, so I want to share one section that made me laugh. "Everybody came to terms with the nose differently.

• 48:16David Senra?

  When JP's partner Dwight Morrow invited Pierpont to his home, his wife Betty, having warned the children not to mention the nose, asked JP, 'Do you like nose in your tea, Mr. Morgan?'" So I bust out laughing at that part. There was another part where Trenal is, Trenal is quoting one of JP's original biographers. And I didn't, I have to find out if JP paid, paid this guy because it was hilarious. Because one of the scandals of JP's life and why some people wouldn't do business with him is because they thought, even though he would, he would like preach to you about how important religion was and doing the right thing, he was well-known for all the

• 48:58David Senra?

  affairs that he had and all the different mistresses that he had all over the world. And one biographer claimed that, and you know, you see JP and they're like, women couldn't get enough of him. And I'm like, oh, I don't know about that. And one- The biographer quotes, "The mistress," or said that you just can't resist him because his lovemaking is that of a lion." I don't think they were trying to be funny, but I thought it was hilarious. One of the things I loved about the book is there's just a ton of interesting characters. And so I have to admit, a bunch of them, but I just want to introduce you to this one. His name is E. H. Harriman. It says Harriman was a very different type from J. P.

• 49:39David Senra?

  Like many on Wall Street, he was the son of a poor clergyman and an unabashed social climber. A crack shot, he had a taste for bloodsport and played tough on the stock exchange as well. Where Pierpont preferred backroom deals sealed with a handshake, Harriman was a market operator, more a trader than a dealmaker. Where Pierpont usually served as a proxy for bondholders, Harriman preferred to buy common stock and exert direct control. Finally, where Morgan was the establishment figure, Harriman was the embidded outsider who showed the damage that could be done by a bright man barred from Pierpont's club. If bankers proved they could dominate companies through voting trusts and other devices,

• 50:23David Senra?

  Harriman showed that the stock raider could dominate both the bankers and their company. So, my main focus of what I want to talk to you about today is J. P. When J. P. dies, he dies in 1913, I think. The book continues all the way up until the history of the House of Morgan in 1989. There's some interesting stories, but I just found Jack, his son, if I'm going to spend hours reading about somebody, I'd rather read about somebody like E. H. Harriman than Jack. And so that's why I chose to focus just mainly on J. P. I'm more interested in the climb than I am of the application and the management of a business when it's already gigantic multinational, multi-billion dollar company.

• 51:08David Senra?

  In this part of the story, we're introduced to an adversary, maybe the most famous adversary that J. P. ever has, and that's Teddy Roosevelt's. And so it says at the time, the view is that the public is being held hostage by the stock manipulation of a few on Wall Street, by a few Wall Street moguls, the most famous of that, of course, being JP. It says, "For the most part, President McKinley was deaf to such outrage. Then on September 6th, 1901, he was shot by an anarchist." We have graphic descriptions of Pierpont's reaction to this news. It goes from having an ally to an adversary, just by the pulling of one person pulling a trigger, right? It says, "A New York Times reporter rushed in with the report, telling JP, 'What?'

• 51:53David Senra?

  said Pierpont, seizing the man's arm. He stared into his eyes, overcome with amazement. Then he slumped into his desk chair." So we see, remember, he's laconic. He hides his feelings. This is him violating that. He was so shocked by this. He says, "This is sad, sad. This is very sad news," he told a reporter. "Other accounts describe him as red-faced and almost reeling with shock. McKinley's assassination would be a turning point in Pierpont Morgan's life." This is so important. "For it instilled in presidency 42-year-old Theodore Roosevelt, a man whose view of big business was far more ambivalent." So this is such an important part in his life, that there's entire books written about

• 52:37David Senra?

  the rivalry between Teddy Roosevelt and JP Morgan, and that will be coming in future Founders episodes, so stay tuned. This is more about JP Morgan's personality. "There's no question, he possessed a wide streak of cynicism. He once told an associate, 'A man always has two reasons for the things he does. A good one and the real one.'" JP's life is a series of reactions and taking advantage of financial crisis, as I've said. This is JP at 70 years old. He dies at 75, so we're near the end of his life. "The 1907 panic was Pierpont's last hurrah. Although semi-retired, reporting to work periodically for only an hour or two, he suddenly functioned as America's central bank. Within two weeks' time, he saved several trust companies and a leading brokerage house. He also bailed

