The monetary expansions and contractions of this period were large waves that capsized thousands of investment ships at sea. But there was one large vessel that, somehow, bobbed up and down with the surges quite well and could be seen throughout the storm 410 THE CREATURE FROM JEKYLL ISLAND
salvaging the abandoned cargoes of those that were in distress. This vessel brought back to port untold riches that once had been the property of others but now belonged to the master of the salvage ship in accordance with rules of the high sea. The captain's name was J.P. Morgan.
It will be recalled from a previous section that J.P. Morgan and Company was no small player in the world chess match called World War I. Morgan had been chosen by the French and British governments as the official agent to sell their war bonds in the U.S.
When the war began to go badly for them, the Morgan interests began to agitate for American entry into the conflict, a move which was calculated to save the loans. The Morgan firm also was the official U.S. trade agent for Britain. In violation of international treaty, it handled the purchase and shipping to England of all war material, including the enormous cargo of munitions aboard the
The close relationship between the Morgans and Great Britain was no accident. J.P. Morgan, Jr., was the driving force behind the Council on Foreign Relations, the American branch of a secret society established by Cecil Rhodes for the expansion of the British empire. In truth, the Morgans were more British than American.
The reason for this is to be found in the origin of the Morgan dynasty. It all began with an American merchant from Danvers, Massachusetts, by the name of George Peabody. In 1837, Peabody travelled to England as a bond salesman for the Chesapeake and Ohio Canal, hoping to find British investors to replace the missing ranks of Americans who, because of a recession at that time, showed little interest in the project. He routinely was rejected by the large investment houses of London but, eventually, his persistence paid off. Stanley Jackson, in his biography of Morgan, says of Peabody: When the panic [in the U.S.] at last started to subside, he callcd time and again on the big City barons [in London] to assure them that Marvland and other states would honor their bonds. He also continued backing American securities with his personal funds Buving at almost giveaway levels, he later reaped a nch harvest. He unloaded most of the Chesapeake and Ohio Canal bonds and won acclaim back home for returning his $60,000 commission intact to Maryland's meager treasury.
1. Stanley Jackson,
THE LONDON CONNECTION
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It was during this trip that Peabody opened an import-export business at 22 Old Broad Street in London and began to provide loans and letters of credit to many of his shippers. That moved him into the investment business specializing in transactions between Britain and the United States.
It was fortunate timing. This was the beginning of a period of rapid expansion in the United States, accompanied by an insatiable need for investment capital and a plethora of bond issues offering tantalizing rates of return which were substantially higher than comparable offerings in Europe. Peabody's firm was in an unusual position to exploit this expanding market, and his firm grew rapidly.
Peabody never married and, as he advanced in years, began to look for someone to carry on the business. The qualifications for such a position were difficult. First, the man had to be an American by birth in order to appear authentic as the representative of American investments. Secondly, he had to be British by instinct and preference. This included being well educated and with good breeding in order to be accepted by the aristocracy in London's financial world. Third, he had to have knowledge of Anglo-American finance. And fourth, Peabody had to like him.
JUNIUS MORGAN SELECTED BY PEABODY
When the Boston merchant, Junius Morgan, met George
Peabody at a London dinner party in 1850, little did he realize that the elder financier took an immediate liking to him and began to discreetly inquire into his background and reputation. This began an extended period of business and social contact that eventually ended in 1854 when Junius moved his family to London and became a full partner in the firm which, eventually became known as Peabody, Morgan & Company.
In addition to selling bonds in England for American commercial ventures and state governments, the partnership also became the chief fiscal agent for the Union government during the Civil War, and it was during this period that the firm's great profits pushed it into the top echelons of London's financial fraternity. In 1864, Peabody finally retired and completely turned the business over to Junius who immediately changed the firm's name to J.S.
Morgan and Company.
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Junius's son, John Pierpont, attended the English High School in Boston but, during much of his youth, was enrolled in European schools and became engulfed in British tradition. He had been born in the United States, however, and that made him ideally suited to carry on the Anglo-American role played so deftly by Peabody and Junius. It was inevitable that the boy would be trained in international finance and groomed to step into his father's shoes. The first move was to find employment for him in 1857 at the New York investment firm of Duncan, Sherman & Company. Seven years later, Junius acquired a competitor New York firm and set his son up as a partner in Dabney, Morgan & Company, which became the New York branch of the London firm. In 1871, with the addition of a third partner, Anthony Drexel from Philadelphia, the firm became Drexel, Morgan & Company. In 1895, following the death of Drexel, there was a final change of name to J.P. Morgan & Company. A branch in Paris became known as Morgan, Harjes & Company.
AMERICANIZING THE NEW YORK BRANCH
After the unexpected death of Junius in a carriage accident a few years later, it was decided by Pierpont to reshape the image of the London firm to be a more British operation. This would allow the New York branch to represent the American side with less suspicion of being essentially the same firm. By that time, his son, J.P.
Morgan, Jr.—known as Jack by his friends—had already been brought into the firm as a partner, and he was to play an important role in the creation of that image. Biographer John Forbes tells us: J.P. Morgan, Jr., became a partner in the London house of J.S.
Morgan & Co. on January 1,1898, and a fortnight later, with his wife Jessie and their three children,... he left New York and took up residence in England for the next eight years.
