The Great Pierpont Morgan (10 page)

4

Not only in business but in other affairs too, Morgan's personality put him naturally in command in any group of men who had a problem to deal with. No railroad executive ever adequately described him in action at a business conference, but the Reverend W. S. Rainsford, rector of St. George's Church, could sketch him in words as he took charge of a vestry meeting of the church, and Rainsford's account of a session at No. 219 in the early eighteen-eighties is illuminating.

It was in 1882, three years before the
Corsair
conference, that Rainsford, a man of fiery religious and social convictions who had been occupying a pulpit in Canada, was invited to become the rector of St. George's. At that time the church was in bad shape. The congregation was dwindling, there was a floating debt of $35,000, and the institution's influence seemed to be waning. The senior warden was Charles Tracy, Morgan's father-in-law; Morgan himself, then forty-five years old, was only a vestryman; but it was significant that when Rainsford arrived in New York to meet with the wardens and vestry, it was to the house into which Morgan had just moved that he was directed.

Mr. Tracy presided at the meeting, which was presumably held in the “black library.” He explained the state of affairs in the church and asked Rainsford whether he would consent to become its rector. Rainsford demurred; he didn't know whether he could cope with such a situation; and he sketched out the sort of work he would like to do. As often happens in sessions of this sort, the conversation began to ramble inconclusively; they seemed to be getting nowhere. Then
Morgan spoke up (I quote directly from Rainsford's autobiography):

“Mr. Rainsford, will you be our rector? If you consent I will do what I can to help you carry out this plan.” Turning to the others, “Gentlemen, do you agree with me?” Then, again turning to me, “Will you accept our unanimous call?”

At once I replied, “I will, on three conditions.”

“Name them.”

“First, you must make the church absolutely free. Buy out those who will not donate their pews. Second, abolish all committees in the church except the vestry, and only reappoint such as I shall name. Third, I must have an annual fund of $10,000 for three years, independent of my salary, to spend as I see fit on church work. My salary I leave to you.”

Dead silence followed. I saw Mr. Morgan look around the circle of tense faces. Then he looked full at me and said one word: “Done.”

5

What is a conservative? The word, like its antonyms “liberal” and “radical,” carries such a freight of special political and economic connotations that it often bears little relation to the actual human impulses to which it is applied. In the strict sense of the word meaning “disposed to maintain existing institutions,” there was a strong conservative strain in Pierpont Morgan's temperament. He cherished old family rites. There must always be a gathering of the Morgan clan for Thanksgiving dinner, with an invariable menu. He loved the traditional Christmas ceremonies: the dressing of the tree on Christmas Eve, a carriage trip with one of the children to distribute presents; church on Christmas morning, and then a family dinner. (For several years, when his children were young, he used to dress up as Santa Claus.) In his religion, unchanged since his Hartford days, he especially warmed to what was venerably traditional. When he liked anything—the furnishings of his library or of his yacht, a certain suite at a hotel, a house or scene hallowed by association—he wanted to keep it as nearly as possible unchanged. In his later years,
as a collector, on a gigantic scale, it was always old things that he collected, books and manuscripts and works of art loaded with venerable tradition: he was associating himself with the beauty of bygone times, which nothing new could possibly match.

