Chapter XX (3)

The panic of 1873 was the natural result of the destruction of capital by war, fire, and unwise investment which had been going on during the previous decade, and of the encouragement given to speculation by a fluctuating paper currency. The money-markets of the world had to reckon not only with the enormous destruction of property during civil war in the United States, but with the similar fruits of two other recent wars: that between Germany and Austria in 1866, which was crowned by the victory of Germany at Sadowa, and the great war between France and Germany in 1870, for which France was compelled to pay to Germany an indemnity of a thousand millions of dollars. The direct cost of the American Civil War, exclusive of pensions, has been estimated at more than $5,500,000,000, and the cost of the Franco-Prussian War at only $2,700,000,000, owing to its shorter duration. An enormous amount of capital also was absorbed in the ten years prior to 1873 in the building of railways. New construction in the United States in 1870 was 5690 miles; in 1871, 7670 miles; in 1872, 6167 miles; and in 1873, including a part of the period of panic, 3948 miles. In Russia a system of 12,000 miles of railway had been almost entirely created since 1868, and in South America nearly $200,000,000 in English capital had been borrowed, mostly for railway enterprises. It was at about this period also that the substitution of Bessemer steel for iron began, as the material for rails, sending thousands of dollars’ worth of old rails to the scrapheap.

The severity of the panic in the United States, as well as in Austria, was heightened by the state of the currency. There had been, up to the climax of the Civil War, an almost uninterrupted decline in the value of the paper money issued by the United States Government, and a corresponding rise in paper prices. With the close of the war, these movements were reversed. A rise in the value of the currency began, and also a decline in prices. This decline in prices spelled ruin to many who had bought real estate or merchandise in the expectation of its rise in value, and it imposed paralysis even upon the more conservative, who had correctly read the downward tendency of values expressed in paper money.

The specific cause usually assigned by economic historians for the panic of 1873 was the failure of the great house of Jay Cooke and Company, as the result of tying up its resources in the Northern Pacific Railway. The incident was, however, only typical of the times; and if Jay Cooke never had lived, the story would have differed chiefly by the substitution of another name for his. The house of Jay Cooke and Company had grown to power and prestige by the clever and original methods employed by Mr. Cooke in borrowing money for the Government during the Civil War. Cooke was a true child of the new America, the first or nearly the first male child born, as he was fond of boasting, in Sandusky, Ohio. Through political and social connections, he entered a Philadelphia banking-house during the period of hazardous financing and State banking before the Civil War, and had made enough money by 1859, while still under forty years of age, to contemplate retiring from active business. But his was not a nature for inactivity. The close relations established by his father and his brother with Salmon P. Chase, the new Secretary of the Treasury, obtained Cooke a hearing in the floating of the early war loans. He was not of the old style of banker, who sat in his office waiting for a customer to come in; he quickly realized that if the Government was to obtain the money necessary to carry on the war, it must be by educating the people to understand the value of the war bonds, and the necessity of taking them as a patriotic duty.

It was a wonderful campaign of advertisement, of canvassing the post-offices, of manipulating the press, and of removing opposition, which Cooke carried on in floating hundreds of millions of the five-twenties, the ten-forties, and the seven-thirties. The later flotations, however, which came after the war, required perhaps as much skill as the earlier ones, because they involved persuading the people to retain their public funds while accepting considerable reductions of interest. Inevitably Cooke’s success drew competitors into the field. When the question of refunding arose, a committee representing other New York banking-houses appeared in Washington to demand a share in the operation. The composition of this committee is of interest because it was virtually the first appearance on the stage of public finance of John Pierpont Morgan, then a young man of thirty-five. He, with Levi P. Morton, who had established the banking-house of Morton, Bliss and Company, and had enlisted the aid of the Rothschilds, appeared in Washington in January, 1873, and demanded and obtained from Secretary Boutwell a share in the new issues. The methods of the syndicate had little of the “go” of the old Cooke methods, and already the tightening of the money-market was making itself felt. Where subscriptions of $600,000,000 had been expected for the new loan, they amounted after several weeks to less than $50,000,000, and the entire operation was ultimately suspended by the outbreak of the panic.

The lack of uninvested capital to subscribe for the government loan was a warning of conditions prevailing in the money-market generally. Jay Cooke, swept along by the great success of his methods in disposing of the war loans, believed it possible to perform the same miracle with the bonds of the Northern Pacific. It was his calculation that he could sell bonds as fast as he was called upon for money for the work of construction, and it was distinctly provided in the contract with the road that the advance in excess of the amounts realized from sales of bonds by the bankers never should exceed $500,000, which itself was secured by the deposit of the company’s bonds at fifty cents on the dollar.

During the summer of 1872, however, with President Grant’s campaign for re-election against Horace Greeley at its height, sales of bonds fell to a few hundred thousand dollars a month, while the drafts of the treasurer of the railway company were running at about $1,000,000 a month. Inevitably, the balance of floating indebtedness by the railroad to the banking house began creeping up, until it stood near the close of August at $1,583,000. Ex-Secretary McCulloch, who had become head of the London connection of Jay Cooke and Company, and other associates of Cooke were quick to realize that the house was getting into deep water, and that further uncovered advances must be stopped. It was much easier to lay down this rule, however, than to carry it out. Already there were complaints along the line of construction that wages were not being paid promptly and that men were being laid off. Smaller railway enterprises in hands less strong were going to the wall from similar causes, and in October, 1872, the coupons were defaulted on the St. Paul and Pacific road, in which a controlling interest was owned by the Northern Pacific.

