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The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance
The winner of the National Book Award and now considered a classic, The House of Morgan is the most ambitious history ever written about an American banking dynasty. Acclaimed by The Wall Street Journal as "brilliantly researched and written," the book tells the rich, panoramic story of four generations of Morgans and the powerful, secretive firms they spawned. It is the definitive account of the rise of the modern financial world. A gripping history of banking and the booms and busts that shaped the world on both sides of the Atlantic, The House of Morgan traces the trajectory of the J. P. Morgan empire from its obscure beginnings in Victorian London to the crash of 1987. Ron Chernow paints a fascinating portrait of the private saga of the Morgans and the rarefied world of the American and British elite in which they moved. Based on extensive interviews and access to the family and business archives, The House of Morgan is an investigative masterpiece, a compelling account of a remarkable institution and the men who ran it, and an essential book for understanding the money and power behind the major historical events of the last 150 years.
812 pages, Paperback
First published March 20, 1990
About the author
Ron Chernow
24 books5,377 followersRon Chernow was born in 1949 in Brooklyn, New York. After graduating with honors from Yale College and Cambridge University with degrees in English Literature, he began a prolific career as a freelance journalist. Between 1973 and 1982, Chernow published over sixty articles in national publications, including numerous cover stories. In the mid-80s Chernow went to work at the Twentieth Century Fund, a prestigious New York think tank, where he served as director of financial policy studies and received what he described as “a crash course in economics and financial history.”
Chernow’s journalistic talents combined with his experience studying financial policy culminated in the writing of his extraordinary first book, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance (1990). Winner of the 1990 National Book Award for Nonfiction, The House of Morgan traces the amazing history of four generations of the J.P. Morgan empire. The New York Times Book Review wrote, “As a portrait of finance, politics and the world of avarice and ambition on Wall Street, the book has the movement and tension of an epic novel. It is, quite simply, a tour de force.” Chernow continued his exploration of famous financial dynasties with his second book, The Warburgs (1994), the story of a remarkable Jewish family. The book traces Hamburg’s most influential banking family of the 18th century from their successful beginnings to when Hitler’s Third Reich forced them to give up their business, and ultimately to their regained prosperity in America on Wall Street.
Described by Time as “one of the great American biographies,” Chernow’s Titan: The Life of John D. Rockefeller, Sr. (1998) brilliantly reveals the complexities of America’s first billionaire. Rockefeller was known as a Robber Baron, whose Standard Oil Company monopolized an entire industry before it was broken up by the famous Supreme Court anti-trust decision in 1911. At the same time, Rockefeller was one of the century’s greatest philanthropists donating enormous sums to universities and medical institutions. Chernow is the Secretary of PEN American Center, the country’s most prominent writers’ organization, and is currently at work on a biography of Alexander Hamilton. He lives in Brooklyn Heights, New York.
In addition to writing biographies, Chernow is a book reviewer, essayist, and radio commentator. His book reviews and op-ed articles appear frequently in The New York Times and The Wall Street Journal. He comments regularly on business and finance for National Public Radio and for many shows on CNBC, CNN, and the Fox News Channel. In addition, he served as the principal expert on the A&E biography of J.P. Morgan and will be featured as the key Rockefeller expert on an upcoming CNBC documentary.
Chernow’s journalistic talents combined with his experience studying financial policy culminated in the writing of his extraordinary first book, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance (1990). Winner of the 1990 National Book Award for Nonfiction, The House of Morgan traces the amazing history of four generations of the J.P. Morgan empire. The New York Times Book Review wrote, “As a portrait of finance, politics and the world of avarice and ambition on Wall Street, the book has the movement and tension of an epic novel. It is, quite simply, a tour de force.” Chernow continued his exploration of famous financial dynasties with his second book, The Warburgs (1994), the story of a remarkable Jewish family. The book traces Hamburg’s most influential banking family of the 18th century from their successful beginnings to when Hitler’s Third Reich forced them to give up their business, and ultimately to their regained prosperity in America on Wall Street.
Described by Time as “one of the great American biographies,” Chernow’s Titan: The Life of John D. Rockefeller, Sr. (1998) brilliantly reveals the complexities of America’s first billionaire. Rockefeller was known as a Robber Baron, whose Standard Oil Company monopolized an entire industry before it was broken up by the famous Supreme Court anti-trust decision in 1911. At the same time, Rockefeller was one of the century’s greatest philanthropists donating enormous sums to universities and medical institutions. Chernow is the Secretary of PEN American Center, the country’s most prominent writers’ organization, and is currently at work on a biography of Alexander Hamilton. He lives in Brooklyn Heights, New York.
In addition to writing biographies, Chernow is a book reviewer, essayist, and radio commentator. His book reviews and op-ed articles appear frequently in The New York Times and The Wall Street Journal. He comments regularly on business and finance for National Public Radio and for many shows on CNBC, CNN, and the Fox News Channel. In addition, he served as the principal expert on the A&E biography of J.P. Morgan and will be featured as the key Rockefeller expert on an upcoming CNBC documentary.
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June 13, 2021
“The old House of Morgan spawned a thousand conspiracy theories and busied generations of muckrakers. As the most mandarin of banks, it catered to many prominent families, including the Astors, Guggenheims, du Ponts, and Vanderbilts. It shunned dealings with lesser mortals, thus breeding popular suspicion. Since it financed many industrial giants, including U.S. Steel, General Electric, General Motors, Du Pont, and American Telephone and Telegraph, it entered into their councils and aroused fear of undue banker power…It stopped panics, saved the gold standard, rescued New York City three times, and arbitrated financial disputes. If its concerns transcended an exclusive desire for profit, it also had a peculiar knack for making good works pay…”
- Ron Chernow, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance
In terms of subject matter, the “biography” of a bank – even one with the pedigree of J.P. Morgan – is a tough sell. Sure, a bank is a vital part of a functioning economy. They help people and businesses invest, save, and utilize their mattresses for sleeping, instead of hiding hoarded cash. As the dramatic locus of a 700-page narrative, however, a bank leaves a lot to be desired.
There are exceptions, of course, and The House of Morgan is one. Even if you have no interest in banks or bankers, this functions well as a primer on the evolution of American business since the early nineteenth century.
The big draw with this big book is that it is written by Ron Chernow, one of the best biographers working today. Published in 1990, this is actually Chernow’s first work, yet there is no indication of that within these pages. From the start you can see the authorial skills that would culminate in bestselling volumes on the lives of Alexander Hamilton, George Washington, and Ulysses Grant.
Chernow views the various Morgan banks (and there are a bunch) as emblematic of America’s emergence as a world economic superpower. If nothing else, those banks have been around long enough to make the claim viable. First emerging in 1864 – as J.P. Morgan & Co. – Morgan institutions still exist, though as Chernow points out in a 2001 preface, they are no longer independent, having merged with or been subsumed by other entities (J.P. Morgan was absorbed by Chase Manhattan, Morgan Stanley “teamed up with” Dean Witter, and Morgan Grenfell was swallowed by Deutsche Bank).
The scope of this book is extremely impressive. Chernow corrals a lot of information over a long period of time, and organizes things in such a way that it is always manageable for the reader. The House of Morgan is broken into three large parts (and subdivided into shorter chapters): “The Baronial Age” (1838-1913), “The Diplomatic Age” (1913-1948) and “The Casino Age” (1948-1989).
This structure serves a dual purpose, providing both chronological clarity and thematic resonances, as the “personality” of the various Morgan banks change over the decades. In Chernow’s telling, the Morgan started off as a private gentleman’s club for the super wealthy, transitioned into a political power broker in middle age, and then sold out its soul and prestige in the “greed is good” 1980s.
By far, the best parts of The House of Morgan are its first two sections. The reason they are successful is because Chernow is able to tether the story of the Morgan banks to striking personalities. We begin with miserly George Peabody, who left a hopelessly provincial America to start a bank in London, partnered with Junius Spencer Morgan, and made a considerable fortune, much of which he gave away to public causes.
Once Peabody is gone, Chernow segues to Junius, who changed the name of Peabody, Morgan & Co. to J.P. Morgan & Co. upon Peabody’s retirement. By the time Junius is about to exit, the baton has been passed to John Pierpont Morgan, Sr., the Monopoly man come to life. J.P. Morgan, Sr. avoided the draft in the Civil War to make a financial killing, then spearheaded the industrial consolidation of railroads, steel companies, and shipping lines. He helped bring U.S. Steel, General Electric, and the R.M.S. Titanic to life (narrowly escaping the sinking due to a last minute change of plans that Chernow seems oddly uninterested in).
Despite living in the long shadow of his father, J.P. Morgan, Jr., known as Jack, played a huge role in world events during the time of the First World War. His ability to arrange financing for Great Britain and France not only allowed them to survive, it created an interdependency between them and the United States that greatly influenced the later U.S. decision to declare war on Germany. When the two J.P. Morgans have died, Chernow picks up the thread with luminaries such as Thomas Lamont and Dwight Morrow.
Though Chernow stays closest to the men who were closest to the bank, he does provide some familial details about the Morgan clan. One that stands out is his thumbnail sketch of the fascinating Anne Morgan, a union activist, suffragette, philanthropist, and host of exclusive salons. Unsurprisingly, many of her activities annoyed her father, J.P. Morgan, Sr. Nevertheless, he left her a large sum of money in his will, much to the chagrin of the other members of the family. Chernow also does not neglect the profligacy of both J.P. Morgans, who loved collecting art and building yachts so large that one of them was appropriated by the U.S. Navy in wartime. This lavish spending made the Morgans surprisingly illiquid, and led to John D. Rockefeller sneering at the size of Senior’s estate.
Chernow is best with people, but that does not mean he neglects the financial aspects. Throughout The House of Morgan, he does a commendable job of describing banking at just the right level of detail. It’s not so much that you get lost in the twisted skein of J.P. Morgan & Co. interests, but not so little that you can’t understand what made the Morgan banks so good at what they did. Chernow’s coverage of the Great Depression and the Glass-Steagall Act, for instance, is quite solid. He also ably makes sense of the post-WWI financial landscape, which can be summed up as J.P. Morgan & Co. loaning money to Germany to pay reparations to Great Britain and France, which then used that money to pay off loans to J.P. Morgan & Co.
The final third of The House of Morgan dragged a bit for me. Once Thomas Lamont (the first non-Morgan chairman since George Peabody) dies, Chernow no longer has a human focal point for his story. Moreover, the Morgan banks start to multiply, so that it’s not just J.P. Morgan & Co. and Morgan Grenfell, but also Morgan Stanley and Morgan Guarantee. Chernow hops and skips from one to the other, telling tales of successes and – increasingly, as time goes on – scandals. These events might have been important to the people Chernow interviewed, but they lack the large import of Morgan’s earlier roles in stemming financial panics and funding world wars. Ultimately, this eventually took on the tone of a J.P. Morgan & Co. cocktail party, without the open bar. By the final page, my patience was waning, and if I had heard one more gossipy item about a leveraged buyout or corporate raid, I might have flung myself from a cliff.
Part of the problem with the end of The House of Morgan is that its “present” is 1989. A lot has happened – booms, busts, and the Great Recession – since 1989. As such, the “modern” portions of Chernow’s chronicle, in which he attempts to tease out lessons from the past, feel much more dated than the “historical” parts.
The House of Morgan is a worthwhile read, even if it limps a bit across the finish line. It gives dimension, contextualization, and even a bit of sympathy to remarkably wealthy men who are quite easy to caricature. At the same time, it allows one to come to the inevitable conclusion that banking – no matter the gloss – is a profit-making enterprise, and when profit is your chief goal, virtue stands very little chance of thriving.
- Ron Chernow, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance
In terms of subject matter, the “biography” of a bank – even one with the pedigree of J.P. Morgan – is a tough sell. Sure, a bank is a vital part of a functioning economy. They help people and businesses invest, save, and utilize their mattresses for sleeping, instead of hiding hoarded cash. As the dramatic locus of a 700-page narrative, however, a bank leaves a lot to be desired.
There are exceptions, of course, and The House of Morgan is one. Even if you have no interest in banks or bankers, this functions well as a primer on the evolution of American business since the early nineteenth century.
The big draw with this big book is that it is written by Ron Chernow, one of the best biographers working today. Published in 1990, this is actually Chernow’s first work, yet there is no indication of that within these pages. From the start you can see the authorial skills that would culminate in bestselling volumes on the lives of Alexander Hamilton, George Washington, and Ulysses Grant.
Chernow views the various Morgan banks (and there are a bunch) as emblematic of America’s emergence as a world economic superpower. If nothing else, those banks have been around long enough to make the claim viable. First emerging in 1864 – as J.P. Morgan & Co. – Morgan institutions still exist, though as Chernow points out in a 2001 preface, they are no longer independent, having merged with or been subsumed by other entities (J.P. Morgan was absorbed by Chase Manhattan, Morgan Stanley “teamed up with” Dean Witter, and Morgan Grenfell was swallowed by Deutsche Bank).
The scope of this book is extremely impressive. Chernow corrals a lot of information over a long period of time, and organizes things in such a way that it is always manageable for the reader. The House of Morgan is broken into three large parts (and subdivided into shorter chapters): “The Baronial Age” (1838-1913), “The Diplomatic Age” (1913-1948) and “The Casino Age” (1948-1989).
This structure serves a dual purpose, providing both chronological clarity and thematic resonances, as the “personality” of the various Morgan banks change over the decades. In Chernow’s telling, the Morgan started off as a private gentleman’s club for the super wealthy, transitioned into a political power broker in middle age, and then sold out its soul and prestige in the “greed is good” 1980s.
By far, the best parts of The House of Morgan are its first two sections. The reason they are successful is because Chernow is able to tether the story of the Morgan banks to striking personalities. We begin with miserly George Peabody, who left a hopelessly provincial America to start a bank in London, partnered with Junius Spencer Morgan, and made a considerable fortune, much of which he gave away to public causes.
Once Peabody is gone, Chernow segues to Junius, who changed the name of Peabody, Morgan & Co. to J.P. Morgan & Co. upon Peabody’s retirement. By the time Junius is about to exit, the baton has been passed to John Pierpont Morgan, Sr., the Monopoly man come to life. J.P. Morgan, Sr. avoided the draft in the Civil War to make a financial killing, then spearheaded the industrial consolidation of railroads, steel companies, and shipping lines. He helped bring U.S. Steel, General Electric, and the R.M.S. Titanic to life (narrowly escaping the sinking due to a last minute change of plans that Chernow seems oddly uninterested in).
Despite living in the long shadow of his father, J.P. Morgan, Jr., known as Jack, played a huge role in world events during the time of the First World War. His ability to arrange financing for Great Britain and France not only allowed them to survive, it created an interdependency between them and the United States that greatly influenced the later U.S. decision to declare war on Germany. When the two J.P. Morgans have died, Chernow picks up the thread with luminaries such as Thomas Lamont and Dwight Morrow.
Though Chernow stays closest to the men who were closest to the bank, he does provide some familial details about the Morgan clan. One that stands out is his thumbnail sketch of the fascinating Anne Morgan, a union activist, suffragette, philanthropist, and host of exclusive salons. Unsurprisingly, many of her activities annoyed her father, J.P. Morgan, Sr. Nevertheless, he left her a large sum of money in his will, much to the chagrin of the other members of the family. Chernow also does not neglect the profligacy of both J.P. Morgans, who loved collecting art and building yachts so large that one of them was appropriated by the U.S. Navy in wartime. This lavish spending made the Morgans surprisingly illiquid, and led to John D. Rockefeller sneering at the size of Senior’s estate.
Chernow is best with people, but that does not mean he neglects the financial aspects. Throughout The House of Morgan, he does a commendable job of describing banking at just the right level of detail. It’s not so much that you get lost in the twisted skein of J.P. Morgan & Co. interests, but not so little that you can’t understand what made the Morgan banks so good at what they did. Chernow’s coverage of the Great Depression and the Glass-Steagall Act, for instance, is quite solid. He also ably makes sense of the post-WWI financial landscape, which can be summed up as J.P. Morgan & Co. loaning money to Germany to pay reparations to Great Britain and France, which then used that money to pay off loans to J.P. Morgan & Co.
