J.P. Morgan

The Panic of 1907, called the Bankers' Panic or the Knickerbocker Crisis, was a financial crisis unfolding over three weeks from mid-October, when the New York Stock Exchange suddenly dropped almost fifty percent from its previous-year peak, its Wikipedia article records. The panic occurred during a time of economic recession, with numerous runs on banks and trust companies, and it eventually spread throughout the nation as state and local banks and businesses entered bankruptcy, producing the eighth-largest decline in United States stock market history. The crisis was triggered by the failed October attempt to corner the stock of the United Copper Company; runs struck the banks that had financed the cornering scheme and spread to affiliated banks and trusts, bringing down the Knickerbocker Trust Company, New York's third-largest trust, a week later. Only the intervention of J. P. Morgan, who pledged large sums of his own money and pressed other New York bankers to match him, kept the panic from deepening.

The origins of J.P. Morgan and Co. reach back to 1854, when Junius S. Morgan joined George Peabody's London banking business, the firm's history records. Junius took control of the house on Peabody's retirement, restyling it J.S. Morgan and Co. in 1864, while his son Pierpont apprenticed in New York, opened his own firm, and in 1871 joined Anthony Drexel in Drexel, Morgan and Co. Drexel's death brought the 1895 reorganization into J.P. Morgan and Co., the house that financed the formation of the United States Steel Corporation, the world's first billion-dollar company. That same year the firm supplied sixty-two million dollars in gold to the United States government, floating a bond issue and rebuilding the Treasury's hundred-million-dollar surplus. From 1892 it financed the New York, New Haven, and Hartford Railroad, steering that carrier through acquisitions to dominance in New England. Its 23 Wall Street quarters, built in 1914, became known as the Corner and as the House of Morgan.

Jean Strouse's 1999 biography, Morgan: American Financier, won praise for portraying Morgan's personality realistically and for explaining complex financial topics clearly, its author's Wikipedia biography records. Strouse, a Radcliffe graduate, had won the Bancroft Prize for her 1980 biography of the diarist Alice James, served as a book critic at Newsweek from 1979 to 1983, and ran the New York Public Library's Dorothy and Lewis B. Cullman Center for Scholars and Writers from 2003 to 2017; she received a MacArthur Fellowship in 2001 and held Guggenheim and National Endowment fellowships. The biography's reputation rests on joining the psychological portrait to the mechanical explanation: the man whose nose, temper, and collecting mania were Victorian legend, rendered alongside the mechanics of the gold loan, the railroad reorganizations, and the 1907 rescue in language a lay reader can follow. For the founder-thesis reader, it is the bridge between the Morgan of caricature and the Morgan of the balance sheet, the standard account of how the private man produced the public financier.

The Erie Railroad, which emerged from its 1893 bankruptcy reorganization in 1895, began obtaining financial support from J. P. Morgan in that era, the railroad's Wikipedia history records. In 1898 the Erie obtained the New York, Susquehanna and Western as a subsidiary after Morgan purchased the majority of its shares on the Erie's behalf, gaining access to anthracite coal mines south of Scranton to compete with the Delaware, Lackawanna and Western's coal operations. The Morgan partner George W. Perkins brought Frederick D. Underwood into the Erie in 1910 to run it. During the eastern railroad strike of 1913, when Erie employees demanded a twenty percent wage increase that management resisted, the union leader W. G. Lee asserted that the only way to deal with the Erie was through J. P. Morgan and Company, or the banks; Underwood retorted from his home in Wisconsin that he, not George W. Perkins, not J. P. Morgan, nor anybody else, was running the Erie Railroad. The exchange shows how completely the Morgan firm was understood to stand behind the properties it reorganized.

Anthony Joseph Drexel, the Philadelphia banker instrumental in modern global finance's rise after the American Civil War, entered at thirteen the banking house his Austrian-born father Francis Martin Drexel had founded, his Wikipedia biography records. After his father's death in 1863, he closed the firm's Chicago and San Francisco offices and, in 1867, founded the Paris-based banking partnership Drexel, Harjes and Co. Junius Spencer Morgan's urging from London produced the 1871 arrangement by which Drexel took Junius's troubled son as his protege and formed a new partnership with him, Drexel, Morgan and Co. The new merchant banking partnership, based in New York rather than Philadelphia, served initially as an agent for European investment in the United States; over the next generation it assumed the leading role in financing America's railroads, stabilized Wall Street's chaotic securities markets, and created a national capital market for industrial companies, one previously reserved for railroads and canals. Drexel also founded Drexel University in Philadelphia in 1891.

Junius Spencer Morgan, born April 14, 1813, in Holyoke, Massachusetts, was the American banker and financier who built the London house that became the base of the Morgan banking empire and the patriarch of the family, his Wikipedia biography records. Apprenticed at thirteen and trained for five years as a clerk under the Boston merchant banker Alfred Welles, he was bought a partnership in Hartford's largest wholesale dry goods house, Howe Mather and Co., by his father in 1836, and spent the depression years after the Panic of 1837 traveling the South to collect the firm's debts, often in payments of cotton. On May 15, 1853, at the recommendation of James Beebe, he visited the American banker George Peabody in London; Peabody, in poor health, offered him a junior partnership, with the promise that Morgan would be made senior partner upon Peabody's retirement within ten years. Morgan joined the firm in October 1854, strengthened its American accounts with firsthand knowledge Peabody lacked, and on Peabody's retirement took control of the house, renaming it J. S. Morgan and Co. in 1864.

