J.P. Morgan _--_ Co.

“ From private persons, acting in private, and dominated in the main by private motives there cannot be expected the wisest and broadest direction of the flow of money—the lifeblood of business. These men have not asked for this power. They know it is too great for them. On the whole they have behaved with singular restraint. But only a fool would suppose that the best system for financing the small farmer in Florida or the small tin can manufacturer in Oregon is to turn over the entire money power of the nation to J. P. Morgan and a few other private persons. ”

“ It is said J. P. Morgan could raise $10,000,000 on his check any minute; but the man who is raising a large family on $9 a week is a greater financier than Morgan.
To modernize an old prophecy, "out of the mouths of babes shall come much worldly wisdom." Mr. K. has two boys whom he dearly loves. One day he gave each a dollar to spend. After much bargaining, they brought home a wonderful four-wheeled steamboat and a beautiful train of cars. ”

“ Mine men, stockholders, and financiers the country over understand this, although the Eastern newspaper-reading public has been taught to believe that this type of promoter must be a Get-Rich-Quick operator.
A broker in Wall Street who speculates in the securities of the New York Stock Exchange for his own account is considered unsafe. E. H. Gary, Chairman of the Executive Board of the Steel Trust, stated under oath at Washington in June that J. P. Morgan never speculates. Ask the average member of the New York Stock Exchange what chances the stock-gambler has. ”

“ They were originally fashioned in the Pelao Islands, and brought thence to Uap in canoes over a stretch of four hundred miles of ocean. A very large fei could not be changed into smaller coin without seriously disturbing the currency of the island. The owner of one of these twelve-foot masses of wealth is a sort of J.P. Morgan. Like the man with the million dollar bill in Mark Twain's story, he does not need to break his money in order to pay for anything he may buy, but readily secures all that he desires on credit. ”

“ Ogilvy that temporary franchise mentioned in his telegram, it might help me to get in right with J.P.M, at the start,” his hopeful suggested. “I guess it would be kind of poor to be taken on as one of the regular staff of attorneys for a Morgan corporation, eh? Say, they pay those chaps as high as fifty thousand dollars a year retainer!”
“Guarantee it!” his father shouted. “Guarantee it! Well, I should snicker! We'll just show J. P. M. and his crowd that they made no mistake when they picked you as their Sequoia legal representative. ”

“ It is the controlling consideration in its effect on competition in the railroad and industrial world.”
HAVING YOUR CAKE AND EATING IT TOO
But the power of the investment banker over other people’s money is often more direct and effective than that exerted through controlled banks and trust companies. J. P. Morgan & Co. achieve the supposedly impossible feat of having22 their cake and eating it too. They buy the bonds and stocks of controlled railroads and industrial concerns, and pay the purchase price; and still do not part with their money. ”

“ These disclosures, towards the end of 1887, ended the first period of active Garrett management in the Baltimore and Ohio. The directors then turned to New York bankers for the cash that was needed to put the affairs of the company on a sound basis. Samuel Spencer, who afterward became a partner in the banking house of J. P. Morgan and Company, was elected president and active manager. He introduced radical reforms, entirely revolutionized the organization, and adopted modern methods. ”

“ Now, since a, B, b, A, are integers, so also is P; and thence Q; and thence R, etc. But since A/B, P/A, Q/P, R/Q, etc. are all between -1 and +1, it follows that the unlimited succession of integers P, Q, R, are each less in numerical value than the preceding. ”

“ He was primarily a banker, and, as such, acted as an agent for wealthy clients in the investment of money. Some people would call him a practical railroad man, a steel manufacturer, a coal operator, because he was interested in such things and dealt in them. But Mr. Morgan was essentially a worker with money — a master of finance. While his business was a partnership, and not a corporation, he was its dominant factor. No man had greater influence in financial and industrial circles, nor was any individual more trusted. ”

“ Morgan was recognized as a colossal figure in the world of finance, and his counsel and presence were always influential. His breadth of vision, keenness of conception, and ability to immediately grasp and understand the most difficult problems made him a giant power among financial men in all parts of the world. By many prominent financiers and business men he was looked upon as the greatest financier the world has produced for at least a century. ”

“ It is unnecessary to review the evidence; it is too voluminous. The question is one of fact and estimation, and we will content ourselves by stating the conclusions at which we have arrived.
We are of opinion—
(1) That Williams & Thomson had such an interest, and were so situated in the cause, that they had a right, by leave of the court, to except and object to the charges and allowances presented by the trustees and receivers, and that they had a right to appeal from the decree of the circuit court to this court.
(2) That the said decree was a final decree for the purposes of an appeal. ”

“ The Louisville & Nashville Railroad Company furnish $5,000,000 in bonds to be used for the purchase. A portion is to be used to buy the bonds of the old company; a part to pay preferential charges and claims, and to return the property, amounting to $300,000. These two persons are to have the remnant not consumed by those charges on that fund. So, to make their commissions or brokerage or compensation larger, they come to contest with trustees, attorneys, and officers of court who for five years have been at work. ”

“ As to the right of Williams & Thomson to appeal, this depends on the right to intervene and contest the allowances to the trustees; or rather on the power of the ourt to allow them to do so. And we do not well see how this power can be doubted, if they had a substantial interest at stake. From the first, they claimed to have such an interest, not only as interested under the purchasing agreement, (a copy of which they filed with the master,) but as bondholders chargeable with the payment of their part of the charges. ”