The year 1873 was thick with omens of disaster for the new railway enterprises. The Boston fire of the previous November, while not so disastrous as that in Chicago the year before, caused a crash in the stock market similar to that which followed the San Francisco fire in 1906. Scandalous frauds were disclosed in the management of the Erie Railroad; General John C. Frémont failed conspicuously in an effort to raise money for the Southern Pacific system in France; and at last grave exposures were made in connection with the Union Pacific Railroad, which resulted in the Crédit Mobilier investigation and its long train of scandals. A traveler in Germany wrote home in August that an American railway bond, “even if signed by an angel in heaven, would not sell.” So desperate was the situation becoming that Henry Cooke, brother of Jay Cooke, put his chief dependence, in a letter to his brother, on “an unfailing confidence in the God in Whom we put our trust.” “I do not believe,” he said, “He will desert us.”

But the Lord did not intervene to prevent the results, which seemed to the profane to be an inevitable outcome of economic laws. Jay Gould was still manipulating a powerful gold pool in the late summer and early autumn, when on September 8, 1873, the first rude blow was given to the card house of the New York money-market. The New York Warehouse and Security Company suspended, followed five days later by a firm with which Daniel Drew was associated. When Jay Cooke reached his Philadelphia office on September 18, he found a despatch announcing that the New York office had been closed by his partners in that city. The news spread like fire on one of the Northern Pacific’s own dry prairies. Other houses fell the same day or the next day; stocks dropped from twenty to forty points; money could hardly be had at any price; and the Stock Exchange Committee closed the exchange, in the language of the vice-chairman, “to save the entire Street from utter ruin.”

While ultimately the assets of the failed house proved to be amply adequate to meet its liabilities, the career of Mr. Cooke as a financier was ended. Facing cheerfully for a time the prospect of extreme poverty, he found his fortune partially recouped six years after the panic by an almost forgotten mining investment. Repurchasing his old home in the suburbs of Philadelphia, he continued to live there, content with the society of his children and grandchildren, his farming and fishing, almost forgotten by the new generation of Americans, until his death in 1905 at the age of eighty-four. In his great cape cloak and his wide-brimmed, gray, soft felt hat, set over a gentle face adorned by a long white beard, his patriarchal figure was long familiar in the streets of Philadelphia, a very different type from the shrewd, grasping men who speculated in their country’s fortunes in the New York gold-room.

THE FIRST MOVE FOR A CONTRACTION OF THE CURRENCY

The disorder and discouragement caused by the panic did not make easy the return to a sound monetary system. Already, prior to 1873, the people had expressed themselves against the policy of acute contraction so vigorously urged by Secretary McCulloch. The return of the Southern States to the Union naturally opened a new field for the circulation of greenbacks and national bank-notes. Influenced by this wider area of circulation for the employment of money, and by the improvement of public credit, the greenbacks rose from a gold value of $49.50 in 1865 to $71.20 in 1866, for $100 in paper. There was little further change in average value until 1870, when there was a gain of about $10 per $100 and a further advance the next year to $88.70, which remained substantially the average during the years of depression that followed. The average value of these years, however, is no measure of the fluctuations, which arose naturally from differences in the demand for currency and were made erratic from time to time by speculation.

Up to 1875 no one knew what steps were to be taken, or whether any were to be taken, to restore specie payments. Half a dozen different schools argued crudely, with imperfect economic knowledge and narrow horizons, as to the proper policy to be pursued. For a moment the sturdy Scotchman, McCulloch, at the head of the Treasury from 1865 to 1869, carried Congress with him in his policy of sharply contracting the volume of government notes by an issue of bonds. A resolution passed the House of Representatives on December 18, 1865, by a vote of 144 to 6, that the House cordially concurred in the view of the Secretary of the Treasury in relation to the necessity of a contraction of the currency, with a view to as early a resumption of specie payments as the interests of the country would permit, and that “We hereby pledge coöperative action to this end as speedily as practicable.”

The problem was not, however, so simple as it seemed. The greenbacks formed considerably more than one half of the currency circulation of the country. Unless gold or some other form of currency could be brought in, their retirement would mean violent contraction at the very moment when the new field of the South had been opened to the national money. While such a contraction would undoubtedly have tended to bring the greenbacks up with a jerk to their old parity of 100 cents in gold, such a sudden enhancement in the value of the monetary unit would have caused a fall in prices which would have spelled wide-spread ruin. Only vaguely, apparently, was this danger apprehended by advanced economists; but the danger was real enough to arouse among the masses, especially in the debtor States, stubborn opposition to immediate resumption or to the reduction of the volume of paper currency. Mortgages on farms, running for three, five, or even ten years, which had been incurred in paper, if required to be paid back in gold would have absorbed more than the total value of the farms. Other conditions are thus summed up by Senator Theodore E. Burton of Ohio in his “Life of John Sherman” (1906):

Prices were high in 1865; great investments were made in numerous
enterprises at the existing high prices; agricultural areas of the
West were rapidly developed, and the production of cereals vastly
increased. With the returning soldiers of the disbanding armies,
and increased immigration from abroad, new fields were settled.
The change of so great a multitude of soldiers from consumers to
producers, changed the relation between demand and supply in many
classes of products.

