Morgan

by Jean Strouse

  a The 1909 Payne-Aldrich Act also modestly reduced other tariffs, set a 2 percent tax on corporate income, and authorized a constitutional amendment for a personal income tax.

  b The company was more august than he knew. After Twain died in 1910, a magazine editor offered Morgan a private edition of the author’s “Conversazione at the Court of Queen Elizabeth,” with the warning that it was “frankly and appallingly vulgar.” Belle Greene replied, “frankly and confidentially,” that “there are two men whom I have been endeavoring for several years to give a clean slate for posterity—one is George Washington, and the other is Mark Twain. I have very often been asked to buy vulgar outpourings of these two men, and I have refused to do so because I thought that they did not typify the men themselves and would only give rise to nasty and unjust statements in future biographies. Since Mark Twain’s death I have been appalled at the amount of such stuff of his that has been offered me, and, as the books in this Library will be preserved for all time, I felt that it would be an injustice to him to hand this side of him on to posterity.” The Washington material she felt called on to clean up for posterity apparently had to do with stockbreeders’ language.

  c Five of the Vermeers in the Hudson-Fulton exibition are still ascribed to that artist. They are, in addition to Morgan’s, Young Woman with a Water Pitcher and Woman with a Lute (both at the Met), Girl Interrupted at Her Music (at the Frick Collection), and A Woman Asleep (from the collection of Benjamin Altman, who gave it to the Met by bequest in 1913). The sixth canvas was John G. Johnson’s The Guitar Player, now in the Philadelphia Museum of Art as an excellent copy. The 1909 exhibition did not include Isabella Stewart Gardner’s The Concert, which was stolen in 1990.

  d It was designated a New York City landmark in 1979, and is now the Guatemalan Mission to the UN.

  e In 1935 the English diplomat Harold Nicolson reflected on the Morgan bank’s attitude toward government. Nicolson was writing a book about Morgan partner Dwight Morrow, and the bank, now headed by Jack, objected to certain passages of the manuscript. Nicolson told his wife, Vita Sackville-West, that the conflict boiled down to the difference between his own conception of banking and Morgan’s: “I had written, in describing the immense expansion assumed by Morgan’s bank at the outbreak of [World War I], ‘It ceased to be a private firm and became almost a Department of Government.’ I meant that as a compliment. Old J. P. Morgan [Jack] appears to have regarded it as an insult. He has added a little note on his own, ‘I have no right to ask you to alter this, but it will be interpreted as if we were reduced to the status of a department subordinate to the Government.’

  “This is characteristic of both of us,” continued Nicolson. “I feel it the highest compliment to compare Morgan’s to the Foreign Office. They regard it as an insult to suggest that they have any connection with the Government, or any Government. But you see, the whole point of view is different. I regard bankers and banking as rather low-class fellows. They regard officials as stupid and corrupt.”

  f Recalled to New York, Willard Straight went to work at the Morgan bank and stayed four years, but never really fit in. He and Dorothy supported Roosevelt in 1912, and in 1914 they financed a new left-liberal magazine about politics and the arts edited by Herbert Croly, The New Republic. Straight left the Morgan bank in 1916, and died in 1918. Dorothy subsidized The New Republic for the next forty years.

  g Morgan sent $5,000 to Princeton presidents John Aikman Stewart in 1911 and John Grier Hibben in 1912. The gifts were recorded in a diary of expenses and appointments kept by Morgan’s secretary; there is no diary for 1913, the year Morgan died.

