Review: House of Morgan: Epochal Storey, Few Heroes

At the outbreak of World War II, Chrysler Corporation was awarded the lucrative government contract to build U.S. Army Tanks for America's war effort. To carry it out, Chrysler built a special assembly plant to manufacture both the M3 Lee and M4 Sherman tanks. The problem for Chrysler was with the the 30-piston engine the company had planned to power their tanks. It was a technological piece of magical engineering that would deliver a socko 485 horsepower, more than enough to make the lightweight, highly maneuverable Chrysler tank superior to anything the enemy might produce. The problem was that while Chrysler's engineering staff could design a sophisticated engine that would include five (count 'em five) six-cylinder radial banks, that would drive a single crankshaft, the company lacked the technology to cast the such a complex engine block. No one did, except the Ford Motor Company, and Henry Ford was not about to share his company's secret of casting a complex engine block. Period. And Walter P. Chrysler, certainly didn't savor the idea of his world-class tank being powered by what amounted to a Ford engine.

Someone was needed to negotiate a deal between these two proud and strong- minded business men. What person could possibly negotiate such a sensitive and critical deal? With his legendary charm and considerable negotiating skill, President Franklin Delano Roosevelt had a reputation for changing the most hostile and obstinate's minds in Congress. But even he felt he wasn't up to it. In the end he picked a former of enemy of Roosevelt's New Deal administration, the president of the prestigious and super-wealthy House of Morgan. Yes, the rich and influential Morgan commercial bank had financed the American Industrial Revolution, and helped finance both the Civil War, and the first world war. The counsel of J. P. "Jack" Morgan Jr, and his father before him, "J.P. "Pierpont" Morgan, had been sought by presidents and kings, as well as by the captains of American industry. For more than a century, when the House of Morgan spoke, the world stopped to listen.

In the past, Jack Morgan and his coteries of wealthy bankers had fought the FDR administration's effort to regulate the American banking industry. However, since the outbreak of World War II, Jack Morgan had a change of heart, and exchanged his insatiateable appetite for even greater profits, for that of a red-white-and-blue patriotic American, and a decided supporter of FDR's valiant war effort.

Jack Morgan turned out to be the one man in America who knew both captains of the Detroit auto industry intimately, and managed to bring both CEOs to the negotiating table, and, with some arm-twisting, strike a deal. Yes, the state-of-art M3 Lee and M4 Sherman tanks would become the first--and only--Ford-powered Chryslers, and the rest, as they say, is history.

The A57 Chrysler-Ford tank engine is as fine and impressive piece of American ingenuity you're likely to find anywhere (indeed, the bizarre, impossibly complex engine looks like something aliens from another world had air-dropped in Detroit, while en route to Alfa Centauri). Once housed in the Walter P. Chrysler Museum in Detroit (now defunct), the 30-cylinder mechanical marvel is now on display in the Tank Museum in Duckworth, England.

The story doesn't end here. In a private meeting called by FDR, who was deeply concerned about the overwhelming public debt the U.S. war effort was generating, asked Jack Morgan to analyze the numbers, and advise the president as to the results. Morgan and his team of financial wizards, did so, and told FDR, to rest easy. Having studied the potential of the post-war U.S. economy, Morgan and his elite financial team determined the U.S. debt would be paid down and be manageable by 1955. After that the economy would soar, and become the envy of the world. As it turned, out Morgan's prediction was on the money, so to speak.

However, Jack Morgan wouldn't live to see how right he was. Never happy, and rarely in good health, Jack Morgan passed away in 1943. Ironically, World War II turned out to be Jack Morgan's finest hour.

Curiously, these two important and fascinating stories were not reported in Ron Chernow's magisterial "House of Morgan". I found out about them listening to the History Chanel, and by doing some research.

That said, Ron Chernow conducted an exhaustive research effort, reading countless letters, contracts, and biographies of a host of money men who dominated world finance for at least 100 years.

The story begins in Charles Dickens' England, where the first stirrings of international finance began. From there the story crosses the Atlantic to America, where J.P. "Pierpont" Morgan opened a dry-goods store, that prompted him to build wealth and to become a financier of the American Industrial revolution--railroads, steel, oil, and the like. Having the midas touch, he even helped finance the American Civil War, by lending money to the Lincoln Administration to buy more guns, army supplies and heavy artillery. Eventually, he opened a commercial bank at 23 Wall Street, in New York City. Being an unapologetic Anglophile, Morgan expanded his commercial banking enterprise to London. From England, he opened commercial banks in France, Germany, Italy and in China and Japan. As he grew ever more wealthy, Morgan began making contributions to museums and opera houses in New York City. At the sme time he built large and luxurious townhouses in Manhattan, as well as in London. He also purchased large land holdings in upstate New York, and on Long Island, as well as in the English countryside. These country estates included magnificent homes, large stables for horses, and huge preserves for hunting and fishing. Morgan employed an army of servants and overseers, to manage his large estates. Pierpont Morgan rarely traveled on public transpiration, rather he traveled in luxury and extravagance, in private yachts and in personal railroad cars. Yet another excess, was that many of these Bankers sat of the board of the companies they financed.

J.P. Morgan Sr. would marry, and have a number of sons who would help manage his banking empire, one of whom was the equally talented, J.P. "Jack" Morgan Jr. who would assume control of the House of Morgan upon his father's death. The Morgan financial empire managed to survive a number of financial panics that were the bane of the American economy, until the creation of the Federal Reserve in the early 20th century. When World War I began, the U.S. government turned to the House of Morgan to help finance the American war effort in Europe.

Between world wars, many of the loans granted by the various commercial banks, ended up being uncollectible (particularly by nations taken over by tyrants (Germany, Italy, and Japan), who, after solemnly promising to pay the debt gleefully defaulted. Nonetheless, these very commercial banks were so flush with cash that they managed to absorb the loss without missing a beat.

The tragedy of these wealthy men of high finance, is that despite their privilege and wealth, they were not particularly happy people, often overweight, and not in good health. Wearing the finest clothes money could buy (three-piece custom suits, with gold chains dangling from their vests; top hats and patent leather shoes), they looked very much like the cartoonish character you see on a monopoly game box. Indeed, the author makes a lot of fun of Pierponts' large bulbous red nose. Despite his cartoonish nose, J.P. Morgan Sr. was a decided womanizer, with girlfriends in cities around the world.

To his credit, J.P. Morgan Jr. remained faithful to his wife, until her untimely death.

These masters of high finance were not shy about displaying their wealth and privilege, even during the Great Depression, when so many average Americans were out of work, and struggling to put food on the table. The wealthy traveled in high style and shot game on their vast estates, oblivious to the poor and needy on the streets. Many of them, including J.P Morgan senior and junior, were anti-semitic and highly prejudiced against foreigners and black Americans.

There's not a lot to like about these men of high-finance. They did next to nothing to help the less-fortunate They graduated from the best schools, and hired only those who had a knack for making money, or from their very own families. They balked at any government effort to reform their business practices, particularly during the Great Depression. They were not men who accepted defeat gracefully.

The benefit of Chernow's sprawling saga, is the history of world finance and world events that occurred between Victorian London, and the economic meltdown of 1987.

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