So if I ask you to close your eyes and just,
you know, picture the ultimate capitalist, the
platonic ideal of the old school cigar chomping
banker, who do you see? For most of us, it's
got to be the Monopoly man, right? Rich Uncle
Pennybags. Exactly. The top hat, the cane, maybe
a monocle. If you're feeling that Mandela effect.
Which, fun fact, he never actually wore one.
He didn't. But that's the point. That caricature,
it didn't just appear out of the ether. It has
a very, very real inspiration. And the man behind
that cartoon was infinitely more complex, vastly
more powerful, and frankly, a lot more terrifying
than a mascot on a board game. I mean, it's a
safe bet that Rich Uncle Pennybags couldn't have
single -handedly saved the United States government
from defaulting on its debt. Twice. Twice. We're
talking, of course, about John Pierpont Morgan.
J .P. Morgan. And while the monopoly comparison
is fun, it really, really diminishes the sheer
scale of who this man was. We're not just talking
about a rich guy in the modern sense, like a
tech billionaire who buys a social media platform
on a whim. We're talking about a man who, at
the height of his power, didn't just run a bank.
He was the bank. He was the central nervous system
of the American economy. That's a perfect way
to put it. And that's exactly the hook that grabbed
me when we started pulling all these sources
together. It's hard to wrap your head around
because we live in a world with, you know, safety
nets. Right. We have the Fed. We have the Federal
Reserve. We have the SEC. We have deposit insurance.
But for a huge chunk of American history, those
things just didn't exist. None of them. Instead,
you had JP Morgan sitting in his library in New
York playing solitaire and deciding which banks
would live and which would die. It is so difficult
for a modern mind to comprehend how precarious
that era was. Right. There was no central bank
in the United States during Morgan's prime. The
economy was incredibly volatile. It crashed frequently
and violently. And when it did, the president
didn't call some government agency. He didn't
look to Congress. He looked to a private citizen.
Which is just wild to think about. A private
citizen with that much leverage. So I think the
mission for this deep dive is pretty clear. We
want to move past the caricature, past the robber
baron twisting his mustache. We want to understand
the mechanics of this power. How did he get it?
How did he use it? And specifically that tension
you mentioned in our prep, the tension between
order and competition. Exactly. Because we're
all taught competition is good, right, Morgan?
Yeah. He did not agree. Not at all. That is the
central theme we need to keep coming back to.
To Morgan, competition, the very thing we celebrate
as the engine of capitalism. The thing that lowers
prices and drives innovation. He saw it as a
disease. He called it ruinous. He saw it as chaotic,
wasteful, and destructive. His life's work was
replacing that competition with what he called
a community of interest. Or consolidation. In
a word, order. But it was always order on his
terms. And we've got a fantastic stack of sources
to get us there. We've got biographical records,
business archives from the House of Morgan, detailed
breakdowns of those huge financial panics. Ones
in 1893 and 1907. And some really interesting,
maybe slightly darker stuff on his personal life,
his art collecting, his health, the controversies
that just never seem to leave him. And just to
set the tone here. We're going to see a man who,
yes, he accumulated wealth, but he seemed way
more interested in control. He was the architect
of the modern American industrial economy. And
whether that architecture is a cathedral or a
prison. Well, that's what historians still debate.
But there's no denying he laid the bricks. So
let's unpack this. We have to start at the beginning.
Origin story time. And I think there's this misconception
that every robber baron was a rags to riches
story. The classic Andrew Carnegie narrative.
Yeah. Poor immigrant boy makes good. That is
not J .P. Morgan, is it? Not even close. This
is not a pull yourself up by your bootstrap story.
This is a story of dynastic succession. Right.
John Pierpont Morgan was born on April 17th,
1837 in Hartford, Connecticut, right into the
Morgan dynasty. His father, Junius Spencer Morgan,
was already a Titan. Okay, so he wasn't starting
from scratch. He was a partner at a massive dry
goods wholesaler, then moved into merchant banking
in London. Pierpont didn't start from the bottom.
He started from a launching pad his father built.
So JP, or Pierpont, which he preferred, and honestly
that just sounds so much more aristocratic. It
really does. He was born into the game. But reading
about his childhood, it doesn't sound like he
was just a spoiled rich kid. There was a lot
of pressure on him. Immense pressure. He was
born into the game, but he was also born into
a very specific kind of psychological crucible.
