J.P. Morgan: The Man Who Owned America

wealth power and influence JP Morgan had it all he owned the first billion dollar company he dominated the country's most profitable Industries and on multiple occasions the economy of the United States quite literally depended on the actions of JP Morgan with a simple word or the stroke of a pen he could save a company from claps or Doom it to bankruptcy hated by some admired by others there will never be another man quite like JP Morgan this is his story uh John Pierpont Morgan was born in Connecticut in 1837 into privileged circumstances John's father Junior Spencer Morgan was already a wealthy banker and he ensured that Jon had the best education that money could buy since he wanted John to follow in his footsteps as a financier however despite being born into wealth Jon's childhood was Bleak he was a sickly child he regularly suffered from brutal coughing vets migraines seizures and various diseases such as scarlet fever his medical conditions meant he often couldn't play outside with the other kids instead you'd find him inside studying or reading financial statements in fact at one point John became incapacitated by rheumatic fever and his father's solution was to send Jon to live by himself in the Azure islands in the middle of the Atlantic Ocean his dad believed the climate and salty air would help Jon recover from his condition so Jon stayed on that island for nearly a year without any family and when he was finally well enough he continued his education by 1857 John had studied in Boston Switzerland and Germany and was now 19 years old and ready to enter the workforce at this point John's father was a junior partner at a london-based merchant banking firm called George Peabody and Co and thanks to his father John was able to get a job on Wall Street in the banking firm which looked after Peabody's interest in America part of John's job involved writing reports to his father's firm detailing the financial and political goings-on In America which of course at the time was still an Emerging Market however from an early age John's father feared that his son was too rash and hot-tempered to ever become a successful financier and that he needed to learn restraint and responsibility one example of this was in 1859 while on a trip to New Orleans John made a seemingly Reckless gamble by using company money to purchase an entire shipment of Brazilian coffee that arrived in Port without a buyer even though John sold it and made a tidy profit the senior members of the banking house including John John Farber couldn't stand this kind of risk-taking so in 1861 age 24 John left the Safety and Security of an established firm in order to strike it out on his own founding his own company which continued to act as an agent for his father's Bank back in England it was also that year that John married his first love a frail young woman named Amelia Sturgis and for a brief period John was the happiest he'd ever been however Amelia soon came down with a persistent cough that was later diagnosed as tuberculosis so right after their wedding John took her on an extended honeymoon in the Mediterranean hoping that the new climate might restore her strength just like Jon's father had tried for him when he was younger but it was no use Jon's wife died just four months after their wedding leaving John a widower at 24. understandably he was an inconsolable mess and it's believed he never truly recovered from this tragic loss of his wife at such a young age immediately after losing her John threw himself deep into his work more than ever however whilst John was going through his own crisis so was the United States around this time the American Civil War had broken out and the 1863 conscription act should have meant Jon went off to fight but he didn't instead John paid 300 to be removed from enlisting and have a substitute stand in his place that's not to say John London get involved in the war though in fact on the contrary he profited from it hugely one of the most notable examples was when he financed the purchase of 5 000 Surplus Hall carbine rifles a 3. 50 each from the government that were considered too old to use but then the Consortium who bought them made some minor adjustments and almost immediately sought the same rifles back to the government for 22 each it was an over 600 increase in price and thus whilst it was a very lucrative deal for Jon to be involved in this war profiteering was certainly not popular with the public or the government but that was the least of his worries Jon would soon be facing some much bigger controversies in 1871 John saw the golden opportunity to team up with one of the leading financiers in the country a banker named Anthony Drxel together they founded the Drxel Morgan and co-private Merchant banking house which was later renamed to Simply JP Morgan and Co and this would be the firm that John would manage for the rest of his life serving as the precursor to the modern banking Titan we know today as JPMorgan Chase now early in John's career he'd mostly just been a facilitator of deals like connecting wealthy investors and Visionaries together in exchange for occur the profits but as John amassed a bigger personal fortune and reputation he was able to finance many of these projects on his own and John had already identified his first major investment the American railroad system now at the time most of the other big industries were dominated by one single magnate like Carnegie dominated in steel and Rockefeller dominated an oil but the railroads weren't monopolized actually it was the opposite there were so many competing companies that offered very similar routes that they often slashed their prices to try and win customers but whereas most looked at the railroad business and saw a fierce competition John saw opportunity he felt the answer was consolidation merging railroads together rather than competing that's because Jon knew that the bigger a business got the more it could benefit from economies of scale so John skull was always to turn multiple small companies into one unified conglomerate suddenly rather than competing against each other and driving down prices they could set whatever prices they wanted as they