  h One of the physicians Jack consulted was Austen Fox Riggs, to whom he referred years later as “my much admired and beloved” Dr. Riggs. In 1919 Jack pledged $20,000 to the Austen Riggs Foundation for the study and treatment of nervous disorders in Stockbridge, Massachusetts. Born in Cassel, Germany, Riggs had come to the United States with his parents as a child, graduated from Harvard in 1898, and trained at the Columbia College of Physicians and Surgeons. He specialized in pulmonary tuberculosis for several years in New York, then in 1907 gave up his practice because of an illness and moved to Stockbridge. After a year off he went back to work specializing in nervous disorders, and was in Stockbridge when Jack saw him in 1910. A quiet pioneer in the nascent field of psychiatry, Riggs published an article on the “Treatment of Neurasthenia” in 1916, and a book called Just Nerves in 1922. His foundation, incorporated in 1920 and capitalized at $125,000, was designed especially for patients who could not afford treatment. Riggs served as consulting neurologist at hospitals in Massachusetts and Connecticut, and was appointed clinical professor of neurology at Columbia in 1922. Jack sent him several patients, including one of his own daughters in 1917 and one of his partners—Harry Davison—in 1921. Riggs’s cure, Jack explained to his mother on the latter occasion, “means beside health a power to take life in such a way as not to fall down so far again. What Davison has lacked has been a certain moderation of mental outlook which Riggs teaches how to cultivate.” Davison may have lacked mental moderation, but he also had a brain tumor, and died the following year.

  i McClure entertained an offer of several hundred thousand dollars from Lamont a few months later, as he tried to reorganize his financially strapped company. Fearing Wall Street control, he turned Lamont down and found financing elsewhere, but the new owners quickly forced him out. He later told the editor of the American that he had made a mistake in not selling to Lamont.

  j Lippmann also gave an acute analysis of Morgan’s role in modern capital markets—in which giant corporations are owned by thousands of diverse shareholders who exercise no direct control: “to-day the central condition of business is that capital shall be impersonal, ‘liquid,’ ‘mobile.’ The modern shareholder is a person of no account whatever. It mattered very much what kind of people the old landlords were. But it matters not at all what kind of person the shareholder is.… He cannot fulfill any responsibility to the property he owns.” As a result, it mattered very much what kind of person did take responsibility for supervising industrial managers and answering to the shareholders. Morgan’s “enormous power,” continued Lippmann in 1914, lay in his “ability to direct the flow of capital.” The financier headed what was “no doubt a colossal autocracy,” and great efforts had been made “to break it up, to decentralize the power that concentrated about Morgan. But no one proposes to put back into the hands of the investor the decision as to the financing of industry.… The question of where money is to be applied is a matter for experts to answer. And so reform of the credit system does not consist in abolishing the financial expert. It consists in making him a public servant.”

  And when Ida Tarbell wrote essays that did not expose corruption in high places, she was surprised to learn that her readers wanted only “attacks”—“they had little interest in balanced findings.” In 1925 she published a book about Elbert Gary that did not portray him or U.S. Steel as evil incarnate, and former admirers dismissed her as having been bought. The flood of ugly revelations produced during the Progressive Era led the public to believe, Tarbell wrote in her autobiography, “that the inevitable result of corporate industrial management was exploitation, neglect, bullying, crushing of labor, that the only hope was in destroying the system.”

  k The Court in the Standard Oil case formulated a “rule of reason,” under which only contracts that unreasonably or unduly restrained trade could be held unlawful. This principle more or less upheld Roosevelt’s view that the Sherman law should apply to specific illegal conduct rather than to size or the mere fact of combination—his Northern Securities suit notwithstanding.

  l In the case against U.S. Steel, many of the corporation’s customers and rivals testified that it had not abused its pricing power, but had kept prices low in rising markets and high in declines, which enabled smaller firms to survive business-cycle fluctuations. A West Coast steelmaker told the court: “I have always found the co
mpetition of the United States Steel company and its subsidiaries fair; its existence has been beneficial to the steel and iron trade of the country.” The federal district court ruled unanimously in 1915 that U.S. Steel did not violate the Sherman Act. The judges found no evidence of the competitive “oppression” that had appeared in the cases against American Tobacco and Standard Oil, and concluded that insofar as competing steel companies had united “in testifying that the business conduct of the Steel Corporation has been fair, we can rest assured that there has been neither monopoly nor restraint.” The court also discovered no evidence for “that most injurious feature of monopoly’s wrong to the public”—increased prices or deteriorating quality of products. A concurring opinion held that U.S. Steel had intended to restrain trade, but that since it had not tried to ruin its rivals or drive them out of the market, since price controls were efficient only when cooperatively deployed, and since the company had been “conspicuously free from that business brutality, meanness, and unfairness” that characterized other large corporations found guilty under Sherman Act, “a decree of dissolution should not be entered against it.” The Supreme Court upheld this result in 1920.

