The Book Club

Burrough and Surowiecki


Jean Strouse’s Morgan: American Financier certainly arrives with as much fanfare as any recent biography (of someone who isn’t a modern-day celebrity, I mean) I can remember. Glowing reviews almost everywhere, articles by Strouse herself in The New Yorker and the New York Review of Books, lectures at the Morgan Library: It all seems pretty ironic for a book about a man whose motto was “Think a lot, say little, write nothing.”

But I think Strouse’s biography lives up to its advance billing. Given that it comes well after Vincent Carasso’s The Morgans and Ron Chernow’s engaging The House of Morgan, I certainly approached Morgan with the attitude: “Do we really need another book about this guy?” I mean, the outlines of the portrait of J.P. Morgan are pretty well known, and no one was going to convey the romance (or the horror, depending on your perspective) of international banking much better than Chernow did. So, I wasn’t really sure that Strouse could add anything that would be worth the 750 pages–and God knows how many years–she’s devoted to Morgan.

I’m still not sure whether the book was worth all those years–one thing I’d be interested in talking about here, if you have the inclination, is why anyone would want to devote more than a decade to the story of someone else’s life–but it’s certainly terrific. To be banal about it, the J.P. Morgan of Strouse’s book feels like a real person, something other than either the heartless robber baron or the business visionary that competing histories have made him out to be. I found Strouse’s long chapters on Morgan’s love life and his art collecting often annoying, mainly because I just got tired of hearing about Morgan’s shopping sprees, but they’re certainly not beside the point. For someone who worked incredibly hard, and who forced his subordinates to work even harder (to the point where some of them, like Charles Coster, seem to have literally worked themselves to death), Morgan seems to have always wanted a life that was about more than just work. I’m not convinced that he actually knew what that life should be–his art collecting, for instance, seems like a not-so-cultured person’s idea of what a cultured person was supposed to do–but it’s good to know that U.S. Steel and the railroads weren’t the only things in his life.

On the other hand, when it comes to Morgan, U.S. Steel and the railroads are the things I’m most interested in. Morgan played, after all, an important–perhaps crucial–role in the shaping of the U.S. industrial economy. At the turn of the century, he was arguably the country’s effective central banker, its most important commercial banker, and a force for the combination and consolidation of industry. Needless to say, no one figure in the U.S. today has his or her hands in so many pies. You’d probably have to go to Thailand or Malaysia to find a modern analogue to Morgan, since his power depended on the kinds of tight relationships between bankers and corporations that the explosion in public ownership of U.S. corporations has tended to fray. (A company’s bankers tend not to sit on its board of directors, and banks are obviously less important when companies can raise money by going directly to public markets.) The irony is that the crony capitalism that we assail in Asia is probably not that different from the way Morgan and his colleagues did business. The real difference is that global markets are so much more liquid that the sins of crony capitalism get punished much quicker.

Strouse doesn’t talk about crony capitalism, but in general I was impressed by her discussion of Morgan the financier, which is sophisticated without being too dense and which does a good job of situating Morgan in the right historical context. And although Strouse negotiates her way between the two extreme positions on Morgan–demon and visionary–she does make a convincing case for the virtues of what she calls Morganization: the rationalization, cost-cutting, and improvements in efficiency that followed the combination of many competing enterprises into one. She’s aware of what consolidation costs but suggests that without it the American economy would never have developed into the powerhouse it became.

That particular conclusion about the virtues of consolidation seems to me about right, although there has been a lot of interesting historical work lately on alternative paths the U.S. economy might have followed had huge industrial enterprises not become the order of the day. But I’m less sure that Morganization is the right name for that kind of consolidation.

I think Strouse overestimates Morgan’s business skills, particularly in the industrial field. Morgan may very well have been a visionary when it came to foreign-exchange markets and propping up the U.S. economy every time it was on the verge of running out of gold. But his record in terms of the “real” economy is fairly unimpressive. The railroads he backed kept going bankrupt, many of the industrial trusts he created quickly failed, and U.S. Steel–his most noteworthy accomplishment–never became the industrial powerhouse people expected it to be. Morgan may have understood that scale and scope conferred advantages, but I don’t he think he had a sense of how necessary successful management was to realizing those advantages.

Even more interesting than Strouse’s overestimation of Morgan’s business skills may be the idea of thinking about business primarily in terms of individuals. Obviously, Morgan and Rockefeller and Carnegie were far more personally important to the U.S. economy in the late 19th century than anyone could be today. Next to those guys, Bill Gates, Hugh McColl, and Jack Welch are relatively insignificant. But I’m not sure that even Morgan and Rockefeller were more interesting (let alone important) than the institutions they helped create and the markets they tried to tame.

I like Strouse’s book very much, and I think she does a good job of letting us see the development of the American economy through the prism of Morgan’s life. But I also think that prism distorts our understanding of the economy in a way that a book like Alfred Chandler’s The Visible Hand (an institutional history of the same period) doesn’t. You could never write a biography according to this principle, but sometimes I think people are more the objects of economic history than its subjects. How’s that for a sign-off?