In politics and economics too, he was what most of us would call deeply conservative. He voted the Republican ticket steadily except in 1884, when he disapproved of Blaine and cast his ballot for the fearlessly honest Cleveland, who was certainly no apostle of quick change. He objected to any sort of government intervention in business. In his son-in-law's biography of him there is a passage describing the prosperity of 1881 which reflects the conservative nineteenth-century attitude: “There were not many problems in the national life of the day. Immigration was practically unrestricted. Work was plentiful. Food and clothing were cheap. Everybody was busy. Labor was not yet unionized. The organized attempts to stir up discontent and raise class feeling had not been begun. Pierpont was making money, as was almost everybody else who was engaged in sound business.…” That passage would probably have struck Morgan himself as reasonably stated. If you had reminded him that the Reading Railroad's anthracite workers in the valleys of Pennsylvania, for example, were sharing only microscopically in the benefits of national prosperity, being virtually peons of the company, overworked and underpaid, the glare he would have given you would have signified that this was wholly irrelevant: that new inventions and new industrial processes, sensibly applied by well-financed and expanding companies, were one of the answers to general poverty; that churches and charities were another; and that—in the words of William Graham Sumner—“the yearning after equality is the offspring of envy and covetousness, and there is no possible plan for satisfying that yearning which can do aught else than rob A to give to B; consequently all such plans nourish some of the meanest vices of human nature, waste capital, and overthrow civilization.” As for politicians being of any value in combatting poverty, Morgan had seen enough of them in the Albany & Susquehanna business and in subsequent litigations to be convinced that they were low fellows who bleated about the poor and were always ready to sell their services for a handout from the rich. People like
himself, who helped business secure capital and tried to keep it on an orderly and solvent basis, were doing more for the general well-being than all these yawpers put together.

Most of us would call such sentiments—which were pretty representative of downtown business sentiment at that time—extremely conservative. Yet the label is misleading to the extent that it suggests that Morgan wanted to see things stand still. On the contrary, he was constantly intervening in businesses to reform and strengthen them in his own way, merging little railroads to make big systems, clearing the way for new construction, and (in later years) utilizing new legislation such as the New Jersey holding-company law to speed these new developments. In a real sense it was he and the other fabricators of giant industries, and the lawyers and legislative draftsmen inventing new corporate devices, who were the radicals of the day, changing the face of America; it was those who objected to the results who were conservatives seeking to preserve the individual opportunities and the folkways of an earlier time. You might question the direction in which Morgan was moving; but that he was moving fast, and with a purpose which seemed to him to be to the country's benefit, is certain. In this the major sphere of his life, he was not a brake, he was an engine.

Nor did his love for old customs and old traditions prevent him from hastening technological change. He was one of Thomas A. Edison's earliest backers. He put money into the Edison Electric Light Co. as early as 1878, when the coming of electric lighting systems was only a hope. When, in September 1882, Edison's first power station for lower Manhattan was completed, the Drexel Building was one of the first ones to be equipped (with 106 bulbs). Edison came to that building to turn on the lights for a brief experimental test; and when, at about five o'clock on the afternoon of Monday, September 4, 1882, the switch was finally thrown at Pearl Street, it was to Morgan's office that Edison returned, along with five of his associates, to turn on the lights again in his backer's presence, while “throughout a third of the downtown district little lamps began to glow.” (One of those five other men, incidentally, was Samuel Insull.)

At that time Morgan was completing the alterations to 219 Madison Avenue, and he seized the opportunity to install the
new lights there, thus making his house the first residence in the world to be thus lit throughout. Then began a chapter of troubles. There was no central power station in that part of the city, an engine had to be installed in a cellar under his stable, and an engineer had to visit this plant daily to get up steam so that the generator would operate. The gas lamps which had been installed in the house were used for the new electric-light bulbs, and this caused all sorts of troubles with the wiring. There were frequent short circuits or failures of power; once the lights died out at 11
P.M
. while the house was full of guests, because the Morgans had forgotten that the engineer went off duty then. Neighbors complained of the noise of the motor; one even alleged that it gave off smoke and fumes which tarnished her silver. And when the lamp on the big desk in the middle of Pierpont Morgan's library was wired—a new problem to Edison's assistant, Everitt H. Johnson, who had previously wired only wall lamps—the inevitable happened: there was a short circuit and then a fire which ruined the rug and the desk and filled the house with the odor of charred wood.

The next morning, according to Satterlee, Johnson arrived at the house when Morgan was at breakfast. He went into the library and surveyed the wreckage, apprehensive lest the banker lose all future interest in financing Edison's enterprise. “Suddenly he heard footsteps, and Pierpont appeared in the doorway with a newspaper in his hand and looked at him over the tops of his eyeglasses. ‘Well?' he said. Johnson had been formulating an explanation ever since he had heard of the fire and was preparing to make elaborate excuses. Just as he opened his mouth to speak, he saw Mrs. Morgan behind Pierpont. Catching Johnson's eye she put her finger on her lips. Johnson took the hint, and looked dejectedly at the heap of debris. After a long minute's silence, Pierpont said, ‘Well, what are you going to do about it?'