In late November 1910, Senator Nelson W. Aldrich, joined by Assistant Secretary of the Treasury A. Piatt Andrew, brought five leading financiers to a private meeting at the Jekyll Island Club, off the Georgia coast, to draft recommendations for a central banking system able to answer panics like that of 1907, the island's Wikipedia history records. The invited group comprised Frank Vanderlip, Henry P. Davison, Arthur Shelton, Benjamin Strong, and Paul Warburg. Davison was the senior partner of J. P. Morgan and Company; Strong, who represented the Morgan-influenced Bankers Trust, would become the first head of the Federal Reserve Bank of New York. Their plan called for fifteen self-governing branches spread across the country under a national commission that would coordinate policy. Aldrich put the proposal before the National Monetary Commission without acknowledging where it came from, and the Federal Reserve Act carried a similar federated structure. Disclosure waited until 1930, when Carter Glass claimed credit for the Federal Reserve's design and drew rebuttals from Warburg and other banking experts.

The National Monetary Commission was created by the Aldrich-Vreeland Act of 1908 after the Panic of 1907 and chaired by Senator Nelson Aldrich, a Republican Senate leader, its Wikipedia article records. Aldrich personally led a team of experts to the major European capitals, where they were stunned by how much more efficient the European financial system appeared and how much more important than the dollar the pound, franc, and mark were in international trade. The commission issued thirty reports between 1909 and 1912, a detailed and authoritative survey of the era's banking systems published by the Government Printing Office. Its plan provided for local associations of banks grouped into regional associations and a national reserve association headquartered in Washington, holding the country's bank reserves, issuing an elastic currency based on commercial assets, and rediscounting commercial paper. The plan failed to win strong public support because of its resemblance to a central bank and popular suspicion of Aldrich, but many of its features were incorporated in the Federal Reserve Act, enacted December 23, 1913.

During 1889 Thomas Edison held business interests in many electricity-related companies, General Electric's Wikipedia history records: the Edison Lamp Company, a lamp manufacturer in East Newark; the Edison Machine Works, a maker of dynamos and large electric motors in Schenectady; Bergmann and Company, a manufacturer of electric lighting devices; and the Edison Electric Light Company, which held the patents and financed Edison's lighting experiments with backing from J. P. Morgan and the Vanderbilt family. Henry Villard, a longtime Edison supporter and investor, proposed consolidating these interests, a proposal supported by Samuel Insull, who served as Edison's secretary and later became a financier. In 1889 Drexel, Morgan and Co., the firm founded by Morgan and Anthony Drexel, financed Edison's research and helped merge several of the separate companies under one corporation, forming the Edison General Electric Company, incorporated in New York on April 24, 1889, which also acquired the Sprague Electric Railway and Motor Company in the same year. Morgan's backing of Edison dated to 1878, when he financed the Edison Electric Illuminating Company.

By 1900 Morgan's collection had outgrown his residence, with his son-in-law describing the basement as packed with objects and part of the holdings stored at the Lenox Library, the Morgan Library's Wikipedia history records. In January 1900 he bought a plot on 36th Street for a library, and in 1902 two more lots; between his house and a new limestone house for his daughter Louisa, Charles McKim of McKim, Mead and White designed a classical marble library. Morgan rejected Warren and Wetmore's baroque proposal and McKim's Greek temple variant, telling the architect he wanted a gem; he insisted on marble despite his family's brownstones, and switched from white to pinkish-gray Tennessee marble after a neighbor warned that white would make the building look like a mausoleum. He prohibited workers from talking to the press, paid an extra fifty thousand dollars for dry masonry construction without mortar joints, and completed the library in 1906 at a cost of 1.2 million dollars. The Wall Street Journal reported he wanted the most perfect structure human hands could erect, at whatever cost.

The International Mercantile Marine Company, which grew out of the International Navigation Company, was a trust of the early twentieth century conceived as J. P. Morgan's bid to monopolize the shipping trade, its Wikipedia history records. The magnates behind it were Clement Griscom, whose interests included the American and Red Star lines; Bernard N. Baker of the Atlantic Transport Line; J. Bruce Ismay, who headed the White Star Line; and John Ellerman of the Leyland Line; J.P. Morgan and Co. bankrolled the project. After negotiations that absorbed the Atlantic Transport Line, concluded in December 1900 after six months of talks, the Leyland Line was revealed as a trust member in April 1901, and the prestigious White Star Line was bought by Morgan's team after long negotiations in April 1902. On October 1, 1902, the Morgan firm announced the founding of IMM, incorporated in New Jersey. The trust alarmed the British shipping industry, and its formation led directly to government subsidies in Britain for Cunard's new liners, the Lusitania and the Mauretania, built to compete.

The Pujo Committee was a United States congressional subcommittee in 1912 and 1913 convened to probe the so-called money trust, the community of Wall Street bankers and financiers whose grip on the nation's finances had become the era's political obsession, its Wikipedia article records. After Congressman Charles August Lindbergh Sr. asserted in July 1911 that a banking trust existed and should be investigated, the Democratic Money Trust Caucus passed House Resolution 405 on February 7, 1912, and Arsene Pujo of Louisiana, chairman of the House Banking and Currency Committee, submitted a resolution that passed by a vote of 268 to 8. The lawyer Samuel Untermyer, who as early as December 1911 had advocated the investigation and encouraged Lindbergh to keep fighting for it, became the committee's counsel. The inquiry examined clearing houses, the New York Stock Exchange, and the concentration of wealth, though its scope was hampered when the Comptroller of the Currency furnished only a fraction of the requested loan data. Witnesses were first examined on May 16, 1912.

