The Book Club

Financial Giant, Emotional Lilliputian


I know exactly what you mean by style, and certainly Morgan seemed to have it, at least in his office. But I have to confess that grown-up was not the first word that came to mind as I was reading about Morgan’s ridiculous pas de deux with Victoria Sackville-West or his insistence that Belle Greene–his secretary–never leave him to marry or the way he would tell the story of the death of his first wife to new lovers. Every time Strouse quoted one of Morgan’s letters or conversations, I cringed at the florid sentimentality, a sentimentality that seems to me to be a reflection of more than just Morgan’s cultural background. Emotionally, at least, Morgan seems to have been stuck in perpetual adolescence, and it troubled me that this man who was so obsessed with controlling his world–both economic and personal–seemed to have so little control over himself.

Now, maybe every time he started courting another married woman, Morgan knew that he wasn’t really in love, and that all he was doing was trying to avoid boredom, in which case I’m wrong about his lack of control. But it sounds instead like every time his head was turned he really did think, “Again, I am in love!” In that respect, Morgan strikes me as combining the worst aspects of Romanticism and Victorianism. All the way through, I kept wondering how he and Henry Adams could have started in such similar places–culturally speaking–and ended up so differently.

The great paradox of Morgan’s life, it seems to me, is that this great economic modernizer was so thoroughly unmodern in his sensibility. (And by “modern” I don’t necessarily mean “modernist,” since someone like Adams was both modern and an antimodernist.) It’s as if he wanted to pull the country’s economy into the 20th century while keeping its culture firmly rooted in the mid-19th (and the lamest aspects of the mid-19th, at that). His affection for salon painting, his utter lack of appreciation for Impressionism, and his affinity for the most overdone elements of Renaissance art: It’s not even as if Morgan was fighting against the modern sensibility (whatever that phrase means). It’s as if he didn’t even know it existed.

It’s possible, of course, that Morgan’s thoroughgoing lack of irony was what allowed him to act so resolutely in times of crisis. (Though I’m always uncomfortable with the idea that only true believers get things done.) In any case, you’re exactly right that there were more times of crisis than we can imagine during Morgan’s life. Like you, I was struck by the fragility of the financial system, and also by the havoc that people seemed to accept as part of the natural course of events. Depression in 1873, panic in 1890, panic again in 1891, massive depression in 1893, near collapse in 1901, and then barely-averted disaster in 1907–and that list includes only the major crises. In 1881, for instance, Morgan wrote his dad about a bank panic: “I never saw anything look as black as it did on Friday,” but in most economic history books, 1881 was a relatively stable year.

The other thing about these crises is that even though Morgan–after 1890–did help avert complete disaster, he couldn’t stop the economy from plunging into depression, thousands of businesses from going under, and hundreds of thousands of people from losing their jobs. In that sense, while Strouse is right to underscore Morgan’s role in stabilizing the system, it’s also understandable why so many people saw him and his colleagues as nefarious. Morgan always emerged from these crises unscathed, and as one Pujo Committee member pointed out, he always made sure that the bankers got their fees when bankrupt corporations were reorganized (as they had to be). And knowing that the system as a whole has been rescued must have been cold comfort to someone who had just lost his farm or his grocery store.

Still, pinning the blame on Morgan was clearly a mistake, the flipside of assuming that as long as Morgan was in charge everything would be OK. The really ironic thing is that in retrospect Morgan’s testimony before the Pujo Committee–which called on him in 1912 as part of an investigation into the so-called Money Trust–seems much less cynical than it did at the time. The committee’s investigator, Samuel Untermyer, kept trying to get Morgan to admit that he had tremendous control over the U.S. economy, while Morgan kept insisting that whatever control he had was tenuous at best. “You are talking about a money control,” Morgan said, “now there is nothing in the world that you can make a trust on money.”

Untermyer thought Morgan was being coy, but in fact he was being truthful. If Morgan had had as much control as everyone thought he did, the companies he organized wouldn’t have kept going bankrupt, and the markets upon which his wealth depended wouldn’t have kept collapsing. Morgan’s ability to put things back together after they’d fallen apart testified to his power, but his inability to keep them from falling apart in the first place testified to the limits of that power.

Like you, I think Strouse’s argument that Morgan generally acted out of a broader concern for the economy as a whole rather than just self-interest makes sense. (Though, clearly, Morgan’s self-interest was wrapped up with the economy as a whole.) But what I do wonder, and what I wish Strouse had spent a little more time discussing, is whether Morgan’s self-interest blinded him to the need for structural changes in the economy as a whole, like the creation of a central bank and the abandonment of the gold standard. Greenspan and Rubin’s ascendancy, after all, has come at the expense, in some sense, of traditional bankers (which is why Morgan’s real analogues today are found in Asia).

And the creation of paper money has meant that being able to round up $50 million gold–as Morgan was routinely able to do–isn’t important, since all the central bank has to do is run the printing presses. I have no doubt that the creation of the Fed and the abandonment of the gold standard were instrumental in fostering stable growth, and I wonder whether Morgan’s opposition to both was just a function of his time or whether it was the result of his refusal to accept that the economy would be better served if the reins of power were held by someone other than himself.