• 53:22David Senra?

  out New York City and rescued the stock exchange." And it's that last part of the sentence, rescuing the stock exchange, that I thought was so interesting. I'm going to read you a description of that now. "On Thursday, October 24th, with stock trading virtually halted, New York Stock Exchange President Ransom Thomas crossed the street and told Morgan that unless $25 million was raised immediately, at least 50 brokerage firms might fail." Thomas wanted to shut the exchange. "At what time do you usually close it?" Morgan asked, though the stock exchange was— I thought this was surprising— though the stock exchange was 20 paces from his office, J.P. didn't know its hours. He thought stock trading was vulgar.

• 54:04David Senra?

  "Why, at 3 o'clock," said Thomas. Pierpont wagged his finger. "It must not close one minute before that hour today." At 2 o'clock, Morgan summoned the bank presidents and warned that dozens of brokerage houses might fail unless they muster $25 million within 10 or 12 minutes. By 2:16, 16 minutes later, the money was pledged. So now the author says, "This shows why contemporaries saw Morgan as the incarnation of pure will." And so this was the description of that day that was recorded at that time. It says, "Anyone who saw Mr. Morgan going from clearinghouse back to his office that day will never forget the picture."

• 54:49David Senra?

  Remember, he's 70 years old. "With his coat unbuttoned and flying open, a piece of white paper clutch tightly in his right hand, he walked fast down the street. His flat-top, black derby hat was set firmly down on his head. Between his teeth, he held the paper cigar holder in which was one of— which held one of his long cigars, half-smoked. His eyes were fixed straight ahead. He swung his arms as he walked and took no notice of anyone. He did not seem to see the throngs in the street. So intent was his mind on the thing that he was doing. Everybody knew him, and people made way for him, except some who were equally intent on their own affairs, and these he brushed aside.

• 55:33David Senra?

  The thing that made his progress different from that of all of the other people on the street was that he did not dodge, or walk in or out, or halt, or slacken his pace. He simply barged along, as if he'd been the only man going down the street. He was the embodiment of power and purpose."

• 55:55David Senra?

  And now we reach the paragraph, which I think really, for me, is the main takeaway of the book. So I'm going to read you the paragraph first and I'll tell you my interpretation of it. "Morose and fatalistic in his last years, Pierpont felt misunderstood by the public and angered by the uproar over his trusts. He shook his cane menacingly at reporters, a murderous gleam in his eyes. He wouldn't admit to legitimate public curiosity about his affairs. In 1911, he burned the bound letters that he had sent to Junius for 33 years." So he had all this correspondence between him and his father over a 33-year period. They bound in books. He winds up burning them. I would love to read them. And they talk about why this was so devastating, such a devastating act.

• 56:39David Senra?

  "He burned the bound letters he had sent to Junius for 33 years, destroying perhaps the most important chronicle of Anglo-American finance in the late 19th century. He craved a privacy impossible for the world's most famous banker. Like a ghost, he brooded in his library beneath stained glass windows and thick draperies that muffled the sounds of a changing world." And so what I took away from that is, what is the point of being successful if this is the end of your life? This isn't it. He lost the thread. Maybe he never had the thread his entire life, but I don't consider being, in your early 70s, close to death and being

• 57:22David Senra?

  this unhappy with the way your life turned out to be successful. And there's enough examples in these books that this happens over and over again. I think we should be aware of it so we can avoid that fate. I want to give you an example of how ruthless he could be. He was estranged from one of his daughters. They never use the word lesbian, but that's clearly what they're inferring in Morgan's time. And so he says it's her friend, in quotes, "who caused the estrangement." And so he seeks revenge on his daughter's friend, which is essentially her lover. So it says-

• 57:58David Senra?