WHETHER TO PULL THE GREENBACK UP OR THE GOLD DOLLAR DOWN

During the thirteen years from July 1, 1865, to July 1, 1878, six months before the resumption of specie payments, the net monetary stock of the country in circulation remained practically stationary, and the per capita average was reduced by the addition of thirteen millions of population from $20.57 to $15.32. It is not surprising that under the pressure of such drastic contraction, all manner of financial heresies sprouted and thrived. The amazing proposition came from President Johnson himself, in his annual message of 1868, that inasmuch as the holders of government securities had received upon their bonds a larger amount than their original investment, as measured by gold, it would be just that the six per cent. interest then paid them should be applied to the reduction of the principal of the debt, thus liquidating it in sixteen years and eight months. Thaddeus Stevens, the great congressional leader of the Civil War, made violent speeches in favor of paying the bonds in paper. In the West, the proposition was so warmly advocated by Senator Thurman of Ohio that it became known as “the Ohio idea.”

It is a question whether the soundest economic policy would not have been to take the resolute steps for resumption supported by McCulloch and the Eastern bankers, and at the same time to adopt a new monetary unit which recognized the status quo; in other words, to create a new gold dollar worth 75 or 80 per cent. of the old. This was the principle adopted by Austria-Hungary in 1892, by Russia in 1895, and by Mexico in 1905, in bringing to an end the instability of their currency and planting it upon a permanent basis of gold. The conclusive argument for such a policy lies in the fact that it recognizes and crystallizes the existing purchasing power of money, in which prices are expressed, instead of seeking violently to change it. It thus permits the transition from the old unstable basis to the new fixed basis without jar, and without radically changing the relations between the holders of money and those who are under contracts to pay money.

Monetary science was less advanced, however, in 1865 than it is in our time. In the United States the problem of the monetary unit was entangled by both parties with the very different problem--whether the bonded debt of the Government should be paid in the money in which it had been promised. While ultimately the country reached the ideal of the most pronounced hard-money men of pulling the greenback up to 100 cents in gold, it was at the cost of six years of falling prices, which spread a pall over real estate and industrial development, and ruined many men who had in good faith bought property at its valuation in paper when paper was the legal-tender money of the country.

The ink was hardly dry on the resolutions by which the House approved the proposals of Secretary McCulloch in 1865 before a counter movement set in. By the following April a bill had been enacted aimed at tying the secretary’s hands by limiting the retirement of United States notes to $10,000,000 for the next six months, and thereafter to $4,000,000 a month. In the face of two succeeding annual reports by the secretary in favor of contraction, Congress, by the act of February 4, 1868, suspended entirely his authority to make any reduction of the currency by retiring or canceling United States notes.

“Lay low!”

FROM A CARTOON BY THOMAS NAST IN “HARPER’S WEEKLY,” DECEMBER 27, 1879]

GENERAL GRANT’S SERVICE TO SOUND MONEY

Thus matters stood up to the inauguration of President Grant. Early in his term was passed the “act to strengthen the public credit,” with its courageous declarations that “the faith of the United States is solemnly pledged to the payment in coin, or its equivalent, of all obligations of the United States not bearing interest, known as United States notes, and of all interest-bearing obligations of the United States.” The final clause was subject to a few proper exceptions; but coin was then held to mean gold, and the Government thus stood committed to establish its monetary system, as well as to discharge its debts, upon the basis of other advanced nations. General Grant as President brought to the solution of financial problems much of that grim, hard sense which served him so well in the field. In his annual message of 1869 he urged resumption of gold payments, but added:

~Uncle Sam~: “You stupid Money-Bag there is just so much Money in you; and you can not make it any more by blowing yourself up!”]

Money is _tight_, but let it recover itself naturally, and then it will stand on a _Sounder Basis_.

Stimulants or _Inflation_ only bring _final collapse_.

FROM CARTOONS BY THOMAS NAST IN “HARPER’S WEEKLY,” DECEMBER 20, 1873]

“Immediate resumption, if practicable, would not be desirable. It would compel the debtor class to pay, beyond their contracts, the premium on gold at the date of their purchase, and would bring bankruptcy and ruin to thousands.”

~Uncle Sam~: “There is no circulation in that leg, and it’s swelling every day more and more. Mortification will set in, and I am sure my other leg will be affected. Now Dr. ~Sherman~, something must be done, and quick, too.”

FROM A CARTOON BY THOMAS NAST IN “HARPER’S WEEKLY,” NOVEMBER 29, 1879]

But Grant, like other Republican Presidents, set his face like a flint against further inflation. When he received from a Congress controlled by his own party the so-called “Inflation Bill” of 1874, authorizing the increase of the volume of greenbacks to $400,000,000, he promptly returned it with his veto. John Sherman, a leading member of the Senate Committee on Finance, who had been unwilling to follow McCulloch in 1865, became convinced by 1873 that the time had come for setting a definite date for specie resumption. His method was not to retire the greenbacks, but to provide a gold fund for their current redemption. It was not until the crushing Republican defeat in the Congressional elections of 1874, however, that the party was ready for action. In the short session of December a special committee of Republican senators was appointed, from whose labors emerged the Resumption Act of January 14, 1875. It was a vague and evasive measure, purposely avoiding questions upon which there were wide differences of opinion; but it contained the one salient declaration that “on and after the first day of January, 1879, the Secretary of the Treasury shall redeem in coin the United States legal-tender notes then outstanding, on their presentation for redemption at the office of the Assistant Treasurer of the United States in the City of New York.” It also placed power in the hands of the Secretary of the Treasury to prepare and provide for resumption.