owned all the nearby railroads so John invested heavily in multiple railroads which he began consolidating he'd take over under Finance railroad companies streamline their management and operational efficiency and merge the small companies together into one dominant player that could crush any remaining competitors which of course he'd then be able to take over as well Jon used this tactic to such great effect that it was even named after him becoming known as morganization but the other thing Jon did differently to other businessmen and investors of the time was that he played a very proactive role in the corporate management of these companies John wasn't content with simply buying shares then sitting back and raking in the profits he was a man who craved control Jon needed to be the one and calling the shots so he regularly used his influential position on the boards of directors to direct the company as he saw fat he often reshuffled the leaderships of all these different Railway companies to his liking and assembled them into monopolies with himself at the head of the table of course when railroad came to him for help he'd refuse unless he was given full control this not only gave Jon the power he wanted but also created a more stable industry which in turn attracted even more Investments money from Europe flowed into U.

S Railway companies now that it looked more Consolidated and stable thanks to Jon and this of course made John even wealthier Jon kept acquiring more Rail lines and constantly wanted to outdo his previous achievements and be more ambitious for example he purchased 250 000 shares of stock from William Vanderbilt and one of the most prominent Railways in the country the New York Central Railroad he then took things even further the following year when he executed the largest transaction in railroad bonds ever made in the United States underwriting the sale of 40 million dollars in bonds to finance the completion of the Northern Pacific railroad before long john owned one-third of all roads in America at a time where sixty percent of America's stock market capitalization consisted of railroad companies in other words John was no longer just a wealthy financier he was literally shaping Railroad conglomerates and being heavily involved in reorganizations and mergers all of which grew his power and wealth further and his growing reputation as a formidable Titan of industry was matched by his intimidating appearance Jon had a skin condition called rosacea that inflamed and ruptured the blood vessels of his nose making it very red and disfigured whilst he also had rhino-fimer which made his nose much larger and covered in pimples John was actually very self-conscious about his appearance and got angry at being photographed according to his grandson whenever John had a portrait done he always ordered them to redo his nose to make it look more normal which is why it's not as noticeable in pictures of him but his startling facial features combined with his towering height and his aggressive way of speaking all meant that Jon was an intimidating presence to be around however in 1901 it seemed Jon had finally met someone who would stand up to him president Theodore Roosevelt you see John had just Consolidated his Northern Pacific railroad together with two other Railways in the region and created a massive new holding company called the Northern Securities Corporation and he'd been able to get away with these kind of monopolistic practices due to his close relationship with the current President William McKinley but then McKinley was assassinated and suddenly Theodore Roosevelt became president who took a very different view on what John was doing Roosevelt ordered the justice department to file a suit against the company for violating the Sherman Antitrust Act of 1890 whilst John fought this in court the company was ultimately sped up and this was just the beginning of a very tense relationship between the two men when John Hood Roosevelt was going to Africa one year John said good I hope the first lion meets him does his duty for John though this was merely a small setback he was already planning something much crazier foreign Carnegie steel was at its peak it dominated the steel industry and was one of the most valuable companies in the country but despite it netting 40 million dollars a year Carnegie was ready to retire and wanted to sell his company but who could buy it that's where John came in he basically told Carnegie to name his price and he did 480 million dollars which would be more than any other business deal in history and yet John agreed on the spot and later confessed he would have paid 100 million more John made the landmark purchase in 1901 but this was just the beginning of his ambitious plan he merged Carnegie steel with the federal Steel company and a few other businesses to form U. S steel the world's first billion dollar corporation which had a market cap of 1. 4 billion dollars just to put that in perspective all the manufacturing in the country was capitalized at a combined 9 billion this deal gave Jon control over roughly two-thirds of the American steel production so basically two of the largest Industries at the time were steel and railroads and Jon had seemingly conquered both and he didn't stop there John helped finance Thomas Edison's early experiments with electricity he then played an important role in merging Edison Electric with its competitors in order to create General Electric and John was also influential in creating what would later become a t Jon's talents for combining companies together and turning them into Unstoppable Giants was unmatched but unfortunately a crisis was about to begin in 1893 the United States was facing a depression the likes of which he had never seen before after several decades of continued growth and unchecked Investments the bubble burst and the American economy was plunged into chaos stocks plummeted losing almost half their value thousands of business closed their doors forever hundreds of banks went bankrupt and unemployment rates skyrocketed throughout the country the crisis scared off Foreign investors who cashed in their American Bonds in exchange for gold slowly but surely depleting the U.