Elbert Henry Gary, a lawyer and former DuPage County judge addressed as Judge Gary ever after, numbered among the founders of U.S. Steel in 1901, together with J. P. Morgan, William H. Moore, Henry Clay Frick, and Charles M. Schwab, his Wikipedia biography records. He first became interested in steel while hearing a case as a judge, took the presidency of the Federal Steel Corporation in Chicago in 1898, and retired from his law practice to lead the merged company as chairman of the board and the finance committee from its founding until his death in 1927, moving its headquarters to New York in 1900. When President Theodore Roosevelt said Gary was head of the steel trust, Gary considered it a compliment, and the two men communicated in a nonconfrontational way unlike Roosevelt's dealings with the leaders of other trusts. The steel town of Gary, Indiana, founded in 1906, was named for him. Supported by Morgan, Gary consolidated control of the board, which consisted primarily of bankers and lawyers, over the traditional competitive steelmakers dominated by Carnegie's men.

In 1901, J. P. Morgan created the United States Steel Corporation by merging the Carnegie Steel Company, Federal Steel, and National Steel for 492 million dollars, roughly nineteen billion today, the company's Wikipedia history records. At its peak the company, which Wall Street called simply the Corporation, drew more notice for size than for efficiency or innovation: in 1901 no steelmaker came close to it, with roughly two-thirds of all American steel pouring from its mills, and its Pittsburgh Steamship Company ran the largest commercial fleet on the Great Lakes. Capitalized at 1.4 billion dollars, it was the world's first billion-dollar corporation, although the Bureau of Corporations would later value it at around seven hundred million. Because Andrew Carnegie demanded gold bonds for his share, leaving large founding debts, and because of concerns about antitrust lawsuits, U.S. Steel operated cautiously. Charles M. Schwab, the Carnegie Steel executive who originally suggested the merger to Morgan, became the new corporation's first president.

The Knickerbocker Trust was chartered in 1884 by Frederick G. Eldridge, a friend and classmate of J. P. Morgan, and as a trust company it chiefly acted as trustee for individuals, corporations, and estates, its Wikipedia history records. Charles T. Barney, president from 1897, had the trust's funds committed in 1907 to a plan for driving up copper prices through a corner, a gamble that unraveled when millions of dollars of copper were dumped to defeat an unrelated hostile takeover. Barney sought a meeting with Morgan about assistance for the bank and was rebuffed. Once Barney admitted his part in the F. Augustus Heinze and Charles W. Morse speculations, the board called for his resignation; that same afternoon the National Bank of Commerce declared it would stop clearing the Knickerbocker's checks, touching off the depositor run that forced suspension of operations. Barney shot himself on November 14, 1907. Weeks after its forced closing the trust reopened, ultimately paying every depositor in full with interest.

John Pierpont Morgan Sr., whose life ran from April 17, 1837, to March 31, 1913, was the financier and investment banker who dominated Wall Street's corporate finance across the Gilded Age and the Progressive Era, according to his Wikipedia biography. Heading the banking house that eventually became JPMorgan Chase and Co., he drove a wave of industrial consolidations at the turn of the twentieth century, among them U.S. Steel, International Harvester, and General Electric. Controlling interests in Aetna, Western Union, the Pullman Car Company, and twenty-one railroads gave him and his partners enormous influence over the nation's capital markets. When the Panic of 1907 struck, the coalition of financiers he assembled saved the American monetary system from collapse. He died in Rome at seventy-five, leaving fortune and business to his son, J. P. Morgan Jr., with biographer Ron Chernow estimating his wealth at eighty million dollars, about 1.9 billion in 2024 terms.

The panic's opening act was a stock manipulation scheme aimed at cornering F. Augustus Heinze's United Copper Company, the article records. Heinze had made a fortune as a copper magnate in Butte, Montana, moved to New York in 1906, and formed a close relationship with the notorious Wall Street banker Charles W. Morse; together they gained control of many banks, sitting on the boards of at minimum six national banks, ten state banks, five trust companies, and four insurance firms. Augustus's brother Otto devised the corner, believing the Heinzes already controlled a majority of the company and that speculators had sold short borrowed shares that could be squeezed at any price. On Monday, October 14, he began aggressively purchasing; United Copper rose in one day from 39 to 52 dollars a share. But short sellers found plenty of shares from other sources, the stock closed at 30 on Tuesday, and it fell to 10 by Wednesday. Otto Heinze was ruined, and his brokerage house, Gross and Kleeberg, went into bankruptcy.

Morgan was born in Hartford, Connecticut, to Junius Spencer Morgan, then a partner in the city's largest dry goods wholesaler, and Juliet Pierpont, daughter of the poet John Pierpont; his uncle James Lord Pierpont composed Jingle Bells. He preferred to be called Pierpont rather than John. His grandfather Joseph Morgan died in 1847, leaving the family a large fortune, and had been a co-founder of Aetna. Educated in New England public and private schools, Pierpont passed the entrance examination for the English High School of Boston, which specialized in mathematics for commercial careers. In April 1852 he suffered rheumatic fever so severe that its worsening symptoms eventually left him unable to walk, and his father sent him to the Azores to convalesce for nearly a year. In 1856 Junius enrolled him at Bellerive, a Swiss school in the village of La Tour-de-Peilz, where his French became fluent, and then at the University of Gottingen to sharpen his German, finishing an art history degree in six months in 1857.

The year 1907 brought the acquisition of its largest competitor, the Tennessee Coal, Iron and Railroad Company, an emergency purchase arranged during that year's panic to save the brokerage Moore and Schley and calm the markets; Tennessee Coal was replaced on the Dow Jones Industrial Average by General Electric, the company's Wikipedia history records. The following March, chairman Elbert H. Gary formed the Committee on Safety of United States Steel after meetings with the safety managers of the operating companies, an initiative that led to the introduction of the modern Safety First movement, intended to reduce worker accidents and to safeguard the company against criticisms and legal liability. The sequence illustrates the merged firm's posture under the Morgan bankers: stabilize competition through acquisition, then manage public and political exposure through institutionalized reform. In 1911, the same year the federal government broke up Standard Oil, prosecutors also turned antitrust law on U.S. Steel, without success.

