Abstract

"Mr. Morgan's Grand Design"

Wyatt Wells, Auburn University Montgomery (wcwells@knology.net)

Business History Conference
Presentation Proposal
Wyatt Wells
“Mr. Morgan’s Grand Design”

During the severe depression of the 1890s, J.P. Morgan engaged in extraordinary operations to raise gold for the American government and to reorganize insolvent railroads. Historians are familiar with these efforts, but few have noticed how they fit together. By reorganizing railroads, Morgan put them in a position to undertake badly-needed capital spending. By securing gold for the federal government, Morgan preserved the gold standard, which allowed American railroads to borrow on good terms in Europe. Taken as a whole, Morgan’s activities constituted a coherent program of economic recovery.

Morgan himself did not explain his operations in these terms—he was an intuitive thinker who grasped complex situations without formal analysis. Moreover, his prestige was such that he did not usually have to explain himself to others—he just acted. Yet outside sources, particularly the papers of August Belmont and the London Rothschilds, who were his partners in the efforts to raise gold for the government, make clear that all these operations did fit together. For instance, after selling over $30 million in federal government bonds in London for gold in 1895, Morgan took advantage of the enthusiasm generated by the sale to dispose of another $70 million in the bonds of American railroads there.

A presentation on this episode would be interesting in and of itself, but it would also fit well into this year’s topic for the Business History Conference. Morgan certainly made large profits on all these operations, but he liked to think that he was also performing a public service—doing well while doing good. Certainly, no one else at the time—politicians or private citizens—offered a better solution to the country’s economic problems.