WHEN THE GOLD WAS THERE IT WAS NOT WANTED

Market conditions did not at once respond to this promise; but after the election of Hayes, a sound-money President, in 1876, and the gradual accumulation of gold, under the guiding hand of John Sherman, as Secretary of the Treasury, the same man who had managed the passage of the Resumption Act, it began to be understood that specie resumption was to be actually accomplished. The banks of New York City, which held about $125,000,000 of the $346,000,000 in legal-tender notes outstanding, abolished special gold deposits and agreed with the Treasury to receive and pay balances without discrimination between gold and notes. The news of these arrangements, completed in November, 1878, removed lingering doubts. In the gold-room of the New York Stock Exchange--the scene of so much agitation on “Black Friday” nine years before--a sale of gold was made, on December 17, 1878, at 12:29 ~P.M.~, at par. It was the first sale at par in sixteen years, but so quietly was the transaction accomplished that only three or four persons who stood near the registrar’s desk were cognizant of it. When the first of January, 1879, dawned, the banks, which might have presented millions of notes for gold, did not ask for a dollar; and the dull corridors of the New York Sub-Treasury hardly afforded an indication that the United States had reached and passed a crucial point in her history and on that day had reëntered the circle of solvent nations. Truly, the experience of that day, carefully prepared for as it had been, and attained at much cost and suffering, seemed to verify the contention of those who for many years had insisted that “The way to resume is to resume.”

~Uncle Sam~: “As long as I keep these outstanding notes on my mind, which I am well able to pay, I am violating the laws of my constitution: and how can I expect my body to recover when my mind is not at ease?”

FROM A CARTOON BY THOMAS NAST IN “HARPER’S WEEKLY,” DECEMBER 13, 1879]

THE “CROSS OF GOLD”

Twenty-one years were to pass, however, before the country was to be extricated finally and absolutely from the shadow of an uncertain monetary standard. Specie resumption had not been accomplished when a bill was passed over the veto of President Hayes, on February 28, 1878, providing for the infusion of large masses of silver dollars into the circulation. This was followed by the so-called Sherman Silver Law of 1890, further increasing the amount of silver to be absorbed by the Treasury. The underlying motive for an increase in the monetary stock was the steady contraction which had been going on in the effort to restore the paper dollar to its old parity with gold; and for a time the country absorbed without apparent risk the additions made by the silver to the currency of the country. Gold exports set in, however, in heavy volume after the law of 1890; the Treasury began to lose its gold; and soon after the inauguration of President Cleveland, in 1893, the country stood face to face with the destruction of the gold standard. Panic supervened, and only at a special session of Congress in the autumn of 1893 was the further purchase of silver suspended by law.

The country lay prostrate for three years under a variety of ills, from which a young prophet from the West sought to rescue it by raising the standard of the free and unlimited coinage of silver “without the aid or consent of any other nation.” For a moment it seemed that the majority of the voters would respond to the electric thrill conveyed by this young leader, William Jennings Bryan, to the Democratic National Convention of 1896, when he wound up his famous speech with the declaration, “You shall not press down upon the brow of labor this crown of thorns; you shall not crucify mankind upon a cross of gold!”

A REAL CROSS OF GOLD

The country decided for the continuance of the gold standard, and its decision was crystallized into law by the act of March 14, 1900. This act set aside for the protection of the greenbacks the sum of $150,000,000 in gold, to be kept inviolate from all other uses, and declared the bonds and other obligations of the Government to be redeemable in gold and in gold only. But the causes that were operating prior to 1892 to cause contraction in the monetary stock were reversed after that date by the great outpouring of new gold from the mines of South Africa and the Klondike. New processes of separating gold from low-grade ores made profitable fields that in earlier years would have been considered unavailable. The gold production of the world rose from $113,000,000 in 1890 to $202,251,000 in 1896 and $454,000,000 in 1910. Gold flowed into the Bank of England in the summer of 1896, even while Mr. Bryan was making his canvass for free silver, to an amount never before recorded in monetary history; and the beneficent flood soon overflowed the coffers of the advanced commercial nations and filled up the void in metallic money in such developing countries as Argentina, Brazil, Mexico, and India. In place of the fear of a scarcity of gold, which hung like a pall over some minds at the close of the last century, such a redundancy of the yellow metal arose that swollen bank reserves stimulated loans at low rates, manufacturing plants were extended, and prices of commodities advanced with a rapidity which lessened the purchasing power of wages and threatened to reduce the world to the unfortunate state of Midas, making gold a curse instead of a blessing.