A government suit was looming in November 1904 when Gary took a proposal to President Roosevelt, his biography records: cooperation traded for preferential treatment. The company would lay open its books to the Bureau of Corporations, and where the Bureau turned up evidence of wrongdoing, U.S. Steel would receive private warning and an opportunity to set matters right. Roosevelt accepted what became known as a gentlemen's agreement because it accommodated his interest in the modern industrial order while preserving his public image as slayer of the trusts. Gary then pursued stability through what historians describe as price leadership and orderly practices of competition: publicly announced fixed prices, wage stability, an unusual amount of information for stockholders in annual reports, and conservative technological progress. Starting in 1906 he built the world's largest fully integrated steel plant on the shore of Lake Michigan, in the area duly named Gary, Indiana, on which the company had expended seventy-eight million dollars by 1911. The posture reflected the thesis that industrial stability protected both profits and the public peace.

The Pujo Committee's report, concluded in 1913, found that a community of influential financial leaders had gained control of the major manufacturing, transportation, mining, telecommunications, and financial markets of the United States, the article records. The investigators documented that 180 individuals holding 341 directorships in 112 corporations possessed 22.245 billion dollars in aggregate resources, that the twenty largest banks held 42.9 percent of America's total banking resources, and that a cartel headed by J. P. Morgan, George F. Baker, and James Stillman controlled at least eighteen major financial corporations, commanding an estimated 2.1 billion dollars through seven banks and trust companies. The report further found that interlocking directorates and a system known counterintuitively as banking ethics restricted competition among banks and firms, and that a handful of men held manipulative control of the New York Stock Exchange. It also singled out individual bankers including Paul Warburg, Jacob Schiff, Felix Warburg, and Benjamin Strong.

IMM was structured as a holding company over subsidiary corporations that had subsidiaries of their own, and Morgan's plan, its history records, was to rule transatlantic shipping through interlocking directorates and railroad contracts; the plan failed against the unscheduled character of sea transport, American antitrust law, and the British agreement. As an American he could not hold British ships directly, though he could hold the company that held them. Immigration swelled the combine's 1902 traffic to 64,738 passengers, and a partnership concluded in New York on February 20, 1902 linked it with Germany's two greatest shipping companies, Norddeutscher Lloyd and HAPAG. The competitive response came in 1908, when Harland and Wolff was authorized to build the White Star Line's Olympic-class trio of liners: the Olympic, the Titanic, and the Britannic. An agreement with Lord Pirrie dating from 1902 routed all of the company's shipbuilding to his Belfast yard.

Around the library's completion, Morgan hired Belle da Costa Greene as his personal librarian, and she remained in charge of the collection for more than four decades, the history records. Greene cataloged and researched the history of each item and aggressively expanded the collection, hunting rare volumes in back alleys, though she initially avoided auctions and rarely spent more than ten thousand dollars on a book without permission. She tended to acquire items created before the sixteenth century, since Morgan believed other libraries were able to adequately care for newer material. In one recorded episode, Morgan bought a Vermeer painting minutes after learning about the artist; in others he refused works he judged too expensive, sometimes buying whole collections and sometimes only a few pieces. The Wall Street Journal wrote in 1911 that Morgan bought books as some financiers buy a thousand shares of stock, and in some years he spent half his income on the collection. Larger late acquisitions included a cache of rare American authors' manuscripts from the merchant S. H. Wakeman in 1909.

General Electric took shape in the 1892 merger that fused the Edison General Electric Company with the Thomson-Houston Electric Company, a consolidation the company's Wikipedia history credits to the conception and orchestration of financier J. P. Morgan. Thomson-Houston, led by Charles Coffin, traced its origins to the American Electric Company of New Britain, Connecticut, formed in 1880. Incorporation took place in New York, the Schenectady works serving as headquarters long afterward, with both companies' original plants continuing under the GE banner. Steinmetz came aboard in 1893 through the purchase of a smaller New York company, a genius in mathematics and electronics who accumulated over two hundred patents and proved a major force in advancing the company. In 1896 General Electric was one of the original twelve companies listed on the newly formed Dow Jones Industrial Average, where it remained for 122 years, though not continuously. The merger became a template for Morgan's method: combine competing manufacturers, then capitalize the combination at a scale no rival could challenge.

Junius Morgan's London house survived its gravest test in the Panic of 1857, when the railway boom ended, prices collapsed, and London rumors spread that Peabody and Co. was on the verge of failure, with major clients suspending or failing and rivals including Barings demanding immediate payment, the biography records. Peabody declined a conditional bailout from the major London houses that would have closed the firm, instead securing an emergency line of credit of 800,000 pounds from the Bank of England. Junius became the active head of the firm in February 1859 and grew J. S. Morgan and Co., with his son's aid, into a trans-Atlantic financial empire dominant in government and railroad finance, with allied firms in New York, Philadelphia, and Paris. He died on April 8, 1890, five days after a fall left him unconscious with a broken wrist and concussion, leaving a fortune of 12.4 million dollars. His pallbearers included Anthony Joseph Drexel and Cornelius Vanderbilt II, and at his death the Morgan banks were the pre-eminent American banking house.

After finishing his education, Morgan went to London in August 1857 to join his father, then a partner in the merchant banking firm George Peabody and Co., and for the next fourteen years served as his father's American representative through a series of affiliated New York houses: Duncan, Sherman and Company, his own J. Pierpont Morgan and Company, and Dabney, Morgan. Junius reinforced the apprenticeship with religious discipline, writing his son to remember that an Eye above watched every act, word, and deed for which he would one day give account. The Peabody house was struggling in the wake of the Panic of 1857, surviving only after George Peabody defied creditors, including Baring Brothers, and secured an emergency loan from the Bank of England in November of that year. Morgan spent months in the South learning the cotton trade from New Orleans, and he considered an unauthorized but profitable coffee trade his first fully independent transaction, though it drew a stern warning from Duncan Sherman.

