The Great Pierpont Morgan (19 page)

But perhaps the most striking thing about Morgan's giving was the speed with which it was consummated. Unlike other men of wealth—especially today's men of wealth—he did not ask committees of experts to study appeals made to him. He had no truck with surveys of needs. Just as he hated haggling, so he hated undue deliberation. When he saw something worth giving to, he liked to do it without delay or ceremony.

To complete our brief triangulation of Morgan's nature, let us turn to Joseph B. Gilder's account, in the
Century Magazine
, of how Morgan made one of his major gifts. The story may be exaggerated, but at least it is characteristic.

Harvard University wanted to build a new group of buildings in Boston for its Medical School. Morgan liked the idea. Harvard was a good place; his son Jack had gone there and the results had seemed satisfactory. President Eliot was an excellent man. Medicine was a good thing, and the Harvard Medical School was well spoken of. So when Morgan was approached for a gift he said he would be glad to see the plans for the new group of buildings.

According to Gilder, John D. Rockefeller had taken six months to have the school's needs investigated. Morgan, when two or three representatives of the school came to see him at 23 Wall Street, and were shown into an inside room, walked in watch in hand.

“Gentlemen,” said he, “I am pressed for time and can give you but a moment. Have you any plans to show me?”

The plans were unrolled.

Said Morgan, moving his finger quickly from point to point, “I will build
that
—and
that
—and
that
. Good morning, gentlemen.” And he departed, having committed himself to the construction of three buildings at a cost of over a million dollars.

*
Samuel Spencer was never a partner, nor, apparently, on the salary list of the firm. But as a railroad expert he was in the office a great deal, and he had a procuration for the signing of checks. At 23 Wall Street they insist today that Morgan would not have “rapped for” Spencer as he is later represented as doing. If not, this is a minor flaw in the accuracy of a revealing anecdote.

*
Fry says his sister-in-law, Miss Burns, but on this point I follow Satterlee.

IX

BILLION-DOLLAR ADVENTURE

1

During the summer and autumn of 1897 there came a change in the economic weather. It was something like the change which comes when, after many a day of rain and wind and fitful sunshine and renewed storm, suddenly the wind veers into another quarter, the clouds begin to break and scatter, patches of deep blue sky appear, and men and women walk with a fresh briskness. For more than four years America had been beset with depression, unemployment, unrest, and uncertainty. Brief recoveries had been followed by renewed distress. Now all at once men began to look ahead with lively hope. An immense change was beginning—a change which, in the words of the sober financial chronicler Alexander Dana Noyes, transformed within half a dozen years “the crippled industrial and financial state of 1894, with the country's principal industries declining, its great corporations drifting into bankruptcy, and its government forced to borrow on usurious terms from Europe to maintain the public credit” into “a community whose prosperity had become the wonder of the outside world.”

On this new tide of confidence Pierpont Morgan was to rise to the crest of his power and prestige. Up to this moment, he had been an important figure in international finance, the most powerful of all bankers in United States Government finance, the greatest railroad reorganizer in the United States, and a mighty, if not determining, influence in the management of many American railroads. But only in a limited way had he been concerned with manufacturing. He was now about to move into a new domain.

The prospect in the fall of 1897 was heartening for business men. The sober and conservative William McKinley, having demolished William Jennings Bryan the preceding autumn in
a political campaign of unprecedented bitterness, now sat in the White House, with Mark Hanna, the friend of the corporations, at his elbow to guide him. The silver heresy was no longer a menace; the government's gold reserve was once again adequate; the world supply of gold was increasing and helping to lift prices the world over; a bumper wheat crop on the Plains was bringing good prices for export because of a wheat famine in Europe, and as the revenues of railroads and manufacturing companies and all manner of other businesses began slowly to swell, confidence at last returned. Plans for new enterprises were taken off the shelf where they had lain year after year because of the uncertain prospects for trade, and men began to sense that a new era of growth and activity for American business was beginning.

By today's standards, to be sure, the prosperity of this new era was singularly restricted. At the beginning of the twentieth century, while Andrew Carnegie was enjoying a personal income of something like fifteen million dollars a year (with no income taxes to pay), the mass of unskilled workers in the North were receiving less than $460 a year in wages, and in the South the figure was even lower—less than $300. According to Robert Hunter's study of
Poverty
, published in 1904, the wages of streetcar employees ranged from $320 a year to $460; a cotton-mill proprietor in Georgia testified before the Industrial Commission that the average wage paid to his employees was $234 a year; and the average wage in the anthracite district was less than $500. And this in a period when one millionaire's domestic staff was said to be ready at an hour's notice to serve a hundred guests; when another gave a dinner at Delmonico's at which seventy-two guests sat about a huge oval table in the middle of which was a contrived pond thirty feet long with four swans swimming in it; when a third was basking in a Scotch castle with forty guest suites, eight footmen whose sole function was to serve wine, and a personal bagpiper whose assignment was to march round the castle in the morning playing to wake the guests; and when a fourth was building a vast residence which was to contain a swimming pool, a gymnasium, a billiard room with ten tables, a private chapel with a marble altar weighing ten tons, a $50,000 organ, and a refrigerator large enough to hold twenty tons of beef!

