Jean Strouse, author of the Bancroft Prize-winning biography of Alice James, spoke recently with NEH Chairman William R. Ferris about her latest book, Morgan: American Financier.
William Ferris: Your wonderful new book on the life and times of J. P. Morgan is certainly attracting a lot of attention. What drew you to him, and what were some of the things that surprised you about him?
Jean Strouse: As you know, I had written a biography of Alice James before this. I loved the late nineteenth century and also the form of biography, since it allows you to be a historian and a detective and a psychologist and a novelist all together. After I finished Alice James, I worked at Newsweek as a book critic for about four years, and I was looking around for a new subject. My background would have prepared me to do a literary figure, but I tried several, and I did not really get engaged with any of them.
At dinner one night, a friend said “robber barons," and I thought, "Oh, yes." I started reading about that chapter of American history, and Morgan quickly seemed the most interesting of its characters. I had lunch with my editor and he said, "Morgan, Morgan, Morgan, Morgan. That is the story of late nineteenth-century America." So I sat down and read a shelful of books about him, and it seemed that he had been drawn primarily in caricature. His admirers saw him as a great hero of industrial progress while his critics saw him as a rapacious robber baron. I thought if there were new archival material that made it possible to see beyond the caricatures, it was worth trying to tell this story again. And then I found out that the Pierpont Morgan Library in New York, which Morgan had built to house his collections of rare books and manuscripts, had a vault full of uncataloged material: his childhood letters and schoolbooks and diaries, both his grandfathers' diaries, his son's letters home for forty years, his business records, the records of his art purchases. It was a fabulous treasury of material, which was irresistible to me.
It took me about five years to read through the Morgan Library papers, and I found more material in other archives on both sides of the Atlantic as well. Finally I began to write, but part of the way through the first draft I realized it wasn't working. After talking to my editor and some friends, I came to see that I had in fact found Morgan's critics far more persuasive than his champions—they told much better stories, they were better writers, they reflected widespread American assumptions about the "robber baron" story—and as a result I had gone into the research looking for a robber baron. I was not noticing a lot more dimension and depth to him. I had to go back and do it all over again.
There were many surprising things. Although he was very conservative and in some ways a nineteenth- or almost eighteenth-century figure, he was also flexible and constantly on the lookout for new people with good ideas and competence and energy and skills that he did not have. One of them was Thomas Edison, whom he backed from the minute Edison lit up a light bulb in 1878; Morgan stayed with this project for the next fourteen years, and organized General Electric out of the original Edison Company. There were other surprises. The rector of his church was a radical activist who brought social work to the impoverished communities of the Lower East Side, and Morgan paid for it. And his personal physician was a reformist doctor— an obstetrician—who built New York's Lying-In Hospital to give first-class medical treatment to women who could not afford it. Morgan gave him a million dollars to build the hospital. Those things really surprised me.
Ferris: Normally, when people hear Morgan's name, they think about U.S. Steel. When Andrew Carnegie sold his steel operation to Morgan in 1901, it created a $1.4 billion company that controlled two-thirds of the nation's steel production. How did Morgan come to be in a position to pull off such a deal?
Strouse: It was an extraordinary moment. Morgan had been organizing the financing of railroads from the 1850s to the 1890s. Railroads were the primary engine driving the U.S. economy at that time. It was enormously expensive to build a railroad, and there was not enough capital here, so the money had to be raised in Europe. Morgan and his father took what they called "moral responsibility" for the properties they represented, which meant that if a Morgan road went bankrupt, they would fire the managers, hire new ones, restructure the finances, and appoint a board of directors to watch over the company until it was restored to financial health. The Morgan Bank established a sterling reputation between the 1850s and the 1890s.
