The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance

by Ron Chernow

  Mrs. Dwight Morrow and

  Mr. Thomas Lamont

  Request the honor of your company

  at a dance given in honor of

  Mrs. Thomas Lamont and Mr. Dwight Morrow.18

  JACK Morgan moved through the twenties like a monarch. One journalist described him embarking from his limousine at 23 Wall: “I saw two other men inconspicuously draw themselves up in an attitude of attention, like soldiers in mufti, acting on their instincts or through force of habit. . . . The great doors with their huge panes of spotless glass and their polished brass swung open and shut.”19 He enjoyed his spot at the top of the Morgan empire. About to present Pope Pius XI with restored Coptic texts in 1922, he made this observation: “My special job is the most interesting I know of anywhere. More fun than being King, Pope, or Prime Minister anywhere—for no one can turn me out of it and I don’t have to make any compromises with principles.”20

  Jack lived regally at his 250-acre island estate, Matinicock Point, off the North Shore. Visitors passed through enormous wrought-iron gates and down an endless drive shaded by linden trees; in season bloomed several thousand tulips and daffodils under the direction of Jessie Morgan. The estate required several dozen full-time gardeners. There were also cows, horses, greenhouses, boxwood and rose gardens, cottages for the staff, and a dock down at the Sound.

  Amid open lawns and high trees, the red-brick mansion was grander than any of Pierpont’s residences. It was designed by Grant La Farge with an imposing columned entrance. Inside, three famous ladies—Rubens’s Anne of Austria, Gainsborough’s Lady Gideon, and Sir Thomas Lawrence’s countess of Derby—stared down from the walls of a house specially fireproofed for them. The majestic stairway of the forty-rive-room house was lined with beautiful floral arrangements.

  Jack liked quiet, domestic pleasures. Delicate and sedentary, a born dabbler, he enjoyed detective novels and crossword puzzles. His literary hero was Rudyard Kipling. He disapproved of contact sports, and when his two sons, Junius and Harry, went to Groton, he protested the introduction of football, calling it immoral, dangerous, and brutal.21 He loved taking drives in his chauffeured cars and had four of them—two Rolls-Royces, a Lincoln, and a Buick roadster.

  He was fanatical about his privacy and hostile to the press. The Morgans always kept their daughters and granddaughters off the society pages. Like his father, Jack often threatened intrusive photographers and would screen his face with his Panama hat as he left church on Sunday mornings. Because he commuted to Wall Street by water, photographers awaited him on boats in the Sound. To foil them, he constructed a flowery archway that curved down to the dock and obscured his movements. The only problem was the gangplank. For the final seconds it took to board the boat, his butler, Henry Physick, would remove his coat and hold it up to shield his master from the press. Sailing home from work, Jack would take afternoon tea on board.

  Only once did Jack submit willingly to press photographs. One day, as a motorboat was taking him out to the Corsair the photographers were in their usual hot pursuit, when Jack’s Panama hat blew into the Sound. A photographer fished it from the water and gave it to Jack’s boatswain, saying, “Your boss hasn’t treated me with much courtesy, but I am glad to do him a favor.”22 Like Pierpont, Jack was sentimental and could be disarmed by a gallant gesture. When he heard the story, he ordered the photographer up on deck and posed for twenty minutes of pictures.

  Both Jack and Jessie loved England, which they visited each spring and summer. When the London Times tagged him an English squire, Jack was thrilled.23 He had a London townhouse at 12 Grosvenor Square and bequeathed Princes Gate, the old family townhouse, to the U.S. government as a residence for the American ambassador. Just as George Peabody had hosted annual Fourth of July dinners, Jack hoped future ambassadors would “live like gentlemen and have their Fourth of July receptions in adequate surroundings.”24 Later on, Princes Gate would be the wartime residence of Ambassador Joe Kennedy, who finally slipped into the House of Morgan through a back door. It was the house opposite Hyde Park fondly remembered by the Kennedy sons.

