Industrialization and the Rise of Big Business 1870-1900 - J. Pierpont Morgan

ASU HST 200 (Historical Themes) Industrialization and the Rise of Big Business, 1870-1900 J. Pierpont Morgan There was no "rags-to-riches" hero like J. P. Morgan, unlike Carnegie and Rockefeller. He came from a wealthy family and amassed enormous money as an investment banker by helping the diligent business owners realize their dreams of financial success. In order to manage the family's commercial interests in New York, Morgan the son relocated there in 1857. Morgan's father was a banker in London. He broke away from the London bank after arriving in America and founded the J. Financial company Pierpont Morgan and Company. The business invested the family's riches in businesses that showed a lot of potential and made a significant profit by buying and selling shares in those expanding businesses. Emerging corporate titans like Carnegie and Rockefeller owe their success to investments from companies like his. Morgan and other investment bankers wanted seats on the boards of the corporations in exchange for their investments, giving them much more influence over decisions and policies than they would have had from their investment alone. Morgan and these other bankers faced a lot of criticism, especially from members of a congressional subcommittee in the United States that looked into the influence that financiers had over important businesses in the nation. The subcommittee described Morgan's business as an even more potent type of "money trust" than the ones run by Rockefeller and other individuals. Morgan compared his position to a form of public service and contended that his company and others like it provided structure and stability to a fiercely competitive capitalist market. In the end, when Morgan acquired Andrew Carnegie in 1901, the steel sector became the subject of his most significant investment and consolidation. At first, Carnegie was hesitant to sell, but when Morgan repeatedly badgered him, he disclosed his asking price—an absurdly high $500 million. Without hesitation, Morgan consented and went on to combine Carnegie's interests with a number of smaller steel companies to become the U.S. Steel Company. After then, U.S. Steel was valued at $1.4 billion. It was the first billion-dollar company in the nation. Admirers praised Morgan for the modernization and efficiency he brought to investment banking practices, as well as for his philanthropy and support of the arts. However, reformers also criticized Morgan, accusing him and other bankers of being part of the artificial prosperity bubble that eventually burst during the 1930s Great Depression. Without a question, Morgan's adept handling of money and astute business practices kept him well-positioned. Subsequently, in 1912, a U.S. congressional investigation found that his company possessed 341 directorships in 112 firms with assets valued at nearly $22 billion. By contrast, the assessed worth of all the land in the United States west of the Mississippi River was less than that amount of wealth. In contrast to the well-known "rags-toriches" narrative surrounding individuals such as Carnegie and Rockefeller, J. Pierpont Morgan was descended from a prosperous family. His ascent to popularity resulted from his skillful work as an investment banker, enabling hardworking business owners to realize their financial goals. After moving to New York in 1857 to manage his family's business ventures, Morgan's father's London banking background served as the basis for the founding of J. Pierpont Morgan & Company. Morgan made huge gains by trading shares in these firms, capitalizing on their growth through savvy investing techniques. Emerging business titans like Carnegie and Rockefeller, who profited from Morgan's financial support, were greatly aided by his investments. Morgan and his fellow bankers received seats on corporate boards in return for investments, giving them considerable control over strategic choices and policies. This led to criticism from congressional subcommittees that were examining the power of financiers over large corporations. Framing his function as a type of public service, Morgan defended his business methods by arguing that they are necessary to provide stability to a highly competitive capitalist market. But as he consolidated his position of authority, he was accused of having monopolistic intentions, which were best illustrated in 1901 when he bought Andrew Carnegie's steel holdings. Carnegie was initially reluctant to sell, but Morgan persisted in negotiating and eventually struck a $500 million record deal, combining Carnegie's holdings with smaller steel businesses to create the U.S. Steel Corporation, the first billion-dollar company in the country. While detractors ascribed the false prosperity of the era to the acts of Morgan and other bankers, which ultimately contributed to the collapse during the Great Depression of the 1930s, Morgan was praised for revolutionizing investment banking methods and his charitable initiatives. Even yet, Morgan's ability to manage money made him influential; a congressional examination in 1912 disclosed the company's enormous wealth and assets, which surpassed the value of property west of the Mississippi River. The legacy of J. Pierpont Morgan is nuanced, containing both praise and condemnation. His contributions to industrialization and the emergence of large business changed the American economy, but his increasing authority sparked worries about monopolistic control and its effects on stability. In the end, Morgan's impact went much beyond the financial sector, permanently altering American capitalism and igniting continuous discussions over the place of power and wealth in society.