The final third of The House of Morgan dragged a bit for me. Once Thomas Lamont (the first non-Morgan chairman since George Peabody) dies, Chernow no longer has a human focal point for his story. Moreover, the Morgan banks start to multiply, so that it’s not just J.P. Morgan & Co. and Morgan Grenfell, but also Morgan Stanley and Morgan Guarantee. Chernow hops and skips from one to the other, telling tales of successes and – increasingly, as time goes on – scandals. These events might have been important to the people Chernow interviewed, but they lack the large import of Morgan’s earlier roles in stemming financial panics and funding world wars. Ultimately, this eventually took on the tone of a J.P. Morgan & Co. cocktail party, without the open bar. By the final page, my patience was waning, and if I had heard one more gossipy item about a leveraged buyout or corporate raid, I might have flung myself from a cliff.
Part of the problem with the end of The House of Morgan is that its “present” is 1989. A lot has happened – booms, busts, and the Great Recession – since 1989. As such, the “modern” portions of Chernow’s chronicle, in which he attempts to tease out lessons from the past, feel much more dated than the “historical” parts.
The House of Morgan is a worthwhile read, even if it limps a bit across the finish line. It gives dimension, contextualization, and even a bit of sympathy to remarkably wealthy men who are quite easy to caricature. At the same time, it allows one to come to the inevitable conclusion that banking – no matter the gloss – is a profit-making enterprise, and when profit is your chief goal, virtue stands very little chance of thriving.
February 7, 2017
In his first massive biographical tome, Ron Chernow definitely takes up an undertaking that proves daunting and yet highly interesting. Chernow sought to explore not only financial ties in America through the ages, but to explore a powerful financial, business, and political force that has lasted for more than a few decades. The Morgan name has been deeply ensconced in the American fabric (the international one as well) for well over a century, helping to steer world events and political ideals one way or another. In his exploration of the House of Morgan--more than a familial biography in the true sense--Chernow examines the entity during three distinct epochs: the Baronial Age, the Diplomatic Era, and the Casino Period. Readers can marvel not only at the power held by these multi-millionaires, but how the House survived many a plight (both political and economic) and remains as strong as ever. While I am not one who is well-versed in finances or who can attest to being the greatest handler of money, I feel any reader with patience and a passion to learn will devour this and see just how powerful and corrupt money can be, no matter the holder.
Chernow first examines the House of Morgan by exploring the lives and ventures of Junius and Pierpont Morgan in what he coins as the Baronial Age. This father and son duo sought to forge greatness in an era when the American aristocracy was finding its feet. As Chernow lays the groundwork for his entire piece, the House set up its own foundations, whereby the elite nature became the basis for future Morgan enterprising. The Morgans sought not to be a bank in the traditional sense, with tellers and small accounts, but to offer services to the uppermost crust of society, requiring inflated minimal deposits and refusing to publicise their services. Chernow touches on this in the preface, but does explore how Junius wanted to use the mid-nineteenth century to develop a core group by which he could make sizeable investments and see his own profits soar. By the time Pierpont took over daily running of the House, banking became but one of the ventures undertaken to produce great wealth. Railroads were coming into vogue and their development as more than regional entities could be seen by amalgamating companies into monopolising monstrosities. The House of Morgan had capital for those who wished to expand holdings, but also elbowed their way onto the board of many companies. The rise in rail importance created a strong upswing in the Morgan profits and thereby helped earn Pierpont Morgan the title of Robber Barron in the late nineteenth century. At the dawn of the early twentieth century, the House of Morgan found itself firmly rooted in America's upper class and became the go-to lenders of the top tier. When Wall Street felt tremors of a crash in the first decade of that century, it was the House that held firm and weathered the storm. Pierpont did all he could to keep things running effectively, leaving a powerful and influential House of Morgan for his son, Jack, after his death in 1913. Creating a financial aristocracy in America and laying the groundwork for international importance, the baronial age ushered in some of the most trying and successful years of the House of Morgan.
In the lead-up to major political changes on the world scene, the House of
Morgan undertook using their strong voice in what Chernow titles the Diplomatic Era. Divesting its monetary policy outside of America, the Morgans had enterprises in London and Paris, two key areas in Europe with long reaches across the continent and around the world. The House used its significant influence to help foster stability within the European countries, providing key loans and, at times, propping up their national currencies to the point of steering away from significant devaluation. With strong diplomatic intentions, the House was not overly picky about their clients for a time and would help wherever they could. Even after the Great War commenced, the House of Morgan invested heavily in munitions and metals that became essential to the war effort. Chernow goes so far as to discuss how the Morgans were seemingly war profiteers by investing in both sides without outwardly supporting the Axis. This was precarious territory and could flirt with treasonous activity. But, the House of Morgan sought to invest in what would bring profit and did so effectively. In those inter-war years, the House began seeing itself managed more by US administrations, through legislation. President Wilson passed income tax laws and tried to limit control of the Morgans with the creation of a Federal Reserve. Wilson received much pushback and watched the House do all they could to react. With the arrival of the Depression, Jack Morgan, now at the helm, sought to push through as panic enveloped the world, steadying the financial markets and remaining above the fray. The European situation brought dual concern to the Morgans, who watched the reparations of the Great War cripple Germany and the rise of the Nazis, fuelled by that resentment. As Chernow explains, the House could strike to aid with reparation stability and prop-up the German economy, which might prevent the need for war. There was much to be done with these sorts of monetary policies, but the House was kept from offering complete assistance, with pressure from both FDR and Churchill on both sides of the Atlantic. Trying to keep from sullying their reputation and steering away from treasonous activities, the Morgans would not allow themselves to make concrete ties with the Nazis or the extermination policies enacted throughout the concentration camps. The House remained firmly rooted in the American camp, though financial potentials surely crossed political ideologies in the 1930s and 40s. The diplomatic era saw the House of Morgan hold onto much power around the world, though they were not able to prevent some of the major political skirmishes. The profits they reaped allowed them to divest from national government concerns and focus solely on the personal investor.
Chernow's third era of the House of Morgan, which he calls the Casino Period, proved to be one in which gambles in finances were precipitated by a loss of control by the House at a time when multinational corporations were the new Goliaths. With the onset of the Cold War, the world proved divided along ideological lines, but this did not force the House of Morgan to shy away from their business ventures. Using corporations as clients, the House sought to bridge financial wealth with the acquisition of key businesses all over the world, though they were more a servant to aid in the diversification of business interests. The American presidents tried to turn away from some of the ventures being undertaken, but those heading up various investment branches of Morgan were able to turn politics on its head with bold and daring moves. Be it subsidizing means to acquire and monopolize Japanese high tech firms or foster third-party fiscal exchanges so as not to violate embargoes in the Middle East, the House of Morgan was there through it all. Chernow offers numerous concrete examples of how the House tried to keep itself one step ahead of the precarious markets while also pushing the limits with offering seed money for hostile takeovers. Whatever it was, it brought things into the late 20th century at a time when financial security was rare, even with relative peace on the political front. Hedging bets for their clients proved to be the effective means of creating a relatively effective House of Morgan in the latter part of the century and into the twenty-first, after Chernow's narrative comes to a close.
As the political and economic world remains balanced on the head of a needle, Chernow exemplifies how the diverse and risky approaches of the House of Morgan keep their financial prowess effective. I am no money man, nor do I feel I learned enough in these pages to expound much on the subject. However, Chernow's strong ability to lay out a thought-provoking and timely narrative pushes the reader through the various situations with ease. Political, economic and personal grief pepper the story throughout and Chernow is able to draw them all together. His focus has to be varied as he handles a number of people and their personal stories, but he does so effectively and to the point that the reader is sure to want to know more. This is the sign of a good historian and biographer, something that I know Chernow has fostered after reading a number of his works. There is more to the House of Morgan than money, but it is their passion for it that shaped them as men and a family (both blood and business) for so long. While Chernow sought to find a family whose influence on worldwide banking lasted long enough to write about its development, he has done so in spades with this exploration of the Morgans.
Kudos, Mr. Chernow for shedding so much light on these men and their empire, which showed numerous changes over its development. Your books always leave me wanting more and curious as to what else you have in store. What a wonderful way to begin your life-long journey of writing.
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Chernow first examines the House of Morgan by exploring the lives and ventures of Junius and Pierpont Morgan in what he coins as the Baronial Age. This father and son duo sought to forge greatness in an era when the American aristocracy was finding its feet. As Chernow lays the groundwork for his entire piece, the House set up its own foundations, whereby the elite nature became the basis for future Morgan enterprising. The Morgans sought not to be a bank in the traditional sense, with tellers and small accounts, but to offer services to the uppermost crust of society, requiring inflated minimal deposits and refusing to publicise their services. Chernow touches on this in the preface, but does explore how Junius wanted to use the mid-nineteenth century to develop a core group by which he could make sizeable investments and see his own profits soar. By the time Pierpont took over daily running of the House, banking became but one of the ventures undertaken to produce great wealth. Railroads were coming into vogue and their development as more than regional entities could be seen by amalgamating companies into monopolising monstrosities. The House of Morgan had capital for those who wished to expand holdings, but also elbowed their way onto the board of many companies. The rise in rail importance created a strong upswing in the Morgan profits and thereby helped earn Pierpont Morgan the title of Robber Barron in the late nineteenth century. At the dawn of the early twentieth century, the House of Morgan found itself firmly rooted in America's upper class and became the go-to lenders of the top tier. When Wall Street felt tremors of a crash in the first decade of that century, it was the House that held firm and weathered the storm. Pierpont did all he could to keep things running effectively, leaving a powerful and influential House of Morgan for his son, Jack, after his death in 1913. Creating a financial aristocracy in America and laying the groundwork for international importance, the baronial age ushered in some of the most trying and successful years of the House of Morgan.
In the lead-up to major political changes on the world scene, the House of
Morgan undertook using their strong voice in what Chernow titles the Diplomatic Era. Divesting its monetary policy outside of America, the Morgans had enterprises in London and Paris, two key areas in Europe with long reaches across the continent and around the world. The House used its significant influence to help foster stability within the European countries, providing key loans and, at times, propping up their national currencies to the point of steering away from significant devaluation. With strong diplomatic intentions, the House was not overly picky about their clients for a time and would help wherever they could. Even after the Great War commenced, the House of Morgan invested heavily in munitions and metals that became essential to the war effort. Chernow goes so far as to discuss how the Morgans were seemingly war profiteers by investing in both sides without outwardly supporting the Axis. This was precarious territory and could flirt with treasonous activity. But, the House of Morgan sought to invest in what would bring profit and did so effectively. In those inter-war years, the House began seeing itself managed more by US administrations, through legislation. President Wilson passed income tax laws and tried to limit control of the Morgans with the creation of a Federal Reserve. Wilson received much pushback and watched the House do all they could to react. With the arrival of the Depression, Jack Morgan, now at the helm, sought to push through as panic enveloped the world, steadying the financial markets and remaining above the fray. The European situation brought dual concern to the Morgans, who watched the reparations of the Great War cripple Germany and the rise of the Nazis, fuelled by that resentment. As Chernow explains, the House could strike to aid with reparation stability and prop-up the German economy, which might prevent the need for war. There was much to be done with these sorts of monetary policies, but the House was kept from offering complete assistance, with pressure from both FDR and Churchill on both sides of the Atlantic. Trying to keep from sullying their reputation and steering away from treasonous activities, the Morgans would not allow themselves to make concrete ties with the Nazis or the extermination policies enacted throughout the concentration camps. The House remained firmly rooted in the American camp, though financial potentials surely crossed political ideologies in the 1930s and 40s. The diplomatic era saw the House of Morgan hold onto much power around the world, though they were not able to prevent some of the major political skirmishes. The profits they reaped allowed them to divest from national government concerns and focus solely on the personal investor.
Chernow's third era of the House of Morgan, which he calls the Casino Period, proved to be one in which gambles in finances were precipitated by a loss of control by the House at a time when multinational corporations were the new Goliaths. With the onset of the Cold War, the world proved divided along ideological lines, but this did not force the House of Morgan to shy away from their business ventures. Using corporations as clients, the House sought to bridge financial wealth with the acquisition of key businesses all over the world, though they were more a servant to aid in the diversification of business interests. The American presidents tried to turn away from some of the ventures being undertaken, but those heading up various investment branches of Morgan were able to turn politics on its head with bold and daring moves. Be it subsidizing means to acquire and monopolize Japanese high tech firms or foster third-party fiscal exchanges so as not to violate embargoes in the Middle East, the House of Morgan was there through it all. Chernow offers numerous concrete examples of how the House tried to keep itself one step ahead of the precarious markets while also pushing the limits with offering seed money for hostile takeovers. Whatever it was, it brought things into the late 20th century at a time when financial security was rare, even with relative peace on the political front. Hedging bets for their clients proved to be the effective means of creating a relatively effective House of Morgan in the latter part of the century and into the twenty-first, after Chernow's narrative comes to a close.
As the political and economic world remains balanced on the head of a needle, Chernow exemplifies how the diverse and risky approaches of the House of Morgan keep their financial prowess effective. I am no money man, nor do I feel I learned enough in these pages to expound much on the subject. However, Chernow's strong ability to lay out a thought-provoking and timely narrative pushes the reader through the various situations with ease. Political, economic and personal grief pepper the story throughout and Chernow is able to draw them all together. His focus has to be varied as he handles a number of people and their personal stories, but he does so effectively and to the point that the reader is sure to want to know more. This is the sign of a good historian and biographer, something that I know Chernow has fostered after reading a number of his works. There is more to the House of Morgan than money, but it is their passion for it that shaped them as men and a family (both blood and business) for so long. While Chernow sought to find a family whose influence on worldwide banking lasted long enough to write about its development, he has done so in spades with this exploration of the Morgans.
Kudos, Mr. Chernow for shedding so much light on these men and their empire, which showed numerous changes over its development. Your books always leave me wanting more and curious as to what else you have in store. What a wonderful way to begin your life-long journey of writing.
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November 23, 2017
This was the first Chernow documentary I ever read and immediately fell in love with his style. He is the sort of historian who loads his books with so much information that it's impossible not to walk away more knowledgeable on the subject matter. He captures more in one chapter than some other biographies capture in an entire book.
What stands out most is that he not only saturates the book with information, but he also humanizes the characters. House of Morgan doesn't just give the chronological history of Junius, JP, and JP Jr, in their journey of establishing financial dominance; it also captures their humanity--their strengths, weaknesses, merits, and faults. (Believe me there were a lot of faults).
It's also just a fascinating piece of American history. So much of what we take for granted today was innovative during the timeline of this book--if not a product of the Morgans then it was that of their contemporaries.
If you are looking for a book to finish in a hurry, this is not an ideal pick. But if you have a lot of free time on your hand and looking for something dense you can really sink your teeth into and come out feeling like you really learned something, then look no further than Chernow.
What stands out most is that he not only saturates the book with information, but he also humanizes the characters. House of Morgan doesn't just give the chronological history of Junius, JP, and JP Jr, in their journey of establishing financial dominance; it also captures their humanity--their strengths, weaknesses, merits, and faults. (Believe me there were a lot of faults).
It's also just a fascinating piece of American history. So much of what we take for granted today was innovative during the timeline of this book--if not a product of the Morgans then it was that of their contemporaries.
If you are looking for a book to finish in a hurry, this is not an ideal pick. But if you have a lot of free time on your hand and looking for something dense you can really sink your teeth into and come out feeling like you really learned something, then look no further than Chernow.
October 22, 2018
"Never before in the history of the world has there been such a powerful central control over finance, industrial production, credit, and wages as it is at this time vested in the Morgan group."
- Former Republican Chairman, quoted in Fortune, August 1933.
