Ron Chernow
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Customer Reviews:
Total reviews: 53
Average rating: 4.5 of 5
Learn the history of American finance as a whole by studying one titanic banking empire. 5 out of 5 stars.
4 of 4 people found this review helpful.
Chernow pioneered the popular study of corporate history with this sweeping history of the Morgan banking empire back in 1990. This is a superb bit of history writing on almost every level: it's intensively researched and documented; it's a great story with a real narrative arc and emotional tension; it has far reaching implications in the fields of economics and American history and synthetically knits together these two areas with insight and revelatory vision.
The story of the House of Morgan isn't just the story of JP Morgan and it isn't just the study of Morgan Guarantee or Morgan Stanley. (The House of Morgan historically has encompassed Drexel's Philadephia bank, Morgan's NY bank, Morgan Grenfell in London and Morgan Harjes in Paris.) The House of Morgan has its roots in George Peabody's London merchant bank of the 1830s hawking junk rated US State securities, then passed to Junius P. Morgan, then on to his son J.P. Morgan, and then on to his son J.P. Morgan (Jr. - known as "Jack") and then goes right through to the modern era (the book ends in the heyday of the corporate takeover binge of the 1980s). There have been a number of excellent biographies of J.P. Morgan (such as Jean Strouse's excellent "Morgan: American Financier" of 2000), but they all pick up the story of the Morgan banking empire in mid stream and then drop out when J.P. dies in 1913 - right before things get really interesting. The Morgan Bank was instrumental in arming England in WW1 and was in the very thick of the war reparations morass following the Treaty of Versailles. The Glass-Steagle act of 1933 (which forced the split between investment and commercial banks) was aimed straight at the House of Morgan - one of a series of government actions (including the creation of the Federal Reserve banking system) designed to limit the tremendous power of the House of Morgan. Glass-Steagle forced the creation of Morgan Stanley which arguable only increased the House of Morgan's reach and power. "The House of Morgan" gets it all and puts it all in its place. This is essential reading for anyone who wants to understand the Morgan banking empire - and by extension anyone who wants to understand American finance in the period century of the United State's ascent.
The heart of the story is J.P. Morgan, of course. Morgan was the consummate guardian of the "Gentleman Banker's Code" - a Victorian notion of serving the greater good through serving the client that formed the heart of the finance culture - with some Protestant spiritual overtones thrown in. Morgan's bank, with its twin loci on either side of the Atlantic, sat astride the flow of capital between England and the US. In the 19th Century English capital investment was vital for American industrial development and Morgan helped tame the destructive competitive business practices common in the railroad wars where rival rail lines would squander millions building parasitic parallel lines in an effort to drive the competition out of business. Morgan learned the lesson that cutthroat competition was wasteful of investor's capital and he ever after strove to build peaceful vast monopolies. This kind of business value system seems at odds with our current notion of free market capitalism it certainly wasn't very popular with labor or with those who feared the power of vast trusts. Vast trusts were Morgan's specialty. He personally assembled the first billion dollar stock offering in knitting together the vast majority of US steel production into US Steel. He set up a host of other vast monopolistic conglomerates including General Electric, International Telephone & Telegraph, International Harvester, International Mercantile Marine, and a host of railroad accumulations (just to mention the highlights). In defending foreign investment interests he defended the dollar's value on the International market by defending the gold standard - putting him at odds with bimetallism and William Jennings Bryan. In the East Room of his fabulous 36th St. Library there is a huge 16th century tapestry representing the sin of greed. Morgan clearly thought of himself as a force for moral order among robber baron thieves. When JP Morgan died he left less than $120 million - a figure that shocked many people who had figured he was worth far more. Morgan assembled vast economic power through board voting proxies with the goal of orchestrating a smoother running economy for the profit of his clients. While Morgan did good business on legitimate business, he didn't skim or abuse his position (granted "insider trading" wasn't considered a sin in those days - if it was done discretely). JP Morgan died in 1913 a year after the Titanic (which was built by IMM - his new shipping trust; thus stressing Morgan doubly because he had friends who died on board and the disaster stood to devastate the bottom line of a huge project/client of his) and the Pujo hearings where Morgan was grilled for his role in resolving the Panic of '07 which involved a massive hat trick of capital manipulation that featured putting Teddy Roosevelt over a barrel and forcing him to approve a critical bit of monopolistic corporate takeover business for the US Steel concern.
As juicy as all that is, things actually get even better during the reign of Jack Morgan (who ruled the House of Morgan from 1913 to 1943) when we get to see Morgan banks' involvement with the rise of fascism in Italy and Japan and driving home the spike of reparations in post WW1 Germany. It's fascinating beyond that too. We see the rise of corporate wealth and access to capital in the post WWII period with a tide of legislation, but also the critical post Bretton Wood's unmooring of the capital markets. With corporations gaining direct access to capital markets banks struggled to stay relevant with the balance of power tipping to consumer banking. Commercial and Investment banks were forced to get creative and the leveraged buyout and corporate takeover booms are seen as an adaptive response by the banking industry to the new economic reality - with the final abandoning of the Gentleman Banker's code as a consequence (and a metaphorical Jolly Rodger flag as its replacement). I really can't recommend this book more highly to anyone with any shred of interest in any of this vitally important stuff.
Editorial Review:
The House of Morgan is the most ambitious history ever written about an American banking dynasty. Hailed as an investigative masterpiece, it traces the trajectory of the J. P. Morgan empire from its obscure beginnings in Victorian London to the crash of 1987 and beyond. A rich, panoramic story of four generations of Morgans and the powerful, secretive firms they spawned, it is the definitive account of the rise of the modern financial world.
From the period glamor of the late nineteenth century to secret alliances during both world wars, The House of Morgan is studded with startling revelations about the men and women -- Henry Ford, Franklin Roosevelt, Nancy Astor, Winston Churchill, Adnan Khashoggi, Paul Volcker, and many others -- who have transformed the financial and political world in the past 150 years.