It is this situation which has reduced the real income of the laborer, the professional man, and other classes, through the diminished purchasing power of their money, which is imposing a true cross of gold on the world to-day, and which presents to a new administration the problem of finding a way to establish and maintain an equitable standard of value.

THE WIDOW

FROM THE PAINTING BY COUTURE

(EXAMPLES OF FRENCH PORTRAITURE)]

FOR A BLANK PAGE

BY AUSTIN DOBSON

Life, like a page unpenned,
Spreads out its whiteness,
Nothing, from end to end,
Marring its brightness.

Surely a field to claim
Steadfast endeavor?
Where one might win a name
Vocal forever?

Now--to review it all--
What a prosaic,
Patched, unmethodical,
Paltry mosaic!

Plans that ne’er found a base;
Wingless up-yearning;
Speed, that ne’er won the race;
Fire, without burning;

Doubt never set at rest,
Stifle or falter it;
Good, that was not the best--
Yet, would you alter it?

Yet, would you tread again
All the road over?
Face the old joy and pain--
Hemlock and clover?

Yes: for it still was good,
Good to be living;
Buoyant of heart and blood,
Fighting, forgiving;

Glad for the earth and sky,
Glad--for mere gladness;
Grateful, one knew not why,
Even for sadness;

Finding a ray of hope
Gleam through distresses;
Building a larger scope
Out from successes;

Careless of loss and gain,
Rendering ever,
Both for the joy and pain,
Thanks to the Giver.

So, though the script is slow,
Faint though the line is,
Let the poor record go,
Onward to _Finis_.

THE MORGAN LIBRARY, EAST THIRTY-SIXTH STREET, NEW YORK

(Architects, McKim, Mead, and White)]

MR. MORGAN’S PERSONALITY

AS VIEWED BY HIS FRIENDS

BY JOSEPH B. GILDER

It was in the panic days of 1907--late October. The Secretary of the Treasury had hurried from Washington to New York, and was spending his days (long days they were, too) at the Sub-Treasury and his evenings at the Manhattan Hotel, where all who needed to could see him. Meanwhile the bankers conferred daily at Mr. Morgan’s office, across the street from the Sub-Treasury, and nightly at his library in Thirty-sixth Street. While they put their heads together and worked out details, their host spent most of his time in his private room in the library building, not infrequently playing solitaire. But he was always within reach when counsel was needed; and his word was law.

To allay popular fears, it was decided to issue a public statement, and the library conferees prepared one and took it up to show to Secretary Cortelyou at his hotel. Mr. Morgan went with them. He had not yet seen the statement, and when one of the party started to read it aloud, he stopped him at the first sentence. “Is that correct?” he asked. “It will be by the time the statement is published,” was the reply. “No, gentlemen, that won’t do. If it isn’t so _now_, we can’t say it. We’ve got to state the facts exactly as they are. The public must have the truth and nothing but the truth.” And the statement was modified accordingly.

Mr. Morgan had had just half a century’s preparation for doing the public the immense service he rendered it in “composing” the panic of 1907; for he had been in the banking business since 1857--another panic year. Ability, experience, character, reputation, and financial resources were his, and had put him in a position to ride the whirlwind and direct the storm. He had done wonders to preserve the national credit before the year 1907, but it had never fallen to his lot to do anything quite so spectacular (though unintentionally so) as he did at this time. What he did, no one else, however capable, could have done, or, at least, have done so well. It needed just the combination of attributes and qualities he possessed to give the needed authority to his acts.

His whole character was summed up in the brief sentences addressed to his fellow bankers in Mr. Cortelyou’s presence. Always his words were few; but always they were pregnant and unequivocal. What he said he meant, and what he meant he said.

It is no truer that Wall Street--“the Street” _par excellence_--is the financial center of the Western world than that Mr. Morgan was the dominant personality therein. He himself was not the Street, for that term includes the Stock Exchange, a large part of the activities of which are purely speculative; and at no time in his life was Mr. Morgan a speculator. Wall Street signifies, and will increasingly signify, as time goes on, the abiding-place of bankers rather than of brokers; and it was in the banking world that Mr. Morgan reigned supreme.

The transactions in which he was the chief factor ran all the way up to the more than $1,400,000,000 capital of the United States Steel Corporation. The total amount involved in his organizations and reorganizations of railways, industrial concerns, and public utilities, and his flotations of American and English government bonds, was thousands of millions of dollars. Never has one man exercised such control over the accumulated wealth and undeveloped resources of a great country. The power appeared to be despotic, but if it really was so, the despotism was so tempered by probity and a high sense of responsibility as to lose all the terrors the term usually connotes.

An old friend, a banker in close touch with many of Mr. Morgan’s most important operations, was asked the secret of his success. “There was no secret about it,” said he. “I think his chief asset was integrity. Of course, being honest doesn’t make a man rich. He must have--as Mr. Morgan had--immense energy and ability. But a man in the banking business can’t make a great success with these qualities alone. At the ‘Money Trust’ inquiry it was shown that the Morgan house had more than a hundred million dollars on deposit; and this was by no means high-water mark. Probably these deposits have been twice as great, at times. Now, no matter how brilliant a man is, people don’t put more than two hundred million dollars in his hands unless they know him to be honest to the core, as Mr. Morgan was.” When I quoted this to a clergyman, he said: “That is the business man’s point of view.” “So much the better for business,” I replied. The president of a great commercial bank made this confirmatory comment: “Mr. Morgan’s power lay in his keen sense of trusteeship.”