“Johnson answered, ‘Mr. Morgan, the trouble is not inherent in the thing itself. It is my own fault, and I will put it in good working order so that it will be perfectly safe.'

“Pierpont asked, ‘How long will it take to fix it?'

“Johnson answered, ‘I will do it right away.'

“‘All right,' said Pierpont, ‘see that you do.' And he turned and went down the hall and so on out.

“The result of the new installation was so satisfactory that Pierpont gave a reception, and about four hundred guests came to the house and marveled at the convenience and simplicity of the lighting system.”

The morning after the reception, when the financier Darius Ogden Mills visited the Drexel Building to buy a thousand shares of Edison stock, Morgan waylaid him and told him that he would permit his partners to make such a sale only on one condition, “that for every share of Edison stock that they buy for you, they buy one for me.” And still later, when a million dollars was needed to build an uptown power station, he subscribed half of the amount himself.

That would not seem to be evidence of wholehearted resistance to change. It is evidence, rather, that this was the sort of change which kindled Morgan's imagination: a wonderful invention, a wonderful investment, a wonderful chance for corporate promotion, and withal the germ of a great new industry which would shed its light over the whole country.

VI

RAILROAD REORGANIZER—AND EMPEROR?

1

Like a general whose supreme tactical opportunity comes when the battle is going badly, Morgan had to wait for a time of financial and business disaster to come into his own as a really decisive power in the railroad industry. During the eighteen-eighties, as we have seen, he had ended one railroad war, had had some practice in reorganizing bankrupt or hard-pressed railroad companies, and had tried, with only indifferent success, to persuade the railroad chiefs of the country to end voluntarily the sort of corporate knifing and gouging that seemed to him to be imperiling the investment standing of the nation's most important industry. Now he was to step into a position of unprecedented authority in that industry. The opportunity came during the financial hurricanes of the mid-nineties.

For more than four years—1893, 1894, 1895, 1896, and part of 1897—the United States was tormented by what we would now call a major depression. (In those days they spoke of the Panic of 1893 and of the “hard times” which followed.) Business which formerly had been prosperous went into the red; factories shut down; bankruptcies multiplied; wages were cut; workers by the millions lost their jobs, and year after year faced the recurring nightmare of unemployment; and there was industrial strife, bitterness, and unrest—from the Homestead Strike of 1892 to the Pullman Strike of 1894, the pathetic march upon Washington of “Coxey's Army,” and many another dramatization of the anger and bewilderment of the time.

One of the most dismaying things about that depression was the epidemic of financial bankruptcy among the railroads. In some cases one would have had to go back many years to find
the chief cause of financial trouble: it lay in the speculative looting and blackmail competition and gross overcapitalization to which company after company had been subjected during the preceding two or even three decades. In other cases there had been more recent waste, mismanagement, or folly. But in each case, as passenger and freight traffic declined and red ink replaced black ink on the company's books, the moment came when the managers of the line no longer had money in the till to pay their debts and joined the melancholy procession to the courts of bankruptcy. According to Alexander Dana Noyes, the financial historian, within the short space of two years nearly one-fourth of the total railway capitalization of the country passed through these courts, and by the middle of 1895 no less than 169 railroads with 37,855 miles of track—amounting to more than one-fifth of the total mileage of the country—were being operated by receivers. Nor were little shoestring lines the only ones to suffer; many of the largest and proudest failed—including the Baltimore & Ohio, the Erie, the Northern Pacific, the Union Pacific, and the Santa Fe, to say nothing of the Reading, the Norfolk & Western, and the hodgepodge of lines grouped under the loose direction of the Richmond Terminal (which later became the Southern Railway System).