That put Morgan in a powerful position. He was watching over U.S. credit in international markets and trying to keep the U.S. economy on track when we did not have a central bank. By 1890, when Morgan's father died, America was still a net debtor. We remained a net debtor country until 1914. But by the nineties, there was a great deal more capital here than in the 1850s, and Morgan turned from railroads to steel. Andrew Carnegie owned the most powerful steel company, with the lowest costs and highest productivity, in the world. Morgan knew that if he wanted to establish an umbrella corporation for American steel, he would have to buy out Carnegie. The president of Carnegie Steel, Charles Schwab, presented this idea to Morgan at the beginning of 1901. Morgan sent Schwab to find out whether Carnegie would be willing to sell. Schwab went to see Carnegie on the golf course and asked him. Carnegie said he would think about it overnight, and the next day came back with a piece of paper on which he had written in pencil, $480,000,000. That would be his selling price. Schwab took the piece of paper down to Morgan on Wall Street. Morgan took one look, nodded his head, and said, "I accept this price."
The federal government was spending only about $300 million a year in 1901, and Carnegie's asking price was considerably more than that. Morgan proceeded over the next few weeks to put together a syndicate that purchased other steel companies and railroads and ore lands and steamships and barges. He capitalized U.S. Steel on March 3, 1901, at $1.4 billion. It was the largest corporation in the world.
The giant "steel trust" terrified people and awed them at the same time. The headlines about the formation of U.S. Steel dwarfed the stories about the inauguration of President McKinley and his vice president Theodore Roosevelt. Henry Adams said, "Pierpont Morgan is apparently trying to swallow the sun." Critics charged that half of the company consisted of watered stock, but within a few years the stock was actually fully valued. So it was quite an amazing achievement in financial terms. But it raised lots of questions, about monopolies and competition and innovation, that people are still debating a hundred years later.
Ferris: Did Morgan have a philosophy that guided his approach to business?
Strouse: He was not an articulate or introspective man, and he never gave reasons for the things he did. From his actions, I think we could say that he had a vision of how the U.S. economy should be working, and he wanted to impose a certain stability and order on it. Although he is has often been regarded as the high priest of modern capitalism, he did not really believe in unregulated competitive markets. He was trying to stabilize America's chaotic economic growth to regulate the money supply, to furnish liquidity during times of panic, to do away with what he thought was wasteful competition. So he was quite an interventionist. By the first decade of the twentieth century, however, the rest of the country was not willing to leave all of this in Morgan's hands.
Ferris: We think of him in the world of robber barons and the Gilded Age. Would you put Morgan in the same category as Carnegie or Vanderbilt?
Strouse: Not really. He was a banker. The term robber baron, loosely used, applies mostly to men like Carnegie and Rockefeller, who were organizing industries based on certain kinds of natural resources, and then turning them to their own profit and becoming spectacularly successful.
I don't think he would have used that term about Carnegie either. I think he thought that Carnegie had built a successful industry, and Morgan just wanted to make it more rational.
Ferris: After the creation of U.S. Steel, a second episode occurred in 1907, when Morgan helped rescue the U.S. economy in the midst of a financial panic by pooling together assets of New York banks to prop up shaky financial institutions. How did one man acquire enough wealth and power to essentially save the U.S. economy?
Strouse: He was in that powerful position because of what he had been doing all his adult life with the railroads, with the steel industry, with earlier panics. In fact, he and a couple of other leading New York bankers had put together pools of reserves trying to head off earlier panics. So he had been acting as an unofficial central banker for some years. A liquidity crisis that had started overseas hit America in October of 1907, and some trust companies in New York started to fail. I think Morgan was able to do what he did because other bankers all over the world trusted him.
He was also, of course, acting out of self-interest. It was just a very large definition of self-interest, because he represented people who had billions of dollars invested in the U.S. economy. For three straight weeks he stood at the head of teams of bankers and supplied liquidity as it was needed. At one point, the head of the stock exchange came across the street to the Morgan Bank and said, "We have to close the Exchange before three o'clock because we do not have enough money to make the trades." Morgan said, "You cannot close early." He called several of the city's leading bankers into his office and said, "I need twenty million dollars in the next ten minutes, or the Stock Exchange will close." They came up with the money. They trusted him.