An intimate friend of Mr. Morgan’s, speaking of the financier’s mental attributes, remarked that his mind never appeared to work deliberately, logically, but to attain its results by intuition, as it were; in other words, he was a man of genius. What the business man usually lacks is imagination; but imagination was perhaps the largest element in Mr. Morgan’s mind. It was this that made his actions great. It was his constructive imagination that made it possible for Mr. Claflin, President of the New York Chamber of Commerce and himself a distinguished man of affairs, to say: “Like the founders of this nation, Mr. Morgan had prophetic vision; like them, he was an organizer of scattered possibilities and a builder of mighty structures such as no man had built before.” It was because of his imaginative force that Senator Root called him “the greatest master of commerce of the world”; and that Mr. Choate said that “only once in a generation is such a mind born in such a body.” And it was this that prompted our English kin to liken him to Cecil Rhodes, to Bismarck, and to Napoleon.

Mr. Morgan’s great gift to Harvard University was made in a way that illustrates his habitual promptness of decision. He and Mr. Rockefeller were among those who were asked to contribute to the habilitation of the Medical School. The latter caused a thorough investigation to be made, which lasted for six months. At the end of that time he received a favorable report and was advised to give $500,000. He bettered the advice, however, by giving a round million. Mr. Morgan’s course was equally characteristic. When the needs of the school were explained to him, he made an appointment to see two or three of the professors at his office. Entering from his private room with his watch in his hand, he said: “I am pressed for time and can give you but a moment. Have you any plans to show me?” The plans were produced and unrolled; and moving his finger quickly from point to point, “I will build that,” he said, “and that--and that--and that. Good morning, gentlemen.” The cost was over a million dollars. Mr. Morgan and Mr. Rockefeller had reached exactly the same conclusion as to the merits of the case and the amount of his contribution, but by what different methods!

Mr. Morgan’s activities and achievements in the financial field divide themselves into three main groups: the reorganizing of bankrupt railways, or railways threatened with bankruptcy; the forming of great industrial organizations, and the floating of corporate or government bonds. His chief performance in the last-mentioned line was the flotation of United States Government bonds in the year 1895, when, incidentally, Messrs. Morgan and Belmont arranged with President Cleveland and his Secretary of the Treasury further to protect the national credit by putting a stop to the menacing outflow of American gold to Europe.

At the age of seventy, the veteran financier was called upon to render another great service to the country by organizing and directing the forces that put an end to the panic of 1907, as noted at the beginning of this article. His efforts at this trying time won the gratitude and applause of all right-thinking men. Yet, five years thereafter, in the spectacular search for a bogy popularly styled the “Money Trust,” he was put upon the rack by a congressional committee and subjected to a prolonged quizzing. To a man so proud, so shy and so sensitive, the ordeal was a dreaded one, but he had made no attempt to evade it. In the end, it afforded him an opportunity of bearing emphatic witness that personal integrity is the basis of all credit. The tonic effect of this testimony was felt from one end of the land to the other, and, had the witness been a younger man, his gratification would have much more than outweighed the strain upon his nervous system. As it was, his friends do not attribute to this ordeal his collapse a few weeks later, while on his way to the scene of the excavations in Egypt which the Metropolitan Museum of Art was conducting at his expense.

Nothing has been said oftener of Mr. Morgan than that he was “a ‘bull’ on America.” One of his old friends disclosed, the other day, the origin of this “bullishness.” As is well known, Mr. Morgan was an optimist. His father’s temperament was the same, and the older man impressed upon his son--when he was returning to America more than half a century ago, to go into business--his own belief in this country and his faith in its future. “Any man who is a ‘bear’ on America is bound to fail,” he said. Coming from the lips of his father, whom during his life the son leaned on and respected, and whose memory he revered and honored, these words made an indelible impression on the young man’s mind; the more indelible as they confirmed his personal feeling and conviction and, in later years, his experience. As it turned out, his confidence in the country’s future was a potent factor in its material prosperity.

Current report has it that once, when Mr. Morgan invited into his firm a young man who had made a name for himself, he said, “I want you to come down here and ‘do things.’” Less well known--though as well worth preserving--is his word to another bright young man, in similar circumstances. Surprised no less than gratified at the invitation, the fortunate one exclaimed, “But what can _I_ do for J. P. Morgan and Company?” “I don’t ask you to make money for us,” was the reply; “but we have a great many duties and responsibilities here, and I want you to come in and help us bear them.”

It is related that Mr. Morgan’s father once threatened to withdraw his power of attorney from the son, if the latter persisted in overworking. If the warning was given, it probably was heeded; but Mr. Morgan was always a great worker, though in his later years, at least, he realized the value of holidays, as is shown in the saying ascribed to him: “I can do a year’s work in nine months, but not in twelve.” Apropos is the legend that partnership in the Morgan house meant a short life, if not a merry one. Undoubtedly, all the members of the firm had their work cut out for them. It could not be otherwise in a house that stood at the top and meant to maintain its position. There was an immense amount of work to be done, and they were there to do it. But they were always men who liked to work; and the fact is that when a partner died or retired, it was at an age when death or retirement was not unnatural. There have been few exceptions to this rule. And one, at least, of Mr. Morgan’s former partners has survived his chief, though several years his senior.

