Transcript
Introduction
"This book is about the rise, fall and resurrection of an American banking empire: the House of Morgan. Until 1989, J.P. Morgan and Company solemnly presided over American finance from the short building at 23 Wall Street. Much of our story revolves around this chiseled marble building and the presidents and prime ministers, moguls and millionaires who marched up its steps. With the records now available, we can follow them inside the world's most secretive bank. In the popular mind, the two most familiar Morgans, J.P. Morgan, Sr. And J.P. Morgan, Jr. are rolled into a composite beast, J.P. Morgan, that somehow endured for more than a century. For admirers, these two J.P. Morgans typified the sound old-fashioned banker whose word was his bond and who sealed his deals with a handshake. Detractors saw them as hypocritical tyrants who bullied companies, conspired with foreign powers and coaxed Americans into war for profit. Nobody was ever neutral about the Morgans.
The old House of Morgan spawned 1,000 conspiracy theories. It catered to many prominent families, including the Astors, Guggenheims, du Ponts and Vanderbilts. It shunned dealing with lesser mortals, thus breeding popular suspicion. Since it financed many industrial giants, including U.S. Steel, General Electric, General Motors, DuPont and AT&T, it entered into their councils and aroused fear of undue banker power. The early House of Morgan was something of a cross between a central bank and a private bank. It stopped panics, saved the gold standard, rescued New York City three times and arbitrated financial disputes. What gave the House of Morgan its tantalizing mystery was its government links. Much like the old Rothschilds and Barings, it seemed insulated into the power structure of many countries, especially the United States, England and France and, to a lesser degree, Italy, Belgium and Japan. As an instrument of U.S. power abroad, its actions were often endowed with broad significance in terms of foreign policy.
At a time when a parochial America looked inward, the bank's ties abroad, especially those with the British Crown, gave it an ambiguous character and raised questions about its national loyalties. The old Morgan partners were financial ambassadors whose daily business was often closely intertwined with the affairs of state. While people know the Morgan house by name, they are often mystified by their business. They practice a brand of banking that has little resemblance to standard retail banking. These banks have no tellers, issue no consumer loans and grant no mortgages. Rather, they perpetuate an ancient European tradition of wholesale banking, serving governments, large corporations and rich individuals. As practitioners of high finance, they cultivate a discreet style. They avoid branches, seldom hang out signposts and until recently wouldn't advertise. Their strategy was to make clients feel accepted into a private club as if a Morgan account were a membership card to aristocracy. The story of the Morgan banks is nothing less than the history of Anglo-American finance itself. For 150 years, they've stood at the center of every panic, boom and crash on Wall Street.
They have weathered wars and depressions, scandals and hearings, bomb blasts and attempted assassination. No other financial dynasty in modern times has so steadily maintained its preeminence. This book's thesis is that there will never be another bank as powerful, mysterious or opulent as the old House of Morgan. What the Rothschilds represented in the 19th century and the Morgans in the 20th won't be replicated by any firm in the next century. The banker no longer enjoys a monopoly on large pools of money. As world finance has matured, power has become dispersed among many institutions and financial centers. "So our story looks back at a banking world fast vanishing from sight, one of vast estates, art collections and ocean-going yachts, of bankers who hobnobbed with heads of state and fancied themselves royalty. Contrary to the usual law of perspective, the Morgans seem to grow larger as they recede in time."
That was from the prologue of the book that I want to talk to you about today, which is The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance, and it was written by Ron Chernow. And Ron was writing those words in 1989. But the copy of the book that I have in my hand is actually the 20th-anniversary edition. And so it includes an additional foreword in the book where he's looking back at the creation of his first book 20 years after the fact. And there's a few things in that brief section that really jumped out to me that I want to bring to your attention.