His upbringing was incredibly international.
Which gave him a huge advantage. A perspective
most Americans at the time just didn't have.
He wasn't just schooled in Connecticut. He was
sent to school in Switzerland at a place called
Bellarive, where he became fluent in French.
And in Germany, right. Then the University of
Göttingen in Germany. He mastered German so well
he could conduct complex business deals in it
later in his life. And he got a degree in what,
economics? Art history, of all things. Art history.
Yay. That's surprising for a guy who ended up
owning half the railroads in America. It's a
huge tell, though. It totally foreshadows his
later life as this voracious collector. But there
was another reason for all this travel, a physical
one. Pierpont was a sickly child. Right. He had
rheumatic fever. Yes. And that's a nasty condition,
especially in the 19th century. It's an inflammatory
disease that can develop after a strep infection.
And it left him with lifelong pain. Lifelong
pain and joint issues. At one point, he couldn't
even walk. His father sent him to the Azores,
those islands in the middle of the Atlantic.
To recover. To convalesce for a year, basically
alone. So picture this. You have a boy who is
isolated, often in physical pain, highly educated,
and constantly being watched from afar by a very
demanding father. Let's talk about the father
Junius, because the sources highlight this one
quote from Junius to his son that feels it's
heavy. It is incredibly heavy, and it defines
Pierpont's entire psychology. Junius was a strict,
strict disciplinarian. He wrote to Pierpont,
Remember that there is an eye above that is ever
upon you. And that for every act, word and deed,
you will one day be called to give account. I
above. Wow. That's not just do your homework.
That's God is watching you. And so am I. And
every single mistake you make is a moral failing.
Exactly. It instilled this mix of terror and
duty. It created a rigid, almost terrifying sense
of religious discipline and this relentless ambition.
He wasn't just working for a paycheck. He was
working to justify his existence to that. eye
above. That's crucial. He didn't see business
as separate from his morality. In his mind, bringing
order to chaos was almost a religious calling.
So he starts his career in London under his father's
watch. Then moves to New York to work for Duncan
Sherman and Company. He was effectively the representative
of British capital in New York. Which puts him
in a very unique, very powerful spot when the
American Civil War breaks out. The perfect spot.
He's young, he's rich, he's in New York with
access to all this foreign money. And this is
where we get the first real whiff of that robber
baron label, isn't it? Oh, absolutely. This is
where the polish on that eye above starts to
look a little tarnished. The Civil War was a
complicated time for finance, and Morgan made
some moves that, well, that critics have never
really forgiven him for. Never. And first, there's
the issue of the draft. Morgan was in his mid
-20s, healthy enough to work these long hours.
He could have fought. But like a lot of wealthy
men at the time, Grover Cleveland, Rockefeller,
he took advantage of the Conscription Act. He
did. He paid a substitute. He paid a guy $300
to go take his place in the Union Army. $300.
That was the going rate. And we have to be clear,
this was legal. Completely legal. The government
actually encouraged it as a way to raise funds.
But looking back... It sets a tone. It sets a
tone. It establishes the separation. There's
a class of people who fight the wars and a class
of people who finance them. But the bigger controversy
wasn't the giraffe dodging. It was the rifles.
The whole carbine affair. This story is just
wild. Walk us through the mechanics of this deal
because it sounds like an out -and -out scam.
This is the incident that haunted his reputation
for decades. It's often cited as the origin of
the robber baron narrative for him. Here's how
it worked. Okay. The Union Army was desperate
for weapons in 1861. There was a lawyer named
Simon Stevens who knew the government had these
old Halkardians sitting in an armory. They were
obsolete. Obsolete and condemned. The government
had actually condemned them and sold them to
an arms dealer for just $3 .50 each. Okay, so
scrap metal prices. Basically. So Stevens gets
this idea. He wants to buy them from the dealer
and immediately flip them back to General Fremont,
who was commanding troops in the West and was
screaming for guns for $22 each. Fly at $350,
sell at $22. That is a massive markup, almost
600%. But Stevens didn't have the cash to buy
them first. He needed front money. So he goes
to J .P. Morgan. He goes to Morgan. Morgan looks
at the deal and loans him $20 ,000 to finance
the purchase. So Morgan finances it. But here's
the kicker. Weren't these rifles dangerous? I
read something about thumbs. They were notorious.