Mr. Morgan’s own stalwart physique and capacity for work were an inheritance from his father, whose death, at seventy-seven, was due to an accident. Some of his indomitable energy must have come to him from his maternal grandfather and namesake, John Pierpont; for, when the Civil War began, that poet, patriot, preacher, and ardent reformer, after seventy-six strenuous years, had the pluck to enlist as a chaplain (though for a very brief service) and lived to be eighty-one years old.

It is recalled that at school Mr. Morgan was a writer of verse, but it does not appear whether this was due to the example of his grandfather, one of whose poems on the death of a child--“I Cannot Call Him Dead”--has gone into the anthologies.

An interesting incident relating to the poet is told me by a friend. During the Civil War, Father Pierpont (as he was called) was a clerk in the Treasury Department at Washington, and while there was often a visitor at the house of Paul H. Berkau, well remembered in Washington as president of the Schillerbund, a club for the study of German literature. The Berkaus were abolitionists, friends of Sumner and Julian, and other men of that faith, and this was a bond between them and their friend the poet. One day, when he came to see them, he found on the table a copy of his volume, “Airs of Palestine and Other Poems.” He took it up and wrote on the fly-leaf these lines:

“Shame! that my book should to my friend be _sold_
Rather than made a present of, or lent;
Sold, too, for _paper_, not so good as gold
By forty-eight or forty-nine per cent.

Jno. Pierpont.

Washington, D. C., 3 Dec., 1863.”

In 1902 one of the owner’s family, coming into possession of this volume, presented it to Mr. Morgan with this inscription:

This volume, formerly the property of my uncle, Mr. Paul H. Berkau,
to whom the poet wrote the inscription, is respectfully presented
by me to Mr. John Pierpont Morgan, who has done so much to keep our
“paper” as “good as gold.”

Mr. Morgan received the volume with evident delight.

For many years it was Mr. Morgan’s custom to engage a furnished house in the city in which a general convention of the Episcopal Church was to be held (he himself being always a lay delegate from New York), and to entertain therein, as long as the convention lasted, a group of his particular friends in the episcopate. A private car conveyed these parties to their destination; and once, when the place of meeting was San Francisco, a special train was engaged for the long journey. Mr. Morgan’s guests on these occasions were usually Bishop Potter or (later) Bishop Greer of New York, Bishop Doane of Albany, the Bishops of Connecticut and Massachusetts, and the wives or other members of the families of these gentlemen. The present bishop of New York relates that once, when some one raised the question of the familiarity of the members of the party with the services of the church, it proved that their host was better versed in the collects, the hymns, and the Shorter Catechism than any of his clerical guests. This only confirms other anecdotes illustrating the extraordinary retentiveness of his memory; for, while he was a habitual church-goer, never missing a Sunday morning service if he was within reach of a church, he could hardly have attended as many services, in the course of his life, as the youngest of the bishops present. His similar hospitality and constant attention to the Archbishop of Canterbury, primate of the Church of England, during that prelate’s visit to America a few years ago, caused a wit to speak of His Grace as “Pierpontifex Maximus.”

His devotion to the interests of the church was of long standing. It showed itself, of course, at Highland Falls, on the Hudson, the village nearest his summer home; and more conspicuously at St. George’s in Stuyvesant Square, New York City, where the simple, impressive service chosen by himself was read at his funeral on the fourteenth of April. To the activities of this church--a body less distinguished for the wealth and social prominence of its members than for its work among the poor--he was for many years a liberal subscriber. The spacious, well-equipped parish-house commemorated his father-in-law, Mr. Charles E. Tracy, a former vestryman. And at a time when there was special need of larger revenues, he made it known that, for a considerable period, he would duplicate every contribution made by other parishioners. At the time of his death, he was senior warden of St. George’s, and he never had missed a meeting of the vestry when he was in New York.

His interest in denominational affairs manifested itself in other directions. To the building fund of the Protestant Episcopal Cathedral in Albany he gave handsomely. When subscriptions were first asked for the building of the Cathedral of St. John the Divine, in New York, he put his name down for half a million dollars; and to this sum he afterward added $100,000. At a meeting of a committee appointed to raise money for a synod house, when he learned that $50,000 had been subscribed but that $250,000 more was needed, he made himself responsible for the whole amount, requesting that the earlier subscribers be relieved of their obligations. Finding, however, that Mr. Bayard Cutting wished to participate on equal terms in this gift to the General Convention, he contented himself with assuming one half the entire burden--which in its entirety proved to be $350,000 instead of the estimated $300,000. Thus his gifts in connection with the new cathedral amounted to nearly $900,000, and his friends in the church were not surprised that his will made no further provision for this great undertaking. Not only at home but abroad was he the cheerful giver the Lord is said to love, as witness the installation of electricity in St. Paul’s Cathedral, London, at a cost approximating $200,000.