Ron Chernow's first financial biography/history is large It is 720 pages, plus notes/etc., and spans 1938 - 1989. It started off strong. Part I: The Baronial Age (1838-1913) is focused on the MEN, namely George Peabody, Junius Spencer Morgan, and J. Pierpont Morgan. The banks were simply extensions of the men. This section was 5-stars. It was fascinating. Part II: The Diplomatic Age (1913 - 1948) is focused on the bank(s). It begins with J.P. Morgan's death follows the House of Morgan through the war years (with "Jack" Morgan shepherding). Towards the end, with Glass-Steagal, the House of Morgan breaks into three major entities: Morgan Grenfell (already separate, English), Morgan Stanley (Investment Banking), and J.P. Morgan & Co. For me this was 4-stars. Part III: The Casino Age (1948-1989) explored the explosion of banking activity post war, the focus on M&A, and the loss of stature of the House of Morgan, both as it lost power and prestige. The book ends before J.P. Morgan was bought by Chase in 1990 (the book was published in 1990). This part was interesting, but like a shotgun, the further from Pierpont you get, the more diffuse the narrative. Eventually, there just seemed too much (too many actors, too many scandals, too many narrative threads). This part probably desereves 3-stars.
All in all, I liked the book. It showed Chernow's early talent for financial storytelling and gift for capturing historical characters. For me, the most valuable part of this book (besides the information on Pierpont) was the information on the other major partners that played a big roll during the wars, and Morgan's relationships with various 19th and 20th century figures (financial, cultural, political). I was fascinated by the deep relationship the House of Morgan had with fascist Italy, ultranationalist Japan, Germany, and the Vatican. I was entranced by Tom Lamont, Monty Norman, Russell Leffingwell, etc. The book was worth the effort just to learn about these other Morgan men.
Chernow writes primarily about banking families and American biographies:
Chernow's Banking Dynasties:
1. Titan: The Life of John D. Rockefeller, Sr. - ★★★★
2. The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance - ★★★★
3. The Warburgs: The Twentieth-Century Odyssey of a Remarkable Jewish Family - ★★★★
Chernow's American Political Biographies:
1. Alexander Hamilton - ★★★★★
2. Washington: A Life - ★★★★★
3. Grant - ★★★★★
Upon reviewing my reviews, I'm convinced Chernow does slightly better at writing histories of individuals rather than families; politics rather than finance. However, I should note, I've enjoyed ALL of his books and he's a master at his craft.
- Former Republican Chairman, quoted in Fortune, August 1933.
Ron Chernow's first financial biography/history is large It is 720 pages, plus notes/etc., and spans 1938 - 1989. It started off strong. Part I: The Baronial Age (1838-1913) is focused on the MEN, namely George Peabody, Junius Spencer Morgan, and J. Pierpont Morgan. The banks were simply extensions of the men. This section was 5-stars. It was fascinating. Part II: The Diplomatic Age (1913 - 1948) is focused on the bank(s). It begins with J.P. Morgan's death follows the House of Morgan through the war years (with "Jack" Morgan shepherding). Towards the end, with Glass-Steagal, the House of Morgan breaks into three major entities: Morgan Grenfell (already separate, English), Morgan Stanley (Investment Banking), and J.P. Morgan & Co. For me this was 4-stars. Part III: The Casino Age (1948-1989) explored the explosion of banking activity post war, the focus on M&A, and the loss of stature of the House of Morgan, both as it lost power and prestige. The book ends before J.P. Morgan was bought by Chase in 1990 (the book was published in 1990). This part was interesting, but like a shotgun, the further from Pierpont you get, the more diffuse the narrative. Eventually, there just seemed too much (too many actors, too many scandals, too many narrative threads). This part probably desereves 3-stars.
All in all, I liked the book. It showed Chernow's early talent for financial storytelling and gift for capturing historical characters. For me, the most valuable part of this book (besides the information on Pierpont) was the information on the other major partners that played a big roll during the wars, and Morgan's relationships with various 19th and 20th century figures (financial, cultural, political). I was fascinated by the deep relationship the House of Morgan had with fascist Italy, ultranationalist Japan, Germany, and the Vatican. I was entranced by Tom Lamont, Monty Norman, Russell Leffingwell, etc. The book was worth the effort just to learn about these other Morgan men.
Chernow writes primarily about banking families and American biographies:
Chernow's Banking Dynasties:
1. Titan: The Life of John D. Rockefeller, Sr. - ★★★★
2. The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance - ★★★★
3. The Warburgs: The Twentieth-Century Odyssey of a Remarkable Jewish Family - ★★★★
Chernow's American Political Biographies:
1. Alexander Hamilton - ★★★★★
2. Washington: A Life - ★★★★★
3. Grant - ★★★★★
Upon reviewing my reviews, I'm convinced Chernow does slightly better at writing histories of individuals rather than families; politics rather than finance. However, I should note, I've enjoyed ALL of his books and he's a master at his craft.
September 5, 2020
When I picked up this book, I assumed it was a biography of the two famous John Pierpont Morgans. But this is far more; indeed it is a true history of the Morgan bank, though admittedly with heavy emphasis on the biographies of the key figures. Given that this history spans over a century and includes a huge number of players, politics, and policies, the fact that Chernow could put out such a polished book in two and a half years is a testament to his skill as a writer and researcher.
The book is most colorful in its beginning and slowly fades into the dullness of contemporary reality. The Bank of Morgan began with the 19th century financier George Peabody, a sort of Dickensian miser turned philanthropist. Lacking a son, Peabody passed on his business to Junius Spencer Morgan, another personality of a bygone age, who managed to combine pious moralizing with strict business. His son, Pierpont, is by far the most captivating character in this panorama. A rabid art collector, an amateur archeologist, and an inveterate womanizer with a swollen nose and an enormous yacht, Pierpont was a central figure in the American economy of his age.
His son, “Jack,” though resembling Pierpont physically, was a far more mild-mannered sort of banker. His life is mostly lacking in racy and romantic stories (except for the time he was shot by a would-be assassin). The Morgan line mostly fizzles off after Jack; but there are many other Morgan bankers to take note of. The most important was undoubtedly Thomas Lamont. Chernow tracks Lamont’s strange journey from the cosmopolitan advocate of the League of Nations to an apologist for Italian fascism and Japanese aggression. It appears wide culture and smooth manners do not immunize one from ugly politics.
The wider historical arc of Chernow’s book gave me a bit of nostalgia. We begin with bankers in top hats and stiff collars, guzzling port wine and sucking on cigars. (Pierpont was a heavy drinker and smoker, and believed that exercise was unhealthy.) These bankers relied on charisma and relationships as much as they did on any technical understanding. The early House of Morgan was paternalistic towards its employees and stressed an esprit de corps—the importance of banking tradition over personal egos. This sleepy world of respectable bankers gives way, in the late twentieth century, to the high-octane world of trading, where highly trained employees work twelve-hour days trying to beat one another in an enormous casino.
The activities of the bankers also change markedly in this history. While nobody would argue that Pierpont was saintly or altruistic, his main activities consisted of reorganizing industrial companies to make them more productive and effective. This is a great contrast with the bankers of the 1980s, who are mainly concentrated on speculative activities and hostile takeovers which seem to have very little to do with work of real value.
Of course, my impressions of this history are colored by the fact that I know relatively little about finance and thus at times had trouble following the business side of things. Chernow, for his part, is typically vague when it comes to any technical details; his preferred style is to focus on individuals and their foibles. This was a bit frustrating, since I felt that I could have learned more had Chernow simply included more in the way of explanation.
But, as it stands, this is an extremely readable and compelling history of one of America’s most important banks. Things have changed since the publication of this book. Morgan Stanley is still going strong, though J.P. Morgan mainly serves as a brand used by Chase bank, and Morgan, Grenfell & Co. does not even exist as a name anymore. Even 23 Wall Street, the iconic home to this iconic bank, now sits empty and unused, apparently owned by a shadowy billionaire who is reportedly sitting in a Chinese jail. Such is the fate of all great empires.
The book is most colorful in its beginning and slowly fades into the dullness of contemporary reality. The Bank of Morgan began with the 19th century financier George Peabody, a sort of Dickensian miser turned philanthropist. Lacking a son, Peabody passed on his business to Junius Spencer Morgan, another personality of a bygone age, who managed to combine pious moralizing with strict business. His son, Pierpont, is by far the most captivating character in this panorama. A rabid art collector, an amateur archeologist, and an inveterate womanizer with a swollen nose and an enormous yacht, Pierpont was a central figure in the American economy of his age.
His son, “Jack,” though resembling Pierpont physically, was a far more mild-mannered sort of banker. His life is mostly lacking in racy and romantic stories (except for the time he was shot by a would-be assassin). The Morgan line mostly fizzles off after Jack; but there are many other Morgan bankers to take note of. The most important was undoubtedly Thomas Lamont. Chernow tracks Lamont’s strange journey from the cosmopolitan advocate of the League of Nations to an apologist for Italian fascism and Japanese aggression. It appears wide culture and smooth manners do not immunize one from ugly politics.
The wider historical arc of Chernow’s book gave me a bit of nostalgia. We begin with bankers in top hats and stiff collars, guzzling port wine and sucking on cigars. (Pierpont was a heavy drinker and smoker, and believed that exercise was unhealthy.) These bankers relied on charisma and relationships as much as they did on any technical understanding. The early House of Morgan was paternalistic towards its employees and stressed an esprit de corps—the importance of banking tradition over personal egos. This sleepy world of respectable bankers gives way, in the late twentieth century, to the high-octane world of trading, where highly trained employees work twelve-hour days trying to beat one another in an enormous casino.
The activities of the bankers also change markedly in this history. While nobody would argue that Pierpont was saintly or altruistic, his main activities consisted of reorganizing industrial companies to make them more productive and effective. This is a great contrast with the bankers of the 1980s, who are mainly concentrated on speculative activities and hostile takeovers which seem to have very little to do with work of real value.
Of course, my impressions of this history are colored by the fact that I know relatively little about finance and thus at times had trouble following the business side of things. Chernow, for his part, is typically vague when it comes to any technical details; his preferred style is to focus on individuals and their foibles. This was a bit frustrating, since I felt that I could have learned more had Chernow simply included more in the way of explanation.
But, as it stands, this is an extremely readable and compelling history of one of America’s most important banks. Things have changed since the publication of this book. Morgan Stanley is still going strong, though J.P. Morgan mainly serves as a brand used by Chase bank, and Morgan, Grenfell & Co. does not even exist as a name anymore. Even 23 Wall Street, the iconic home to this iconic bank, now sits empty and unused, apparently owned by a shadowy billionaire who is reportedly sitting in a Chinese jail. Such is the fate of all great empires.
January 22, 2024
"A fascinating historical journey from Charles Dickens' London to Tom Wolfe's New York." ---The Atlantic
The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance written by Ron Chernow is a portrait of finance, politics, and ambition on Wall Street but it has the tension and movement of an epic novel. As the author states in the Prologue, this book is about the rise, fall and resurrection of an American banking empire--the House of Morgan. Until 1989, J.P. Morgan and Company presided over American finance from the corner of Broad and Wall.
Part One: The Baronial Age comprised the years from 1838 to 1913 beginning with the story of Baltimore merchant George Peabody sailing for London in 1935 when the world was in the throes of a debt crisis. In 1837, Peabody moved to London establishing a merchant house and developed a business dealing with commodities serving only governments, large companies, and rich individuals. It was inherited by the Morgan family and transplanted to New York.
Part Two: The Diplomatic Years comprised the years from 1913 to 1948. In early 1912, the House of Morgan bought 23 Wall Street and its property from Elizabeth Drexel. A month after Pierpont's death, the old Drexel building was demolished to clear the way for a new marble palace. The Morgan partners bought a quarry of Tennessee marble to guarantee a supply of high-quality construction material.
"Pierpont had insisted the new building retain a catercorner entrance, facing both Broad and Wall streets. On his last trip to Rome, he had planned to bring home triumphal columns to frame the entrance. Although he never laid eyes on the Italian Renaissance building, designed by Trowbridge and Livingston, it preserved his spirit. On December 30, 1913, Jack set the cornerstone, which contained a special copper box. Sealed inside, like saintly relics, were Pierpont's will, a copy of his Pujo testimony, the articles of partnership, and an appropriate merchant banking touch--the form used for letters of credit. It was homage to the past, even as the firm moved ahead."
Before the Depression, 23 Wall was headquarters of an empire with several foreign outposts. Seated behind rolltop desks on the Broad Street side, the New York partners were allied with three other partnerships--Morgan Grenfell in London, Morgan at Compagnie in Paris and Drexel and Company in Philadelphia. The empire was shattered by the Glass-Steagall Act of 1933 which erected a high wall between commercial banking and investment banking.
Part III: The Casino Age comprised the years from 1948 to 1989. Ron Chernow poignantly points out in the Prologue that during the postwar Casino Age, the banking industry lost control over its clients in the fierce anonymous competition of global markets.
"Leffingwell was the last of the handpicked thinkers that Morgans bred prolifically between the wars, when Wall Street still produced Renaissance men. As members of small partnerships, the elite financiers straddled all aspects of business. They had time to read, to ponder, to enter politics: the gray era of specialization hadn't dawned. Leffingwell thought Glass-Steagall, by segmenting banking, had destroyed the most interesting jobs on Wall Street."
This was a riveting book that spanned many generations and all of the history of these changing times. Ron Chernow's premise of this book was that there would never be another bank as powerful, mysterious or opulent as the old House of Morgan. Chernow emphasizes that world finance has matured and power has become dispersed among many institutions and financial centers. This is a powerful read but it may be a while before I read The Warburgs: The Twentieth -Century Odyssey of a Remarkable Jewish Family.
February 12, 2024
Super Bowl Sunday! It should be a national holiday, and I just gave myself a reading holiday after completing Ron Chernow’s first award winning book last night. Ads going for $7 million for a thirty second spot is not exactly what George S. Peabody envisioned when he sailed for England in 1835. At the time, the Baltimore merchant desired to study the banking community in London, how the banker and client relationship worked, so that eventually he could start such a bank in the United States. At the time the United States was a young, agrarian national, but Peabody and his partner Junius Spencer Morgan foresaw greatness for both the nation and themselves. At least this is what Chernow, lately of Alexander Hamilton fame, wanted readers to believe from the opening paragraphs of this account. Such begins the story of the House of Morgan, the banking dynasty that spurred an empire and lead American finance to a modern age. With these captivating first lines, I knew that I was in for an adventure through America as the country grew from a rural to urban and industrialized nation.
Chernow divides the story of Morgans into three sections, each focusing on the growth of the bank from an impersonal banking house to the dynasty that it is today. In the Baronial Period, Peabody, Junius Morgan, and the Drexel family desired to copy a system that survived in England for centuries. Clients would journey to their banking house once a year to meet with their banker, enjoying a personal and confidential relationship passed down for generations. The early scions of the House of Morgan lived most of their lives in London, at that point the center of the English empire, because the City was more advanced and cultured than any city in the United States at the time, New York included. The original Drexel bank centered in Philadelphia, not New York, and it was not until the late 19th century that the Morgan family transferred their power base to a famous Wall St address. When Peabody began this would be empire, the world’s economy still ran on gold, the titans of industry had not yet emerged, and the Civil War had not yet been fought. Bankers earned their fortunes by establishing lifelong, confidential relationships with their clients and enjoyed checkless power because industries at the time were weak. The early Morgans listed heads of nations as their personal friends, including generations of the house of Windsor. By the time Junius’ son Pierpont took over the banking dynasty, the Morgan name had already been established as peerless and without blemish. Pierpont with his unique nose and sixth sense for banking that he would pass down to his son Jack would lead Morgans toward the multinational empire that it is today.
The original heads of the house of Morgan were Anglophiles because when the lending house began England was the leading nation in the world. Following the Industrial Revolution, the center of power began to shift to New York. Pierpont Morgan shifted the center of his business to the famous New York address, 23 Wall St, that today is on the national register of historical places. Pierpont began the Morgan head practice of hobnobbing with heads of state. There was no need for a national bank because Morgans was the national bank. In this Diplomatic age, the Morgans influenced the financial futures of entire nations as well as being at the forefront of the monopolistic culture that dominated the era. Morgan partners would sit on boards of emerging businesses such as US Steel and Kennecott Copper, beginning a practice that spanned a dynasty, leading to Morgans amassing great fortunes. Pierpont chose to give his wealth over to philanthropic causes such as the Metropolitan Museum of Natural History and sat on the board alongside Theodore Roosevelt, Sr. He had a penchant for sailing on his yachts Corsair I-III and built the Morgan Library, a rich collection of antique manuscripts and artwork. The library still exists; however, much of the collection had been sold over the years to finance new Morgan ventures. Pierpont also kept multiple residences in New York and England, a practice handed down to his son Jack, a self-proclaimed Anglophile. By the time Jack Morgan took over as the head of the house, the Morgan name was still very much respected if not feared by politicians who viewed them as having too much power, which lead the house to restructure and adapt to the changing world.