In the Panic of 1907, the institution's history records, the city's bank and trust company presidents spent the night locked inside the library and were not released until they had agreed on a plan to stop the financial crisis, making the new building the physical stage for the rescue that capped Morgan's career. He had first used his office there in November 1906, hosting the Metropolitan Museum of Art's purchasing committee, with the decorative details completed in January 1907 and the collection relocated into the library later that year. Morgan frequently met foreign bankers in the library's study and often opted to work there rather than in his downtown office, so the crisis found him already conducting the firm's business among his books and manuscripts. Afterward, to allow people to see the library from Madison Avenue, he demolished the neighboring Dodge house in 1907 and 1908 and replaced it with a garden designed by Beatrix Farrand. He had bought two hundred cases of books, temporarily stored at the Lenox Library and moved into the new building beginning in December 1905.

The early 1910s marked the turning point for the shipping trust. On April 15, 1912, the Titanic, flagship of its fleet and property of the White Star subsidiary, sank during her maiden voyage. Beyond the toll of lives and money, the sinking unsettled the trust's organization: Senator William Alden Smith, through the American commission of inquiry into the disaster, attacked the combine's very principle and Morgan's combination itself, the history records. Ismay's retirement as IMM president, arranged before the Titanic went down, took effect in 1913 with Harold Sanderson succeeding him; Morgan died that March 31. Analysis of the company's financial records shows that IMM was overleveraged and suffered from inadequate cash flow, defaulting on bond interest payments in late 1914 and entering a friendly receivership in 1915, from which it emerged in 1916. The combine never managed to dominate the bulk of the North Atlantic trade, and its corporate remnants eventually re-emerged as the United States Lines.

The failed corner sent contagion through the banking system, the article records. The State Savings Bank of Butte, owned by Augustus Heinze, announced its insolvency, and depositors rushed the Mercantile National Bank in New York, of which Heinze was president; the New York Clearing House, afraid of the tainted reputations of Heinze and Morse, forced both men to resign all their banking interests. The contagion then reached the trust companies, whose assets had grown 244 percent in the decade before 1907, against 97 percent for national banks. On Monday, October 21, the Knickerbocker Trust's board asked its president, Charles T. Barney, to resign over his associations with Morse, and the National Bank of Commerce, a Morgan-dominated bank, announced it would no longer serve as clearing house for the Knickerbocker. The next day a classic run withdrew nearly eight million dollars in less than three hours, forcing suspension before noon. Call money rates on the exchange soared to seventy percent, and runs spread to the Trust Company of America and the Lincoln Trust.

Although Pujo left Congress in 1913, the committee's findings inspired public support for ratification of the Sixteenth Amendment authorizing a federal income tax, for passage of the Federal Reserve Act that same year, and for the Clayton Antitrust Act of 1914, the article records. The findings were also widely publicized in Louis Brandeis's book Other People's Money and How the Bankers Use It, which gave the money trust diagnosis its permanent literary form. Morgan himself, though suffering ill health, testified before the committee in December 1912 and faced several days of questioning from Untermyer; the exchange between the two men on the fundamentally psychological nature of banking, an industry built on trust rather than on money or property, is often quoted in business articles to this day. Morgan's associates laid his continuing physical decline at the hearings' door: he fell ill in February 1913 and died on March 31, with the Federal Reserve still nine months from officially displacing the money trust as lender of last resort.

Morgan's estate was valued at 128 million dollars, over half of it the worth of his collection, and he bequeathed all except one piece to the library, asking that his son make it permanently available for the instruction and pleasure of the American people, the institution's history records. Jack Morgan sold off much of the overseas collection rather than importing it, but kept what was already in his father's library, and in 1924 he incorporated the Pierpont Morgan Library as a public institution with a 1.5-million-dollar endowment, retaining Belle da Costa Greene as director. The library was not a public lending library and initially admitted only researchers, ten at a time; Jack's warning that one soiled thumb could undo the work of nine hundred years expressed its standard of custody. The collection, more than 350,000 objects by the early twenty-first century, includes three Gutenberg Bibles, the manuscript of A Christmas Carol, and the only significant music manuscript Morgan bought in his lifetime, Beethoven's Violin Sonata in G major, Opus 96, acquired in 1907.

As the chaos began shaking the confidence of New York's banks, their most famous practitioner was away at a church convention in Richmond, Virginia, the article records. Morgan returned to Wall Street late on the night of Saturday, October 19, and the following morning the library of his brownstone at Madison Avenue and 36th Street had become a revolving door of bank and trust company presidents seeking help. Morgan and his associates examined the Knickerbocker's books, judged it insolvent, and declined to intervene; its failure, however, triggered runs on healthy trusts, prompting Morgan to take charge of the rescue. After an overnight audit showed the Trust Company of America to be sound, Morgan declared this was the place to stop the trouble, then assembled the other trust companies' presidents and held them in meeting until midnight, when they agreed to provide 8.25 million dollars in loans to keep it open. On Thursday Treasury Secretary Cortelyou deposited around twenty-five million dollars in New York banks, and John D. Rockefeller deposited ten million more.

