J.P. Morgan & Company

J.P. Morgan & Company

Important details.

• Founder: J. Pierpont Morgan.
• Distinction: Preserved and expanded the American financial system.
• Primary products: Commercial banking and investment services.
• Annual sales: $18.110 billion.
• Number of employees: 15,512.
• Major competitors: Deutsche Bank, Goldman Sachs, Merrill Lynch.
• Chairman and CEO: Douglas A. “Sandy” Warner III.
• Headquarters: New York, N.Y.
• Year founded: 1854.
• Web site: www.jpmorgan.com.

J.P. Morgan & Company

            The fabled House of Morgan first surfaced as a financial powerhouse in the mid-19th century. It was instrumental in the formation of corporate icons such as U.S. Steel and General Electric. At one time, it controlled a significant portion of America’s railroads. It loaned millions to the governments of France, England, Mexico, and Russia. It helped preserve America’s monetary system more than once when it was threatened with collapse. It endured the Great Depression, two World Wars, and federal regulations that forced it to shed one of its most lucrative businesses. Despite being such a major player in the business world, however, it could not survive the massive changes that transformed its industry in recent years.

With roots going back to a London merchant bank opened in the 1830s, J.P. Morgan & Company has long been more than a run-of-the-mill financial institution. From its headquarters on Wall Street and offices in some three dozen countries, the firm assembled by three generations of Morgans has served as fiscal advisor to the most prominent and powerful people on earth. It has underwritten some of the largest stock offerings and corporate mergers ever initiated. It was once the primary source of U.S. Government financing, and members of the family from which it takes its name are widely considered the most influential financiers of modern times.

But that doesn’t mean the Morgans were always held in high esteem. With equal parts greed and guile, they often made bold moves to advance their interests at the expense of others. They flaunted their successes in public—at times when many Americans were struggling to get by. They had a none-too-subtle fondness for beautiful women, expensive cigars, immense yachts, and world-class art. They acted as if America’s economic landscape was their own private playground, ultimately alienating the government they often assisted as well as many people they made rich.

The firm’s attitude and approach shifted markedly over the last 50 years, but changes in the financial marketplace even
tually caught up. And in the fall of 2000, Morgan announced its acquisition by another storied name in the world of banking—one whose roots, if not its influence and importance, go even deeper than its own.

In 1838, American businessman George Peabody opened a merchant bank in London. A few years later he took on a partner named Junius Spencer Morgan, the descendent of a prominent New England trading family who took over the firm in 1854 and renamed it J.S. Morgan & Company. Morgan then ran the operation for more than three decades, serving as a key financial connection between Britain and the U.S. and setting the tone for its future by loaning $50 million to France during the Franco-Prussian War.

Before leaving for Europe, Morgan had a son. After attending schools in Boston, Switzerland, and Germany, the young J. Pierpont Morgan returned to New York for a job as an accountant with a fir m representing his father’s company. During the 1860s and 1870s he worked for several investment concerns, including Drexel, Harjes & Company of Paris. He inherited his father’s business after the senior Morgan’s death in 1890, changing the official name to J.P. Morgan & Company and consolidating its European and American interests. He also made his first mark on the financial world just a few years later, assembling a bond issue to resupply the U.S. Government’s depleted gold reserves and relieve a treasury crisis.

With the company based back in New York, J. Pierpont started turning it into a prime developer of American business. He began with a foray into the railway industry, arranging a rate agreement between two of the largest competitors—the New York Central and Pennsylvania railroads—and then helping reorganize others including the Southern, Erie, and Northern Pacific. As partial compensation he accepted stock in the companies and positions on their boards of directors, greatly expanding his wealth and influence. By 1902, he controlled about one-sixth of all America’s rails.

Morgan, nicknamed Jupiter because of the dominance of his orbit, soon branched into other fields. Three years after financing the 1898 creation of the Federal Steel Company, he helped combine it with Carnegie Steel and other independents to create U.S. Steel—the world’s first billion-dollar corporation. That same year he also arranged the merger of the Edison General Electric and Thomson-Houston Electric companies to form General Electric. He later aided in the assembly of other corporate giants, including International Harvester, AT&T, Western Union and Westinghouse.