During the Great Depression, Morgans faced their greatest adversary, President Franklin D Roosevelt, who believed that Morgans enjoyed too much power. With Morgan Grenfall in London and Morgan et Companie in Paris as well as Drexel Burnham in Philadelphia, Morgans enjoyed unmatched wealth in the banking world. Partner Tom Lamont who would lead the company after Jack Morgan, would influence financial decisions around the world. Yet, FDR and his liberal team feared Morgans power, and in 1935 passed the Glass Steagall act, which would curtail international lending. Perhaps, the measure spurred on by another Morgan adversary Louis Brandeis, was payback for the WASP- Jewish split on Wall St. Houses such as Lehman Brothers and Kuhn, Loeb cornered the retail industry; however, Morgans did not have a Jewish partner until the 1970s. This practice occurred in England as well as Siegmund Warburg and his house sparred with Morgan Grenfall, who separated themselves from Jewish immigrants to the City. Even with Glass Steagall, Morgans persevered and even made money during the depression. The company split off into Morgan Stanley and eventually Morgan Guaranty, separate entities, which allowed J.P. Morgan to continue trading around the world.
The last section the Casino Age focuses on how Morgans adapted to a modern age in a changing, international world. No longer were money lenders stronger than industries who needed loans to finance entire markets. The center of power had shifted, and with it, Morgans established new markets around the world, financing national loans in emerging nations in South America and Asia. These multi billion dollar loans to third world countries might never be paid off, but it lead to more Morgans riches as well as scandals that threatened the integrity of the once proud house. Chernow writes of how the computerized age changed Wall St from a historical street of bankers into a billion dollar conglomerate. Morgans outgrew 23 Wall and eventually moved into a skyscraper at 60 Wall St, home to thousands of employees. Little remained of the company started in the 1830s; however, new initiates still had to spend a year at an office abroad and clients still included the most successful companies in the world. Both the World Bank and International Monetary Fund had replaced Morgans as international lenders; however, Morgan partners still enjoyed wealth that few could imagine. As this book was published well before the 2007 housing bubble crash, Chernow does not mention how Morgans emerged from the crisis yet again. As of today, Morgan Stanley is still going strong.
I am hardly a connoisseur of financial history, and I had to ask my husband who is versed in economics about many of the terms in this book. I had previously read Lords of Finance and was familiar with the loss of the gold standard which lead to the worldwide Great Depression of the 1930s. Even that Pulitzer winning book only scratched the surface of Chernow’s research. I appreciate how as an emerging historian voice at the time, he did not dumb down the language for people like myself who are not proficient in financial terms. My daughter asked me why at this point Chernow has only written six books, the answer being that between each tome, the historian could spend eight to ten years researching the subject, which is far more than that needed for a two hundred page novel. Today Chernow is primarily known for Alexander Hamilton, which began a worldwide phenomenon; but, originated as a writer of financial history: the Morgans, Warburgs, and Rockefellers. While I don’t think George Peabody or Pierpont Morgan could envision anyone but themselves paying for the equivalent of a $7 million thirty second ad, this year Morgan Stanley Investments did just that. What the founders dreamed of is a financial empire that still exists today. I can add Chernow to my list of masters of the craft read this year. From this first volume of his, it was apparent that his writing belongs in the upper echelon of historians.
4.5 stars
Chernow divides the story of Morgans into three sections, each focusing on the growth of the bank from an impersonal banking house to the dynasty that it is today. In the Baronial Period, Peabody, Junius Morgan, and the Drexel family desired to copy a system that survived in England for centuries. Clients would journey to their banking house once a year to meet with their banker, enjoying a personal and confidential relationship passed down for generations. The early scions of the House of Morgan lived most of their lives in London, at that point the center of the English empire, because the City was more advanced and cultured than any city in the United States at the time, New York included. The original Drexel bank centered in Philadelphia, not New York, and it was not until the late 19th century that the Morgan family transferred their power base to a famous Wall St address. When Peabody began this would be empire, the world’s economy still ran on gold, the titans of industry had not yet emerged, and the Civil War had not yet been fought. Bankers earned their fortunes by establishing lifelong, confidential relationships with their clients and enjoyed checkless power because industries at the time were weak. The early Morgans listed heads of nations as their personal friends, including generations of the house of Windsor. By the time Junius’ son Pierpont took over the banking dynasty, the Morgan name had already been established as peerless and without blemish. Pierpont with his unique nose and sixth sense for banking that he would pass down to his son Jack would lead Morgans toward the multinational empire that it is today.
The original heads of the house of Morgan were Anglophiles because when the lending house began England was the leading nation in the world. Following the Industrial Revolution, the center of power began to shift to New York. Pierpont Morgan shifted the center of his business to the famous New York address, 23 Wall St, that today is on the national register of historical places. Pierpont began the Morgan head practice of hobnobbing with heads of state. There was no need for a national bank because Morgans was the national bank. In this Diplomatic age, the Morgans influenced the financial futures of entire nations as well as being at the forefront of the monopolistic culture that dominated the era. Morgan partners would sit on boards of emerging businesses such as US Steel and Kennecott Copper, beginning a practice that spanned a dynasty, leading to Morgans amassing great fortunes. Pierpont chose to give his wealth over to philanthropic causes such as the Metropolitan Museum of Natural History and sat on the board alongside Theodore Roosevelt, Sr. He had a penchant for sailing on his yachts Corsair I-III and built the Morgan Library, a rich collection of antique manuscripts and artwork. The library still exists; however, much of the collection had been sold over the years to finance new Morgan ventures. Pierpont also kept multiple residences in New York and England, a practice handed down to his son Jack, a self-proclaimed Anglophile. By the time Jack Morgan took over as the head of the house, the Morgan name was still very much respected if not feared by politicians who viewed them as having too much power, which lead the house to restructure and adapt to the changing world.
During the Great Depression, Morgans faced their greatest adversary, President Franklin D Roosevelt, who believed that Morgans enjoyed too much power. With Morgan Grenfall in London and Morgan et Companie in Paris as well as Drexel Burnham in Philadelphia, Morgans enjoyed unmatched wealth in the banking world. Partner Tom Lamont who would lead the company after Jack Morgan, would influence financial decisions around the world. Yet, FDR and his liberal team feared Morgans power, and in 1935 passed the Glass Steagall act, which would curtail international lending. Perhaps, the measure spurred on by another Morgan adversary Louis Brandeis, was payback for the WASP- Jewish split on Wall St. Houses such as Lehman Brothers and Kuhn, Loeb cornered the retail industry; however, Morgans did not have a Jewish partner until the 1970s. This practice occurred in England as well as Siegmund Warburg and his house sparred with Morgan Grenfall, who separated themselves from Jewish immigrants to the City. Even with Glass Steagall, Morgans persevered and even made money during the depression. The company split off into Morgan Stanley and eventually Morgan Guaranty, separate entities, which allowed J.P. Morgan to continue trading around the world.
The last section the Casino Age focuses on how Morgans adapted to a modern age in a changing, international world. No longer were money lenders stronger than industries who needed loans to finance entire markets. The center of power had shifted, and with it, Morgans established new markets around the world, financing national loans in emerging nations in South America and Asia. These multi billion dollar loans to third world countries might never be paid off, but it lead to more Morgans riches as well as scandals that threatened the integrity of the once proud house. Chernow writes of how the computerized age changed Wall St from a historical street of bankers into a billion dollar conglomerate. Morgans outgrew 23 Wall and eventually moved into a skyscraper at 60 Wall St, home to thousands of employees. Little remained of the company started in the 1830s; however, new initiates still had to spend a year at an office abroad and clients still included the most successful companies in the world. Both the World Bank and International Monetary Fund had replaced Morgans as international lenders; however, Morgan partners still enjoyed wealth that few could imagine. As this book was published well before the 2007 housing bubble crash, Chernow does not mention how Morgans emerged from the crisis yet again. As of today, Morgan Stanley is still going strong.
I am hardly a connoisseur of financial history, and I had to ask my husband who is versed in economics about many of the terms in this book. I had previously read Lords of Finance and was familiar with the loss of the gold standard which lead to the worldwide Great Depression of the 1930s. Even that Pulitzer winning book only scratched the surface of Chernow’s research. I appreciate how as an emerging historian voice at the time, he did not dumb down the language for people like myself who are not proficient in financial terms. My daughter asked me why at this point Chernow has only written six books, the answer being that between each tome, the historian could spend eight to ten years researching the subject, which is far more than that needed for a two hundred page novel. Today Chernow is primarily known for Alexander Hamilton, which began a worldwide phenomenon; but, originated as a writer of financial history: the Morgans, Warburgs, and Rockefellers. While I don’t think George Peabody or Pierpont Morgan could envision anyone but themselves paying for the equivalent of a $7 million thirty second ad, this year Morgan Stanley Investments did just that. What the founders dreamed of is a financial empire that still exists today. I can add Chernow to my list of masters of the craft read this year. From this first volume of his, it was apparent that his writing belongs in the upper echelon of historians.
4.5 stars
April 21, 2022
Ron Chernow has established himself as one of the world’s preeminent biographers. This is the book that launched his career, the day a new writer was introduced to the world. Reading it then is something of a birthday celebration and that’s what makes it fun—to read it knowing who he would grow up to be.
The book is divided into three sections. The first two are anchored by the colossal personalities of the three Morgan men: Junius, his son Pierpont, and his son Jack. Each was a planet of his own sort, having distinct identities and shaping the bank in their own way. But one thing they shared: they each held such a massive center of gravity that they imbued the House of Morgan with tremendous influence over world affairs.
I. The Baronial Age
The first section is a documentary of the bank’s inception. It was founded by George Peabody, a real-life Ebenzeer Scrooge. In his late years, he became a philanthropist, and with no heirs, he had to select someone to inherit the bank. He chose Junius Morgan, who expanded the bank’s operations from London to New York, and brought Pierpont into the fold. This section covers both of their tenures.
II. The Diplomatic Age
The second section covers Jack’s years, who took the helm of the empire upon the death of his father Pierpont in 1913. While both of them loathed publicity (like father, like son in that regard), Jack was a far more reticent bank manager, content to remain in the background and let someone else run the daily operations. That someone was partner Thomas Lamont, and after reading this book, I'm convinced that he’s one of the most important figures in the 20th century that nobody knows about.
Lamont conceived of the US export department to sell goods to the Allies during WWI—an operation which drastically expanded the bank’s reach and power; he was the US Treasury representative at the Treaty of Versailles; 10 years later, he was at the center of the Young Plan, a scheme to renegotiate German reparations and out of which the Bank of International Settlements was created (its board was staffed with Germans and essentially became a backchannel funding mechanism for the Nazi party); he wrote a propaganda memo defending Japan’s invasion of Manchuria while knowing its pretext was a false flag event; he dismissed the dangers of fascism, extending loans to Italy which fueled Mussolini’s rise and then publicly excused his actions when the dangers proved true; he aligned with British Appeasers, deriding Churchill and cheering Chamberlain upon his return from Munich where he had conceded Sudetenland.
Lamont did not trigger the avalanche that was WWII, but he certainly contributed to the snowpack’s underlying instability.
When Jack died in 1943, Lamont officially became Chairman of the bank. This is where the third section of the book begins.
III. The Casino Age
After reading several other reviews, a common complaint is that this is the weakest section of the three. Some have even recommend skipping it altogether. The main reason it seems is that the story loses some of its coherence. It’s a fair criticism and I understand the grumbles, but let me frame it a little differently.
The central lesson of the third section is that the bank changed. In its early years, the House of Morgan was marked by a stately calm. Everyone acted with composure, exuded confidence, and always maintained exceptional discretion. Everything was kept behind closed doors. After Lamont took over, the realities of a changing world took hold, and the bank was forced to adapt to the times. Relationship banking was out, free markets were in. With that came turbulence. Finance wasn’t an old boys’ club anymore. It was a fast-paced, high-churn, bare-knuckle brawl for market supremacy. Chernow’s change in writing style reflects that change in environment. Where his early sections are linear and orderly—carried along by the perpetual presence of a Morgan at the head of the bank—the third section is a series of profiles and anecdotes told in rapid staccato fashion as new leaders are continually being promoted. This shift in Chernow’s tone creates an immersive atmosphere in which you feel the story rather that merely read it.
I don't know if that was intentional. I suspect it was not so much a conscious decision as it was an inherent byproduct of the story he was telling. Viewed through that lens, the discordant celerity of the last section adds to rather than detracts from the book's merit in my opinion.
As a final note, I must offer a caveat. I work in finance and therefore took great interest in the material from start to finish. Without that background, I can easily see how esoteric tales of securities issues wouldn’t hold mass appeal the way his more recent popular biographies do. But if you’d like a look behind the curtain of the money men who shaped the world (often in stomach-churning ways rife with corruption), then this is your book.
The book is divided into three sections. The first two are anchored by the colossal personalities of the three Morgan men: Junius, his son Pierpont, and his son Jack. Each was a planet of his own sort, having distinct identities and shaping the bank in their own way. But one thing they shared: they each held such a massive center of gravity that they imbued the House of Morgan with tremendous influence over world affairs.
I. The Baronial Age
The first section is a documentary of the bank’s inception. It was founded by George Peabody, a real-life Ebenzeer Scrooge. In his late years, he became a philanthropist, and with no heirs, he had to select someone to inherit the bank. He chose Junius Morgan, who expanded the bank’s operations from London to New York, and brought Pierpont into the fold. This section covers both of their tenures.
II. The Diplomatic Age
The second section covers Jack’s years, who took the helm of the empire upon the death of his father Pierpont in 1913. While both of them loathed publicity (like father, like son in that regard), Jack was a far more reticent bank manager, content to remain in the background and let someone else run the daily operations. That someone was partner Thomas Lamont, and after reading this book, I'm convinced that he’s one of the most important figures in the 20th century that nobody knows about.
Lamont conceived of the US export department to sell goods to the Allies during WWI—an operation which drastically expanded the bank’s reach and power; he was the US Treasury representative at the Treaty of Versailles; 10 years later, he was at the center of the Young Plan, a scheme to renegotiate German reparations and out of which the Bank of International Settlements was created (its board was staffed with Germans and essentially became a backchannel funding mechanism for the Nazi party); he wrote a propaganda memo defending Japan’s invasion of Manchuria while knowing its pretext was a false flag event; he dismissed the dangers of fascism, extending loans to Italy which fueled Mussolini’s rise and then publicly excused his actions when the dangers proved true; he aligned with British Appeasers, deriding Churchill and cheering Chamberlain upon his return from Munich where he had conceded Sudetenland.
Lamont did not trigger the avalanche that was WWII, but he certainly contributed to the snowpack’s underlying instability.
When Jack died in 1943, Lamont officially became Chairman of the bank. This is where the third section of the book begins.
III. The Casino Age
After reading several other reviews, a common complaint is that this is the weakest section of the three. Some have even recommend skipping it altogether. The main reason it seems is that the story loses some of its coherence. It’s a fair criticism and I understand the grumbles, but let me frame it a little differently.
The central lesson of the third section is that the bank changed. In its early years, the House of Morgan was marked by a stately calm. Everyone acted with composure, exuded confidence, and always maintained exceptional discretion. Everything was kept behind closed doors. After Lamont took over, the realities of a changing world took hold, and the bank was forced to adapt to the times. Relationship banking was out, free markets were in. With that came turbulence. Finance wasn’t an old boys’ club anymore. It was a fast-paced, high-churn, bare-knuckle brawl for market supremacy. Chernow’s change in writing style reflects that change in environment. Where his early sections are linear and orderly—carried along by the perpetual presence of a Morgan at the head of the bank—the third section is a series of profiles and anecdotes told in rapid staccato fashion as new leaders are continually being promoted. This shift in Chernow’s tone creates an immersive atmosphere in which you feel the story rather that merely read it.
