Review: The House of Morgan

The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance by Ron Chernow

My rating: 4 of 5 stars

When I picked up this book, I assumed it was a biography of the two famous John Pierpont Morgans. But this is far more; indeed it is a true history of the Morgan bank, though admittedly with heavy emphasis on the biographies of the key figures. Given that this history spans over a century and includes a huge number of players, politics, and policies, the fact that Chernow could put out such a polished book in two and a half years is a testament to his skill as a writer and researcher.

The book is most colorful in its beginning and slowly fades into the dullness of contemporary reality. The Bank of Morgan began with the 19th century financier George Peabody, a sort of Dickensian miser turned philanthropist. Lacking a son, Peabody passed on his business to Junius Spencer Morgan, another personality of a bygone age, who managed to combined pious moralizing with strict business. His son, Pierpont, is by far the most colorful character in this panorama. A rabid art collector, an amateur archeologist, and an inveterate womanizer with a swollen nose and an enormous yacht, Pierpont was a central figure in the American economy of his age.

His son, “Jack,” though resembling Pierpont physically, was a far more mild-mannered sort of banker. His life is mostly lacking in racy and romantic stories (except for the time he was shot by a would-be assassin). The Morgan line mostly fizzles off after Jack; but there are many other Morgan bankers to take note of. The most important was undoubtedly Thomas Lamont. Chernow tracks Lamont’s strange journey from the cosmopolitan advocate of the League of Nations to an apologist for Italian fascism and Japanese aggression. It appears wide culture and smooth manners do not immunize one from ugly politics.

The wider historical arc of Chernow’s book gave me a bit of nostalgia. We begin with bankers in top hats and stiff collars, guzzling port wine and sucking on cigars. (Pierpont was a heavy drinker and smoker, and believed that exercise was unhealthy.) These bankers relied on charisma and relationships as much as they did on any technical understanding. The early House of Morgan was paternalistic towards its employees and stressed an esprit de corps—the importance of banking tradition over personal egos. This sleepy world of respectable bankers gives way, in the late twentieth century, to the high-octane world of trading, where highly trained employees work twelve-hour days trying to beat one another in an enormous casino.

The activities of the bankers also change markedly in this history. While nobody would argue that Pierpont was saintly or altruistic, his main activities consisted of reorganizing industrial companies to make them more productive and effective. This is a great contrast with the bankers of the 1980s, who are mainly concentrated on speculative activities and hostile takeovers which seem to have very little to do with work of real value.

Of course, my impressions of this history are colored by the fact that I know relatively little about finance and thus at times had trouble following the business side of things. Chernow, for his part, is typically vague when it comes to any technical details; his preferred style is to focus on individuals and their foibles. This was a bit frustrating, since I felt that I could have learned more had Chernow simply included more in the way of explanation.

But, as it stands, this is an extremely readable and compelling history of one of America’s most important banks. Things have changed since the publication of this book. Morgan Stanley is still going strong, though J.P. Morgan mainly serves as a brand used by Chase bank, and Morgan, Grenfell & Co. does not even exist as a name anymore. Even 23 Wall Street, the iconic home to this iconic bank, now sits empty and unused, apparently owned by a shadowy billionaire who is reportedly sitting in a Chinese jail. Such is the fate of all great empires.



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