  Jack’s major British residence was Wall Hall, his three-hundred-acre estate north of London with artificial lakes and gardens. He ruled the village like a whimsical Prospero. He didn’t simply live in the village; he owned it. As Fortune magazine explained, “At Wall Hall he is a Tory squire with the whole of Aldenham Village as his property except the ancient church, and with all the villagers in his employ, each supplied with a rent-free house and registered milk and free medical treatment and an old-age pension and membership in the Aldenham Parish Social Club.”25

  A paternalistic landlord, he fretted about his villagers. So that they wouldn’t loaf, he provided them with cricket grounds, tennis courts, and bowling greens. He was afraid that the village tavern, the Chequers, might be bought by a brewer. So he dispatched Teddy Grenfell on a secret mission to buy it at any price. This high-level corporate raid occasioned some drollery between them. “It is a new kind of business for me altogether,” Jack said, “as I have owned many kinds of property, but never a public house before, and I am quite excited at the investment.”26 Rather old-maidish, Jack considered taking away the tavern’s liquor license. But the problems that accompanied Prohibition in America persuaded him to retain the pub license. He even added a hall for movies and dancing, saying, “It’s really going to make a difference to a good number of honest, hard working and powerfully dull men and women.”27

  To an extraordinary degree, he was a creature of custom and comfort. So that he could drive without removing his plug hat, he had an English firm design a car with a special high top. He corresponded with a haberdasher about socks that didn’t slide smoothly enough over his heel. Perhaps fearing his own emotions—or else in homage to his Yankee-trading ancestors—he always wanted things around him to proceed tidily. He was obsessed with punctuality. At Wall Hall, he had so many clocks that someone came in weekly just to rewind them. For gifts, he often gave his partners rare gold watches.

  The year had its unchanging rhythms for Jack. The high spot was August 12—the Glorious Twelfth that launched the Scottish grouse-hunting season. “Nearly everybody I know has started for shooting in Scotland,” he once wrote a partner in early August.28 Who else in America could make such a statement? After 1913, Eric Hambro and Jack jointly owned Gannochy Lodge near Edzell, in Scotland. They and their eminent guests bagged up to ten thousand birds a year, and each hunter was attended by a butler. In honor of Jack, the Scottish retainers even put together a “Morgan tartan.”

  For his Manhattan residence, Jack retained the townhouse at Madison Avenue and Thirty-seventh Street that his father had bought for him. Somber and brooding outside, it was light and airy within. It had white marble fireplaces, French revival furniture, and crystal chandeliers. When staying there, Jack would visit the library next door each day. He added four thousand books and manuscripts to his father’s nineteen thousand and continued his raid on illuminated books and British literature. A tip from Tory leader Stanley Baldwin brought him the manuscript of Sir James Barrie’s Shall We Join the Ladies? “I hate manuscripts leaving the country,” Baldwin confessed to Jack. “But if they have to go, I would far rather they found a home with you than anybody else!”29

  After his father’s death, Jack hadn’t been able to pursue collecting and was preoccupied with settling the estate. Now, in another parallel to Pierpont’s life, Jack widened his collecting as he moved into his midfifties. Once again, Belle Greene went on buying trips to Europe, and Jack regarded her with affection and slightly fearful awe. When four rare manuscripts owned by the earl of Leicester came on the market, Greene was afraid to commit so much money on her own. She asked Jack to negotiate. He went to Europe and after a sleepless night bought them for an estimated $500,000. Jack told the seller: “My librarian told me she wouldn’t dare spend so much of my money. But just the same, I wouldn’t dare face her if I went home without the manuscripts.”30

  Ja
ck hadn’t yet erected the sort of monument to Pierpont that Pierpont had to Junius. In 1924, he incorporated the Pierpont Morgan Library in his father’s memory, with Belle Greene as the first director; he provided a $1.5-million endowment. Perhaps recalling the brouhaha over the art collection’s breakup, he summoned reporters for a wistful interview. Seated in the West Room, where Pierpont had worked and Junius stared down from above the mantel, Jack said, “This is the room where my father literally lived. I think it is probably the most peaceful room in New York. You never hear a thing here except occasionally a bad automobile horn.”31

  As he took reporters around the library, he snatched up interesting items and talked about them. Taking up a Dickens manuscript, he said, “Scrooge and all the rest of them are there. Isn’t that nice?” In his remarks may be heard the plaintive note of a man seeking public love—love that he felt he deserved but was always denied. At the end of his tour, he asked, “Now what do you think of it? Have I done a good thing in making this gift?”32

  In 1928, Pierpont’s brownstone mansion next to the library was torn down and replaced by an annex, designed by Benjamin Wistar Morris, to provide exhibition facilities and more space for scholars. (One now enters the library through the annex.) Under the imperious sway of Belle Greene, the library remained a jewel-box institution with a tiny staff. Belle could be curt with dilettantes, voyeurs, and just plain fools, but her stature in the museum world was mythical on account of her devotion to genuine scholars.