The hull carbines had a breech -loading mechanism
that was known to be defective. If you didn't
close it perfectly, or if it was worn out, the
explosion from the gunpowder could blow backwards.
There were reports they could literally blow
the thumb off the soldier firing them. Yikes.
So, just so I have this straight. Morgan finances
the sale of thumb -blowing, condemned rifles
to the Union Army at a 600 % markup, while the
Army is desperate for weapons to fight a war
he paid $300 to get out of. That is the accusation,
and it is a damning one. Okay, but what's the
defense? There has to be a defense. There is.
As responsible historians, we have to look at
it. Biographers like Ron Chernow argue that there's
no hard evidence Morgan knew the rifles were
defective, or that he knew about the fraudulent
nature of the markup at the time he signed the
check. He just thought it was a normal loan.
Chernow argues he treated it as a standard commercial
loan. He lent the money, the guns were delivered,
the government paid, and Morgan took his commission
and interest. He saw about $55 ,000 come into
his account, took his cut, gave the rest to Stevens.
But then you have other historians, like Matthew
Josephson, who actually popularized the term
robber baron, who basically say, come on. Morgan
was a sharp guy. He was meticulous. He presented
the bill to the government himself. Is it plausible
he didn't know what he was financing? It's a
debate that will never be fully settled because
we don't have a smoking gun document, no pun
intended. But the optics were just terrible.
A congressional committee later investigated
and called the profiteers worse than traitors
in arms. Morgan wasn't charged. No criminal charges.
Yeah. But the Hulk Harbin affair became shorthand
for the idea that these financiers viewed the
war as a profit center, not a national tragedy.
And he didn't help that perception with the gold
speculation either. That feels even more. More
like betting against the home team. It does.
In 1863, the Union war effort was stalling. Confidence
in the Union greenbacked. The paper currency
was wavering. So Morgan and a partner, Edward
Ketchum, they secretly shipped about $1 .15 million
in gold to England. Yes, to create a scarcity.
By taking that much gold out of the New York
market, they caused a temporary spike in the
price of gold in the U .S. And the economics
of that. If gold goes up, the greenback goes
down. And if the greenback goes down, it usually
meant the union was losing. So betting on gold
was essentially betting against the union currency.
So if the union loses a battle, gold goes up
and Morgan makes money. Precisely. He made a
fortune on the fluctuation he helped create.
Again, strictly legal. But it reinforced this
image of a cold, calculating opportunist. But
this is the pivot point in his life. Yeah. He
moves from this raw opportunism to something
else. Yes. As he matured, he stopped looking
for these quick flips and chaotic profits. He
started looking for that order we talked about.
He realized that chaos might be profitable in
the short term, but control was profitable forever.
All right, let's pivot to that because Morganization
literally became a verb. It wasn't just business.
It was a strategy. It sounds like something out
of science fiction. You have been Morganized.
What does that actually mean? Morganization is
essentially the process of taking a bankrupt.
chaotic or inefficient industry. OK. Taking control
of it through financial leverage, reorganizing
its corporate structure. And this is the crucial
part, eliminating competition to ensure profitability.
See, that eliminating competition part is where
I get stuck. I thought capitalism was all about
competition. Coke versus Pepsi, Ford versus Chevy.
Doesn't competition make things better for the
consumer? To a modern economist, yes. Competition
drives innovation and lowers prices. But J .P.
Morgan wasn't looking at it from the consumer's
perspective. He was looking at it from the investor's
perspective. Exactly. And you have to understand
the specific economics of the railroads in the
late 19th century. Railroads are a high fixed
cost industry. Meaning it costs a fortune to
lay the track before you ever make a dime. A
fortune. You have massive debt to pay for the
tracks and the trains. If you don't fill those
trains, you go bankrupt. So you had all these
different railroad lines building. duplicate
tracks parallel to each other. They were desperate
for cash flow. So they started these vicious
rate wars. Vicious. They would slash ticket prices
below the cost of operation just to get people
on the train. It was a race to the bottom. Everyone's
losing money. It was ruinous competition. Morgan
looked at this and saw waste. He saw capital
being set on fire. He believed that if you consolidated
these companies, brought them under one roof
or a community of interest. You could stop the
rate wars. You could set stable prices. And sure,
the consumer pays more, but the railroad stays
in business, the bonds don't default, and the
system is stable. He valued that stability over
the brawl of the free market. And he didn't just
write op -eds about this. He summoned people
to make it happen. The outline mentions the 1889
conference. This sounds like a scene from The
Godfather. It was incredibly dramatic. Morgan
summoned the presidents of the major railroads
to his home in New York. These were powerful,
wealthy men who hated each other. They were warlords.
