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the Glass-Steagall Act of 1933, which erected a high wall between commercial banking (making loans and accepting deposits) and investment banking (issuing stocks and bonds).
In 1935, J. P. Morgan and Company chose to remain a commercial bank and spun off Morgan Stanley, an investment house.
merchant bankers who traded in dry goods and also financed such trade; hence, their businesses became known as merchant banks.
British investors cursed America as a land of cheats, rascals, and ingrates.
Peabody was constantly exposed to the fierce snobbery of British aristocrats toward the American commercial class.
he mostly hoarded his money in preparation for the next panic.
Junius Morgan, who became Peabody’s partner in 1854,
he spent only about $3,000 of a total annual income of $300,000.
American grain prices soared during the Crimean War, and western railroads that transported grain boomed as well, creating a mania for their shares. Railroads devoured vast amounts of capital, and in the decade before the Civil War, investors poured $1 billion into their development, triple any former commitment.
Wheat prices tumbled with the end of the Crimean War, causing hardship for American banks and railroads.
Ever since Andrew Jackson killed the second Bank of the United States in 1832, the United States lacked a uniform currency.
His later tolerance for the proposed Federal Reserve System has often been traced to this early Bank of England bailout of his father’s firm.
slow &, sure should be the motto of every young man.”
“When the streets of Paris are running with blood, I buy.”
the Morgans’ political impulses would mesh perfectly with profitable opportunities.
the line between finance and commerce would blur until much of industry passed under the control of the bankers.
The idea was not to compete, at least not too openly. This meant no advertising, no price competition, and no raiding of other firms’ clients.
bankers acquired such power because many governments in wartime lacked the sophisticated tax machinery to sustain the fighting.
London banks didn’t lend their own funds but would organize large-scale bond issues.
perfect mesh between merchant banks and statecraft? As private partnerships, these small banks were free of prying depositors or shareholders and could indulge their political biases.
“Never under any circumstances do an action which could be called in question if known to the world.”
In 1873, Washington decided to refund, at lower interest rates, the $300 million in bonded debt remaining from the Civil War.
Re-fund. Pay off with lower interest debt.
When grain prices fell after the Franco-Prussian war, the fortunes of the Northern Pacific and other railroads fell along with them.
Transport follows industry and commodities
debilitated by the Northern Pacific, the mighty house of Jay Cooke failed on Black Thursday, September 18, 1873.
The failure ignited a full-blown Wall Street panic.
“the financial crash of September 1873 had been as memorable a landmark as, to the community of half a century later, was the panic of October 1929.”
With Jay Cooke conveniently wiped off the map, Drexel, Morgan stood, with miraculous suddenness, at the apex of American government finance.
the 1873 panic ushered in a period of extended deflation and depression,
Junius’s injunction to “remember one thing always. . . . Always be a ‘bull’ on America.”
Pierpont decided to limit his future dealings to elite companies.
Morgan strategy—dealing only with the strongest companies and shying away from speculative ventures.
He wouldn’t haggle and presented his bids for foreign exchange on a take-it-or-leave-it basis.
he had trouble delegating authority and low regard for the intelligence of other people.
“The longer I live the more apparent becomes the absence of brains
Commodore Vanderbilt’s death was a pivotal moment in the shift of business from family to public ownership
the Commodore bequeathed to his oldest son, William Henry, 87 percent of New York Central stock.
The Commodore had merged eleven small railroads to form the forty-five-hundred-mile New York Central.
Several commentators have noted Pierpont’s “savior complex,”
For Pierpont, a gentleman wasn’t a rich man but a member of a social caste.
he called himself a merchant and his firm a countinghouse.
arch enemy of the House of Morgan—Franklin Delano Roosevelt.
for Pierpont the Church wasn’t an active, reforming spirit, but a repository of ancient beauty, powerful because it was archaic and unchanging.
Extortion artists would lay down parallel lines just to be bought out by an established road.
He had no gift for sustained analysis; his genius was in the brief, sudden brainstorm.
“Morgan has one chief mental asset—a tremendous five minutes’ concentration of thought.”
Morgan reorganized the big Philadelphia and Reading Railroad. This involved issuing new bonds with lower interest rates
The basic weakness with America’s railroad system was overbuilding, which forced the roads into endless rounds of rate cuts and wage cuts to service debt.
Morgan always favored government planning over private competition, but private planning over either.
In 1887, Congress passed the Interstate Commerce Act, the first regulatory commission, which enshrined competition as its guiding principle and eliminated the controversial rebates.
the gentleman’s agreements suffered the historic fate of cartels. They couldn’t control small outside competitors, who cut rates, outflanked larger rivals, and won new business.