Ferris: Senator Robert LaFollette once described Morgan as a “beefy, red-faced, thick-necked financial bully drunk with wealth and power who bawls his orders to stock markets, directors, courts, governments, and nations.” Why did Morgan's contemporaries have such a sinister view of him?
Strouse: The things that he was doing were very controversial. He was trying to keep the country on the gold standard because he was looking at the capital markets of Europe. Gold was the international standard, a guarantee that the value of investments would hold steady over time. Whenever there was a threat of going off gold to a paper or silver currency—which would lead to inflation and a decline in the value of dollar-based investments—European investors would draw their money out. It is like what we saw in Russia last summer— suddenly the foreign capital disappears overnight.
On the other side of that issue were farmers and people who had to borrow money, who hated the stringency of the gold standard. In a period of deflation, the dollar was gaining value, and people who borrowed one hundred dollars had to pay it back a year later in money that was worth more than what they had borrowed. William Jennings Bryant's famous speech, "Thou shalt not crucify mankind upon a cross of gold," reflected a passionate conflict in American history. The lines were very clearly drawn, and Morgan was on the side of conservative lenders. He was also organizing giant industrial trusts, which terrified people.
Power was concentrated in Standard Oil, in Carnegie Steel and then in U.S. Steel, and in the railroads, and there was no government regulation. Antitrust, anti-business sentiment grew throughout the 1870s, the 1880s, and in 1890, the Sherman Antitrust Act was passed to try to impose some restrictions on these enterprises, but the law was not really enforced until early in the new century.
Ferris: In your book, you suggest that Morgan was more interested in economic stability than politics. Yet politicians like Teddy Roosevelt fiercely debated his business practices. What relationship did Morgan have with Roosevelt, a man who crusaded for antitrust laws?
Strouse: Morgan was more or less a contemporary of Roosevelt's father, and he watched the younger TR's political ascendancy with an interested but wary eye. He had supported Roosevelt for governor of New York in 1898. Once TR became president the Old Guard did not know what to expect. "Gentlemen" didn't generally go into politics, and the knicker bocker from Oyster Bay seemed like something of a loose cannon---but a compelling and politically adept one. Roosevelt was a force of nature. Morgan was a force of nature, too, and the question was, were they going to clash or find a way to cooperate?
One of the first things Roosevelt did when he came into the White House after McKinley was assassinated was to bring a lawsuit against one of Morgan's biggest railroad trusts, the Northern Securities Company. Morgan was horrified. He was used to cooperation from the White House. He had been the unofficial central bank; he had been advising presidents about economic policy; and all of a sudden this new president comes in and whacks him in the nose, as Henry Adams said. Morgan went to Washington to see Roosevelt about it, essentially saying, "Why couldn't you talk to me about this first? Why couldn't we have worked it out in private like gentlemen? Roosevelt of course had very deliberately made his dramatic move in public. He had correctly read the antitrust sentiment in the country. He was also quite determined to make Washington more powerful than Wall Street and to impose some form of regulation on big business. So he took aim at the biggest fish in the pond.
However, it is more complicated than that because, at the same time that he was prosecuting Morgan's railroad trust, he was encouraging Morgan to organize an international mercantile marine, a shipping trust. TR very much wanted U.S. naval and maritime dominance. And after he made this move against Northern Securities, which was successful—the company was broken up by the Justice Department in 1903 through 1904—Roosevelt worked behind the scenes with Morgan for the next several years. He enlisted Morgan's help to end an anthracite coal strike in 1902, he worked with him on the mercantile marine, he consulted him on financial policy. So he was playing both sides of the street. They did, I think, respect each other most of the time.
Ferris: I want to change directions and ask you about Morgan's private life. Religion seems to have played a large role. He served on a committee that revised the Book of Common Prayer. He gave hundreds of thousands of dollars to support the construction of St. John the Divine cathedral. What was the source of Morgan's spirituality, and did he see a conflict between the moral and the material worlds?