“ On the twelfth of March, 1875, they filed a bill for foreclosure and sale of the mortgaged property in the circuit court of the United States for the district of Louisiana, and were appointed receivers in addition to their character as trustees. The railroad covered by the mortgage was the road running along the gulf between Mobile and New Orleans, and was in a dilapidated condition, needing new bridges, new embankments, and extensive repairs, as well as rolling stock and machinery. ”

“ Their contracts are with a voluntary committee of bondholders who have made a purchasing agreement. They have not purchased the railroad nor purchased the bonds, but have m de an agreement with the committee that they should purchase and sell to the railroad on a variety of conditions which may not be fulfilled. Any higher bidder may acquire the railroad. The trustees have a reserved right and obligation to purchase the road. Williams & Thomson may not appear and carry out one word of the engagement, or comply with the conditions to bind the buyer with the bondholders' committee. ”

“ If such an agreement should be obtained, then the railroad, franchises, equipment, and property should be sold under a decree of foreclosure and sale in the pending cause according to law, and bid in by the committee for the purpose of carrying out the arrangement. It was also agreed that the receivers and trustees should, by the Louisville Company, or in some other satisfactory manner, be protected from all their obligations and liabilities ”

“ We’ve got to state the facts exactly as they are. The public must have the truth and nothing but the truth.” And the statement was modified accordingly.
Mr. Morgan had had just half a century’s preparation for doing the public the immense service he rendered it in “composing” the panic of 1907; for he had been in the banking business since 1857—another panic year. Ability, experience, character, reputation, and financial resources were his, and had put him in a position to ride the whirlwind and direct the storm. ”

“ They have no right to contest the claims or the accounts of the plaintiffs or those of the attorneys. They must take the property as they find it and the charges on it should they purchase the property. ”

“ Their status as bondholders and otherwise does not seem to have been denied. As bondholders, and as interested under the second mortgage, if not under the purchasing agreement, we do not well see how the court, under the circumstances, could have refused their application. The trustees themselves, who were the nominal complainants, were the parties interested to obtain large allowances for themselves, and could not be relied on to have them reduced. ”

“ Combination and control of other people’s money and of other people’s businesses. These are the main factors in the development of the Money Trust. But the wealth of the investment banker is also a factor. And with the extraordinary growth of his wealth in recent years, the relative importance of wealth as a factor in financial concentration has grown steadily. It was wealth which enabled Mr. Morgan, in 1910, to pay $3,000,000 for $51,000 par value of the stock of the Equitable Life Insurance Society. ”

“ Morgan steadily achieved the consolidation of the greater industries into trusts or combinations and effected a community of interests between them and a few dominant banking organizations, with allied insurance companies and trust companies. In New York City have been centered, as never before, the banking reserves of the nation, and here, by the financial management of capital and speculative promotion, there has grown up a unified control over the nation's industrial life. ”

“ VII—MORGAN—FINANCIER
No study of the men of our time would be complete without considering one of the famous financiers of the present age of wealth. Among a group of several, J. Pierpont Morgan stands easily first as the greatest organizer.
Born in Connecticut in 1837, he studied in Boston and later in Germany, and at the age of twenty became a banker. His first large business deal, however, was in the acquisition of a railroad, taking it from the hands of an infamous ring who controlled it and reorganizing [Pg 166] it. After this he adopted the syndicate method for floating bonds. ”

“ Morgan and his partners are usually large owners in the companies they influence or even control. Often they do not own 15 per cent. of the stock of the banks they dominate. Often they become directors with but a few shares of qualifying stock. Still more often their influence is exerted merely as financial advisers. Often they nominate the president of a [Pg 616] railroad or manufacturing company as Morgan & Co. ”

“ When they give out opinions, these opinions become the opinions of a host of others, almost automatically. When Morgan stepped into the breach in the Panic of 1907 with $25,000,000, it was quite as much the fact that Morgan had acted, as it was the millions themselves, which relieved the situation. ”

“ A trust-fund would always be a splendid red-herring to draw across the path of Mrs. Grundy's sleuth-hounds—a quarry more savoury to their nostrils even than a reputation. And nothing soothes the sceptical more than being asked now and again to witness a transfer of stock, especially if it is money held in trust. ”

“ No one man will take Mr. Morgan's place, but the typical man in the group of men that will take his place will justify Mr. Morgan's work, by taking this world in his hand and riveting his vision on where Morgan's vision leaves off. As Morgan has fused railroads, iron, coal, steamships, seas, and cities, the next industrial genius shall fuse the spirits and the wills of men. ”

“ What the business man usually lacks is imagination; but imagination was perhaps the largest element in Mr. Morgan’s mind. It was this that made his actions great. It was his constructive imagination that made it possible for Mr. Claflin, President of the New York Chamber of Commerce and himself a distinguished man of affairs, to say: “Like the founders of this nation, Mr. Morgan had prophetic vision; like them, he was an organizer of scattered possibilities and a builder of mighty structures such as no man had built before.” ”

“ Morgan a speculator. Wall Street signifies, and will increasingly signify, as time goes on, the abiding-place of bankers rather than of brokers; and it was in the banking world that Mr. Morgan reigned supreme.
The transactions in which he was the chief factor ran all the way up to the more than $1,400,000,000 capital of the United States Steel Corporation. The total amount involved in his organizations and reorganizations of railways, industrial concerns, and public utilities, and his flotations of American and English government bonds, was thousands of millions of dollars. ”