  Well, first, his daughter said something about him I thought was interesting, just in one sentence. "To acknowledge defeat was foreign to his temperament. He was always loyal to his mistakes." Okay, so it says Pierpont was wounded by the estrangement with his daughter. "It broke her father's heart when she elected to part from him. Pierpont could be grimly implacable when crossed, and he blamed Bessie Marbury for stealing away his daughter. He found an ingenious way to torture her. Marbury coveted the French Legion of Honor and believed that she deserved it." The person, the French ambassador, the person that elected as French ambassador was this guy named Robert Bacon, who used to work for Morgan.

• 58:40David Senra?

  And he just happens to, at the time that Bessie is trying to get this award, he's the one that has control over it. So it says, "Bowing to Pierpont's wishes, he made sure she was denied the honor. Knowing that the House of Morgan objected prevented Bessie Marbury from ever receiving the government award. Marbury, notwithstanding letters of praise from former Presidents Roosevelt and Taft, couldn't overcome the French fears of offending Morgan's interests." So just another example, this is not a person that you wanted to cross. So right before he dies, this is 1912, they have these hearings, they're called the Pujol hearings. And they're coming, they want, they're essentially public hearings about the influence that bankers

• 59:25David Senra?

  have on the economy. And they bring in, Morgan's essentially the one that they want to testify. So it says, "The Pujol hearings were always portrayed as Pierpont's martyrdom, the public confrontation that had led to his death. Silence was Wall Street's golden rule of conduct. Its leading exemplar was Pierpont's pal, George F. Baker of the First National Bank. His bank was as mysterious as Morgan's. Known as the Sphinx of Wall Street, Baker was the director of more than 40 companies. He gave his first newspaper interview in 1863." And not another one until 1923, when a young woman said she was promised a job if she gained access to the reclusive Baker. Breaking his silence, he said, businessmen

• 1:00:07David Senra?

  of America should reduce their talk two-thirds. Everyone should reduce his talk. There is rarely ever a reason for anybody to talk. By then, Baker's fortune was estimated to be between $100 and $300 million in 1923. As a private merchant, Pierpont felt no obligation to inform the public and never hired a publicist. Now, a new generation of Morgan Partners took charge of a public relations offensive while they're like, okay, we clearly, we realize that we have to start influencing the media. We have to start controlling this. We can't just sit in silence anymore. Media is becoming way too, as we discussed on the Pulitzer Podcast, media is becoming way too influential for us to let them dictate

• 1:00:52David Senra?

  the story. So it says, "The bank hired its first publicist, and he laid out a secret plan approved by JP that would govern Morgan Public Relations for a generation. To improve the bank's image, Morgan's partners would meet with selected reporters, stay in touch with publishers, monitor newspapers, contribute articles, and privately protest critical articles to editors." So I'll get to parts of JP's testimony, but before that, I just want to tell you, this is the scope of his business, the year before he dies. "The Puhoe hearings are celebrated for Pierpont's triumphant retorts and spirited defense of his business honor. In a moment, we shall hear the well-worn phrases, but let us first note the awesome

• 1:01:35David Senra?

  Morgan power that was revealed. Some 78 major corporations, including many of the country's most powerful holding companies, banked at Morgans. Pierpont and his partners, in turn, held 72 directorships, Freudian slip there, right? Dictatorships, held 72 directorships in 112 corporations, spanning the worlds of finance, railroad, transportation, and public utilities." And I just want to share one part of the testimony with you, because as Chernow says, this is JP in a nutshell. So he's being cross-examined by an attorney named Untermeyer. So it says, "Untermeyer got Pierpont to state his rationale for the one-man control of the railroads he sponsored."

• 1:02:22David Senra?

  Untermeier says, "But what I mean is that the banking house assumes no legal responsibility for the value of the bonds, does it?" Morgan: "No, sir, but it assumes something else that is still more important, and that is the moral responsibility which has to be defended so long as you live." The interpretation of this is, this was Pierpont in a nutshell. He represented the bondholders and expressed their wrath against irresponsible management. And the reason I wanted to pull that out is because as I read that, there's a lot of times they talk about this. And it crystallized this idea. I was like, "Oh," I put the book down, I was like, "That's it."

