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Through
his association with Philadelphia's old established firm of Drexel &
Co, J. P. Morgan came to the forefront of American finance, at a
time of big opportunity. Morgan seized them and became the leading
railroad financier, after William Henry Vanderbilt, the Commodore's
eldest son and heir, entrusted him with the sale of 100'000 New York
Central Railroad shares in London. Building also on the Drexel's
connections to the Pennsylvania Railroad, Morgan took the role of
pacificator in the clash between this powerful group and the
Vanderbilt family. He later extended his influence as a railroad
pacificator and reorganizer to the West and the South.
During
the 1890's, as the focus of capitalist concentration shifted from
railroads to industry and public utilities, J.P. Morgan & Co became
a leader in the organization of large corporations, popularly called
"trusts". His influence culminated with the formation of United
States Steel in 1901, the first corporation with securities worth
over $ 1 billion in the market. But Morgan's name was also
associated with General Electric, International Harvester,
International Mercantile Maritime and scores of lesser corporations.
These operations made J. Pierpont Morgan into America's most
prestigious banker and also it's most powerful capitalist.
He
was not unchallenged though. When his associate and customer, the
railroad tycoon of the Northwest James Jerome Hill clashed with the
mighty [Edward Henry] Harriman, the savior of the Union Pacific,
over control of the Forbes-Perkins promoted Chicago, Burlington &
Quincy Railroad in 1901, Morgan sided with Hill in a battle of
titans, where yet unseen financial forces were aligned on both
sides. The struggle over the Burlington extended to the Morgan-Hill
controlled Northern Pacific Railroad, when Harriman enrolled the
Jewish banker Jacob Henry Schiff of Kuhn Loeb & Company, as well as
the Standard Oil controlled National City Bank of New York, to raid
into the heart of Morgan's railroad properties.
Were
it not for Schiff's devout Judaism, which prevented him from
operating on Saturday, May 4, 1901, Harriman would have won control
of both the Northern Pacific and the Chicago, Burlington & Quincy
railroads. The corner of such a large issue as the Northern Pacific,
nearly provoked a panic on the financial markets. In a truce the
tycoons created Northern Securities, a holding company which
received the controlling shares of Northern Pacific from both
factions, plus enough stock of Great Northern Railroad to give the
Morgan-Hill side full control. The holding, capitalized at $ 400
million, was the epitome of Morgan's railroad empire, but it was
dissolved in 1904, a victim of Theodore Roosevelt's campaign against
the trusts.
Kuhn,
Loeb & Company was just one of many Jewish banking houses, which
successfully established themselves, in the aftermath of the
American Civil War. Unlike in Europe, where the Rothschilds had
built a banking empire spanning the Continent, apparently immune to
the influence of wars between the nations, and where such families
as the Warburgs and the Mendelssohns dominated private banking in
Germany, there were no significant Jewish bankers in America before
Civil War. Haym Solomon, the Jewish financier of the American
Revolution and nascent US nation, was ruined as a consequence of his
financial dedication to the revolutionary cause. August Belmont, the
American agent of the Rothschilds, was established in New York
before Civil War, but his influence was still marginal and his
wealth limited. There were rich Jews in Antebellum America, but they
were essentially merchants and, except maybe for the Hendricks of
New York, they hardly ranked among the nation's richest families.
Bankers of the Gilded Age
>
Introduction and Index
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