The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance

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5 Responses to 'The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance'

1. Anonymous - June 1st, 2010 at 12:19 am

   Ron Chernow’s “The House of Morgan” is both an engaging history of the Morgan banks and a brilliant account of the growth of global finance from Victorian times through the late 1980′s. It’s every bit as enjoyable as Chernow’s “The Warburgs,” but provides a better analysis than the Warburg book of key business and political developments of the 20th century.

   No one should be intimidated by this book’s length or the complexity of its subject. Its pages are rich with lively portraits of the sometimes quirky men who ran the Morgan banks, the high and mighty of the world with whom they did business, and the world’s many critics of such concentrated economic might. Pierpont and Jack Morgan and their successors at the top get the most detailed treatment, but figures as diverse as Brandeis, Mussolini, Lindbergh (the son-in-law of a top Morgan partner), Bryan, Theodore Roosevelt and Margaret Thatcher all play a part in the story, not to mention interesting but lesser-known figures like Ferdinand Pecora, Judge Harold Medina and central bankers from Britain, Germany, Italy and Japan.

   As a backdrop to the Morgan saga, this book includes accounts of the main events of 20th-century financial history, such as the Panic of 1907, the creation of the Federal Reserve system, the Crash of 1929 and the depression and bank failures that followed it, the New Dealers’ attack on banks led by Pecora that resulted in the Glass-Steagall Act and the separation of commercial banking from investment banking, and the rise of hostile takeovers, Eurodollars, petrodollars, Latin American lending, junk bonds and the securitization of debt, all refreshingly written for laymen rather than experts.

   “The House of Morgan” has perhaps two overriding themes. The first is that as the years have passed, and the Morgan banks have faced increasing competition, the Morgan bankers’ need to maintain their global preeminence has led them to take bigger and bigger risks. Some of these risks have resulted in large financial loss, but more often they have resulted in a loss of both public and customers’ confidence, which has eroded the very preeminence that the banks seek to maintain. The second theme is that the top Morgan bankers have consistently underestimated the power of government to control what they do, and even make their lives miserable. From Pierpont on down, they have ignored government at their peril. It’s almost a certainty that with the next big economic downturn, the Morgan banks will be attacked again, and I hope that Chernow will be on the scene to provide an account of it.
   Rating: 5 / 5

2. Sheryl Katz - June 1st, 2010 at 12:29 am

   Ron Chernow is truly awe-inspiring. This is one of several, incredibly complete biographies that he has written.

   At 700 plus pages this is an incredibly long book. Unfortunately it is an uneven read. I became progressively less interested in the book as I went along; however, it was worth the effort to complete.

   The first section, which he calls the Baronial Era in banking, is fascinating, and for me it was a page-turner. The Morgan banking house actually began as the George Peabody bank in England, and Junius Morgan was brought over from the US to be his successor. Junius Morgan took the bank to a level far beyond where Peabody had, and then his son JP Morgan Sr. took over. JP Morgan Sr (Pierpont) is the name most associated with Morgan banking, and he was an enormously powerful and colorful character. This was the infamous age of the “Robber Barons” the rise of American railroads, big steel, and the oil industry. Pierpont was at the center of it, commanding industry while collecting art, building yachts and cavorting with women. It makes a great story.

   Pierpont was succeeded by his son JP Morgan Jr(Jack) who headed the bank during what Chernow called the “Diplomatic Era”. The book became less interesting. Jack was nowhere near as colorful as his father, and his reign over the bank nowhere near as autocratic. Several other bankers, among them Dwight Morrow (father of Anne Morrow Lindbergh) were major players at the bank. The bank played a huge role on the international stage in this era, and while it had strong ties to England (and its sister bank Morgan Grenfall) it also helped finance the rise of the Nazis, Mussolini and the nationalists in Japan. This was also the period of the roaring twenties and the depression. The story told in the book is not quite as gripping because it doesn’t hinge on a single character, but the events impacted and the role played by the bank were enough to keep me reading with interest and occassionally complete absorption.

   The third era covered was the “Casino Era”. As a result of the Glass Steagle Act, the bank split into Morgan Guarantee and Morgan Stanley. This section of the book also tells about the demise of Morgan Grenfall in England. This is essentially the modern era of banking where the investment bankers at Morgan Stanley and Morgan Grenfall became involved in takeover battles and modern securities. Morgan Guarantee became a fairly staid, and boring, commercial bank. This section of the book had the least interesting characters. I found it to be pretty dry. I have read several books about the various takeover battles, so this account, which was more of a survey, lacked the blood and drama of other accounts I have read.