• 1:03:04David Senra?

  The bankers derived strength from weak companies. Once you found yourself, you mismanaged your affairs, that you needed Morgan's help, that you needed him to reorganize or help raise money, that's where he got his strength from. There was no benefit, there was no edge JP Morgan had on companies like Rockefeller's and Carnegie's because they were well-run. They didn't need your money. And so, one of the main takeaways of the book is, the power that you have, you're able to maintain financial strength, that you're not being, you're not, you don't have to listen to or be taken advantage of people like JP Morgan. And so, a few months

• 1:03:46David Senra?

  after these hearings, which, once they were done, he just, he started traveling. Because towards the end, he was happiest when he was roaming the earth. And very much so like Pulitzer did, you know, he'd have a giant boat, giant yacht, and he would just go to different European cities, different places of port, and that's where he was happy. And this is also leads, so now we've arrived at the death of JP.

• 1:04:13David Senra?

  Pierpont could find no respite from his troubles. As always, his ailments were a mass of amorphous symptoms rather than a definable illness. He had digestive upsets, depression, insomnia, and nervous attacks. The results of months of strain very apparent. Jack, so they're sending telegrams to his son saying, you know, JP doesn't look good. And so Jack wants to be with his father. Jack now wished to join Pierpont, but theirs was no ordinary father-son relationship. A political succession, no less momentous than a presidential transition, was underway. So his secretary, JP's secretary is writing Jack.

• 1:04:57David Senra?

  It says, "Your suggestion coming yourself has touched and pleased him, but he is anxious. You should remember how much depends upon your being on the spot in New York and how many interests are in your hands. He is too weak to make decisions. He wishes to leave it to you." It was the first time Pierpont had ever explicitly delegated top authority to his son. So I want to point out one thing before I continue with his death. Junius was heavily involved in JP's life, right? JP, which was weird, JP talks about how much he benefited from that, but he didn't do the same with Jack until Jack was much older. Towards the end of JP's life is when he starts taking a very profound interest and starts

• 1:05:41David Senra?

  really building a relationship with his son. But it was not as involved in the early life and where it would serve the most benefit as it was with Junius and JP, which I found confusing. You know, if you benefited from this, why wouldn't you do the same for your father? A lot of people characterize JP Morgan as extremely self-absorbed, so maybe Junius wasn't afflicted with that. Okay, so it says, "The final siege came in a $500 a day suite at Rome's Grand Hotel. He was groggy but sleepless. Even morphine couldn't soothe his tormented mind or slow his racing pulse. On the night of March 31st, he grew delirious and mumbled about his boyhood, imagining

• 1:06:26David Senra?

  himself back at school in Hartford or Switzerland. He praised, 'A lot of fine boys were in my class.' Before he died, he said, 'I've got to go up the hill.'" He died shortly after midnight. The Morgan Partners attributed the death to the hearings. The charge may be overstated. Pierpont was 75 when he died. Almost 20 years before, worried doctors wouldn't approve a life insurance policy in his name. He smoked dozens of cigars daily, stowed away huge breakfasts, drank heavily, and refused to exercise. From boyhood, he had been chronically sick, often spending several days in bed each month.

• 1:07:09David Senra?

  Hardly a period of his life was free of illness and depression. That he lasted until 75, with his myriad ailments and resolutely bad habits, is close to miraculous. How much money had Pierpont amassed? Apart from his art collection, his estate came to $68 million, the equivalent of $802 million in 1989. It was a testimony to Pierpont's Olympian standing that the result of the figures occasioned some disbelief, even some pity. Andrew Carnegie was truly saddened by the revelation of poor Pierpont's poverty.

• 1:07:51David Senra?

  And to think, he was not even a rich man, he sighed. And that's where I'll leave this story. This book, like every other book that I cover, there's so much more, so many more lessons, so many more interesting stories contained in the book. If you want to read it, there's a link in the show notes. And if you buy the book using that link, you'll be supporting the podcast at the same time. That's 139 books down, 1,000 to go, and I'll talk to you again soon.