The benevolent institution that ranked next to the church in Mr. Morgan’s regard was the Lying-In Hospital, near St. George’s Church, in Stuyvesant Square. Having bought the house and grounds of the late Mr. Hamilton Fish, skirting Second Avenue from Seventeenth to Eighteenth Street, and some adjoining houses, he sent Dr. James W. Markoe abroad to study the hospitals of Europe, and in due time authorized the preparation of plans for a model building to cost about $750,000. By the time these plans had been drawn and specifications had been worked out, the price of materials had greatly increased, and the estimated cost proved to be about half a million more than was expected. Instead of abandoning the project, or waiting for prices to decline, or demanding a drastic revision of the plans, Mr. Morgan’s word was, “Go ahead--and cut out nothing.” When the hospital was built and thoroughly equipped, Mr. Morgan made up for the city’s inadequate annual contribution to this great charity by giving $100,000 a year toward its maintenance.

Harvard University, especially the Medical School; the Art Museum at Hartford, founded in memory of his father, Junius Spencer Morgan of London; the New York Trade School, which he handsomely endowed; the American Academy in Rome, and the Loomis Sanatorium were the other chief beneficiaries of his discriminating bounty. But the institutions, causes, and individuals (many of the latter personally unknown to him) that were indebted to Mr. Morgan for substantial aid, at one time or another, were innumerable as the autumnal leaves of Vallombrosa. Many of his benefactions were not publicly recorded, and if he recollected them himself, it was only because his memory was incapable of relaxing its grasp on anything, large or small, that had once entered it. As the London “Spectator” said, never was there a millionaire so set upon effacing his name from his deeds of beneficence.

Mr. Morgan’s connection with the Metropolitan Museum of Art dated from 1871, when the institution was organized. For twenty-five years he was one of the trustees, and since 1904 he had been president. He took an intense interest in its upbuilding, contributing thereto not only of his wealth but of his time and affection. So conspicuous was his identification with the art museum that it obscured his relations with the American Museum of Natural History, on the other side of Central Park. Yet these were equally close and well-nigh as important, involving forty years’ activity as a trustee and long service, first as treasurer and again as vice-president. Here, too, his gifts were lavish. His love of beauty showed itself in the presentation to the museum of large and choice collections of minerals and precious stones; but these were only a small part of his contributions, which included money for endowment, maintenance and research, as well as innumerable objects for exhibition.

Owing largely to modern facilities for travel and communication, the personality of the American Mæcenas was probably better known in foreign countries than that of any private citizen of the past. He was a very familiar figure in England, where he succeeded years ago to the headship of his father’s firm, as well as to the ownership and yearly occupancy of his father’s town house and country-seat; where most of his collections were kept for many years; and where his gift to St. Paul’s Cathedral showed his lively interest in the Church of England and in the City of London. He was equally well known in France, where he was the head of a banking-house and a benefactor of his favorite health resort, Aix-les-Bains; in Germany, where his presentation of an important letter of Luther’s to the Imperial Government was heartily appreciated; in Italy, where he endeared himself to Pope and people by the restoration of the cope of Ascoli, and where his last hours were passed; and finally in Egypt, the antiquities as well as the climate of which had an attraction for him that grew constantly stronger. Moreover, his fame as a collector made him an object of intense, if not altruistic, interest in the various lands in which he sojourned.

Having achieved an international reputation as a maker of money for his clients and customers, as well as for himself, Mr. Morgan found no less pleasure, but rather more, in making a new and quite as wide a reputation as a spender. His collections were made _en prince_. He never haggled over a bargain, but took a thing on the seller’s terms or left it. When he declined a book, a manuscript, or an object of art at the owner’s price, he must have been aware that that price was exorbitant; for his purchases were made with an open hand, many of them at figures that somewhat discounted the appreciation in values when competition should have become even keener than it was when he entered the field. His activities as a buyer doubtless caused a general rise in the price of rarities--an inevitable result of the rather rapid making of a collection that has recently been insured for $23,000,000 and would probably fetch a much larger sum if disposed of under favorable conditions. In estimating the commercial value of such a collection, it must be borne in mind that the number of masterpieces is virtually fixed, while the number of potential competitors for their possession continually increases.

When Mr. Morgan bought the house adjoining his father’s former home, No. 13 Princes Gate, London, joined the two, and filled the addition with things for which there had been no space before--having a room especially designed to hold the series of Fragonards; when he left in the National Gallery the Colonna Raphael, for which he had given a hundred thousand pounds or so; when he filled case after case in the South Kensington Museum with priceless treasures, he had no prevision that by far the greater part of his collections would be coming, before long, to New York. Their departure did not follow hard upon the passage of the law exempting from tariff charges works of art more than twenty years old. But when Mr. Morgan learned, last year, from Mr. Lloyd-George’s own lips, that if he should die while his collections remained in England, his estate would have to pay $300,000 or more on the Raphael alone, he promptly arranged to transfer his treasures to his own country, where the death duties are less onerous. And now that they are safely arrived, word comes, through his will, that in due time they may become permanently accessible to the American people. Already the literary treasures, safeguarded in the exquisite library building adjoining his house in Thirty-sixth Street, are accessible to accredited students and amateurs; hundreds of his art works--paintings, porcelains, carvings, tapestries, etc.--are on view in the Metropolitan Museum; and only the erection of a suitable building (presumably in the form of an addition to the museum itself) delays the revelation of the full extent of the rich and varied collections the acquisition of which gave so keen a zest to the financier’s later years.