I don't know if that was intentional. I suspect it was not so much a conscious decision as it was an inherent byproduct of the story he was telling. Viewed through that lens, the discordant celerity of the last section adds to rather than detracts from the book's merit in my opinion.
As a final note, I must offer a caveat. I work in finance and therefore took great interest in the material from start to finish. Without that background, I can easily see how esoteric tales of securities issues wouldn’t hold mass appeal the way his more recent popular biographies do. But if you’d like a look behind the curtain of the money men who shaped the world (often in stomach-churning ways rife with corruption), then this is your book.
June 10, 2022
Ron Chernow's first book, The House of Morgan charts the progression and evolution of a famous banking dynasty from its isolated roots to the age of international banking. As with Chernow's later
Titan: The Life of John D. Rockefeller, Sr.
, the book provides a wonderfully detailed look into the world of finance and business without ever becoming boring, even if The House of Morgan isn't nearly as well written as Titan and
Grant
were. Those books also had the advantage of following a single individual's life story, whereas The House of Morgan trudges along even after the Morgans and Lamonts are out of the picture and the titular "House of Morgan" becomes a faceless shell of its former self. Indeed, this is one of those books that would have been better as a partial history that ended with the death of Thomas Lamont -- the last Morgan banker whose name I care to remember. As is, The House of Morgan is a lesser work from one of America's finest historians.
May 8, 2010
6 May 2010: Phew! Finally finished this book. Overall comment: Unique and informative financial history, but rather too many threads to keep track of, so the writing loses momentum.
In contrast to other reviews, I found Part III on 1948 to 1989 the most interesting. There are so many nuggets of info here that help chart the evolution of banks from 1960-90, and a lot of the issues continue to echo today -- banks trading against clients, too big to fail, capital shortfalls, etc. Above all, it seems to me that despite all the regulations, banks have always managed to squirm and evolve into new, powerful, dangerous forms; in some cases, regulation reduced profitable opportunities in core businesses and ironically forced banks into riskier, more aggressive, business, to sustain growth. I doubt regulation will do anything more than stall the next phase of evolution, it seems to me an issue of (i) risk taking culture, which is born out of incentive structures and survival instinct; (ii) failure of due diligence procedures at regulators, investors and 3rd party agencies to keep up to speed with bank and market developments; (iii) liquidity conditions. But I think (i) is primary, the others were simply complementary and facilitative.
Chernow was also able to do a lot of first person reporting in part III, so the characters and quotes are fresher, rather than reconstructed from letters. I'll just list significant events, and some thoughts on these.
As the govt developed internal resources, Washington had less need for the Morgan banks as diplomatic agents.
After WWII, due to Glass Steagall (1933), JPMorgan was too small a bank to have much power -- it was too snobbish to take retail deposits, and was short of capital to lend, even though it had established client relationships. It became much less powerful than retail franchises like Chase Manhattan and National City Bank (today's Citigroup). The Warburgs realised that merchant banks no longer had the capital to finance industry or govt on a large scale, and shifted to advisory work -- which relies on brains and rlnships, not capital -- this marked a shift to financial engineering (p523). Still, merchant banks could leverage relationships to act as originators, which they then syndicated to retail banks with capital but no rlnships. JPMorgan also alleviated capital shortfall by taking over Guaranty Trust, a big but sleepy, well capitalised bank, in 1959, to form Morgan Guaranty (p534).
However, at this point, banks also discovered how to finance themselves via Certificates of Deposit, which are tradable (p539). Treasury operations in a bank became important, as banks could trade CDs to manage their cost of funds. Bankers used to lunch with corpoate treasurers to ask them to keep their money in the bank. But as there was increasing reliance on 'rented' capital, the power shifted to traders who bet on interest rates to hedge the cost of the CDs. But this worked against banks, eventually, because corporate treasurers figured they could just as easily issue CDs as banks. Thus, corporates increasing access to money markets distintermediated the banks.
In 1963, the Fed decided that Glass Steagall still allowed commercial banks to underwrite securities outside the US -- this meant the likes of JPMorgan could build i-bank operations outside the US (how ironic). Further, the Fed imposed a tax on the sale of foreign securities to US investors. So, more securities were sold to foreigners who held Eurodollars. (p544) Meanwhile, banks'trust depts grew rapidly in the 1960s due to the explosion of pension funds. At some point, 60% of all institutional money was held via commercial banks trust depts. This led to concerns over insider trading by banks. (p561)
By the 1960s, securities underwriting was a commoditised business. Trading operations became important -- Morgan Stanley used to cultivate users of capital (the corps) but GS and Salomon cultivated institutional investors, the owners of capital, via their strength of execution in trading. Their distributive power then helped them win underwriting business from corporate issuers. MS didn't have a trading desk at the time. In 1979, IBM, a long time MS client, asked them to accept SB as comanager on a big debt issue, MS refused, expecting IBM to back down, but IBM ditched them and jumped ship -- this led to other banks starting to raid MS client list, and marked the end of relationship banking. (p627) Further on this point: In 1982, the SEC passed Rule 415 -- this allowed 'shelf registration', orallowing blue chips to register a large block of stock and sell it off piecemeal on short notice over 2 years, instead of having to register each new issue separately. This meant treasurers could capitalise on sudden dips in interest rates, and converted underwriting to a world of fast trading decisions rather than syndicated rlnships. MS's underwriting market share fell from #1 to #6 in 1983. (p662) In time, this forced MS to resort to less gentlemanly and far more aggressive tactics to win business and survive.
In 1970s, i banks and merchant banks with small capital but large client bases started to figure that they could earn fees from M&A. (p595) With junk bond financing becoming popular, they used junk bonds to help corporates finance M&A. But junk bonds also enabled corporate raiders to get much more aggressive. (p666) This led to the private equity craze in the 1980s. Further, banks discovered, with junk bonds, that they didn't need their own capital after all -- whereupon they started setting up their own private equity funds -- MS had US$10b under management by 1985 -- which, financed with junk bonds, to take stakes in companies. MS'public IPO in 1986 was expressly to raise capital for a PE buyout fund. The rise of banks using their own capital to take stakes in companies led to big conflict of interest issues. They could also earn huge fees whether or not deals happened, again questionable. (p669, 695)
(One big conclusion I take from this is that Glass Steagall, despite the fuss made about reinstating it, didn't really matter -- it accelerated the process, but wasn't critical in and of itself. What matters is banks taking of positions against clients, but that's got nothing to do with Glass Steagall. More to do with competitive dynamics, facilitated by new financial products, and derivative of the gradual eradication of the importance of banking ethics and long term relationships in a world where capital is mobile and available.)
In 1975, the SC abolished fixed commissions on stock trading, this liberalisation again decimated a stable source of bank revenues, led to many regional bank collapses, and again, forced banks to swashbuckle to survive. (p602)
Offshore lending became big as domestic lending died down, and especially with the 1970s oil boom and the growth of Eurodollar market. The recycling of flush liquidity from oil dollars led to the Latin American lending boom, and the big defaults (Mexico, Brazil) in the 1980s. (p643) This led, indirectly to the failure of a big, old Chicago bank, Continental. The FDIC eventually nationalised it, taking a 80% stake (sound familiar?) Chernow writes: "Washington was now saying that some banks were too big to fail" -- but ironically, the FDIC exacerbated the problem -- the bailout created more incentive to bypass small banks and keep deposits in big ones. (p660)
Clearly there is a lot more here -- part III is worth a reread. Am going to photocopy for keeps.
*****
11 April 10: Finished the second third of the book in a great rush, before the workweek starts, and hence having no time for any reading of any other sort this last 2 days! Part II -- the Diplomatic Age -- covers the years between WWI and WWII. There is so much happening that I think Chernow barely keeps track of the parallel narratives, and it feels less like an organised history than a relentless reporting of various tracks. I have to keep reminding myself what this book is about -- not about politics or banking history or even the Morgan family, per se, but about the institutional House of Morgan, the evolution of this particular bank-among-banks, and how it fared during the isolationist years in America through the Great Depression and the 1930s. Just a few thoughts:
1). The govt's relationship with the bank, and bankers in general, appears to have been driven very much by its foreign policy outlook. The bank's allegiance was torn -- it disliked the New Deal Democrats for their intervention in the domestic economy and willingness to incur fiscal deficits, but it also disliked Republicans who were extremely isolationist in their views. The Morgan bank retained close ties to the British royalty, and the partners were very much globalists. Again I find that the bank's stance didn't change -- but the govt's did, depending on what was expedient -- despite feuding between FDR and the bank through the 1920/30s, they kissed and made up in the 1940s, when FDR decided to support the British war efforts and turned again to the bank's partners to leverage their relationships. Despite this, the govt was much less reliant on the Morgan bank in WWII compared to in WWI -- it mainly relied on the bank's relationships, but by this time the govt had its own tax revenue base and budget, and didn't as much need Morgan help to finance the British war effort.
2). Of course, the bank's interests were shaped not only by ethical and aesthetic concerns (though I think the latter, especially, was a BIG deal -- we are aesthetic creatures before material ones, I think, but that is a separate topic) but also because it's clientele was increasingly foreign. American companies had simply grown large and self sufficient enough to not require banker's capital, and also there wasn't much investment and credit growth in the US during the 1930's for obvious reasons.
3). This idea of the clash between govt and bank interests is worth taking further -- in many cases, the bank was torn because in the spirit of traditional private banking it wanted to give full assistance to its foreign clients, like the Mussolini govt in Italy or the Japanese govt, when this would sometimes clash with American interests. Can't recall examples in detail though.
4). None of the JPM senior partners foresaw the depth, or even the coming, of the 1929 crash and the subsequent Depression. To some extent because very few did, but also to a large extent I think because of their private wealth, they were protected from a lot of what 'common' America was going through. This issue of bankers being wealthy elite alienated from and unaware of real America is really not new.
5). Nationalistic interests in Europe have historically led to internal conflicts, which has usually benefited America.
6). There are compelling personal stories buried here. The most interesting character, on which Chernow spends the most time, is Thomas Lamont, the leading partner of the Morgan bank in the interwar years. A former journalist, Lamont was diplomatic, culturally sensitive and aesthetic, yet as Chernow argues, also mercenary and opportunistic. But his biggest failing was deluding himself into believing, against great evidence at the time, that two of his personal clients, Mussolini and the militaristic Japanese govt, would turn out for peace -- this led him to deny many of the outrages they perpetrated in the late 1930s, until it went so far even he had to recognise it. Another lesson here -- people will talk their own book, and people will, if allowed to do so, remember only the best of themselves -- in later years Lamont would make it seem that the loans he arranged to Italy were made under duress. Yet for all this, both he and Morgan were strong philanthropists generous to charities both during their lifetimes and in their wills.
7). The bank's mystical power was still apparent during this period, but certainly fading. Glass Steagall did a lot to erode it, not only by requiring the breakup to commercial and investment bank (ie broker), but also as the series of lawsuits forced the bank to publish its balance sheets. Also, as the three partners -- incl Jack Morgan and Tom Lamont -- aged, the bank turned itself from a partnership into a listed company with public stockholders, so that the death of partners wouldn't mean a loss of capital. This also required public disclosure of earnings statements, again doing much to clear the air of mystique.
*****
27 March 10: still reading this but it's such a massive book I thought I should add a few comments to commemorate my making it past Part 1! The first part deals, swiftly, with the founding of the bank and then moves on to cover in more detail the reign of Pierpont Morgan, arguably the most dominant and formative character of the original JP Morgan, who led the bank through the late 19th C, and all the way up till nearly World War I. His last hurrah was probably helping address the crash of 1907 where he pretty much acted as central banker, which later led to creation of the Fed. Just a couple key notes:
1). Clearly, America's distaste and distrust of Wall St stretches back at over a century. The distrust was sharpened by the extreme confidentiality and elitism of merchant banking practices in those days, which frankly seems to me to more resemble private banking -- lending to individual entrepreneurs on the basis of character, rather than to a corporation, on the basis of credit analysis -- than today's wholesale corporate lending. It was also exacerbated by that companies in the late 19th C, save for a few giants perhaps like Standard Oil, were generally extremely dependent on banks for capital; this gave bankers immense power and pretty much board seats on most of the major corporations in America. The early American corporate governance system, where bankers are directors and help control the company, feels to me more like the current European/German system corp governance, than the current US/UK system. What is pertinent is that as corporates matured in the 20th C, they began to finance capex out of internal cash flows, and also grew large and recognisable enough to tap capital markets directly, thus disintermediating bankers and making bankers much less powerful. It is interesting to think about (and how to think about) what stage Asia is now at.
2). It is further fascinating to think about JP Morgan's role in WWI. I presume from Chernow's writing that there are a ton of conspiracy theories out there that accuse the Morgans as funding death for profit reasons. His account is more balanced -- clearly they profited, but their response to the outbreak of war seems to me humane, nationalistic and genuinely motivated by desire to play their part in the Allied's war efforts. From Chernow's account, JP Morgan didn't just function as a bank during WWI -- yes, they funded London and Paris, but more importantly, in order to stave off American firms profiteering from Europe's woes by pricing up war supplies, Morgan partner Henry Davison suggested the formation of a single purchasing entity on behalf of the Allieds, to have more bargaining power over American suppliers. It was not anticipated that the Morgan's would set up a division that effectively became the procurement arm of the Allied's forces, and that the supplies purchased would amount to US$3 billion (it was at first estimated at US$10m)! JP Morgan was, in effect, the US based trading house and supply chain manager for the British army during WWI -- and given that a majority of war supplies came from the US... As an aside, it is also interesting to read that at this period, many of the Jewish merchant banks -- Kuhn, Loeb; Goldman, Sachs -- refused to lend to the Allieds as they sided with the Germans.
3). It is interesting further to observe the bank-govt relationship evolving and changing with the times. It looks to me like the Morgan's, at least, were consistent with their behavior -- at times this was popular, and at times not. The govt's stance also shifted with the times -- antagonistic when trust busting was popular, and incentuous when the govt wanted to harness the bank's vast financing power, or political/relational clout overseas. It makes one wonder about the current US govt/investment bank relation -- yes yes, we read all about the Goldman trinity, but beyond that, and beyond campaign finance, and beyond the conspiracy theories about who really controls policy making and to what ends (okay that's a lot of 'beyonds') -- it makes you wonder what the govt wants, and how the banks facilitate those ends. Perhaps something much simpler and similar to the early 20th C -- the govt needs the i-banks to help flog its debt overseas?
4). It it incredible how much the structure of finance and industry is shaped by war.
In contrast to other reviews, I found Part III on 1948 to 1989 the most interesting. There are so many nuggets of info here that help chart the evolution of banks from 1960-90, and a lot of the issues continue to echo today -- banks trading against clients, too big to fail, capital shortfalls, etc. Above all, it seems to me that despite all the regulations, banks have always managed to squirm and evolve into new, powerful, dangerous forms; in some cases, regulation reduced profitable opportunities in core businesses and ironically forced banks into riskier, more aggressive, business, to sustain growth. I doubt regulation will do anything more than stall the next phase of evolution, it seems to me an issue of (i) risk taking culture, which is born out of incentive structures and survival instinct; (ii) failure of due diligence procedures at regulators, investors and 3rd party agencies to keep up to speed with bank and market developments; (iii) liquidity conditions. But I think (i) is primary, the others were simply complementary and facilitative.
Chernow was also able to do a lot of first person reporting in part III, so the characters and quotes are fresher, rather than reconstructed from letters. I'll just list significant events, and some thoughts on these.
As the govt developed internal resources, Washington had less need for the Morgan banks as diplomatic agents.