Strouse: He really did not seem to see a conflict between what he was doing in his professional and private life, and his religious beliefs. He was a devoutly religious Episcopalian. He belonged to St. George's Church on 16th Street and Second Avenue in Manhattan. Religion played an enormously important part in his life. But as usual, he didn't talk about it. So once again, I had to read what it meant to him indirectly, through the way he behaved rather than through what he said.
His father had become Episcopalian. I think Morgan very much liked the English heritage of the Episcopal Church, the rituals and the traditions of Anglicanism, and felt a very powerful bond with his father.
He was a very emotional, sentimental man, he found enormous solace in rituals, in hymns, and prayers, and in talking to his rector personally. He served as a lay delegate to the triennial convention of the Episcopal Church, and although he didn't seem to have time to go visit his son at boarding school for twenty minutes, he would take three weeks off every three years and attend these clerical conventions. He escorted parties of bishops and other friends across the country in private railroad cars and then spent three weeks with the bishops, wining and dining them and listening to long ecclesiastical debates.
I cannot really tell you what it meant to him, but I do not think it was in any way an attempt to pass through the eye of the needle. He did not think he was doing anything that he needed to atone for. He saw himself as performing a high patriotic and quite moral service in keeping the U.S. economy on track and watching over U.S. credit in international markets. Neither his religion nor his art collecting was an attempt to clean up the record.
Ferris: One strand that runs through Morgan's life is his battle with bouts of depression. How did depression influence his personal life, and did it have an impact on his business?
Strouse: Depression ran in his mother's family. He began to have real depressive breakdowns in his early twenties, and he had to take time off from work. At certain points he got so "blue" and paralyzed that he wanted to retire from work altogether, which was not part of his father's plan for the future of their firm; instead of retiring, Pierpont arranged to take sabbaticals. He would go off to Europe with his family, to explore foreign cultures and look at art and architecture. He took his family to Egypt for the first time in 1871 and then again five years later. We think of this man striding across the nineteenth-century landscape like a colossus, but in fact, part of him really did not want to do this at all. He just wanted to go off and travel and look at art.
He would spend three months of the year in Europe, in the spring and summer, and part of the time at health spas "taking the waters." By 1902 he was spending half the year abroad, collecting art. His partners were not pleased with this. They wanted him to be minding the store more than he was.
The other part of your question was about how depression affected his personal life. He married for the first time, at twenty-four, a young woman who was quite wonderful and energetic and bright. She got a terrible cough and a series of colds in the winter before their wedding and thought she was too sick to marry him, but he said, "No, no, we will take you to the south of France and put you in the sun and get you well." She turned out to have tuberculosis and she died four months after their wedding. It was after she died that he began to suffer from depression.
He married again about three years after his first wife died. The second marriage, to Frances Louisa Tracy, called "Fanny," did not turn out well. The couple had four children, but it was clear early on that they had quite different tastes and interests. Fanny also suffered from depressions. Her solution to them was to withdraw into domesticity with her children and a few friends. Part of his solution was to surround himself with crowds of people and to engage in frenetic social and professional activity. Those two courses obviously were ill suited to each other. So after about ten or fifteen years, the Morgans lived fairly separate lives. He kept the Atlantic between them. He would go off to Europe with a party of friends in the spring and summer, and then when he came back, he would send his wife off with a daughter and a driver and a paid companion. And he found other women, who I think were much better suited to his character and nature.
Ferris: What women appealed to Morgan? Would you say that he was enlightened in his treatment and attitudes towards women?
Strouse: That is a tricky question. Enlightened in what terms? He was much more of a European about these things than his American puritan peers. He had largely grown up in Europe. He started going abroad when he was in his teens. His father was an American who moved to England and became an Anglo-American merchant banker, so Morgan had an early immersion in Europe and its social mores. He was drawn to energetic, lively, intelligent women very much of his social world. I think his first wife was that kind of woman. His second wife was certainly of his social world, but her energies and interests were not as wide-ranging as his. He liked women who had a lot of sparkle and who enjoyed travel and aristocratic society. He had dinner with Edward VII and went sailing with Kaiser Wilhelm II. Fanny simply did not feel up to that kind of company, but his mistresses did. And he was very much a hedonist. He loved to go to Worth's in Paris and buy fabulous silk and lace concoctions for his women friends, his daughters, and his wife. Fanny did not approve of his extravagance, but he readily found other women who didn't mind it a bit.