  While Jack was paying tribute to his father, he tried to groom his two sons to take over the bank. His eldest, Junius Spencer, Jr., graduated from Harvard in 1914. He served as a junior officer on a destroyer off the English coast in the war, an experience that left him with shattered nerves. Tall and extraordinarily handsome, with the face of a sensitive actor, he became a Morgan partner in 1919. Warmly approachable and possessed of a dry sense of humor, Junius was probably the nicest Morgan—but the most dismal businessman. Jack tried to fool himself that Junius was cut out for banking and sent him to Morgan Grenfell for a two-year apprenticeship in 1922. Jack wrote to Grenfell, “I cannot tell you how glad I am to have him go over and learn London methods, and the London outlook of business, under your careful eye.”33 Junius went through the motions of being a banker and served as a director of U.S. Steel and General Motors. But his real dream was to be a marine architect. His would be a sad, wasted business life, showing the limited options open to sons in a banking dynasty. Like his father and grandfather and brother, Junius became a commodore of the New York Yacht Club—the only certifiable Morgan activity that really fit him.

  Jack’s younger son, Harry Sturgis, looked more promising as a businessman. Born in London in 1900, he was short and stocky, with a more aggressive and temperamental air than Junius. If Junius looked friendly and rather languid, Harry was all thrusting energy, his chin assertive, his lips tightly compressed, his gaze fiery. In 1923, one week after graduating from Harvard, he married Catherine Francis Adams, daughter of Charles Francis Adams, secretary of the navy under Herbert Hoover. That year, Harry started as a $15-a-week Morgan messenger and ran securities around Wall Street. As a Christmas present in December 1928, Harry received his $1-million-a-year Morgan partnership.

  During this period, Jack suffered two emotional blows from which he never recovered. In 1924, he lost his mother, who was still living in the original Madison Avenue mansion; it was torn down only after her death. She had survived into her eighties, by then a stone-deaf old woman. Jack, as a boy, had gravitated toward his mother’s warmth and gentleness. His own close marriage to Jessie probably recapitulated the earlier relationship.

  Like Fanny, Jessie Morgan became somewhat weak and sickly, but there were major differences. Jessie was a natural executive and extremely efficient in running four giant households, supervising butlers, footmen, and housekeepers. She had a shy, matronly look that hid steely discipline. Feminine on the outside, she was tough at the core—as when she lashed out at the would-be assassin in 1915. Neither she nor Jack believed that women should be emancipated, and she tended her gardens, collected lace, and gathered drawings of flowers. She had no interest in politics or lunching with other women. Beneath the frills, she was determined and even slightly fearsome.

  Jack Morgan’s happiness revolved around her and his children. In April 1925, he told Grenfell, “The only excitement in the family—and it is real excitement—has been the arrival in this woeful world of Frances’ twins, running the number of my grandchildren up from nine to eleven in twenty minutes. This satisfies even my most ambitious aspirations.”34 What didn’t jibe with this picture of family harmony was that Jack and Jessie were so engrossed with one another that their children felt excluded. Jessie served Jack, adored him, and advised him in every aspect of his life. She was the invisible safety net that stopped him from falling, and he relied on her judgment implicitly.