And Morgan basically locks them in a room. He
does. And tells them to stop fighting. He pushed
them to agree to public, reasonable, uniform,
and stable rates. So he created a cartel. Let's
just call a spade a spade. In essence, yes. He
was trying to enforce a private treaty among
these warring factions. And why did they listen?
Money. Because Morgan held the purse strings.
He was the bridge to British capital. If you
wanted European money to expand your railroad,
you had to go through the House of Morgan. If
you didn't play by his rules, the tap ran dry.
And by 1900, he basically controlled the whole
network. The House of Morgan controlled or influenced
a massive web of American transport, something
like 48 ,000 miles of track. And he didn't stop
at railroads. He took this blueprint and applied
it everywhere. Electricity. Steel. General Electric
is a classic example. He saw Thomas Edison struggling
with the business side, so he arranged the merger
of Edison General Electric and Thompson Houston
Electric Company to form GE. He literally removed
Edison's name from the company. Which tells you
exactly where the power lay. But the crown jewel
of Morganization was, without a doubt, U .S.
steel. The numbers on U .S. steel are staggering,
even today. It is hard to overstate. In 1901,
Morgan decided to consolidate the steel industry.
To do that, he needed to buy out Andrew Carnegie,
the biggest steel man in the world. And the story
goes that Carnegie just writes a price on a scrap
of paper. $480 million. He hands it to his lieutenant
to give to Morgan. $480 million in 1901 money.
That's billions and billions today. Did Morgan
haggle? Did he call in the auditors? No due diligence.
No lawyers picking apart the assets. Morgan glanced
at the paper and said, I accept this price. Wow.
He knew that to create the monopoly he wanted,
he had to pay whatever Carnegie asked. That is
an insane amount of confidence or hubris. A bit
of both. He merged Carnegie's operation with
several others to form the United States Steel
Corporation. It was the world's first billion
-dollar company. Capitalized at $1 .4 billion.
At a time when the total national wealth of the
United States, everything, land, buildings, cash,
was estimated at around $90 billion. This one
company was a noticeable percentage of the entire
nation's value. So he owns the rails, he owns
the steel to build the rails, and he owns the
electricity to light the cities. He is effectively
the emperor of industry. But his power goes beyond
just companies. We need to talk about his role
as the unofficial central bank. This is the part
that, frankly, scares me the most. This is where
the story becomes almost unbelievable to modern
years. We mentioned that the U .S. had no central
bank, the currency was fragile, and twice the
U .S. government faced total financial collapse.
Twice J .P. Morgan stepped in to save it. Okay,
let's break down the panic of 1893. What was
the crisis? Why was the government going broke?
It was a run on gold. At the time, the U .S.
dollar was on the gold standard. You could take
a paper dollar to the treasury and exchange it
for gold coin. Right. But foreign investors were
getting nervous about the U .S. economy, so they
started pulling their money out. They were trading
in their greenbacks for gold and shipping that
gold to Europe. So the National Vault is just
emptying out. Rapidly. By 1895, the reserves
had plummeted. The safe limit was considered
$100 million. It dropped below $50 million if
it hit zero. Default. The entire economy implodes.
Total collapse. And President Grover Cleveland
is in the White House watching this happen. What
does he do? Cleveland was paralyzed. He was a
Democrat. deeply suspicious of Wall Street, the
last thing he wanted to do was ask J .P. Morgan
for help. He tried a public bond offering first.
He did, but it wasn't working fast enough. So
Morgan takes a train to Washington. He arrives
at the White House and Cleveland refuses to see
him. So what does Morgan do? He just sits outside
the Oval Office smoking his cigar, waiting. That's
the power move to end all power moves. I'll wait.
Finally, Cleveland lets him in. And they're sitting
there while the president is trying to find another
way out. During the meeting, a clerk comes in
and whispers to the president that there's only
about $9 million left in the gold vaults. A single
large check could wipe them out before the banks
even close that day. The clock is literally ticking.