After WWII, due to Glass Steagall (1933), JPMorgan was too small a bank to have much power -- it was too snobbish to take retail deposits, and was short of capital to lend, even though it had established client relationships. It became much less powerful than retail franchises like Chase Manhattan and National City Bank (today's Citigroup). The Warburgs realised that merchant banks no longer had the capital to finance industry or govt on a large scale, and shifted to advisory work -- which relies on brains and rlnships, not capital -- this marked a shift to financial engineering (p523). Still, merchant banks could leverage relationships to act as originators, which they then syndicated to retail banks with capital but no rlnships. JPMorgan also alleviated capital shortfall by taking over Guaranty Trust, a big but sleepy, well capitalised bank, in 1959, to form Morgan Guaranty (p534).
However, at this point, banks also discovered how to finance themselves via Certificates of Deposit, which are tradable (p539). Treasury operations in a bank became important, as banks could trade CDs to manage their cost of funds. Bankers used to lunch with corpoate treasurers to ask them to keep their money in the bank. But as there was increasing reliance on 'rented' capital, the power shifted to traders who bet on interest rates to hedge the cost of the CDs. But this worked against banks, eventually, because corporate treasurers figured they could just as easily issue CDs as banks. Thus, corporates increasing access to money markets distintermediated the banks.
In 1963, the Fed decided that Glass Steagall still allowed commercial banks to underwrite securities outside the US -- this meant the likes of JPMorgan could build i-bank operations outside the US (how ironic). Further, the Fed imposed a tax on the sale of foreign securities to US investors. So, more securities were sold to foreigners who held Eurodollars. (p544) Meanwhile, banks'trust depts grew rapidly in the 1960s due to the explosion of pension funds. At some point, 60% of all institutional money was held via commercial banks trust depts. This led to concerns over insider trading by banks. (p561)
By the 1960s, securities underwriting was a commoditised business. Trading operations became important -- Morgan Stanley used to cultivate users of capital (the corps) but GS and Salomon cultivated institutional investors, the owners of capital, via their strength of execution in trading. Their distributive power then helped them win underwriting business from corporate issuers. MS didn't have a trading desk at the time. In 1979, IBM, a long time MS client, asked them to accept SB as comanager on a big debt issue, MS refused, expecting IBM to back down, but IBM ditched them and jumped ship -- this led to other banks starting to raid MS client list, and marked the end of relationship banking. (p627) Further on this point: In 1982, the SEC passed Rule 415 -- this allowed 'shelf registration', orallowing blue chips to register a large block of stock and sell it off piecemeal on short notice over 2 years, instead of having to register each new issue separately. This meant treasurers could capitalise on sudden dips in interest rates, and converted underwriting to a world of fast trading decisions rather than syndicated rlnships. MS's underwriting market share fell from #1 to #6 in 1983. (p662) In time, this forced MS to resort to less gentlemanly and far more aggressive tactics to win business and survive.
In 1970s, i banks and merchant banks with small capital but large client bases started to figure that they could earn fees from M&A. (p595) With junk bond financing becoming popular, they used junk bonds to help corporates finance M&A. But junk bonds also enabled corporate raiders to get much more aggressive. (p666) This led to the private equity craze in the 1980s. Further, banks discovered, with junk bonds, that they didn't need their own capital after all -- whereupon they started setting up their own private equity funds -- MS had US$10b under management by 1985 -- which, financed with junk bonds, to take stakes in companies. MS'public IPO in 1986 was expressly to raise capital for a PE buyout fund. The rise of banks using their own capital to take stakes in companies led to big conflict of interest issues. They could also earn huge fees whether or not deals happened, again questionable. (p669, 695)
(One big conclusion I take from this is that Glass Steagall, despite the fuss made about reinstating it, didn't really matter -- it accelerated the process, but wasn't critical in and of itself. What matters is banks taking of positions against clients, but that's got nothing to do with Glass Steagall. More to do with competitive dynamics, facilitated by new financial products, and derivative of the gradual eradication of the importance of banking ethics and long term relationships in a world where capital is mobile and available.)
In 1975, the SC abolished fixed commissions on stock trading, this liberalisation again decimated a stable source of bank revenues, led to many regional bank collapses, and again, forced banks to swashbuckle to survive. (p602)
Offshore lending became big as domestic lending died down, and especially with the 1970s oil boom and the growth of Eurodollar market. The recycling of flush liquidity from oil dollars led to the Latin American lending boom, and the big defaults (Mexico, Brazil) in the 1980s. (p643) This led, indirectly to the failure of a big, old Chicago bank, Continental. The FDIC eventually nationalised it, taking a 80% stake (sound familiar?) Chernow writes: "Washington was now saying that some banks were too big to fail" -- but ironically, the FDIC exacerbated the problem -- the bailout created more incentive to bypass small banks and keep deposits in big ones. (p660)
Clearly there is a lot more here -- part III is worth a reread. Am going to photocopy for keeps.
*****
11 April 10: Finished the second third of the book in a great rush, before the workweek starts, and hence having no time for any reading of any other sort this last 2 days! Part II -- the Diplomatic Age -- covers the years between WWI and WWII. There is so much happening that I think Chernow barely keeps track of the parallel narratives, and it feels less like an organised history than a relentless reporting of various tracks. I have to keep reminding myself what this book is about -- not about politics or banking history or even the Morgan family, per se, but about the institutional House of Morgan, the evolution of this particular bank-among-banks, and how it fared during the isolationist years in America through the Great Depression and the 1930s. Just a few thoughts:
1). The govt's relationship with the bank, and bankers in general, appears to have been driven very much by its foreign policy outlook. The bank's allegiance was torn -- it disliked the New Deal Democrats for their intervention in the domestic economy and willingness to incur fiscal deficits, but it also disliked Republicans who were extremely isolationist in their views. The Morgan bank retained close ties to the British royalty, and the partners were very much globalists. Again I find that the bank's stance didn't change -- but the govt's did, depending on what was expedient -- despite feuding between FDR and the bank through the 1920/30s, they kissed and made up in the 1940s, when FDR decided to support the British war efforts and turned again to the bank's partners to leverage their relationships. Despite this, the govt was much less reliant on the Morgan bank in WWII compared to in WWI -- it mainly relied on the bank's relationships, but by this time the govt had its own tax revenue base and budget, and didn't as much need Morgan help to finance the British war effort.
2). Of course, the bank's interests were shaped not only by ethical and aesthetic concerns (though I think the latter, especially, was a BIG deal -- we are aesthetic creatures before material ones, I think, but that is a separate topic) but also because it's clientele was increasingly foreign. American companies had simply grown large and self sufficient enough to not require banker's capital, and also there wasn't much investment and credit growth in the US during the 1930's for obvious reasons.
3). This idea of the clash between govt and bank interests is worth taking further -- in many cases, the bank was torn because in the spirit of traditional private banking it wanted to give full assistance to its foreign clients, like the Mussolini govt in Italy or the Japanese govt, when this would sometimes clash with American interests. Can't recall examples in detail though.
4). None of the JPM senior partners foresaw the depth, or even the coming, of the 1929 crash and the subsequent Depression. To some extent because very few did, but also to a large extent I think because of their private wealth, they were protected from a lot of what 'common' America was going through. This issue of bankers being wealthy elite alienated from and unaware of real America is really not new.
5). Nationalistic interests in Europe have historically led to internal conflicts, which has usually benefited America.
6). There are compelling personal stories buried here. The most interesting character, on which Chernow spends the most time, is Thomas Lamont, the leading partner of the Morgan bank in the interwar years. A former journalist, Lamont was diplomatic, culturally sensitive and aesthetic, yet as Chernow argues, also mercenary and opportunistic. But his biggest failing was deluding himself into believing, against great evidence at the time, that two of his personal clients, Mussolini and the militaristic Japanese govt, would turn out for peace -- this led him to deny many of the outrages they perpetrated in the late 1930s, until it went so far even he had to recognise it. Another lesson here -- people will talk their own book, and people will, if allowed to do so, remember only the best of themselves -- in later years Lamont would make it seem that the loans he arranged to Italy were made under duress. Yet for all this, both he and Morgan were strong philanthropists generous to charities both during their lifetimes and in their wills.
7). The bank's mystical power was still apparent during this period, but certainly fading. Glass Steagall did a lot to erode it, not only by requiring the breakup to commercial and investment bank (ie broker), but also as the series of lawsuits forced the bank to publish its balance sheets. Also, as the three partners -- incl Jack Morgan and Tom Lamont -- aged, the bank turned itself from a partnership into a listed company with public stockholders, so that the death of partners wouldn't mean a loss of capital. This also required public disclosure of earnings statements, again doing much to clear the air of mystique.
*****
27 March 10: still reading this but it's such a massive book I thought I should add a few comments to commemorate my making it past Part 1! The first part deals, swiftly, with the founding of the bank and then moves on to cover in more detail the reign of Pierpont Morgan, arguably the most dominant and formative character of the original JP Morgan, who led the bank through the late 19th C, and all the way up till nearly World War I. His last hurrah was probably helping address the crash of 1907 where he pretty much acted as central banker, which later led to creation of the Fed. Just a couple key notes:
1). Clearly, America's distaste and distrust of Wall St stretches back at over a century. The distrust was sharpened by the extreme confidentiality and elitism of merchant banking practices in those days, which frankly seems to me to more resemble private banking -- lending to individual entrepreneurs on the basis of character, rather than to a corporation, on the basis of credit analysis -- than today's wholesale corporate lending. It was also exacerbated by that companies in the late 19th C, save for a few giants perhaps like Standard Oil, were generally extremely dependent on banks for capital; this gave bankers immense power and pretty much board seats on most of the major corporations in America. The early American corporate governance system, where bankers are directors and help control the company, feels to me more like the current European/German system corp governance, than the current US/UK system. What is pertinent is that as corporates matured in the 20th C, they began to finance capex out of internal cash flows, and also grew large and recognisable enough to tap capital markets directly, thus disintermediating bankers and making bankers much less powerful. It is interesting to think about (and how to think about) what stage Asia is now at.
2). It is further fascinating to think about JP Morgan's role in WWI. I presume from Chernow's writing that there are a ton of conspiracy theories out there that accuse the Morgans as funding death for profit reasons. His account is more balanced -- clearly they profited, but their response to the outbreak of war seems to me humane, nationalistic and genuinely motivated by desire to play their part in the Allied's war efforts. From Chernow's account, JP Morgan didn't just function as a bank during WWI -- yes, they funded London and Paris, but more importantly, in order to stave off American firms profiteering from Europe's woes by pricing up war supplies, Morgan partner Henry Davison suggested the formation of a single purchasing entity on behalf of the Allieds, to have more bargaining power over American suppliers. It was not anticipated that the Morgan's would set up a division that effectively became the procurement arm of the Allied's forces, and that the supplies purchased would amount to US$3 billion (it was at first estimated at US$10m)! JP Morgan was, in effect, the US based trading house and supply chain manager for the British army during WWI -- and given that a majority of war supplies came from the US... As an aside, it is also interesting to read that at this period, many of the Jewish merchant banks -- Kuhn, Loeb; Goldman, Sachs -- refused to lend to the Allieds as they sided with the Germans.
3). It is interesting further to observe the bank-govt relationship evolving and changing with the times. It looks to me like the Morgan's, at least, were consistent with their behavior -- at times this was popular, and at times not. The govt's stance also shifted with the times -- antagonistic when trust busting was popular, and incentuous when the govt wanted to harness the bank's vast financing power, or political/relational clout overseas. It makes one wonder about the current US govt/investment bank relation -- yes yes, we read all about the Goldman trinity, but beyond that, and beyond campaign finance, and beyond the conspiracy theories about who really controls policy making and to what ends (okay that's a lot of 'beyonds') -- it makes you wonder what the govt wants, and how the banks facilitate those ends. Perhaps something much simpler and similar to the early 20th C -- the govt needs the i-banks to help flog its debt overseas?
4). It it incredible how much the structure of finance and industry is shaped by war.
July 1, 2014
For those of you who aren’t familiar with my background, I possess college degrees in both Political Science and Finance. I am fascinated with the subjects of history and economics. So, when I started reading House of Morgan, I quickly realized that the book in my hands was the culmination of all my favorite subjects put together. Ron Chernow, already on my radar as a foremost biographer, was apparently in charge of financial policy studies for a public policy foundation during the 1980′s. With this background, he sought to put together a comprehensive look at the changes taken place in modern American finance over the years, through the vehicle of the J.P. Morgan Company.
Beginning with a fascinating look at 19th century economic expansion, it is clear that without bankers like J.P. Morgan, Americans (and Europeans) would not have enjoyed the successes reaped from the industrial age. These banks were so powerful, it fell to them ensure the success or prevent the failure of corporations and governments alike. In those days there was a gentleman banker code, limiting competition between financial houses and discouraging bankers from rounding up new business. They understood their place in the world and their obligations – which included infusing capital at times to save drowning economies.
Later organizations like the Fed and the World Bank arose to step into that role, and the financial houses were split up between banking and securities. Politicians just weren’t comfortable placing that kind of responsibility in the hands of private businessmen. It was clear that a power struggle was developing that was leaving governments beholden to the banks. So government enacted laws like Glass-Steagal in an attempt to limit the power of financial giants like J.P. Morgan’s empire.
It is one of the most interesting and well-written works of history that I have ever read. It should be required reading for finance or business majors. Heck, it wouldn’t hurt if most people read this book. It might better help people to understand the complex world in which they live.
It has been my experience, that modern political discourse (and apparently throughout history, as the book elaborates), tends to dumb down the world of the finance for the average American. Politicians would rather not have voters aware of how their policies have negatively affected the economies, and usually point fingers at those in the world of finance. While sometimes, that finger pointing is justified (as with insider trading or highly risky leveraged buy-outs), more often than not, it’s government policy that is to blame.
This book came out on 1990, and so the recent mortgage crisis of 2008 is not mentioned in this book. It would be interesting to see if Chernow had any comments on it.
Best book I’ve read in a long time!
Beginning with a fascinating look at 19th century economic expansion, it is clear that without bankers like J.P. Morgan, Americans (and Europeans) would not have enjoyed the successes reaped from the industrial age. These banks were so powerful, it fell to them ensure the success or prevent the failure of corporations and governments alike. In those days there was a gentleman banker code, limiting competition between financial houses and discouraging bankers from rounding up new business. They understood their place in the world and their obligations – which included infusing capital at times to save drowning economies.
Later organizations like the Fed and the World Bank arose to step into that role, and the financial houses were split up between banking and securities. Politicians just weren’t comfortable placing that kind of responsibility in the hands of private businessmen. It was clear that a power struggle was developing that was leaving governments beholden to the banks. So government enacted laws like Glass-Steagal in an attempt to limit the power of financial giants like J.P. Morgan’s empire.
It is one of the most interesting and well-written works of history that I have ever read. It should be required reading for finance or business majors. Heck, it wouldn’t hurt if most people read this book. It might better help people to understand the complex world in which they live.
It has been my experience, that modern political discourse (and apparently throughout history, as the book elaborates), tends to dumb down the world of the finance for the average American. Politicians would rather not have voters aware of how their policies have negatively affected the economies, and usually point fingers at those in the world of finance. While sometimes, that finger pointing is justified (as with insider trading or highly risky leveraged buy-outs), more often than not, it’s government policy that is to blame.
This book came out on 1990, and so the recent mortgage crisis of 2008 is not mentioned in this book. It would be interesting to see if Chernow had any comments on it.
Best book I’ve read in a long time!
December 2, 2014
An exhausting 720 pages of text (followed by extensive notes, bibliography and index) covers all the houses of Morgan and the most significant Morgan men (Junius, Pierpont, and Jack) from even its pre-Morgan days, when George Peabody began the firm (before retiring he took on Junius Morgan) in the early 19th century, up to the 1987 crash. The London branch, Morgan Grenfell, is covered. The bank was, if not the most upper-crusty, certainly among the top white-shoe and Waspy banks. Jews were not welcome. The Morgan men brought in mostly other well-connected young men, Harvard and Yale grads primarily. Even up through the first few decades of the 20th century, women were not welcome as visible bank employees in assisting roles such as secretaries. One recruit wanted to bring along his female secretary and she was banished to some outlying building where she would never be seen by a client or a high level banker. Chernow covers the early days of banking when handshakes concluded business and Pierpont spent weeks at a time grouse hunting in Scotland, through Glass-Steagall, which split the bank into its commercial side and the investment bank (Morgan Stanley). He wraps up with the bank, like every other Wall Street bank, taking on increased levels of risk, becoming obsessed with leveraged buyouts (LBOs) and deals garnering huge undeserved fees, and a few scandals involving Morgan employees. I think at the end of the story, with about 80 managing directors, there was finally one female managing director.
