John Pierpont Morgan
I just recently finished reading a biography of John Pierpont Morgan. The name JP Morgan sounds familiar because the modern financial giant is still named after it’s original founder. Morgan Stanley, another modern investment firm, was started by one of Pierpont’s grandchildren. That said, the Morgan family does not hold any interests in the investment world today.
At a time when anti-trust regulation as virtual nonexistent, Morgan masterminded numerous company consolidations, leading to companies like General Electric and US Steel. He was most likely the most financially powerful man on earth from around 1875 until his death in 1913.
Ego and Bigotry
Morgan viewed himself as a steward of the United States economy. He, along with several other bankers, work to stabilize and “save” it on more than one occasion. Morgan was an active church goer, dedicated to christian ideals (though more in the eye-for-an-eye way; he wasn’t so into brotherly love) and the episcopalian church.
Despite his view of himself as a good man, Morgan was a egotistical bigot, whose megalomania caused far fewer errors than it should have. He wouldn’t work with Jewish firms, for instance, and almost all of his staff looked like “Aryan Ideal” people (athletic, blond hair, blue eyes, etc).
This deep seeded bigotry and a surety of his own decisions combined to make one arrogant man.
The Lesson
I’m pretty fascinated by this period of history, and the characters interest me. Alfred Rothschild, one of Pierpont’s friends, had a carriage drawn by Zebras. That’s just a good story.
But there are lessons to be learned from Pierpont. First, your decisions are never perfect, and your ego and bias (known or unknown) can lead to some bad decisions. In other words, the honest self-evaluation that Morgan avoided, believing all his decisions perfect, can be an effective tool.
Interestingly, Morgan depended heavily on his staff to give him the pertinent information about a given business situation. He would then make a decision after studying the data. His staff had an incredibly power over him, and could have colored to the data as they saw fit (who knows if this happened). But still Morgan was sure that he always made the correct decision.
Second, how our actions are perceived is not under our control. Morgan’s companies were often under scrutiny by the white house, and some anti-trust prosecution began at the end of his life. When Pierpont died, the US government was on the verge of changing the financial world. Morganization, Pierpont’s strategy of brokering stock deals and taking a small portion of cash along with a large chunk of company stock as a commission, put his company’s staff on many boards of directors. The Clayton Antitrust act made serving on the boards of two competing companies unlawful, forcing an end to the Morganization strategy and minimizing the Morgan firm’s power. Further legislation would force the Morgan firm to choose between being an investment office or a bank, and the creation of the Fed meant the JP Morgan firm no longer had to fill the roll of steward of the American economy.
In short, Pierpont’s life, while amazing and influential, probably did not give him the image or legacy he desired. He was often attacked in the press, and his company’s power (along with similar companies’ power) caused fear, inspiring the changes that eventually led to the Morgan firm’s fall from absolute financial power.
Morgan believed himself a good, patriotic man, and was disturbed when he was not perceived as such. If anything, this probably caused him to retreat further into his own surety, ignoring the outside world.
