From Biography of America

John Pierpont Morgan and the American Corporation

By 1900, tough-minded journalists like Lincoln Steffens and Ida Tarbell were waking up to the fact that politicians no longer ran America; big business did. Tammany's power was nothing compared to that of Morgan's.

Morgan was physically imposing: a massive man, with a ferocious glare and a purple, hideously disfigured nose, the result of a childhood skin disease. He smoked Havana cigars so big they were called Hercules' Clubs. And he had a tremendous physical effect on people. One man said that a visit from Morgan left him feeling "as if a gale had blown through the house."

Unlike Carnegie, Morgan was born rich. He grew up in a prominent banking family and got his start in his father's London business at the age of 19. After the Civil War, Morgan began investing in railroads and soon ruled the transportation empire. He didn't build roads; he took over or consolidated, under his control, railroads that had run into financial trouble, a process that came to be called Morganization.

Morgan was a different type of capitalist than Andrew Carnegie. Carnegie built a business and loved competition. Morgan took over other people's businesses and hated competition. Morgan wanted to stabilize the boom and bust American economy, to prevent price wars between business rivals from destroying big corporations and unhinging the economy.

Morgan's program was compatible with many corporate titans, who wanted to absorb their competition by forming giant trusts and monopolies. John D. Rockefeller had done this by creating the greatest monopoly of them all, the Standard Oil Company, which brought order to a wildly chaotic industry. But no other capitalists in the country, except Carnegie, had money to form such gigantic combinations.

So empire-building industrialists were drawn into the arms of Morgan and other formidable Wall Street bankers. This began the great corporate drift to New York. Powerful capitalists like Philip Armour, the meat king, and Collis Huntington, the railroad king, moved to New York in the 1890s to be near big investment houses like Morgan and Company, Lehman Brothers, and Kuhn, Loeb.

By 1895, New York was the headquarter city for American corporations. Almost half the American millionaires lived in the New York metropolitan region. And Morgan controlled a Wall Street syndicate that the financial writer John Moody called "the greatest financial power in the history of the world."

At the peak of his powers, in the early 1900s, Morgan dominated a hundred corporations with more than $22 billion in assets. Among them was the first billion dollar corporation in history, U.S. Steel. Morgan had formed this giant steel trust in 1901 out of mills he'd purchased from Carnegie in a colossal cash deal. This transaction marked the high tide of banker power in America.

Morgan's defenders said he never abused his power. But the question was: should any person in a democracy have this much power? Morgan saw himself as a force for the good. His banks, he thought, had helped to transform America into the world's most powerful nation; and privately, secretly, he gave money to the urban poor.

His partners claimed he could have made a lot more money than he did. Well that's true, but only because he lived a life of self-indulgence, spending time collecting paintings, rare books, tapestries, tremendous houses, ocean-going yachts, and high-spirited mistresses. When Morgan died in 1913, he had as estate of $80 million, that's $1.2 billion today, as compared to Rockefeller's worth of nearly a billion, that's $l90 billion today. When Rockefeller read this in the papers he supposedly said, "And to think, he wasn't even a rich man."

But Rockefeller's remark misses the point. Morgan's power wasn't in the number of his millions, but in the billions he controlled. Senator Beveridge called Morgan "the greatest constructive financier" in the history of mankind. But not everybody agreed.

In 1900, the greatest opponent of corporate consolidation was Nebraska's William Jennings Bryan. Bryan was preparing for another run for the presidency against the Republican incumbent William McKinley, whose 1896 campaign Morgan had bankrolled. To Bryan, Morgan was a predator whose banks and corporations were destroying competition, manipulating prices, buying and selling politicians. While several hundred millionaires lived in luxury, 80% of American families earned less than $500 a year.

In no other country in the world was such power held by men of wealth. In his campaign, Bryan hit hard on this theme of corporate injustice, but his message reached very few people in the coal fields of northeastern Pennsylvania. There, miners and their families lived like serfs in an industrial fiefdom that Morgan had helped create.