When John Pierpont Morgan died in 1913, he was the most powerful banker in the world. As the main conduit for British foreign investment into North America he helped transform the United States from a society of yeoman farmers into an industrial colossus. More controversially, Morgan helped change competitive business into what Lenin called “monopoly capitalism.” His bank financed the consolidation of large sectors of the American transportation, steel, and electricity industries. Most of this made economic sense, eliminating destructive competition, stabilizing the market, and lowering costs to the consumer through economies of scale and marketing. But the resulting concentration of power and wealth produced a popular backlash, leading Congress to pass the Sherman Antitrust Act in 1890.
Morgan’s other offense against the spirit of American democracy was to act as unofficial banker to the US government. In the absence of a central bank, he mobilized the gold to keep the US on the gold standard in 1895 and pumped liquidity into the banking system during the crash of 1907. Economists like Charles Kindleberger would later categorize such services as the “public goods” needed by a capitalist system if it was not to self-destruct. At the time, Morgan’s interventions turned the fury of debtors, mortgage holders, and losers against the New York “money power.” In 1896, William Jennings Bryan, the Democratic presidential candidate, famously accused the hard money men of crucifying America on a “cross of gold.” After Morgan’s 1907 rescue, the bankers were accused of contracting the currency in order to bankrupt debtors and impound their property, then expanding it so they could sell on a rise. This kind of criticism led to the formation of the Federal Reserve System in 1913.
Sitting at the center of a web of trusts and holding companies, negotiating with presidents (for a profit), Morgan became the symbol of uncontrolled and unaccountable financial power. His own defense was perfunctory; he barely deigned to notice his critics—the Populists, muckrakers, Progressives. Late in life he came to resemble, perhaps even played up to, his diabolic caricature; with his walking stick clutched like a slave owner’s cane in one hand, a large cigar in another, his heavily mustachioed face dominated by glaring eyes and a hideous expanding nose, he seemed to exude demonic power.
Morgan came nearest to answering his detractors in his evidence to the Pujo Committee, with which Jean Strouse’s superb biography opens. It was in 1912, he was then seventy-five, and Arsène Pujo, chairman of the House Banking and Currency subcommittee, was trying to prove that the American economy was being manipulated for private profit by a “money trust” headed by Pierpont Morgan. The Pujo inquiry was the climax of two decades of popular agitation; Morgan’s testimony was the climax of the hearings; and the climax of his testimony was the reply he gave to a probing question by the committee’s counsel, Samuel Untermeyer. Untermeyer asked, “Is not commercial credit based primarily upon money or …