The Rise of Big Business
|Digital History ID 3164|
During the Gilded Age, J.P. Morgan stood astride the nation's financial world like a colossus. His banking house erected the structure of the most prominent American industries in the Gilded Age beginning with the railroad. Convinced that cutthroat competition had to give way to order, he consolidated competing railroad lines and many other industries. He organized syndicates to float bond and stock issues that gave birth to such companies as AT&T (which dominated the nation's telephone industry for decades), General Electric, and U.S. Steel (the world's largest steel manufacturer). A voracious collector, he also spent $60 million on paintings, sculptures, rare books, and manuscripts.
His critics considered him a ruthless capitalist pirate, the personification of the oppressive power of Wall Street that would crucify mankind on a cross of gold. But his goal was to replace cutthroat competition with economic stability. Morgan was instrumental in helping to create the modern American economy. After the Panic of 1893, he reorganized many bankrupt railroads and industrial companies. He assembled U.S. Steel, the world's first billion-dollar corporation, and helped establish International Harvester and General Electric. He believed that the combination of rival interests into rational systems was necessary to stabilize the U.S. economy and to prevent harmful price wars.
During a financial panic in 1907, which threatened to trigger a run on the nation's banks, Morgan took charge. He assembled the leading bank presidents in his library and locked the door. At 4 a.m., his lawyer read them an agreement stipulating how much each must pledge to the bailout package. "There the place..." Morgan told one banker, "and here's the pen."
When he decided to buy the Carnegie Steel Company on the way to forming United States Steel, he asked Andrew Carnegie to name his price. Carnegie wrote $480 million on a sheet of paper. Morgan glanced at the paper and said, "I accept this price."