   Finally, from the perspective of 2005, the last section of the book, covering the most recent time period, feels a bit dated. I know more about what happened to both Morgan Guarantee and Morgan Stanley than Chernow knew when he wrote the book, so the very last few chapters felt out of date.

   Overall it was also interesting to see the interaction between the history of the bank, and social history. The bank originally was very “white shoe”, male and protestant. It hired its first Jewish banker in 1963. Pierpont and Jack were quite anti-Semitic. Yet, within its confines, the bank was also a meritocracy and afforded many of its employees entree into the upper classes.

   Although, it can be a bit of a slog at times, if you are interested in the world of banking and finance, or the history of the 19th and 20th century, this is an excellent book.
   Rating: 4 / 5

3. Randall Whitcomb - June 1st, 2010 at 3:02 am

   This book is enormous, and based on the gushing of some of the other reviewers, one wonders if they rate on quantity rather than quality. While it is a huge tome, and it should be considering the enormity of the subject, I repeatedly felt myself looking for more detail.

   Chernow has a habit of putting a few details in, then glossing over the key points, and editorializing on his own to make the vignette correspond to his thesis. His thesis seems to be this: Morgan (whichever one) was a good man in a dirty business and his monopolistic tendancies were for the moral betterment of humanity. The broader thesis is that the banking titans have been cut down to size for the betterment of the average citizen.

   Unfortunately I find much of this posturing nothing more than cheerleading for the rich establishment types that Chernow obviously reveres! He neglects to even mention Morgan’s involvement with Nikola Tesla at Wardencliffe, yanking out Tesla’s funding when it became clear to him that Tesla was working to provide free energy, not the kind that Morgan could monopolize. He leaves out much more as well, such as Morgan’s rather shady involvement in Japan at the end of WW II with Herbert Hoover where they managed to gain preferential treatment in the re-emerging Japanese economy… in alliance with Japanese monopolists eager to preserve their power and control.

   It is incredible how Chernow couches Morgan’s ruthless monopolist tendancies in terms that make them sound like he was a benign visionary! His attack on the Glass-Steagall act is also certain to make him a darling of the bankers. I wish he had just presented the facts, and replaced his “apologies” with MORE facts!

   At any rate, I learned from it, but I recommend viewing much of it with a very jaded eye.
   Rating: 3 / 5

4. John P Bernat - June 1st, 2010 at 5:12 am

   It’s hard to imagine sympathy, let alone interest, for a personality like Morgan’s. If you want to arouse resentment and suspicion among most American’s, mention Wall Street and 10 to 1 you’re going to score.

   But go-zillionaires are people, too*. Ron Chernow does another wonderful job here, as he did with his book on the Rockefellers, “Titan.” Morgan was not anywhere near as “public” or colorful as the Rockefellers, so it’s tougher to maintain reader interest. Chernow does it, though, by telling a detailed and meticulously researched story in an engaging way.

   From this book, the average Wall Street hater learns of how Morgan amassed one of the United States’ largest fortunes, and how, more than once, he used that fortune in a public-spirited manner, bailing our economy out when the government was philosophically opposed to doing so. He does not come across as a particularly greedy man, but a very, very careful one, with a huge sense of responsibility and purpose. Unlike the Vanderbilts, his progeny did not engage in an unseemly race of consicuous consumption, too.

   It is a book you might think you’d have no use for, but when you’re done, you’ll think you’ve read a great biograhpical novel and, like me, realize with deep satisfaction that you just read something…true.

   —

   *Apologies to Forrest Gump
   Rating: 4 / 5

5. Anonymous - June 1st, 2010 at 5:58 am

   Was it the writing or the main character that made this a fascinating read? answer- both! Chernow brought the character and his environment alive(early 20th Century New York merchant society),and what a character JP Morgan was! I read this book some years ago and what has remained with me ever since is the image of JP Morgan as a somewhat reluctant Titan. Sure he was larger than life and his famous piercing stare DOES come through in the photographs. You can easily imagine people hustling out of his way as he strode down Wall Street. Yet Chernow does a good job of humanizing the man, explaining clearly that he really had no choice (family upbringing, apprenticeship, business inheritance) all worked to make JP Morgan what he was. What also comes across is the fact that the Financial world at the time almost demanded and needed a JP Morgan. The early pioneering days of Wall street are vividly portrayed.JP Morgan’s role in leading, cajoling, directing and bullying where necessary,to ensure that industries and markets developed – is explained clearly. You certainly get the sense that the man understood the times and took seriously his responsibility as a person of influence and power. Greed, surprisingly to me, does not seem to be a major factor in explaining JP Morgan. All in all an interesting insight into a bygone era and a fascinating character.
   Rating: 5 / 5

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