Morgan looks at the president and says, the government
will default before 3 o 'clock today unless you
do something. And Cleveland asks, what do you
suggest? Morgan then pulls out an obscure statute
from the Civil War era. a legal loophole from
1862 that allowed the Secretary of the Treasury
to buy gold directly without congressional approval
in an emergency. He found a loophole the president
didn't even know about. He knew the law better
than the government did. Incredible. He proposed
that he and the Rothschilds, the great European
banking family, would sell 3 .5 million ounces
of gold directly to the Treasury in exchange
for bonds. It was making a profit. Oh, yes. But
more importantly, Morgan promised to use his
influence to stop the gold outflow. He would
basically order the financial markets to stop
betting against the dollar. So he basically said,
I'll lend you the gold to save the country, but
I'm going to make a profit on the bonds and I'm
going to flex my muscles to fix the market. Exactly.
And it worked. The credit of the United States
was saved. But the political fallout for Cleveland.
was massive. Disastrous. The populace screamed
that the president had sold out the country to
the bankers. It ruined Cleveland's reputation,
but it cemented Morgan as the man who owned the
country's solvency. That's 1893. But the Panic
of 1907, that sounds even more cinematic. This
is the one with the locked library story, right?
Yes. The Panic of 1907 was the absolute peak
of his power. It was a classic liquidity crisis,
started with a failed attempt to corner the copper
market. Which led to the collapse of the Knickerbocker
Trust Company. And panic spread like wildfire.
People were lining up around the block to pull
their money out of banks. Trust companies were
falling like dominoes. The New York Stock Exchange
nearly had to close because there was just no
money. And again, no Federal Reserve to pump
money in. No lender of last resort. Except Morgan.
He was semi -retired at this point, about 70
years old. He came back to New York like a general
returning to the front. And he summons the nation's
top financiers to his library. That beautiful
Renaissance -style building on 36th Street filled
with rare books and art. He needed the presidents
of the other trust companies to put up their
own money to save the weaker ones. And they were
reluctant. They didn't want to risk their own
capital. They were arguing, dithering. So Morgan
had the doors locked. He literally pocketed the
key. He held the richest men in America. a hostage.
In a very velvet line hostage situation, yes.
He went into the other room and played solitaire.
His favorite way to think. While these titans
of finance sweated it out. And he told them what?
He essentially told them, no one leaves until
we have a solution. He bullied them. He shamed
them. He told them if they didn't act, the whole
system would collapse and their wealth would
vanish anyway. Finally, at 4 .45 in the morning,
they broke. They signed the papers, pledged the
money. But there was one more hurdle, right?
The Moore and Schley brokerage. Right. This brokerage
firm was about to fail because it held a huge
amount of stock in a company called Tennessee
Coal, Iron and Railroad Company, or TCI. If the
brokerage dumped that stock to raise cash. The
market would crash all over again. So Morgan's
solution was classic Morgan. He proposed that
U .S. Steel buy TCI. Wait, U .S. Steel, the company
he already controls. He wants to buy a major
competitor to save the market. That sounds convenient.
You see the brilliance and the danger. It saved
the brokerage, but it also let U .S. Steel swallow
a major competitor at a bargain price. But there
was an antitrust problem. A big one. Theodore
Roosevelt was president now, and he was the trust
buster. He'd been breaking up monopolies. So
they had to get the president's permission to
create a monopoly in order to save the economy.
The irony is just staggering. Precisely. Morgan
sent envoys to Roosevelt and Washington on a
night train. They told Roosevelt, we need to
do this merger immediately to stop the panic,
but we need immunity. from antitrust laws. And
Roosevelt blinked. He had to. Faced with a collapsing
economy, he agreed. He let the deal go through.
And it worked. The panning ended by November
7th. Morgan was hailed as a hero. Crowds cheered
him in the street. He had single -handedly stopped
a depression. But, and this is the key insight,
this event was the tipping point. Yes. The country
looked at this spectacle and realized a terrifying
truth. One private citizen has the power to save
us. That means he also has the power to destroy
us. It was too much power for one man. And that
event directly led to the political will to create
the Federal Reserve. That's a fascinating irony.
Morgan's greatest display of power was the very
thing that ensured that kind of power would be
taken away forever. It was the last gasp of the
era of private central banking. Now, we've painted
him as this invincible force, the man who locks
bankers in a room and stares down presidents.