  m Stillman had vetoed the idea of merging the Commerce with Chase National, thinking it “better at present not to call attention to the great power of trio, which might increase public sentiment against that power throughout the United States,” Jack reported to his father. Stillman also did not want to lose his position as the “first bank in US”—if the Commerce had merged with Chase, the resulting combination would have been larger than City Bank.

  n Woodrow Wilson thought this mix of public and private interests would give government the upper hand and effectively turn banks into “the instruments, not the masters, of business, and of individual enterprise and initiative.” Louis Brandeis disagreed, claiming that there could be no compromise with the devil—that “Concessions to the big-business interests must in the end prove futile.” The journalist William Greider has concluded that Wilson probably did strike the “right moderate balance,” since the Federal Reserve legislation was attacked by extremists on both sides. Populists in the West saw it as serving the interests of big business, while the New York Sun, speaking for Wall Street, denounced it as “covered all over with the slime of Bryanism.” The Federal Reserve Act provided for regional reserves from which money could be delivered quickly to local banks in times of crisis, and an “elastic” national currency that would expand and contract to meet perennially shifting demand. Despite its founders’ hopes, the Fed has been only partly successful at controlling the contractions and expansions of the business cycle, and it failed spectacularly in 1929–41. Just how “disinterested” the system actually turned out to be has been subject to debate ever since.

  Chapter 30

  PORTRAITS

  Morgan left so few records in his own voice for the last years of his life that it is possible to see him mainly through other people’s eyes. Biography inevitably includes elements of triangulation—locating an unknown point on a triangle by reference to its two known points—but the known points for the aging Morgan rarely yield straight lines. His wealth and power so affected people’s perceptions that he could not tell whether they were responding to him or to what he could do for them. Neither could they.

  Since discretion was a prerequisite for membership in his inner circle, few of his close friends left public assessments of his character, and those who did were so intent on defending him against the myth of his satanic majesty that their accounts tend to be numbingly pious and banal. According to Satterlee, Morgan loved children, dogs, and the Fourth of July. Tom Lamont: “I have never visioned a man with such a strong sense of community responsibility as Mr. Morgan had.” New York’s Bishop Greer said Morgan “was the possessor of a big brain, a sincere heart, and honesty was the one secret of his success.”

  More incisive sketches came from colleagues who were not writing for posterity, such as Dawkins to Milner on Morgan’s dinners with Joseph Chamberlain and “Edward Rex,” or Grenfell on Morgan as outwardly “rough because he is very strong & yet very shy.… He sees clearly enough but his explanations in words are quite incoherent.”

  Belle Greene’s delightfully uncensored letters to Berenson raise the question of witness reliability. Just as Dr. Rainsford, Lincoln Steffens, and Roger Fry told stories that emphasized their own intellectual or moral superiority to “the great man,” Belle offered up accounts that were at least as much about herself as they were about her Big Chief. She saw more of the private Morgan than most people who gossiped about him did, but constantly imposed her own profile on the picture. And while she professed interest only in his unadorned self and the high scholarship he was underwriting, she, like everyone else, had other motives as well.

  In the inner sanctum of the library on 36th Street, she learned how much her patron wanted to be admired. He did not know about her affair with Berenson, and once when the two men were about to meet in Europe, she advised BB to “remember that [Morgan] never tires of flattery—he can swallow the most barefaced kind & loves it … don’t be afraid to let him see that you admire & like him very much personally. It will be all for our good later on.”

  She herself dispensed lavish doses of adulation. As Morgan traveled abroad one spring, she wrote: “you must know that my admiration and esteem, above all knowledge of you, makes me feel that whatever of value my little life has, is simply its devotion to you and your interests, and I am willing to fight on to the end, if necessary, in that idea.” The library’s garden, just coming into bloom, “would enchant your soul which loves the beautiful so passionately.”