  Then, in the summer of 1925, Jessie contracted a sleeping sickness—an inflammation of the brain—then prevalent in the United States. It was thought to derive from the influenza pandemic of 1917-18. Jessie fell into a coma and had to be fed through a tube. Antibiotics weren’t yet available, and eminent physicians could only counsel patience. They told Jack the disease was running its course and that Jessie would eventually wake up. A trusting person, Jack waited and prayed. Afraid of submitting to melancholy, he put on a brave front and reported to 23 Wall every day, taking comfort from Jessie’s smallest stirrings and from the fact that, as she slept, she was well nourished and gaining weight. He wrote: “Jessie is getting on well, the doctors assure me, and they all assure me that the recovery, though very slow, will ultimately be complete. Though she is still wholly unconscious, there are little almost imperceptible signs that she will eventually emerge from that state.”35 And: “Of course no one can tell how long she must sleep, but while she sleeps she is not conscious of any pain or discomfort, and the cure is proceeding all the time.”36

  How to reconcile this tender Jack Morgan with the stern anti-Semite of earlier pages? He was a true Morgan. His humanity was deep but narrow, his world divided between those who counted and those who did not. With his family, he was capable of total love. By mid-summer, Jessie had slowly improved, and Jack was buoyed by reports that her condition was better than at any time since the onset of the illness. Doctors assured Jack he could go to work without fear. On August 14, 1925, he went to the office only to receive a late-morning call to return home at once. By the time he arrived, Jessie was dead. Her heart had stopped from what doctors thought was an embolism. They were stunned by the sudden reversal.

  Still recovering from his mother’s death, Jack was distraught, inconsolable. He mourned deeply and reverently, much as Pierpont had mourned the sainted Mimi. In a moving outburst of grief and affection, he told Lamont, “Well, I have all these years to look back upon, everything to remember and nothing to forget.”37 In a letter to a partner, Lamont described Jack during Jessie’s illness: “[He] had felt perfectly confident the last few weeks that his wife was going to come out all right. He was determined that she should. He thought of nothing else day and night. He was looking forward to the time when she would emerge from her sleep. He was most anxious to be with her at that time, thinking that his presence might be an aid to her in regaining her normality . . . he had been wonderful, courageous, and perfect throughout it all.”38

  In her will, Jessie left the bulk of her property to her two sons and two daughters. She included an oddly touching tribute to her husband—one can almost see the ironic twinkle in her eye as she wrote, “I feel sure that if, through any unforeseen circumstances, my dear husband should ever be in need, my children will share with him the property derived from me.”39

  After his wife’s death, Jack became more withdrawn. At Matinicock Point, he left her bedroom as she had left it and tended her tulips and English rose garden. (Becoming a dedicated gardener, he entered dahlias in a Nassau County show and won the J. P. Morgan Prize!) Well drill
ed by Jessie, the servants ran the estates without her. Although now alone, Jack closed no houses and sold no boats or cars. In some ways, he refused to acknowledge the change in his life. Many of his friends testified to the eerie sense that Jessie still was present—not a superstitious feeling so much as one of Jack refusing to let her rituals die. In 1927, Jack bought up waterfront property in Glen Cove to dedicate a $3-million Morgan Memorial Park to his wife. From its quaint clubhouse with its fluted eaves, Jack embarked on his Mediterranean cruises each year.

  Solitary, clad in tweeds, and smoking his meerschaum pipe, Jack wandered about his formal gardens, a melancholy widower. His partners noticed his loneliness. Easily wounded, he had had a tendency toward melodrama and self-pity, both of which now became pronounced. Writing of his fourteen grandchildren in 1928, he told a friend, “It makes a great difference to me in my life, which is necessarily very lonely.”40 Sometimes he asked his chauffeur of twenty-five years, Charles Robertson, to drive him down to the Morgan Memorial Park. He would sit beside the chauffeur and stare silently at the water. For all his money, he now thought himself the loneliest of men.

  CHAPTER FOURTEEN

  GOLDEN

  BY the mid-1920s, the Morgan story had come full circle. Where George Peabody and Pierpont and Junius Morgan had attained power by tapping the flow of British capital to America, the relationship was now fully reversed. London’s merchant banks, hobbled by the postwar embargo on foreign loans, had to act on a smaller stage, their overseas lending largely limited to British dominions or colonies and reconstruction loans. Meanwhile, Wall Street thrived, and J. P. Morgan and Company far surpassed Morgan Grenfell in power. Managing the British portion of the international loans sponsored by 23 Wall, Morgan Grenfell was somewhat buffered from the general London decline.