But he wasn't invincible, was he? No, he absolutely
had limits. And his biggest adversary was that
same president, Theodore Roosevelt. We talked
about U .S. Steel, but before that, there was
the Northern Securities Battle. Right. What was
Northern Securities? Another massive railroad
trust. Morgan, along with E .H. Harriman and
James J. Hill, merged three huge railroads, the
Northern Pacific, the Great Northern, and the
Chicago Burlington, into one holding company.
And they basically controlled all... real traffic
in the Northwest. All of it. And Roosevelt sued.
He used the Sherman Antitrust Act, which had
been collecting dust. Morgan was shocked. He
didn't understand this new political reality.
He famously went to the White House and said
what? If we have done anything wrong, send your
man to my man and they can fix it up. Send your
man to my man. Like it's a dispute between two
kings, not a citizen and the president. Exactly.
He viewed the president as an equal, just another
rival to negotiate with. And Roosevelt replied
that he didn't want to fix it up. He wanted to
stop the illegal monopoly. And the Supreme Court
sided with Roosevelt. They did in 1904. The company
was dissolved. It was a huge blow to Morgan's
sense of political invincibility. He realized
he couldn't just buy his way out of everything
anymore. Speaking of things he couldn't buy his
way out of. Right. Let's talk about Nikola Tesla.
Morgan funded Tesla. I feel like people forget
this. They do. In 1900, Morgan gave Tesla $150
,000, which is nearly $5 million today, to build
a wireless communication system at Wardenclyffe
on Long Island. And Morgan's goal was practical.
Very. He wanted a competitor to the transatlantic
telegraph. He wanted to send stock quotes across
the ocean instantly and privately. Sounds like
a smart investment. Why did it fall apart? Because
Tesla was a visionary, not a pragmatic businessman
like Morgan. Tesla pivoted. He started talking
about using the tower for wireless power transmission.
He wanted to beam electricity through the earth,
potentially providing free energy to the world.
Free energy. I can just imagine a banker hearing
the words free energy and clutching his wallet.
That's exactly what happened. The legend goes
that Morgan asked a very simple, very Morgan
question. Where do I put the meter? If you can't
meter it. You can't charge for it. Exactly. If
anyone with an antenna can just tap into the
power, it destroys the business model of the
electric companies. Morgan had just spent millions
consolidating, like GE. So you pulled the plug.
He refused any further funding. He abandoned
the project. Tesla begged him, wrote him letters.
But Morgan was cold as ice. The project collapsed.
It's one of the great what -ifs of history. Brutal.
And then there's the London Underground. I didn't
even know Morgan tried to build a subway in London.
He did in 1902. He wanted to build the Piccadilly
Line. But he was outmaneuvered by an American
rival, a real scoundrel named Charles Tyson Yerkes.
And Yerkes just snatched the rights out from
under him. using some very shady tactics. Morgan
was furious. He called it the greatest rascality
and conspiracy I ever heard of. It was a rare,
total defeat for Morgan. In London, he was the
outsider. And finally, under failures and near
misses, the Titanic. This one gives me chills.
The Titanic connection is deep. Morgan actually
owned the White Star Line? His trust, the International
Mercantile Marine Company, was the parent company.
So he owned the ship? He owned the ship. And
he had a private suite booked on the maiden voyage.
It was specially designed for him with a private
promenade deck and even a special cigar holder
in the bathroom. He was supposed to be on that
ship. Why wasn't he? He changed his plans at
the last minute. He was in France. Some sources
say he wanted to stay to buy more art. He was
obsessing over some tapestries. Others say he
was just feeling unwell. But he canceled. And
when the ship sank. It was a financial disaster
for his company, which was already over leveraged.
But his reaction was telling. He was quoted as
saying, monetary losses amount to nothing in
life. It is the loss of life that counts. It
is that frightful death. That brings us to the
man himself. We've talked about the banker, the
titan. But who was he physically? He was quite
distinct. You noticed him when he walked in a
room. You didn't just notice him. You were likely
terrified of him. He was an imposing figure,
massive shoulders, piercing eyes. People said
they looked like the headlights of a train coming
at you. But the most defining feature was his
nose. The nose. We have to talk about it. It
wasn't just a big nose. No. He suffered from
a condition called rhinothymia, which is a severe
complication of rosacea. It made his nose bulbous,
purple, and deformed. It had a bumpy texture,
and for a man who controlled everything, he couldn't
control this. Yeah, he must have been incredibly
self -conscious. Extremely. He hated being photographed.