Ferris: Morgan took his role as a patron and collector of art very seriously. He was a trustee for the Metropolitan Museum of Art, the Natural History Museum, and he acquired an extensive art collection and even built a library next to his house to hold his manuscript collection. Where did his interest in art and history come from?
Strouse: He was interested in history and in the visual arts very early on. He began going to Europe at the age of fifteen, and spent most of his free time touring its great museums and private galleries and libraries. At first he bought reproductions of famous Roman statues, as well as mosaics and jewelry and fine kid gloves and boots. As he got older, his tastes got more sophisticated. He began to collect contemporary Barbizon School paintings in the 1870s and 1880s, and then in the 1890s, along with several other Americans of his generation, he moved into the market for Old Masters and rare books and manuscripts. He appointed himself to stock America with great treasures of the foreign past. He did an astonishing job of it. To house his collection of rare books and manuscripts and drawings, he built a library next to his brownstone on 36th Street. Nearly a hundred years later it remains an astonishingly rich and wonderful institution. There are forty-nine Gutenberg Bibles in the world, and the Morgan Library has three of them. It also has a superb collection of medieval illuminated manuscripts. Morgan was president of the Metropolitan Museum of Art from 1904 to 1913; he gave spectacular collections to the Met during his lifetime, arranged for other people to do the same, and organized several new departments and archaeological expeditions.
When he died in 1913, he said in his will that it had been his intention to make his collections permanently available for the instruction and pleasure of the American people, but that he hadn't had time to make that disposition himself. He left everything to his son, who put all the art on display at the Met for two years. Morgan himself had never seen everything together in one place—Old Master paintings, jewelry, armor, seventeenth- century German metalwork, eighteenth-century French decorative arts, tapestries, medieval sculptures, Limoges enamels— collections of extraordinary range and quality and depth.
His son, J. P. Morgan, Jr., ultimately gave seven thousand of the objects to the Metropolitan Museum, another one thirteen hundred to the Wadsworth Atheneum in Hartford, and in 1924 he gave the library with its contents and an endowment to New York City.
Ferris: This is the second time you have written about the Gilded Age. The first was your biography of Alice James, the sister of Henry the writer and William the philosopher. Do you find anything in common between Morgan and James?
Strouse: Well, I thought at the outset that there would be more in common than there was because they lived in exactly the same period. But they occupied rather different universes, the intellectual, introspective Jameses and the active, entrepreneurial Morgan.
Henry James was a friend of Morgan's father, Junius, and often visited Morgan's country house outside London. Pierpont Morgan's wife met James there on one occasion. She lectured him about the women in his fiction, which I cannot think pleased James. And in a late James novel, there is a character very much based on Morgan, a rich American art collector who is buying up the treasures of England's old families.
The Morgans and the Jameses both spent a great deal of time in London and were fascinated by the conjunction of American and European culture. Henry James observed and wrote about it; Morgan lived it.
Ferris: You are one of the on-camera historians in Ric Burns's upcoming documentary about New York City. What imprints of Morgan do we still recognize in New York today?
Strouse: Quite a number. There are of course, the Morgan Library and the Metropolitan Museum. But he was also a founder of the American Museum of Natural History, of the New York Botanical Garden, of the original Madison Square Garden, which, unfortunately, no longer exists. He ran the architectural competition for the Cathedral of St. John the Divine and gave hundreds of thousands of dollars to the Episcopal Church and to the building of the cathedral. I think it would disappoint him to learn that after a hundred years, the structure is still unfinished. He was a donor to Columbia University when it was first moved uptown to the Morningside Heights campus. He was an enormous supporter of St. George's Episcopal Church, which is still there.
