In 1930 Owen Young, then at the height of his renown, told an intimate that he regretted so little was known of J.P. Morgan Jr., for he headed “the most important banking house in the world with the power of affecting the lives of people in this country and throughout the world”. Young’s observation might be extended to historians – it is surprising how little is known of J.P. Morgan & Co. (the Corner) in the Depression decade.
This paper concentrates on the Corner. It advances a set of propositions: that contrary to legend birthed in Roosevelt’s famous inaugural speech in March 1933, the Morgan bankers did not flee the temple when it collapsed but were within it as it fell; that this was reflected in the Morgan balance sheet which weakened markedly as a consequence of developments late in 1931 and early in 1933; that J.P. Morgan & Co. welcomed the Roosevelt administration in 1933 and unlike much of business, remained supportive of the White House; that in response to crisis the Morgan partners sought to sway Hoover and then Roosevelt; and that if we are to understand J.P. Morgan & Co., we need to appreciate that there were three Morgan banks in this period. The Morgan bank before 1931; the Morgan bank grappling with Depression and New Deal between 1931 and 1935; and the Morgan bank of 1936-40, stripped of its investment arm (Morgan Stanley from September 1935) and struggling to adapt the culture, history, and practices of a private investment bank to the reality of commercial banking.
Throughout there was tension between Morgan activism in seeking solutions to crisis and Morgan conservatism, verging on paralysis, in banking praxis. Resolution was found, ultimately, through discarding the Morgan partnership in favour of incorporation as J.P. Morgan & Co. Inc. in 1940.