Titans of Industry: JP Morgan

The next iconic figure in my study of American industrialists is John Pierpont Morgan. He is perhaps better considered a businessmen rather than an entrepreneur, who was able to capitalize on growing markets through massive buyouts and investments. He played a pivotal role in the gilded age of industry that transformed America into the leading economy in the world.

The two most prominent businesses he helped establish was General Electric and US Steel. Both of these companies became billion dollar corporations and leaders in their respected industries. While JP was able to finance numerous massive companies he is perhaps best regarded for his banking empire, which to this day is the largest bank in the United States.

Early Life of JP Morgan

Unlike the other entrepreneurs I have studied thus far, JP Morgan was born into wealth, and was able to expand upon it to become one of the wealthiest men in history. He was born in Hartford, Connecticut in 1837 to the prominent Morgan banking family. As a child he was infected with Rheumatic fever, an illness that brought him long term skin infections. However JP Morgan overcame this skin abnormality to become one of the most influential business men in American history.

By 1857 JP Morgan entered the family business of banking in New York City, helping manage his partnership with George Peabody. He established numerous partnerships with banks in Philadelphia, London, Paris, and New York City. He was able to skip out on the Civil War by paying for substitute soldiers and was accused of wartime profiteering on various occasions.

He continued expanding his banking empire by consolidating other banks and buying out troubled businesses, a process that became known as "Morganizations". By 1871 the JP Morgan & Co bank was established as one of the most prominent banks in New York City and by 1900 it was one of the most powerful banks in the world.


Funding Thomas Edison & General Electric

By 1876 the American inventor Thomas Edison was making major breakthroughs in electricity such as the phonograph and the carbon microphone. However his most groundbreaking invention came in 1878 with the introduction of the light bulb. This would challenge the need for kerosene lights and completely change the market of lighting. JP Morgan quickly saw the profit in Edison's new invention and funded the Edison Electric Light Company. This company was in heavy opposition to Rockefeller's Standard Oil, who feared the light bulb would bring the demise of his business.

The 1880s brought on a decade of electrical innovation and from this came a new business market that caused the War of Currents. Edison was devoted to his direct current system of power delivery, proclaiming it as the safe and reliable means for electricity. However his apprentice, Nikola Tesla introduced a different and more powerful way to deliver electricity known as alternating current. Tesla was funded by the prominent businessman, George Westinghouse, and together they established the Westinghouse Electric Company, which began a leader in the electricity market.

Edison attempted an anti-AC campaign to demonstrate the dangers of this current, however it was to no avail and the demand for AC began to exceed the demand for DC. In order to ensure his investment did not falter to Westinghouse's rapid ascension, JP Morgan began partnering with AC companies. In 1892 JP Morgan merged the Edison Electric Company to become General Electric which controlled three quarters of America's electrical business, whose only competition was the Westinghouse Electric Company.


Carnegie buyout & US Steel

JP Morgan ensured his financial dominance in 1900 when he was able to negotiate a major buyout with Charles M. Schwab and Andrew Carnegie. At the time JP Morgan owned various steel, coal, and mining companies and wanted to merge them all into one single entity. Andrew Carnegie was considering an early retirement and agreed to sell his Carnegie Steel Company to JP Morgan for what became the largest business take-over in American economic history. By 1901 US Steel was the undisputed largest company in the country.

By the early 1900s US Steel controlled two-thirds of the steel industry producing not only the steel but managing numerous building projects. US Steel played a pivotal role in the boom of skyscrapers, bridges, railroads, and various other products. It's mass production was on par with the booming steel industries of Germany and Britain. However similar to Rockefeller's empire, US Steel quickly became considered an unfair monopoly, and received harsh criticism from the government, journalists, and businessmen alike.


Progressive Era 

At the turn of the century, JP Morgan was well aware of the growing social and political concerns of his time. He played a large role in the Efficiency Movement of the Progressive Era and believed that modernization thru science and technology was the answer to all of society's flaws. While he became a target of heightened government regulations he still supported his country thru various economic crisis, most notably the Panic of 1907 that saw the American economy on the brink of collapse. Morgan was able to unite with the major banks of New York City to re-invest in struggling companies and help revitalize the economy. In order to ensure this did not happen again JP Morgan worked with Senator Nelson Aldrich to create the Federal Reserve System in 1913.

From 1890 to 1913 JP Morgan organized and managed 42 major corporations in addition to his banking empire. He was a devout Christian and supported Conservative values in the midst of heightened attacks against his wealth. He was a notable benefactor to the arts, and throughout his lifetime had an impressive collection of which he spent 50 million to acquire. He died at the age of 75 and is recorded as the 23rd richest American history.