Along with these wide contrasts went a state of mind which it is difficult for us, half a century later, to grasp imaginatively. When we go back today and read the polite journals of the eighteen-nineties, we find ourselves in a world of ideas in which there was only one group of people who appeared to matter much: ladies and gentlemen and those who aspired to be ladies and gentlemen (meaning the new rich and other imitators of the ways of the cultivated Eastern urban well-to-do). These journals took scant notice of the vast middle group of the population among whom Lorimer's
Saturday Evening Post
and Bok's
Ladies' Home Journal
were presently to recruit armies of readers, and who in subsequent decades would form the backbone of the audiences for the popular movies and radio shows—the proprietors of little businesses, the more successful farmers, and those hosts of small-salaried business employees and modest professional people whose unassuming and essentially democratic customs and manners William Allen White could celebrate so well. To the polite journalists of the eighteen-nineties, such men and women were untutored and negligible—except perhaps as aspirants to the genteel life. As for “the poor,” the polite journalists referred to them almost as if they were residents of a foreign land. Occasionally one finds in these journals earnest studies of the plight of the poor, or amusing or sentimental accounts of their picturesque ways; but that the poor should themselves read the polite journals, or for that matter become consumers of any of the reasonable comforts of life (except by leaping out of their class, as many of them did, to join the ranks of the prosperous) did not seem to occur to editors or writers.

In part this curiously patrician attitude was due to the reign of genteelism in literary and artistic circles. (For example, business was not considered a suitable subject for general journalistic consideration. Although it was of course the central fact of life in the United States and the favorite topic for talk when men gathered by themselves, it was thought a little vulgar for ladies and gentlemen together; they might better improve themselves by discussing literature, preferably English, or art, preferably Continental. Not until about the turn of the century did McClure, by turning his muckrakers loose upon the scandals and excesses of business, and Lorimer, by chronicling its wonders, begin to satisfy the innate interest
of innumerable readers in the hard facts of the business world.) But in part the attitude of the polite journalists reflected also the actual conditions of American life under which they had grown up and the prevailing attitudes of the day.

Thousands of American communities west of the Alleghenies, and more especially west of the Mississippi, were only just outgrowing the crudities and isolation of frontier times. And as for the poor, they were—aside from the Negroes—mostly immigrants from Europe, who were then pouring into the United States by the hundreds of thousands each year and overflowing from the slums of the Eastern seaboard into industrial towns the country over; they spoke foreign languages, looked rough and ignorant and dirty to people of older American stock, and seemed destined in the nature of things to sweat for low pay and live in miserable slums. (Hence, perhaps, the long-continuing condescension of native-stock Americans toward the mass of Europeans.) If today, when you drive with an elderly man past a factory, he expresses astonishment at the number of cars jammed in the parking lot, that is because he half-remembers what industrialism was like when he was a boy, and is startled to be reminded how the United States has become democratized during the past half century.

Nor was there then any widespread realization of the existence of what we today call the national economy. Not that the statistics of business were not elaborately recorded. One can look back today in the financial journals of that time and find out exactly how much money a given railroad made in a given quarter of the year and exactly what were the totals of bank clearings, exports, imports, and sales of this commodity or that over a given period. One can find elaborate discussions of the condition of this industry or that, this company or that. But one looks in vain for any adequate measurement of the prosperity of the country as a whole, or for any suggestion—except in the writings of indignant radicals—that the prosperity of the country as a whole was anything but the sum of the prosperity of the various businesses which were conducted in it. Not for many years to come would Willford I. King produce the idea that there was such a thing as the national income.

2

But as business accumulated momentum during the McKinley days, an idea precedent to the idea of the national income, and immensely significant, did seize hold of the minds of business men with a vengeance: the idea of national—and even international—markets for individual businesses or combinations of businesses.

The concept was of course not new. Before the eighteen-nineties Rockefeller, for example, had spread the operations of his Standard Oil Trust so widely as to achieve something approaching a national monopoly, and of course many manufacturers—like the Singer Sewing Machine people, let us say—had sold their goods in so many areas of the country (to say nothing of other countries) as to conceive of the United States as a single market for their wares. And Pierpont Morgan, calling together the chief railroad presidents of the country, surely had had in mind at least a vague concept of all these separate lines making together something of a national pattern. But the vast majority even of good-sized businesses were local. Most pools and combinations in industry were apparently conceived more with the idea of holding up prices between competitors in a limited area than with the idea of controlling jointly a market stretching from coast to coast. The concept of national advertising was still in its infancy. Meanwhile during the depression of the mid-nineties almost all grand schemes for new business combinations had been held in abeyance or at least slowed down; the times were not propitious. Morgan, for example, had acquired his unique influence among the railroads of the East not by launching any magnificent plan for expansion, but by acting as receiver, as it were, for distressed corporations. But now, in 1897, ambition began to see its chance to make up for lost time.

The nation was now linked by railroads from Maine to California. The frontier was closed. The pioneer days were ending. The South was at last really recovering from the ravages of the Civil War. Manufacturers were learning the techniques of mass production. (Long before Henry Ford's business began to boom, Andrew Carnegie had demonstrated the
validity of the principle of huge production at low cost and small profit per unit.) And now, all at once, among shrewd and well-heeled business proprietors, the idea spread like a wild epidemic that there was a national market awaiting them if only they could expand or combine to exploit it. And the easy victory of the United States in the Spanish War in 1898 encouraged an extension of this idea: why not an international market, for that matter?

American industry was abruptly—and feverishly—coming of age.

3

Yes, but how could a business or group of businesses grow so big as to capture the whole American market? The chief obstacle was not the Sherman Anti-trust Act, for although this act, passed in 1890, forbade combinations “in restraint of trade,” the government had been singularly lax about enforcing it and the Supreme Court had shown considerable uncertainty as to what constituted restraint of trade. Apparently it was all right for a group of companies to join forces and achieve a near-monopoly in a given industry (provided their methods of eliminating their competitors were sufficiently discreet)
if
they could find a legal way of joining forces. Years before, Rockefeller had combined a lot of oil companies by getting the men who held stock in these companies to turn over their shares to a group of trustees to vote as a unit; hence the term “trust.” But court decisions had made it clear that trusts in this strict or Rockefeller sense would no longer be permitted. How, then, could the thing be done?