If you look at the official portraits, they're
all heavily retouched to smooth out his nose.
He would attack photographers with his cane if
they got too close on the street. There was even
that cruel rhyme kids used to sing. Johnny Morgan's
nasal organ has a purple hue. Ouch. Why didn't
he get it fixed? Surely he had the money for
surgery. The medical speculation is fascinating.
His son -in -law suggested that Morgan refused
surgery because he had suffered from infantile
seizures as a child. He was terrified that the
trauma of surgery or the anesthetic might trigger
the seizures to return. So he just lived with
it. He lived with the disfigurement. But here's
the genius of Morgan. He weaponized it. How do
you mean? He used his terrifying appearance to
intimidate people. He knew he looked scary. When
he stared at you during a negotiation, he dared
you to look at his nose. If you looked away,
you showed weakness. If you stared, you were
rude. He trapped people with his own insecurity.
He made people feel small before he even opened
his mouth. It adds such a layer of vulnerability
to this powerhouse. And his personal life had
real tragedy, too. His first marriage. Amelia
Sturges, Mamie. This is the heartbreaking romantic
side of Morgan that doesn't fit the robber baron
mold. He courted her as a young man, but she
was dying of tuberculosis. Her family tried to
stop the wedding. They did, saying she was too
sick. But he married her anyway in 1861. He literally
had to carry her to the altar because she was
too weak to stand. And he thought he could save
her. He took her to Algiers, hoping the warm
climate would cure her. She died four months
later. He was devastated. It left a permanent
mark on him. He did remarry. To Frances Louisa
Tracy. They had four children, including his
heir, Jack Morgan. But that marriage was more
of a partnership. He spent a lot of time away.
That first loss, it seemed to lock something
away in him. And he filled that void with stuff.
We talked about him being an art history major.
He wasn't just a casual collector. He was a hoarder
of high culture. The collector of collections,
that's what they called him. He didn't just buy
a painting, he bought whole libraries. He bought
manuscripts, gems, tapestries, watches. He was
the president of the Metropolitan Museum of Art.
And he wasn't just buying for his living room.
He saw it as a patriotic duty. He believed the
United States was a great industrial power, but
it lacked cultural history. We were a nation
of factories, not cathedrals. So he used his
money to raid Europe's history and bring it to
New York. He was buying civilization. The Morgan
Library in New York today, that's his personal
collection. It has Gutenberg Bibles, original
Mozart scores, just incredible things. Even had
a gem named after him. Morganite. A pink barrel.
He was a major patron of Tiffany & Co. and their
chief gemologist named that after him. He also
funded Edward S. Curtis to photograph North American
Indians, a massive project. He had a deep appreciation
for preservation. And he lived large. The yachts.
You can't be a Gilded Age tycoon without a yacht.
The Corsair. He had several of them, each bigger
than the last. They were basically floating palaces
over 300 feet long. He used them to escape the
heat of the city and the prying eyes of the press.
And that's where we get that famous quote. If
you have to ask the price, you can't afford it.
Classic. Whether he actually said it or not,
it fits the attitude perfectly. So we're approaching
the end of his life. The year is 1912. The Peugeot
Committee. This feels like the government is
finally catching up to him. The mood in the country
had changed. The progressive era was in full
swing. People were sick of the trusts. The Pujo
committee was a congressional investigation into
the money trust. And they hauled Morgan in to
testify. They did. They wanted to prove that
a small cabal of bankers in New York controlled
the entire U .S. economy. And they weren't wrong,
were they? The stats were damning. They found
that Morgan and his partners held 341 directorships
in 112 corporations controlling $22 billion in
resources. Which was more than the assessed value
of all property in the 22 states west of the
Mississippi River. All of it. But Morgan's testimony,
he didn't back down. He didn't apologize. He
was defiant. There's a famous exchange where
the council, Samuel Untermyer, asked him if commercial
credit was based on money or property. And Morgan
replied, no, sir, the first thing is character.
Character, not collateral, not assets. He insisted
on it. He said money cannot buy it. A man I do
not trust could not get money from me on all
the bonds in Christendom. Which sounds noble,
but it also sounds like a club. I lend to people
I know and trust. Which usually means other...