The culture of the city is saturated in Morgan history.
Ferris: Power and influence was at its height almost a hundred years ago. What is the legacy that we see of his business empire, and on the current monetary system as well? Strouse: Certainly his banks are still very much around. The bank was split in the 1930s into two parts: the investment side became Morgan Stanley, now Morgan Stanley Dean Witter; the commercial bank is J. P. Morgan and Company. Among the companies that Morgan organized are U.S. Steel, now USX, General Electric, and International Harvester. In 1906 he financed AT&T and set it on its modern course. General Electric was the only stock listed in the first Dow Jones Industrial Average in 1896 that is still on the Average a hundred years later, so that is a pretty strong legacy.
Also, he was the forerunner to the Federal Reserve. It is astonishing that one man had that much power, but he really did for fifteen or twenty years act as a sort of central bank. What we now have as the Federal Reserve system grew out of what private bankers were doing at the turn of the century, and some of Morgan's friends and partners were on the commission that proposed the Federal Reserve. That structure is part of Morgan's legacy as well.
Ferris: You have said writing the biography of Morgan was much more difficult than writing about Alice James because it took much longer to hear Morgan's voice. What do you mean by hearing his voice?
Strouse: I don't mean anything mystical or spiritual. I mean just getting to know the character. Some of that has to do with what I was saying about his not being very introspective or articulate. The Jameses were always interrogating themselves and then writing to some family member across the Atlantic about whatever art they were looking at, or whatever play they had gone to see; or something would happen in the family, and they would discuss it and figure it out and examine how they felt about it. Morgan doesn't do any of that. He goes to see the same play Henry James saw, Uncle Tom's Cabin, when it was first put on in New York. Henry James comes home and writes pages in his diary about it; Morgan says how much it cost to get there on the bus. So it was very hard for me to establish an imaginative connection with him, to hear his voice in the sense of feeling that I knew who he was, how he would behave in certain situations. I could not, obviously, get him to speak my language, so I had to learn how to read his, and his language was action. He left his record largely through what he did in finance and art collecting, and in the people he chose to work for him.
Also, I did find wonderful letters and diaries of his two wives, his daughters, and some of his partners and friends, who knew him well and who were more articulate. The best reporters were not writing for the public in any way. They reflected in private about what he was like, and that told me a great deal. Late in my research I found the papers of his eldest daughter—a whole closet full of letters and diaries that nobody had looked at before. She was his favorite child. She traveled with him all the time to Europe, and wrote home to her family about what was going on. That was a wonderful angle of vision for me to have. She offered a loving, very personal, vivid glimpse of Morgan as a man, which you absolutely have to have.
In biography you have to create someone almost the way a novelist creates a fictional character, except you are bound by the truth and you are bound by the evidence you have.
Ferris: What did you like most about Morgan and what did you like least about him?
Strouse: I certainly liked the moments when he is off duty and playful, occasionally witty, although there weren't a great many of those moments. I also liked his flexibility, which was a surprise to me. When I found him choosing to back somebody like Thomas Edison, or some radical reformers such as his rector and his personal physician—not all the men you would expect him to choose—that I liked very much.
I also liked the fact that although he was, of course, operating in self-interest, he also really did have quite a big vision of how this economy should work. I liked that, although it is a more abstract quality than the others.
I did not like some of the ways in which he used people. If you were willing to be ruled by him, that was fine. If you opposed him, you could get into a lot of trouble. His youngest daughter was quite a rebel and eventually objected to traveling with him and his mistress, since she was serving as a sort of cover for his unorthodox private life. When she said no to him, there was quite an explosion in the family.
Also he did not pay attention to the human costs of the industrialization that he was promoting. If he had been more aware of the social dimensions of his actions, he would have been a more sympathetic figure and he would have been much easier for me to write about. On the other hand, if he had been more self-critical and self-conscious, he would not have been Morgan.
Ferris: Well, this is a wonderful piece that you have shared with us, Jean, and I am very grateful for your taking time to talk.