In August 1861 Morgan loaned twenty thousand dollars to Simon Stevens, a well-connected New York attorney, who used it to buy five thousand Hall carbines at 11.50 dollars each from an arms dealer and immediately resell them to General John Fremont at 22 dollars. The rifles had earlier been sold off by the government for 3.50 dollars each; after the Union defeat at Bull Run placed a premium on arms, the resale became a scandal. Morgan held title to the carbines during the thirty-eight-day loan, having their barrels replaced with rifled ones before shipment, and received fifty-five thousand dollars from the Army in September, deducting the loan's face value plus expenses and interest. An 1863 report by a House select committee examining government contracts branded the profiteers worse than traitors in arms. The debate over Morgan's knowledge persisted for decades: Gustavus Myers accused him in 1910, public-relations chief R. Gordon Wasson found no evidence he knew, and historian Vincent Carosso concluded that Stevens had used Morgan's name to cover his own greed.

In 1871, at the behest of Junius Morgan in London, the Philadelphia financier Anthony Joseph Drexel became Pierpont's mentor, and the two formed Drexel, Morgan and Co. in New York, his biography records. The merchant banking partnership acted as agent for European capital moving into the United States, took the leading role in financing American railroads, and stabilized and revitalized the nation's securities markets. Most critically, it built a national capital market for industrial companies, an arena that before then had existed for railroads and canals alone. In government finance, Drexel, Morgan underwrote the pay of the entire United States Army in 1877 to restore investor confidence when Congress refused to act, and bailed out the federal government during the aftermath of the Panic of 1893. Drexel's Philadelphia capital and reputation steadied the younger Morgan, whom his father considered temperamentally speculative, and the partnership gave Morgan what his father's London house alone could not: a New York base from which to dominate American corporate finance for the next four decades.

Despite the cash infusions, New York banks were reluctant to make the short-term loans that facilitated daily stock trades, and prices crashed for lack of funds, the article records. At half past one on Thursday, October 24, Ransom Thomas, the exchange's president, rushed to Morgan's offices to say he would have to close early; Morgan was emphatic that an early close would be catastrophic. He summoned the city's bank presidents, informing them that as many as fifty stock exchange houses would fail unless twenty-five million dollars was raised in ten minutes. By 2:16 p.m., fourteen bank presidents had pledged 23.6 million dollars; the money reached the market at 2:30, and nineteen million had been loaned by the close. Friday brought renewed panic, and Morgan raised only 9.7 million in pledges. The New York Clearing House then issued one hundred million dollars in loan certificates to settle interbank balances, and Morgan contracted to purchase thirty million dollars of city bonds to keep New York from bankruptcy.

On Saturday, November 2, with the brokerage Moore and Schley near collapse under loans collateralized by Tennessee Coal and Iron stock, Morgan called an emergency conference at his library, proposing that U.S. Steel acquire TCI, the article records. That evening, with runs still threatening the Trust Company of America and the Lincoln Trust, forty to fifty bankers gathered, the clearing-house presidents in the East room and the trust executives in the West room. Around midnight Morgan informed a leader of the trust presidents that saving Moore and Schley would require twenty-five million dollars he would not commit unless the trusts also rescued their weakest members. As discussion stalled, the bankers realized Morgan had locked them in and pocketed the key. At three in the morning about one hundred twenty officials assembled for a full report, and by 4:45 a.m. Morgan had persuaded the trusts' leader to sign, the rest following. Next day Elbert Gary and Henry Clay Frick won Roosevelt's assent to the TCI purchase less than an hour before the exchange opened, and the final crisis was averted.

Morgan's ascent to power ran through America's largest business enterprises, the railroads, his biography records. He led the syndicate that broke Jay Cooke's government-financing privileges, raised large sums in Europe through the American rails section of the London Stock Exchange, and developed a national railroad empire through reorganization and consolidation. Instead of acting only as a financier, he took an active hand in managing and reorganizing the railroads themselves, raising efficiency in a practice labeled Morganization and described by his biography as pioneering private equity investing. The year 1883 saw him successfully place a large block of William H. Vanderbilt's New York Central stock with investors. In 1885 he reorganized the New York, West Shore and Buffalo line and leased it to the New York Central. After the Interstate Commerce Act of 1887, he convened unprecedented conferences of railroad presidents in 1889 and 1890, bringing together competitors to write agreements for the maintenance of public, reasonable, uniform, and stable rates, creating a community of interest among rival lines.

At the depths of the Panic of 1893, around 1895, the United States Treasury nearly depleted its gold reserves, Morgan's biography records. Morgan proposed that the federal government purchase gold from his own and allied European banks; when Washington declined in favor of public bond sales, he demanded a meeting with President Grover Cleveland, warning that the government could default that same day absent action. Morgan then reached for an old Civil War statute under which he and the Rothschilds sold 3.5 million ounces of gold straight to the Treasury for a thirty-year bond issue. The Treasury was saved, but Cleveland's standing with the populist agrarian wing of his party was ruined, ending his political career. Bankers faced William Jennings Bryan's withering attacks in the 1896 election, and Morgan donated heavily, like many of his peers, to the Republican William McKinley.

In 1900 Nikola Tesla persuaded Morgan that a trans-Atlantic wireless communication system, built on his theories of electrical conduction through the earth and atmosphere, would outperform the short-range radio apparatus Guglielmo Marconi was then demonstrating, his biography records. In what may have been a philanthropic investment, Morgan gave Tesla one hundred fifty thousand dollars, and Tesla offered him fifty-one percent control of the resulting patents. The letter of agreement was scarcely signed before Tesla resolved to enlarge the facility, eventually sited at Wardenclyffe, to incorporate terrestrial wireless power transmission, which he believed would sharpen the system's competitiveness. Morgan refused to give any further money toward the project, and with Tesla unable to secure other capital, development stalled and the site was abandoned by 1906. The episode displays the classic Morgan pattern: full backing for a founder's defined thesis, and none at all for a scope change.