Even for me, someone who is moderately interested in finance and the history of institutions, the story was pretty damn boring. One interesting side story was Morgan employee Dwight Morrow, the father of Anne Morrow Lindbergh. The House of Morgan was Charles Lindbergh's financial adviser, and Charles and Anne met in Mexico where Dwight Morrow had been made the U.S. Ambassador by Calvin Coolidge, a college buddy. The Morgan bank bundled and numbered the ransom money used in the Lindbergh baby kidnapping.
I notice this got selected for the Modern Library's 100 Best Nonfiction books, which is just shocking.
January 21, 2024
This book takes a look at the history of banking and financial services from the 1830s up to the 1980s by examining the people and corporations that grew out of the legacy of George Peabody and his heirs, Junius Spencer Morgan (son), and John Pierpont Morgan (grandson). Not only does it cover finance, but it encompasses a wide swath of related world history. It starts as a biography of the Morgan founders and follows the family lineage through the decades.
The scope is vast. It touches on the interrelationships among a huge number of topics – the gold standard, stock markets, foreign policies, international finance, underwriting, economic panics, World Wars I, 1929 Stock Market crash, Great Depression, Glass Steagall Act (which split commercial and investment banking), New Deal, World War II, post-war years, Reaganomics, 1987 crash, and a number of scandals. It covers the advice given by Morgan business entities to various Presidents. It traces the evolution of the financial industry from one of the reliance on a “gentleman’s agreement” to the more recent “money is king” mentality.
I particularly enjoyed the early history from the 1870s to 1940s, and I think these are the strongest parts. It outlines the relationships between Morgan bankers and Mussolini, and the related ethical questions. After the split up of several Morgan entities, it gets a little less focused, but overall, I found it fascinating. It will appeal to readers who are interested in the history of financial services. Chernow’s writing is superb, and he does an excellent job of weaving together a compelling narrative out of what could easily have been a very dry topic.
4.5
The scope is vast. It touches on the interrelationships among a huge number of topics – the gold standard, stock markets, foreign policies, international finance, underwriting, economic panics, World Wars I, 1929 Stock Market crash, Great Depression, Glass Steagall Act (which split commercial and investment banking), New Deal, World War II, post-war years, Reaganomics, 1987 crash, and a number of scandals. It covers the advice given by Morgan business entities to various Presidents. It traces the evolution of the financial industry from one of the reliance on a “gentleman’s agreement” to the more recent “money is king” mentality.
I particularly enjoyed the early history from the 1870s to 1940s, and I think these are the strongest parts. It outlines the relationships between Morgan bankers and Mussolini, and the related ethical questions. After the split up of several Morgan entities, it gets a little less focused, but overall, I found it fascinating. It will appeal to readers who are interested in the history of financial services. Chernow’s writing is superb, and he does an excellent job of weaving together a compelling narrative out of what could easily have been a very dry topic.
4.5
February 17, 2017
I love Ron Chernow... But even I have to admit that unless you are truly interested in banking and the history of each little piece of the House of Morgan, you only have to read the first half of this book which covers the crucial period 1830-1950.
February 28, 2016
"It is not a large bank, as Wall Street banks go," said the New York Times. "A dozen other institutions have much larger resources. ... What really counts is not so much its money as its reputation and brains. ... It is not a mere bank; it is an institution."I had heard of the House of Morgan and knew it was prestigious, but being on the west coast, and a person without wealth and no hopes of it, I didn't really know much more than that. This book presented itself to me on Goodreads, and I was curious. There are three sections: The Baronial Age, 1838-1913; The Diplomatic Age, 1913-1948; The Casino Age, 1948-1989.
My interest was piqued in the first section when I learned that in 1873 there was a major downturn in the economy, one which would not be outdone until the crash of 1929. 1873 was the year my maternal grandfather was born, and I realized I would be reading the Baronial Age section with a view to the world this part of my family lived in and read about in the newspapers.
I had that same interest for the second section, the age when my parents came of age and began their lives as adults. But I was also interested because the House of Morgan was a leader in financing the Allies in the first World War, and also in the reparations and reconstruction following it.
The third section was filled with names I recognized, many of which I could readily put faces to. As banking became more diverse, even almost chaotic, this was my least favorite part.
I didn't expect this would take me 3 weeks to read, but I never thought for a minute to set it aside and move on to something else. It kept my interest throughout, though I would be deceitful if I said it was fascinating. It seems to me that non-fiction runs from textbook-like to fiction-like. This leans to the textbook side, though perhaps doesn't fall quite that far. This was Chernow's debut. I liked it well enough to read others by him, but I'll put some time between this and the next one.
February 22, 2010
Ron Chernow is one of the very best historians of our time. But The House of Morgan is not his finest work.
The research is there—-exhaustive as it always is with Chernow’s financial histories. The problem is that he, himself, seems to run out of enthusiasm for his subject. Two-thirds the way through it, after having chronicled more than 180 years of the family and its multifarious banking manifestations, his presentation begins to show an attitude of “Geesh, let’s get this thing over with.” His paragraphs become formulaic. Every new executive is introduced with the required “physiognomy begets personality” sentences, and then it’s off to examine his damage to the corporate reputation.
Chernow is usually better than that. Certainly the first 60 percent of it was, and certainly Hamilton> and Titan (a similar family biography of the Rockefellers) were--in their entirety.
Chernow’s account peters out in 1988, just after the now-small Wall Street calamity of that day. One is left to wonder what he would add now, in 2009.
The research is there—-exhaustive as it always is with Chernow’s financial histories. The problem is that he, himself, seems to run out of enthusiasm for his subject. Two-thirds the way through it, after having chronicled more than 180 years of the family and its multifarious banking manifestations, his presentation begins to show an attitude of “Geesh, let’s get this thing over with.” His paragraphs become formulaic. Every new executive is introduced with the required “physiognomy begets personality” sentences, and then it’s off to examine his damage to the corporate reputation.
Chernow is usually better than that. Certainly the first 60 percent of it was, and certainly Hamilton> and Titan (a similar family biography of the Rockefellers) were--in their entirety.
Chernow’s account peters out in 1988, just after the now-small Wall Street calamity of that day. One is left to wonder what he would add now, in 2009.
April 23, 2019
I can't believe I finally finished this 900-page tome about the Morgan banking dynasty. Also, who do I need to see my address to in order to get my Ph.D. for the history of early banks and economics? haha
I was a good book and I now know more than a lot of my professors about this time period.
I was a good book and I now know more than a lot of my professors about this time period.
January 21, 2020
I listened to about two-thirds of the book and got out of it as much as I wanted. It’s a very detailed history of some of the leading men in American banking, and a little of the English too. I thought the sections where it showcased the Morgan family to be interesting.
Cleanliness: a few swear words and mentions of affairs etc.
*Note: I listened to the audio version of this book so this Cleanliness Report may not be as thoroughly detailed as other reports are. Also, some inappropriate content may have been forgotten/missed and not included in the report.
**Like my reviews? Then you should follow me! Because I have hundreds more just like this one. With each review, I provide a Cleanliness Report, mentioning any objectionable content I come across so that parents and/or conscientious readers (like me) can determine beforehand whether they want to read a book or not. Content surprises are super annoying, especially when you’re 100+ pages in, so here’s my attempt to help you avoid that!
So Follow or Friend me here on GoodReads! You’ll see my updates as I’m reading and know which books I’m liking and what I’m not finishing and why. You’ll also be able to utilize my library for looking up titles to see whether the book you’re thinking about reading next has any objectionable content or not. From swear words, to romance, to bad attitudes (in children’s books), I cover it all!
Cleanliness: a few swear words and mentions of affairs etc.
*Note: I listened to the audio version of this book so this Cleanliness Report may not be as thoroughly detailed as other reports are. Also, some inappropriate content may have been forgotten/missed and not included in the report.
**Like my reviews? Then you should follow me! Because I have hundreds more just like this one. With each review, I provide a Cleanliness Report, mentioning any objectionable content I come across so that parents and/or conscientious readers (like me) can determine beforehand whether they want to read a book or not. Content surprises are super annoying, especially when you’re 100+ pages in, so here’s my attempt to help you avoid that!
So Follow or Friend me here on GoodReads! You’ll see my updates as I’m reading and know which books I’m liking and what I’m not finishing and why. You’ll also be able to utilize my library for looking up titles to see whether the book you’re thinking about reading next has any objectionable content or not. From swear words, to romance, to bad attitudes (in children’s books), I cover it all!
August 17, 2015
I picked this book after reading Alexander Hamilton by Chernow (the best biography I have ever read). This is a historical masterpiece, and it earned a 4 from me instead of a 5 only because the subject matter was a little but less captivating to me than Hamilton's life, but this isn't totally fair to the author. The book is excruciatingly and wonderfully detailed. I can't imagine how a person writes more than one book like this in their lifetime, but chernow has done it.
The Morgan family has played such an integral rule in the world, and I never knew quite how many world affairs they played a leadership role in until I read this book. We think of JP Morgan Chase bank now as a behemoth, but it is a whisper and a shadow compared to the bank that financed world wars and rescued new York city.
I enjoyed the first two parts the most, (Baronial and Diplomatic ages) because they focused more on a few central leaders (Pierpont Morgan, JP Morgan, Tom Lamont), as did the bank during these eras.
The book was still excellent, but slightly harder to follow from 1950-1990 when the bank cycled through several less memorable leaders and accompanying scandals. Obviously the book would have been incomplete without this section (the casino age). I must admit though, I was ready for it to end.
I've added three other famous Chernow books to my to do list, but I venture to guess I have already read the best two.
The Morgan family has played such an integral rule in the world, and I never knew quite how many world affairs they played a leadership role in until I read this book. We think of JP Morgan Chase bank now as a behemoth, but it is a whisper and a shadow compared to the bank that financed world wars and rescued new York city.
I enjoyed the first two parts the most, (Baronial and Diplomatic ages) because they focused more on a few central leaders (Pierpont Morgan, JP Morgan, Tom Lamont), as did the bank during these eras.
The book was still excellent, but slightly harder to follow from 1950-1990 when the bank cycled through several less memorable leaders and accompanying scandals. Obviously the book would have been incomplete without this section (the casino age). I must admit though, I was ready for it to end.
I've added three other famous Chernow books to my to do list, but I venture to guess I have already read the best two.
September 6, 2010
This is a very long book that suffers from two problems. First it is too long and drags with repetition toward the end. And, two, it was written in 1989, which means it covers the exuberance of the 'new' Wall Street banking but misses the disaster of the dot com bubble and especially the the crash of 2007, which shows that his exuberance was totally misplaced. Also Chernow has a tendency to adulate the rich which often ignores the fact that they often gain at others losses. The best part of the book was the early years and how the Morgan's built the business. The most hilarious part was the description of the London branch in the fifties and sixties. They still used high stools and hand written ledgers well into the sixties!
October 6, 2021
An exhaustive history of American finance through the "House of Morgan" perspective - the rough and tumble world of Wall & Broad, "The Corner" at 23 Wall, home of JP Morgan bank through its many permutations of people and power, ages and changes. This book is long on detail but worthy of effort in thoroughness of subject.
October 23, 2018
I haven't finished this book yet, but I have gotten far enough (up to WWII) to see its value in exposing how the American populace is being gamed by socialists/monopolists/technocrats/bankers. See this frank admission from the President, as an example.
Chernow is an advocate and defender for the Morgans, just as his latest book defends and advocates the mercantilism of Alexander Hamilton over against the Constitutionalist, limited-government, vision of Jefferson. So this is no prosecution's case but the testimony of a friend.
So what happens under real Capitalism? Answer: The rich end up giving low-cost goodies to the poor and middle class but often end up rejoining those classes because they lose all their wealth in the process. Capitalism does not lead to concentrations of economic power but constantly threatens them. People who want to keep their economic power go to the government to protect it from the competition of the market. Despite Pierpont's preference for "private planning" his efforts never lasted. He needed the government to get a real cartel going.
People who try to protect us from the concentration of economic power by concentrating economic power are not worth following.
For some more of the history of the cartel Utopia in the oil industry, see these posts:
"Progresive" Cartelization
Are we trying to get more oil or create a shortage
"Conservation" for cartels
It seems anomalous that America's most famous financier was a sworn foe of free markets. Yet it followed logically from the anarchy of late nineteenth-century railroads, with their rate wars, blackmail lines [Note: I think the comma between blackmail and lines is a typo], and lack of standardized gauges. To destroy competing lines, railroads could simply refust to transfer freight to roads that abutted theirs. From an engineering standpoint, Pierpont knew little about railroads. What he did know is that they required steady revenues to cover their fixed interest costs on bonds marketed in New York and London. In the mid-1880s, freight rates were declining sharply under the pressur of savage price-cutting.On why Morgan got along with Teddy Roosevelt progressives:
For Pierpont, the leading symbol of railway monopoly, pure competition was never an option. Years later, he a said, "The American public seems unwilling to admit... that it has a choice between regulated legals agreements and unregulated extralegal agreements. We should have cast away more than 50 years ago the impossible doctrine of protection of the public by railway competition. As we shall see, the House of Morgan always favored government planning over private compilation, but private planning over either.
As the top manufacturer of crude steel, Carnegie decided to branch out into finished products, such as pipe and wire. As the head of the second largest steel group, Pierpont feared a replication of the railroad chaos with overbuilding and price wars. He growled that Carnegie would "demoralize" the entire industry through competition.
Backed by representatives of Barings and Brown Brothers, Pierpont offered the railroad presidents a deal: if they refrained from rate-cutting and cutthroat competition, the financiers would stop underwriting competing railways. It was a clever move, for while Wall Street accused railroads of irresponsible behavior, the railroads blamed Wall Street for floating too many securities and creating the overexpansion that led to price wars.
The populace might dread the power of Pierpont Morgan, but he paid his bills promptly, always stuck by his word, and was almost universally respected among businessmen. He also saw competition as a destructive, inefficient force and instinctively favored large-scale combination as the cure.
Where Pierpont's theorizing was largely nonexistent [partner, Goerge W.] Perkin's was sophisticated. He gave speeches and published pamphlets on every conceivable subject. He was an oddity at the world most cryptic bank. he preached a gospel of industrial cooperation, contending that small-scall business depressed wages and retarded technological advance. Not Wall Street, he said, but steam engines and telephones produced trusts. "What is the difference," he proclaimed, "between the US Steel Corporation, as it was organized by Mr. Morgan, and a Department of Steel as it might be organized by the Government?" He drew a parallel Pierpont wouldn't admit to--that trusts, with their centralized production and distribution, were a form of private socialism. And unlike Pierpont, he saw that they had acquired a public character, and he favored government licensing of interstate companies and extended worker benefits, including profit sharing, social insurance, and old-age pensions. This, he boasted, would be "socialism of the highest, best, and most ideal sort." Although Teddy Roosevelt sometimes wondered whether Perkins simply rationalized a selfish Morgan agenda, there was a striking likeness between their views.
That a Morgan partner should advocate socialism is not so startling. After all, Pierpont, starting with his Railway associations of the late 1880s, espoused industrial cooperation instead of competition. He like his capitalism neat, tidy, and under bankers' control... Perkins wasn't the only one in the Morgan camp to applaud moves toward a planned, integrated economy. Later on, Judge Elbert Gary of U.S. Steel, who held private dinners to fix prices in the steel industry, testified: "I would be very glad if we had some place where we could go, to a responsible governmental authority, and say to them, 'Here are our facts and figures, here is our property, here our cost of production; now you tell us what we have the right to do and what prices we have the right to charge.'"