  Rich as this draft was, it did not compare to the defense she mounted when Berenson ventured to criticize Morgan’s taste in June of 1909. Earlier that spring Morgan had bought a Madonna and Child, ostensibly by Raphael, from the Italian dealer Ezra Volpi on the recommendation of Dr. Bode, for $200,000. Otto Gutekunst, director of the Colnaghi Gallery in London, wrote to Berenson that he had “called on Morgan the other day and … could have cried with rage and disappointment, seeing how delighted he was with some awful rubbish various people—robbers!—must have palmed off on him quite lately! And at phenomenal prices too & there I was unable to tell him the truth because I did not dare make him feel ashamed of himself. Amongst other things he showed me a small Italian picture quite passably pretty & I pretended to like it. But when he began talking about Raphael, I felt funny.”*

  That Berenson and Gutekunst considered Bode wrong might have been grounds for humility—some acknowledgment that the science of attribution was inexact, and that the best scholars made mistakes (Berenson himself was wrongly assigning the canvas to Pintoricchio). Instead, other people’s mistakes tended to breed gloating disdain. Writing to Mrs. Gardner that summer about the “Raphael” and the Fra Angelico Morgan had just bought out from under Roger Fry, Berenson claimed to be above the fray: “Sometimes it amuses me to see all these fabulous great art merchants tear their hair with envy and spite at each other. But on the whole it disgusts me.” He repeated Gutekunst’s critical remarks about Morgan to Belle Greene.

  Though perfectly capable of sneering at Morgan’s taste herself, Belle took immense pride in him—as well as in her intimate understanding of him—and she replied to BB: “I am going to … beg of you on my knees, if you have any spark of friendship—affection or love for me please don’t jeer at my dearly-beloved Boss—You can’t know how your perhaps thoughtless words hurt me—they cut like a whip and make me physically—mentally and at heart sick—

  “You see I have a peculiarly tender feeling for him—for many reasons—but most of all perhaps because he has shown himself to me (in the all too few years I have known him) in a unique way. He has been so absolutely like a child in his confidences—in the expression of his thoughts and feelings.… There is an honesty of thought between us—a soul-oneness which makes it possible for him to tell me things which, as he has often said, he has told no o
ther living being—and I rejoice to hear him, not because it flatters me, but because I cannot help but feel that it affords him a certain relief.”

  Of course it flattered her. This “soul-oneness” made her his partner and the keeper of his secrets. Belle took her place in a long line of interesting women—beginning with Mrs. Hoffman in Vevey—to whom Morgan turned for the pleasure and relief of intimate talk. To BB, she constantly highlighted her stature as chosen confessor, as uniquely able to engage this immensely powerful man.

  Joining the chorus of voices that exalted Morgan with biblical allusions, she went on with no flicker of irony to portray him as the Man of Sorrows: “… by some unerring instinct he remains pre-eminently human,” she told BB—“in him I touch, as it were, the ultimate symbol of humanity and yet he has the Christ-like genius of suffering—though he gazes at one with smiling eyes (his wonderful eyes!) one’s heart is smitten through and through by the pain back of the smile—by the pity of it all—I feel him Royal and Compelling and yet while my heart praises him, it yearns for him.”

  For all her hyperbole, Belle accurately saw Morgan’s isolation, depression, and soreness at being used for what he could give: “I wonder how many other people know, as I do, of the utter loneliness of his life?” she continued. “It seems to me that he is bound to a perpetuity of pain … the ever-recurring bitterness of knowing that his kindness, friendship, and rare affection [have] met with a base or at best a poor return. He gives all and gets what? Only a sickening realization of his money and the world-power it brings him.”

  She also saw some of his conflicts and aspirations: “The night before he sailed … he told me bits of his life—of his unfulfilled hopes—of his failures and disappointments—(never a word of what the world knows as his successes!)—of how he had always sought to be a builder—not a wrecker in the world of things—of how he had tried to put ambition, as such, behind him and accomplishment in the betterment of mankind and things before him—and how it had been indelibly burned in upon his belief that in every phase of action, joy, and love there is fulfillment only otherwhere—and so lost was I in him, so completely attuned to him—that I did not realize until long after I reached home and could not sleep through the rest of the night—that my hand was aching and sore from his grasp.