The Northern Pacific Railway went bankrupt in the Panic of 1893, a bankruptcy that wiped out bondholders and left the property free of debt, and a complex financial battle for its control followed, Morgan's biography records. In 1901 Morgan, the New York financier E. H. Harriman, and Minnesota railroad builder James J. Hill reached a compromise. They formed the Northern Securities Company to combine three of the Midwest's most important railways under one holding company: the Northern Pacific, the Great Northern, and the Chicago, Burlington and Quincy. Unexpected opposition came from President Theodore Roosevelt, who judged the combination harmful to consumers and a breach of the seldom-enforced Sherman Antitrust Act of 1890; in 1902 he directed Attorney General Philander Knox to sue for its breakup. The Supreme Court dissolved the Northern Securities Company in 1904. Morgan did not lose money in the episode, but his all-powerful political reputation suffered.

Talks to buy out Andrew Carnegie's steel business and fold it together with other steel, coal, mining, and shipping firms began in 1900, his biography records. After financing the creation of the Federal Steel Company, he merged it with Carnegie Steel and several other steel and iron businesses in 1901, forming the United States Steel Corporation, the world's first billion-dollar company, with an authorized capitalization of 1.4 billion dollars, larger than any other industrial firm and comparable in size to the largest railroads. Its goals were economies of scale, reduced transportation and resource costs, expanded product lines, and improved distribution to compete globally with Britain and Germany. President Charles M. Schwab and others claimed the company's size would make it more aggressive in distant international markets, while critics regarded it as a monopoly seeking to dominate bridges, ships, railroad cars, rails, wire, and nails. With U.S. Steel, Morgan captured roughly two-thirds of the steel market, and Schwab was confident the company would soon hold seventy-five percent.

In 1902 J.P. Morgan and Co. financed the creation of the International Mercantile Marine Company, an Atlantic shipping trust that swallowed several major American and British lines in a bid to monopolize the carrying trade, his biography records. Morgan's design was mastery of transatlantic shipping through interlocking directorates and railroad contracts, an ambition defeated by the unscheduled nature of sea transport, American antitrust law, and an agreement with the British government. He had reserved a luxury suite with private promenade deck aboard the RMS Titanic, property of the trust's White Star Line subsidiary, and planned to sail on the ill-fated maiden voyage before changing those plans. The famous sinking became a financial disaster for the combine: its financial records show over-leveraging and inadequate cash flow, which drove a default on bond interest payments. Morgan purportedly responded that monetary losses amounted to nothing in life, and that it was the loss of life that counted.

During the Panic of 1907, with major New York banks on the verge of bankruptcy and no mechanism in existence to rescue them, Morgan stepped in to help resolve the crisis, his biography records. Treasury Secretary George B. Cortelyou earmarked thirty-five million dollars of federal money for deposit in New York banks, and Morgan summoned the nation's leading financiers to his New York mansion, compelling them to work out a rescue plan, with James Stillman, president of the National City Bank, at the center of the effort. A team of bank and trust executives that Morgan organized shifted money from bank to bank, opened further international lines of credit, and purchased the plummeting shares of healthy corporations. When the brokerage Moore and Schley, deeply invested in the Tennessee Coal, Iron and Railroad Company, threatened a larger collapse, Morgan proposed merging TCI into U.S. Steel; President Roosevelt promised legal immunity, U.S. Steel paid thirty million dollars for the stock, and by November 7, 1907, the panic was over.

In December 1912, though his health was failing, Morgan appeared before the Pujo Committee, the House Banking and Currency subcommittee, his biography records. Its final conclusion was that a few financial leaders wielded considerable control over many industries. Aggregate resources of 22.245 billion dollars stood under the control of the J.P. Morgan partners together with First National and National City directors, a sum Louis Brandeis likened to all the property in the twenty-two states west of the Mississippi. The statistic became the emblem of the money trust era. Conservatives had hailed Morgan for civic responsibility after the 1907 rescue, but critics attacked the terms of his 1895 gold loan to the Treasury, and writers including Upton Sinclair attacked his handling of the Panic of 1907 itself. The hearings coincided with, and by his associates' account accelerated, Morgan's final physical decline.

Morgan often had a tremendous physical effect on people; one contemporary said that after a Morgan visit he felt as though a gale had swept through the house, his biography records. He was physically large, with massive shoulders, piercing eyes, and a purple nose deformed by rhinophyma, a condition that can result from rosacea. Self-conscious about the deformity, he disliked publicity and hated being photographed without permission, and as a result all his professional portraits were retouched; the condition inspired the schoolyard taunt about Johnny Morgan's nasal organ and its purple hue. Surgeons could have shaved away the growth during his lifetime, but his son-in-law Herbert Satterlee speculated that he avoided the operation because the infantile seizures of his childhood left him afraid they would return. His social and professional self-confidence was too well established to be undermined by the affliction, which he seemed to dare people to face squarely, and he smoked dozens of large Havana cigars a day, dubbed Hercules' Clubs by observers.

Morgan was a wide-ranging collector of books, manuscripts, decorative arts, bronze statuettes, ivories, and clocks, with less interest in paintings than most collectors of his rank, his biography records. He turned seriously to collecting after his father's death in 1891, and as a so-called collector of collections built what ranked among the world's largest and most notable private holdings. A founding member of the Metropolitan Museum of Art, he served as trustee from 1888 to 1913, became vice-president and then president of the museum in 1904, and directed its emphasis toward the pursuit of important, original works. After the passage of a favorable tariff bill, his collection was shipped from London to the United States and exhibited at the Metropolitan in 1913, filling the second floor of a new wing in 1914; his son Jack donated roughly forty percent of the total to the museum in 1917. Morgan also assembled America's most important gem collections with Tiffany's George Kunz and funded Edward Curtis's photography of American Indians.

