J.P. Morgan on Founding and Origins

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.

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.

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.

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.

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 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.

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.

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 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.