Rich white guys in his circle. Exactly. To Morgan,
it was about personal honor. To the committee,
it sounded like an admission of a closed system
where access to capital depended on whether J
.P. Morgan liked you. He also claimed, I like
a little competition. Which drew laughter in
the hearing room because everyone knew he had
spent his entire life destroying it. But in his
own mind, he truly believed he was a force for
good. He died shortly after that, didn't he?
In 1913. The stress of the hearings took a real
toll. He traveled to Rome, his favorite city.
He died in his sleep at the Grand Hotel there
on March 31st, 1913. And the reaction tells you
everything about his standing. The stock market
closed for two hours. That's an honor usually
reserved for heads of state. Flags on Wall Street
flew at half -staff. But here's the surprise.
His estate. We think of him as the richest man
ever. Was he? When his estate was tallied, his
net worth was about $80 million plus the art
collection, which was worth another $50 million
or so. Now that's about $2 to $3 billion today.
A huge amount. But not Rockefeller rich. Not
even close. John D. Rockefeller, who was worth
vastly more, supposedly read the obituary and
said, and to think, he wasn't even a rich man.
That is the ultimate shade. He wasn't even a
rich man. It highlights the difference. Rockefeller
owned the oil. Carnegie owned the steel. Morgan
was a banker. He controlled money, but much of
it was other people's money. His power was influence,
leverage, and trust, not just raw net worth.
And his legacy. The House of Morgan isn't one
thing anymore. No. The fear of that power led
to real changes. First, the Federal Reserve was
created in 1913, just months after he died. Then,
after the Great Depression, the Glass -Steagall
Act of 1933 forced banks to separate commercial
banking from investment banking. So the House
of Morgan had to split. JPMorgan & Co. became
the commercial bank. which eventually became
today's JPMorgan Chase. And the partners who
left formed Morgan Stanley. So both of those
massive modern entities come from the same root.
Before we wrap up, we have to address a modern
revelation. We talked about origins earlier.
In the 2000s, some very dark history came out
about the bank's ties to slavery. Yes. And this
is crucial for a full accounting of American
finance. In the early 2000s, cities like Chicago
passed ordinances requiring companies to disclose
any ties to slavery if they wanted city contracts.
So JPMorgan Chase did an internal investigation.
They did. And they found that two of their predecessor
banks, Citizens Bank and Canal Bank in Louisiana,
had accepted enslaved people as collateral for
loans between 1831 and 1865. So plantation owners
would say, I need a loan. And they would put
human beings up as the security. Correct. And
when the plantation owners defaulted on those
loans, the banks took ownership of those human
beings. The investigation showed the banks ended
up owning approximately 1 ,250 enslaved people.
They took possession of them. That just turns
that whole eye -above concept on its head. It's
a stark reminder that the capital that built
this system wasn't just gold. It was blood. It
is. JPMorgan Chase apologized for this in 2005
and set up a scholarship fund, but it serves
as a permanent reminder. You cannot separate
the history of American capitalism from the history
of slavery. They are intertwined in the ledger
books. So we've unpacked the man, the myths,
the nose, the power, and the darkness. What does
it all mean? J .P. Morgan was just a total paradox.
He really was. A man who saved the nation's economy
twice, yet his power was so terrifying it forced
the nation to create the Federal Reserve to replace
him. A devout religious man who ruthlessly crushed
his competitors. A patron of the arts who was
mocked for his appearance. He built the tracks
we still ride on and the companies that still
light our homes. And that brings us to our final
thought. Morgan believed ruinous competition
was bad. He believed consolidation led to efficiency
and stability. And that is the question for you,
the listener, today. Look at our world. Look
at big tech. Amazon, Google, Microsoft. We see
massive consolidation. We see efficiency. You
can get anything delivered in two days. We see
stability. Are these modern tech monopolies just
the new organization? Was Morgan a prophet of
modern capitalism, proving that scale is the
only way to compete globally? Or is he a warning
from history about what happens when one entity
or one man holds too much control over the levers
of society? A prophet or a warning. I'll let
you chew on that. And hey, next time you play
Monopoly, show a little respect to Rich Uncle
Pennybags. He might just lock you in his library
until you trade in Park Place. Indeed. Thanks
for diving deep with us. We'll catch you on the
next one.