Morgan was a lifelong member of the Episcopal Church and by 1890 one of its most influential lay leaders, his biography records. A founding member of the Church Club of New York, he sat among the first laymen appointed to the committee behind the 1892 revision of the Book of Common Prayer, petitioning for a special limited collectible printing that he later financed. In 1910, impressed by Bishop Charles Brent's proposal for a world conference of churches, he contributed one hundred thousand dollars to finance the commission's work. His club life showed the same force of character: when his friend, Erie Railroad president John King, was blackballed by the Union Club, Morgan resigned, organized the Metropolitan Club of New York, donated land on Fifth Avenue that cost one hundred twenty-five thousand dollars, and instructed Stanford White to build a club fit for gentlemen and forget the expense, serving as its president from 1891 to 1900. He was also a benefactor of museums, hospitals, and trade schools.

In 1913, newspapers reported that Morgan had fallen into a long sinking spell marked by extreme weakness and nervousness, with a paralysis of the throat muscles preventing him from taking food, his biography records. He had been traveling abroad, and he died in his sleep on March 31, 1913, at the Grand Hotel Plaza in Rome, at seventy-five. His body came home aboard the French Line passenger ship SS France; Wall Street's flags hung at half-staff, and the stock market suspended trading for two hours as the coffin passed through New York City, an honor ordinarily reserved for heads of state, with the body lying the first night in his home and adjacent library. He was interred in Cedar Hill Cemetery in his birthplace of Hartford. His estate was worth 68.3 million dollars, of which about thirty million represented his share of the New York and Philadelphia banks, with the value of the art collection estimated at fifty million.

Morgan's son, John Pierpont Morgan Jr., known as Jack, took over the business at his father's death, but he was never as influential as the founder, the biography records. The Glass-Steagall Act of 1933 broke the House of Morgan into three parts: J.P. Morgan and Co., which became Morgan Guaranty Trust and ended up merging with Chase Bank; Morgan Stanley, the investment house formed in 1935 by his grandson Henry Sturgis Morgan with Harold Stanley; and Morgan Grenfell in London, the overseas securities house. The gemstone morganite was named in his honor, and the Cragston Dependencies of his Highland Falls estate were listed on the National Register of Historic Places in 1982. From 1890 to 1913, forty-two major corporations were organized, or had their securities underwritten in whole or part, by J.P. Morgan and Company, the institutional residue of a single banker's judgment acting as the American economy's allocator of capital.

What separates the Panic of 1907 from earlier panics, explains the Federal Reserve History essay by Jon Moen and Ellis Tallman, is the central part played by New York City's trust companies. Trust companies were state-chartered intermediaries that competed with banks for deposits but were not central to the payments system and cleared few checks, so they held cash reserves of roughly five percent against deposits, compared with twenty-five percent for national banks. Because their deposits were payable in cash on demand, trusts were just as susceptible to runs as banks. The trusts loaned large sums directly into New York equity markets, extending uncollateralized day loans to brokers, who then used the securities they purchased as collateral for call loans from nationally chartered banks. Runs on trust deposits short-circuited their role as the initial liquidity provider to the stock market. The essay draws the structural parallel to the shadow banks of 2007-09: both crises started outside the institutions at the center of the payments system.

The Federal Reserve History account details the decision that turned the Knickerbocker Trust into the panic's detonation point. After news broke on October 18 that its president, Charles T. Barney, was an associate of Charles Morse, and runs had begun, on Monday, October 21, the National Bank of Commerce asked the New York Clearing House for a loan on the Knickerbocker's behalf. The Clearing House refused, its resources being reserved for member institutions, and the Knickerbocker stood outside the membership. A request for aid was then made to J. P. Morgan, who asked Benjamin Strong, then a vice president at Bankers Trust and later the first head of the New York Federal Reserve Bank, to examine the Knickerbocker's books and determine its condition. In the time available, Strong could make no definitive determination of solvency, and Morgan therefore refused to aid the trust. That day the board dismissed Barney, the National Bank of Commerce withdrew as clearing agent, and after nearly eight million dollars of withdrawals the Knickerbocker suspended operations.

An upward spike in call money rates was among the first signals of distress, the Federal Reserve History essay records. On the day the Knickerbocker closed, October 22, the annualized rate on overnight loans against stock collateral jumped from 9.5 percent to seventy percent, reaching one hundred percent two days later; at moments nobody offered credit at any price. That the New York Stock Exchange stayed open at all was largely the work of what the essay calls Morgan's legendary actions: he solicited cash from large financial and industrial institutions and had it delivered straight to the loan post on the exchange floor, supporting brokers as they extended credit. On Saturday, October 26, after an unusual five-day delay, the New York Clearing House Committee formed a panel to issue clearing-house loan certificates, the predecessor to Federal Reserve discount window lending, and the clearing house banks restricted the convertibility of deposits into cash. The restriction produced a currency premium and a substantial influx of gold imports from abroad, which appear to have been instrumental in spurring the New York market's recovery.

The panic's real effects were severe, the Federal Reserve History essay notes: industrial output fell seventeen percent in 1908 and real gross national product twelve percent, a contraction surpassed only by the Great Depression, though the real sector recovered rapidly, in little over a year. The Knickerbocker Trust itself reopened in March 1908 after an infusion of 2.4 million dollars in new capital, having suspended rather than failed. The essay emphasizes that the panic occurred before the Federal Reserve, deposit insurance, or securities regulation existed, when only the National Banking Acts and the private New York Clearing House structured crisis response. It records the argument of Moen and Tallman that the experience changed how Clearing House bankers judged the value of a central bank, since the panic's grip fell mainly on trust companies outside their membership. The 2008 rescue of Bear Stearns, bought by JPMorgan Chase with a Federal Reserve loan, is compared to the Clearing House support for the Mercantile National in 1907, and the Knickerbocker suspension is set beside the failure of Lehman Brothers.