House Of Morgan: An American Banking Dynasty And The Rise Of Modern Finance, by Rod Chernow
This, the second book by the author I have read , shares much in common with the other book I have read. For one, it is voluminous, deeply detailed in economic history, showing a perspective in favor of government intervention in economics, and certain elements of socialism, and also fond of uncovering hints of tawdry and scandalous action on the part of the leaders of the various Morgan companies. Here there is a generous helping of both personal and business scandals, including one of J. Pierpoint Morgan’s daughters who turned out to be a lesbian but still got her share of the family inheritance, which caused some family infighting, and other scandals that led people, including the brother of a future Morgan bank chairman, to be imprisoned for various charges of financial malfeasance. Despite this marked interest into prurient matters, though, Chernow tends to be most interested in the ways of corporate strategy and how it intersects with corporate ethics, and despite the fact that this is a lengthy book, it is worthy of the National Book Award it won for its epic scope and incredible detail.
In terms of its sprawling contents, the book is divided, like ancient Gaul, into three parts in chronological order. Eight chapters take the reader from the beginnings of the House of Morgan as the heirs to an Anglo-American banking concern run by a childless scourge to the shipwreck of the Titanic and the start of World War I that ended the so-called “Baronial Age” of the family. The second part of the book takes sixteen chapters to cover the “Diplomatic Age” between 1913 and 1948 when banks got particularly involved in political and geopolitical matters and served as adjuncts of somewhat mistrustful governments. During this time the banking reforms of FDR after the 1929 crash forced a separation of the Morgan House into several parts, one of which chose to focus on investments (Morgan Stanley) and the other of which, in the United States, focused on mercantile banking. The third part of the book takes twelve chapters to discuss the so-called “Casino Age” between 1948 and 1989 (which could have continued to the present period) when banks were losing a lot of their power and had to behave more aggressively in order to preserve a privileged position, engaging in leveraged buyouts that ended up greatly harming businesses by saddling them with excessive debt.
To be sure, this book is not an easy read. It has almost as many important characters, all of them real, as Tolstoy’s War And Peace, and one almost needs a complicated family tree to keep track of them and all of their relations by blood and marriage. Despite the complexities of its subject material, economic history over a span of 150 years, the book is a compelling narrative with many compelling elements. One can witness, for example, the strange fascination of many of the Morgan men with ships and yachts, including one particularly unfortunate case where one of J. Pierpoint Morgan Sr.’s yachts was impressed into the US Navy in time for the Spanish-American War. Other lessons include the fact that after the 1940’s, many of Morgan’s directors became so interested in making money nearly exclusively that they lost a lot of the class and cultural knowledge that had given them respect in the general world, despite the envy that was often attached to the House of Morgan. Also of interest is the way in which the various Morgan companies, including Morgan Grenfell in London, which is given its full share of material here, ended up fighting each other over business like siblings instead of acting in a unified fashion. Perhaps the most interesting observation to me, though, was the way in which the Morgan businesses revealed an important truth, that gentlemanly codes of honor were only effective among bankers as long as they felt strong and secure. Apparently even Morgan bankers, with their conservative ways, did not feel strong enough to be gentlemanly when their position was threatened. If honor depends on strength, we should do what we can to make others feel and be strong.