Critical Acclaim for Ron Chernow’s The House of Morgan, WINNER OF THE 1990 NATIONAL BOOK AWARD FOR NON- FICTION: “The House of Morgan offers a long look at how the contemporary financial landscape came into being. . . . A panoramic and well-researched look at the most powerful family of banks in America over the last century . . . Chernow has a supple, refined style.” —The Washington Post Book World “Chernow presents fresh portraits of the Morgans and the brilliant senior partners who made the bank an international powerhouse. . . . He dishes up enough scandal, tragedy, and intrigue for a TV miniseries.” —USA Today “A brilliant, generation-spanning history of the Morgan banking empire, which offers a wealth of social and political as well as economic perspectives. . . . He writes in a lively, definite fashion that could make the exhaustively documented account the standard reference for specialists as well as lay readers.” —Kirkus Reviews (starred review) “Entertaining and meticulously researched . . . pulls aside the cloak of mystery that has long surrounded this powerful American institution . . . that wielded far more power than most Americans ever imagined, even in their most fevered nightmares.” —Dallas Times Herald “Packed with revelations, Chernow’s mammoth history demystifies the inner workings of the secretive Morgan banking empire.” —Publishers Weekly “Brilliantly researched and written, The House of Morgan is to . . . Liar’s Poker what War and Peace is to a Judith Krantz novel. . . . To a potentially dry and certainly difficult subject—the influence of high finance on modern life— Chernow brings a lively style and the endurance of a trouper.” —The Wall Street Journal “Long, ambitions, but highly readable . . . Chernow highlights the degree to which the Morgan bank symbolized an era of Anglo-American hegemony and the growing shift of financial power from London to New York. . . . The book is as much about the characters of Morgan as about its history.” —The Economist “Chernow vividly portrays the influence that the Morgan banks have had on the history of the Western economy since the late-eighteenth century. . . . Epic . . . An important book.” —Library Jounral (starred review) “Ron Chernow’s The House of Morgan is utterly absorbing. The study of J. P. Morgan & Co. and its offshoots is not merely the chronicle of an institution, but indeed of American finance and society. Chernow has done his research thoroughly, and written it up splendidly. A must for anyone curious as to how things have come to work the way they do.” —Michael M. Thomas “Far more than the history of an American banking dynasty—it’s the story of the evolution of modern finance . . . so skillfully and engagingly written, it’s hard to put down once begun . .. Richly woven . . . Every page is fascinating.” —Pittsburgh Press “A fabulous cast of characters, some well-known by name if not personality, others well-known only to the aficionados of wealth . . . This evolution of banking and companies, and the triumphs and tragedies along the way, is both a fascinating and instructive story.” —Fort Worth Star-Telegram “Rich, monumental. . . As enchanting as an old-fashioned novel.” —Entertainment Weekly “A lucid and highly entertaining account of this century and a half of transmogrification, presenting the findings from newly available archival material to capture brilliantly the inherent drama, global historical sweep, immense business, and political magnitudes, high social glamour, and, above all, moral ambiguities of the story.” —America “As informative and entertaining a history, especially of the period from 1880 to 1930, as this reviewer has ever read . . . Nowhere has our tenuous financial system been better described than by Chernow.” —Los Angeles Times Book Review THE HOUSE OF MORGAN An American Banking Dynasty and the Rise of Modern Finance RON CHERNOW For Valerie and Israel and Ruth Copyright © 1990 by Ron Chernow Foreword © 2010 by Ron Chernow All rights reserved. No part of this book may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval systems, without permission in writing from the publisher, except by a reviewer, who may quote brief passages in a review. Scanning, uploading, and electronic distribution of this book or the facilitation of such without the permission of the publisher is prohibited. Please purchase only authorized electronic editions, and do not participate in or encourage electronic piracy of copyrighted materials. Your support of the author’s rights is appreciated. Any member of educational institutions wishing to photocopy part or all of the work for classroom use, or anthology, should send inquiries to Grove/Atlantic, Inc., 841 Broadway, New York, NY 10003 or [email protected]. Excerpt from The House of Morgan: An Intimate Portrait by Herbert L. Satterlee reprinted with permission of Macmillan Publishing Company. Copyright © 1939 by Herbert L. Satterlee, renewed 1967 by Mrs. Mabel Satterlee Ingalls. Published simultaneously in Canada Printed in the United States of America Library of Congress Cataloging-in-Publication Data Chernow, Ron. The house of Morgan: an American Banking dynasty and the rise of modern finance / by Ron Chernow. ISBN-13: 978-0-8021-4465-2 1. Morgan Guaranty Trust Company of New York—History. 2. Banks and banking—United States—History. I. Title. HG2613.N54M6613 1990 332.1’2’097471—dc20 89-17542 DESIGN BY JOYCE C. WESTON Grove Press an imprint of Grove/Atlantic, Inc. 841 Broadway New York, NY 10003 Distributed by Publishers Group West www.groveatlantic.com 10 11 12 13 14 10 9 8 7 6 5 4 3 2 1 It is necessarily part of the business of a banker to profess a conventional respectability which is more than human. Life-long practices of this kind make them the most romantic and the least realistic of men. —John Maynard Keynes CONTENTS Foreword Prologue PART ONE: THE BARONIAL AGE, 1838-1913 1. Scrooge 2. Polonius 3. Prince 4. Corsair 5. Corner 6. Trust 7. Panic 8. Titanic PART TWO: THE DIPLOMATIC AGE, 1913-1948 9. Metamorphosis 10. War 11. Explosion 12. Odyssey 13. Jazz 14. Golden 15. Saint 16. Crash 17. Depression 18. Midget 19. Crack-Up 20. Wizard 21. Embezzler 22. Appeasement 23. Hostages 24. Passages PART THREE: THE CASINO AGE, 1948-1989 25. Methuselah 26. Mavericks 27. Jonah 28. Tabloid 29. Samurai 30. Sheiks 31. Tombstones 32. Samba 33. Traders 34. Bang 35. Bull 36. Skyscraper Acknowledgments Abbreviations Notes Bibliography Photo Credits Index