As we shall see, the mortal attacks on the House of Morgan came not from socialists but from such trustbusters as Louis D. Brandeis, Felix Frankfurter, and William O. Douglas, who favored small economic units and sharp competition. This tradition would lambaste the Morgan Money Trust as the biggest and most dangerous trust of all. Because the House of Morgan preached socialism for the rich, it always had a partial affinity for those who preached it for the poor.COMMENT:
Chernow is an advocate and defender for the Morgans, just as his latest book defends and advocates the mercantilism of Alexander Hamilton over against the Constitutionalist, limited-government, vision of Jefferson. So this is no prosecution's case but the testimony of a friend.
So what happens under real Capitalism? Answer: The rich end up giving low-cost goodies to the poor and middle class but often end up rejoining those classes because they lose all their wealth in the process. Capitalism does not lead to concentrations of economic power but constantly threatens them. People who want to keep their economic power go to the government to protect it from the competition of the market. Despite Pierpont's preference for "private planning" his efforts never lasted. He needed the government to get a real cartel going.
People who try to protect us from the concentration of economic power by concentrating economic power are not worth following.
For some more of the history of the cartel Utopia in the oil industry, see these posts:
"Progresive" Cartelization
Are we trying to get more oil or create a shortage
"Conservation" for cartels
January 16, 2020
JPMorgan Just Posted the Best Year for Any U.S. Bank in History sez Bloomberg the other day. But why should you care? Well, a very short summary of this book is that you shouldn't, but back in the day, you should have - when the top-hatted, pipe-smoking mascot of capitalism sang I'm J.P. Morgan, my friends/ The wealthiest man on this earth in Ragtime.
For Chernow's epic, engaging bio opens in what he calls the "Baronial Age", the unregulated time when Whitneys, Fricks, Guggenheims, Carnegies and Rockerfellers ran everything. Any large museum with a non-obvious name was probably endowed by one these banking and industrial fortunes. The overall arc of the book is how capitalism grew up, or how in the words of Matt Levine (maybe the best of today's chroniclers of capitalism) “everything is too efficient and it’s exhausting”. The market went from a cozy business of deals between friends who went to the same select schools, to a sharp-edged, constant race to carve out slight profits, where any rest would let the competition ahead of you. Which is fairer, and better for everyone; but obviously worse for the incumbents, less interesting to read about, and also just sort of exhausting.
As the subtitle promises, it is a history of modern financial capitalism, at least in the Morgansphere - which is a lot, but still Atlanto-centric (East Coast, England, France). Many of today's concerns were just as big then: the fiery populist Williams Jennings Bryant railed against Wall Street, the trust-buster Taft thundered, and then the pro-business McKinley was elected. After the 1907 crash Wall Street got a bailout but the Federal Reserve was founded, taking control of future crises. There's a sovereign loan to China which goes bad: American bankers lent money to the doomed Manchu dynasty and had the loans assured by US soldiers, capitalism and political power fusing (a common theme in the book, especially in the next section). But after a popular uprising the Manchus were chased out and Sun Yat-Sen's republic was founded.
During the next section, the "diplomatic age" (end of WWI-end of WWII) the government used bankers to carry out its policy at a remove, while bankers used the government to enforce loan collection. Populist US president Warren Harding wanted European war debt collected, while the arch-Anglophile Morgans wanted to cancel it on moral grounds. But the public was on Harding's side. Since the US was tough on the Allied powers, they in turn had to be tough on Germany in order to afford their payments, leading to well-known unpleasant consequences. Some of America's industrialists were more provincial, but the bankers, as today, were international-minded, interested in European stability and English success as much as their own profits.
Part of the full Morgan service was political clout and behind the scenes influence, which could have bad consequences in the diplomatic age when governments were clients of big banking houses. The liberal Tom Lamont represented Japan and fascist Italy, and tried with his diplomatic/media connections to drum up support for the invasion of Manchuria.
In this era the typical Morgan man was an Episcopalian, Ivy-educated white male, a pro-business Republican and liberal internationalist. He would live in an Upper East Side condo, or at least Englewood. (Also acceptable was a Long Island estate from which he could yacht to work each morning.) He might be a member of a secretive club: the Zodiac club, for example, where every member is a powerful banker representing a zodiac sign. (This is 100% in the book.)
The old banking culture had certain rules. Merchant bankers would only deal with big fish, and not make loans to retail/small businesses - you were proud of being a client of a big bank as it was mark of status. They didn't trade stocks, seeing it as speculation. There was a gentlemen's agreement not to poach clients - a bank wouldn't take a client without the consent of the rival bank. Which sounds like a cartel but wasn't because...basically they just agreed to be fair about it? It sort of worked with a small monoculture: everyone agreed that maximising the respect of the profession and maintaining banker's honour was better than trying to squeeze out higher fees. Finally, if you were a client the bank was invested in your success, so would take board seats (until eventually pressured not to) and advise, making sure the client succeeded so it reflected well on them.
As the Depression set in, anger turned on the bankers. The Glass-Steagall act was aimed at the House of Morgan, which did private banking for individuals (but only the ones they wanted, the very wealthy ones), but also was a merchant bank. The result was meiosis into JP Morgan (commercial) and Morgan Stanley (investment). In a sense this was unfair: the crisis wasn't caused by them, since they weren't speculators. But Morgan also made a fortune from the crisis, and the nation was desperately struggling, so their indignation rings hollow. (The tendency of very wealthy people to feel persecuted is a running motif in this section.)
Last year I reviewed Louis D. Brandeis: American Prophet. This is kind of the origin story of his nemesis. Brandeis had the Jeffersonian idea that any business was bad if it grew beyond a certain point. But everyone has their perspective: Morgan ran a large network that preserved values of trust and banking ethics, and could bridge opposing parties (in the national as well as commercial world - this was the diplomatic age). At one point they argue that large trusts setting prices centrally would lead to better market outcomes than the wild fluctuations of capitalism, an almost socialist idea. ("Because the House of Morgan preached socialism for the rich, it always had a partial affinity for those who preached it for the poor.") But the world was getting too big for such a small group to handle, and the "casino age" dawned.
Previously banks had been guardians of capital - capital was scarce, and so they were also austere and unfriendly. Now it was abundant and banks had to chase business. There were many more options for companies to raise money (issuing commercial paper, money markets) and banks needed to schmooze and actively chase down deals. (Today, too, you have Warren Buffett and Apple sitting on mountains of cash, desperate to find ways to invest it!)
In the casino age, relationships and traditions count for little, and any scrappy newcomer can win a client by offering lower fees or some new financial instrument. Less romance and secrecy, more efficiency and greed. This was more egalitarian, and bad for old-school bankers accustomed to easy livings, although the Morgans have done fine in the new order. The book covers the fate of minor offshoots like Morgan, Grenfell in London (the story of Rupert Murdoch's News of the World takeover is a good one). But the book sags a bit toward the end: this is just about banks eking out profits in creative ways, not anything world-historical.
This is a biography of the House of Morgan, and there is a fair amount of biographical information I haven't touched on, because although Chernow does a fair job of distilling the highlights, it isn't all that interesting (BUT did you know that J. Pierpont Morgan's youngest daughter Anne was a radical activist in the 1910s who lived in a lesbian ménage à trois!?) This book is worth reading inasmuch as it describes the mystique and magic of banking and its place in global history and politics; a story about a successful but elitist and self-enriching industry increasingly resented by an unequal society, a role better represented today by the tech industry. Plus ça change!
For Chernow's epic, engaging bio opens in what he calls the "Baronial Age", the unregulated time when Whitneys, Fricks, Guggenheims, Carnegies and Rockerfellers ran everything. Any large museum with a non-obvious name was probably endowed by one these banking and industrial fortunes. The overall arc of the book is how capitalism grew up, or how in the words of Matt Levine (maybe the best of today's chroniclers of capitalism) “everything is too efficient and it’s exhausting”. The market went from a cozy business of deals between friends who went to the same select schools, to a sharp-edged, constant race to carve out slight profits, where any rest would let the competition ahead of you. Which is fairer, and better for everyone; but obviously worse for the incumbents, less interesting to read about, and also just sort of exhausting.
As the subtitle promises, it is a history of modern financial capitalism, at least in the Morgansphere - which is a lot, but still Atlanto-centric (East Coast, England, France). Many of today's concerns were just as big then: the fiery populist Williams Jennings Bryant railed against Wall Street, the trust-buster Taft thundered, and then the pro-business McKinley was elected. After the 1907 crash Wall Street got a bailout but the Federal Reserve was founded, taking control of future crises. There's a sovereign loan to China which goes bad: American bankers lent money to the doomed Manchu dynasty and had the loans assured by US soldiers, capitalism and political power fusing (a common theme in the book, especially in the next section). But after a popular uprising the Manchus were chased out and Sun Yat-Sen's republic was founded.
During the next section, the "diplomatic age" (end of WWI-end of WWII) the government used bankers to carry out its policy at a remove, while bankers used the government to enforce loan collection. Populist US president Warren Harding wanted European war debt collected, while the arch-Anglophile Morgans wanted to cancel it on moral grounds. But the public was on Harding's side. Since the US was tough on the Allied powers, they in turn had to be tough on Germany in order to afford their payments, leading to well-known unpleasant consequences. Some of America's industrialists were more provincial, but the bankers, as today, were international-minded, interested in European stability and English success as much as their own profits.
Part of the full Morgan service was political clout and behind the scenes influence, which could have bad consequences in the diplomatic age when governments were clients of big banking houses. The liberal Tom Lamont represented Japan and fascist Italy, and tried with his diplomatic/media connections to drum up support for the invasion of Manchuria.
In this era the typical Morgan man was an Episcopalian, Ivy-educated white male, a pro-business Republican and liberal internationalist. He would live in an Upper East Side condo, or at least Englewood. (Also acceptable was a Long Island estate from which he could yacht to work each morning.) He might be a member of a secretive club: the Zodiac club, for example, where every member is a powerful banker representing a zodiac sign. (This is 100% in the book.)
The old banking culture had certain rules. Merchant bankers would only deal with big fish, and not make loans to retail/small businesses - you were proud of being a client of a big bank as it was mark of status. They didn't trade stocks, seeing it as speculation. There was a gentlemen's agreement not to poach clients - a bank wouldn't take a client without the consent of the rival bank. Which sounds like a cartel but wasn't because...basically they just agreed to be fair about it? It sort of worked with a small monoculture: everyone agreed that maximising the respect of the profession and maintaining banker's honour was better than trying to squeeze out higher fees. Finally, if you were a client the bank was invested in your success, so would take board seats (until eventually pressured not to) and advise, making sure the client succeeded so it reflected well on them.
As the Depression set in, anger turned on the bankers. The Glass-Steagall act was aimed at the House of Morgan, which did private banking for individuals (but only the ones they wanted, the very wealthy ones), but also was a merchant bank. The result was meiosis into JP Morgan (commercial) and Morgan Stanley (investment). In a sense this was unfair: the crisis wasn't caused by them, since they weren't speculators. But Morgan also made a fortune from the crisis, and the nation was desperately struggling, so their indignation rings hollow. (The tendency of very wealthy people to feel persecuted is a running motif in this section.)
Last year I reviewed Louis D. Brandeis: American Prophet. This is kind of the origin story of his nemesis. Brandeis had the Jeffersonian idea that any business was bad if it grew beyond a certain point. But everyone has their perspective: Morgan ran a large network that preserved values of trust and banking ethics, and could bridge opposing parties (in the national as well as commercial world - this was the diplomatic age). At one point they argue that large trusts setting prices centrally would lead to better market outcomes than the wild fluctuations of capitalism, an almost socialist idea. ("Because the House of Morgan preached socialism for the rich, it always had a partial affinity for those who preached it for the poor.") But the world was getting too big for such a small group to handle, and the "casino age" dawned.
Previously banks had been guardians of capital - capital was scarce, and so they were also austere and unfriendly. Now it was abundant and banks had to chase business. There were many more options for companies to raise money (issuing commercial paper, money markets) and banks needed to schmooze and actively chase down deals. (Today, too, you have Warren Buffett and Apple sitting on mountains of cash, desperate to find ways to invest it!)
In the casino age, relationships and traditions count for little, and any scrappy newcomer can win a client by offering lower fees or some new financial instrument. Less romance and secrecy, more efficiency and greed. This was more egalitarian, and bad for old-school bankers accustomed to easy livings, although the Morgans have done fine in the new order. The book covers the fate of minor offshoots like Morgan, Grenfell in London (the story of Rupert Murdoch's News of the World takeover is a good one). But the book sags a bit toward the end: this is just about banks eking out profits in creative ways, not anything world-historical.
This is a biography of the House of Morgan, and there is a fair amount of biographical information I haven't touched on, because although Chernow does a fair job of distilling the highlights, it isn't all that interesting (BUT did you know that J. Pierpont Morgan's youngest daughter Anne was a radical activist in the 1910s who lived in a lesbian ménage à trois!?) This book is worth reading inasmuch as it describes the mystique and magic of banking and its place in global history and politics; a story about a successful but elitist and self-enriching industry increasingly resented by an unequal society, a role better represented today by the tech industry. Plus ça change!
January 15, 2017
This book won a National Book Award, and I won’t argue with that. It’s meticulously researched and rigorously detailed, hallmarks of a Chernow book. The problem for me is that the details were just stultifying. I couldn’t find anything fascinating, or even particularly interesting, about the history of Wall Street and its narrow-minded, patrician, sexist, anti-semitic Good Ole Boys that were responsible for its rise. The only reason these well-fed, pampered white men weren’t homophobic and racist was because gays and people of color did not inhabit their rarified air (at least, not that they were aware of) unless they were servants. Chernow does a good job of hitting the positive side of their characters: scrupulously honest, devoted to character and reputation, civilized and mannered, incredibly hard-working. Many of them sacrificed their health and died because of overwork, or they were incredibly incompetent (at least one of J. P. Morgan’s sons) and were basically dilettantes. But they were all world-class snobs in the tradition of their Victorian English roots; and if Dickens wasn’t following them around with a writing pad, then he must have had some other way of capturing them because they were all right out of one of his novels.
They say Wall Street is different now, but that just means that it’s no longer narrow-minded and -ismed. It now worships anybody who can bank more dollars than anybody else, no matter what their pedigree; and it no longer considers honesty and character a requirement for being in high finance.
February 22, 2022
This was a very long book and I think much of the modern content could have been more succinct. Interesting stuff for sure, but the people impacting the changing tides of the Morgan banks got a lot less interesting as the story went on. Maybe there was less to know about them or less research done or the content was less worthy of retelling or some combination. But that’s my main complaint - the people were less engaging at the end and it was hard to attach the economic tides to anything human.
July 22, 2014
This book was about how banking went from gentleman bankers of the 1800's to the pillaging corporate pirates of today, that buy up companies and sell off their assets to make millions for themselves while putting thousands out of work.
This book had a lot of really good date but could have been editing down to about half the size, as the average really will not be interested into the massive amount of details collected here.
This book had a lot of really good date but could have been editing down to about half the size, as the average really will not be interested into the massive amount of details collected here.
January 19, 2018
Multiple generations and iterations of a single family managed to set the tone of international banking for over a hundred years. Then a downfall into 80s "banking" practices erodes all that they once held dear.
This book was published in 1990. One hopes for an updated version covering up to 2008 and beyond. A remarkable book on banking.
This book was published in 1990. One hopes for an updated version covering up to 2008 and beyond. A remarkable book on banking.
March 16, 2018
Better than a text book highly educational and interesting.
April 24, 2023
Frankly, I was disappointed with the book. It is good popular history but not really serious history. For example, the author talks about how bad the 1987 stock market crash was but fails to mention that stocks end the year higher than they had begun. He mentions thousands of boards the various characters served on but not once in the 700 pages are we inside a board room. One reviewer talks about how he lavishes some areas with detail and then ignores others. I agree. I found myself wanting to know more many times. The mini-biographies throughout the book seem like the author simply is looking at an old photograph and sheds little else on the subject. I did make it through the book but found myself wanting more information.
June 16, 2021
Phew Not an easy listen very dry and Herman Munster as narrator. I will continue on the Ron Chernow book path, he's a terrific historian.
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