To most people, March 31, 2013 passed just like any other day. Very few people, if any, noted anything special about that date. It was certainly the last day of March. To those in the financial world, it’s also significant that it’s the last day of the first quarter of the year. But perhaps among them, a few would know that on that day 100 years ago, Wall Street, the United States, and a larger part of the world lost a colossal figure, and whose influence is still felt today.
John Pierpont Morgan, or better known as J.P. Morgan, died on March 31, 1913 in his sleep. He was just a few days shy of his seventy-six birthday.
I am not a person who has any special interest in money. I earn my living by doing an engineer’s job. Money to me is important. But I know little about financial matters and I don’t have a keen and strong interest in those matters, comparing to my interest in Chinese and English literatures. There should be no reason for me to revere someone like J.P. Morgan. Yet I cannot suppress my burning desire to write something about this historical figure, due completely to a book I read couple of years ago and I am reading it again.
Morgan, American Financier by Jean Strouse is a fascinating book. I have read many biographies and I think this is one of the best. The book describes to us a historical and important person, as it is the essential task of a biography. But if it just documented the life and work of Morgan, then it would have been just like any other biography. What this book does differently in introducing the subject to the readers is that it doesn’t limit itself to telling the lives of Morgan, it brings us back to the Gilded Age and presents a complete picture of how Morgan, his family, friends, and colleagues lived and worked. From the book we can learn in those years how a single person could have garnered so much power in a short period of time and even was called upon to act as the central banker of the United States. In waves after waves of great financial crisis Morgan essentially functioned as the Federal Reserve and more than once he saved the US financial systems from complete collapse.
In his life time, the United States transformed itself from a primarily agriculture society to one of the most powerful and industrialized nations, and it would not be an exaggeration to say that Morgan was one of the major drivers of that transformation.
Whenever I look back in history I cannot avoid subconsciously comparing what was happening in this side of world with what was going on at the other side of the world. The United States fought a civil war and suffered great damages from it. But in a few decades it quickly rebuilt itself and became one of the strongest nations in the world. Around the same time, Chinese also fought among themselves and that civil war was followed by wars with foreigners as well. The result was that one of the most advanced civilizations that dominated the world for over 2000 years collapsed. To this day, Chinese people still feel the effect of those years and are still pining for the return of the old glorious status.
Reading the book would help readers understand how the United States and her people made that possible. In addition to social and political changes, the financial advancements played a significant role in transforming American into a world power. Morgan was the indisputable leader in that process. To a large extend, Morgan’s role was almost like a branch of the government. He was not elected and was not enthroned by anyone. He made that possible all by himself.
In a democratic society, when so much power was concentrated in one person, there was no shortage of weariness by the public about his power. When he wielded his power, even with the best intention and unimpeachable personal integrity in the act, people couldn’t tolerate the idea that a single person could decide the fate of a country, although at the time despotic hereditary system was the norm in the rest of the world. Morgan was viewed as a villain by some and a hero by others. Until the publication of this book, there was not a complete picture of the person. I remember that when I was in high school in China we were learning Marx’s theory on capitalism and the teacher made quite a few references to the huge trusts like J. P. Morgan. The trusts dominated by a few super rich people were thought to be one of the worst evils of capitalism. We thus believed that capitalism was bad. But after reading this book, one can recognize that not only Carl Marx saw those things as bad, the American people also saw that uncontrolled trusts were bad to capitalism. They saw the problem and they fixed it.
But fixing trusts was not enough, people soon saw there were other problems and challenges that needed the attention and resourcefulness of the Americans. In Morgan’s life time, the United States regularly experienced financial turmoil about once every seven years. Morgan struggled to find ways to avoid the financial storms. He worked together with the US government to successfully navigate through the storms. After his death, the Federal Reserve was created. Although there were even bigger storms after Morgan died, at least the United States was able to weather through the crisis without asking for a private citizen for help.
Nearly 100 years after his death, we experienced a crisis that threatened to bring down the entire financial system of the world. People who know something about the world during Morgan’s time now had a chance to appreciate the kind of role Morgan played when he basically did what the Federal Reserve did in 2008. What people would think of someone who is able to save the entire financial system of the world from collapse and controls almost 1/3 of the GNP of the United States (now in trillions of dollars)? There is no such person today and it’s doubtful that there can ever be someone with that kind of power in the future. But more than 100 years ago, there was J. P. Morgan.
Morgan lived a rich life in terms of his wealth and his deeds. The United States, like a rapidly growing youth, was full of exuberance, vigor, and energy, while suffering from periodic growing pains. The time was right and exciting for Morgan. As we look back, we are awed by what he did. History cannot be changed, but it’s books like this one that makes history interesting to us.
I highly recommend this book, even if you are not interested in high finance. You may be interested in war histories, love stories, and other things, and after reading this book, you may be from now on interested in how big money changed the world, just like what big wars did. History has yielded many great heros, villains, political leaders, generals, artists, and scientists. But history has not given us many great money men, among them, Morgan was probably the greatest money man of all time.
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