S reserves since at the time the dollar was still tied to the gold standard meaning anyone could convert their paper money into physical gold and thus had more confidence their paper money was actually worth something as a result the American government always kept at least 100 million dollars worth of gold bullion on hand to back the dollar but by 1895 most of that gold was gone and the dollar value was in a sharp decline at its lowest the government had no more than nine million dollars worth of gold reserves which meant that it was in danger of defaulting on its loans at any moment and of course this run on gold just spread more Panic having a domino effect where more investors pulled their money out of the US and depleted the reserves even further the US didn't have a central bank at the time to rescue them and the situation was extremely dire President Cleveland understood this was a Crossroads moment for America that would forever alter its course the traditional strategy of Simply selling more bonds to the American people wouldn't work fast enough John knew this was the time for drastic and immediate action so he traveled to Washington to meet the president lay out his game plan in order to bring America back from the brink of an economic disaster John's audacious scheme was to form a private Syndicate consisting of the most prominent Bankers in the country who would work together with foreign investors to shore up America's gold reserves his Syndicate offered to purchase 65 million dollars worth of 30-year gold bonds using 3. 5 million ounces of gold thanks to an old Civil War statute President Cleveland could agree to the deal right then and there without having to wait for approval from Congress once Cleveland signed the agreement John wired his men in New York and told them to act and in only 22 minutes they brought out all the gold bonds Jon's decisive actions had an immediate a calming effect on the volatile Financial market and restored faith in the economy John had almost single-handedly saved them from Total claps and of course being the shrewd businessman that he was he had also made a large profit from the Enterprise by securing generous rates on the gold bonds that he purchased unless whilst John had saved the day and helped bail out the government it also raised concerns it Illustrated the vast influence and power of one single Banker on the entire U. S economy and some asked whether his motivations were really patriotic or simply opportunistic to line his own Pockets at the next election the relationship between big Banks and the government was a hot topic for the Democrats but John and his Banker friends donated heavily to the Republican nominee who won the election instead so for now Jon kept his close ties to the government but this was not the only time that Jon was instrumental in stabilizing the American economy in 1907 the country was facing another deepening financial crisis which led to several Banks being on the verge of bankruptcy leading to hordes of people queuing up around the block to withdraw their money from their bank accounts the government reportedly had to tell bank tellers to deliberately count the money slower to try and reduce the rate cash was being withdrawn because if everyone pulled their money out at the same time it could be catastrophic by this point Roosevelt was the president and as we already know he certainly did not see eye to eye with John on most things but the crisis of 1907 was so dire that they both agreed it would be in America's best interest if the government and big business worked together to save the country from falling into a depression so Roosevelt called on JP Morgan to salvage the situation once again Jon's strategy was to spend a lot of money where it was needed most he summoned dozens of the leading financiers and leaders of the nation's biggest banks and trusts to join him in his private library on Madison Avenue and decide on the best course of action John's planet was essentially for them to invest in their smaller competitors Jon concluded that although some banks would inevitably fail others could still be saved so he and his associates deposited giant sums of money in a number of banks so that they would be able to pay their depositors and avoid declaring bankruptcy after revealing his plan John then locked the door while the bankers negotiate shaded among themselves literally locking them in until they agreed on a resolution by the morning everyone had agreed with Jon's plan and with Roosevelt's approval the U.

S treasury also contributed 25 million showing the level of trust and respect the president had for Jon's business sense what's remarkable is that John was 70 years old at this point and negotiated all of this whilst having a terrible cold meaning he was constantly coughing and sneezing while saving the US economy but his plan ultimately worked lots of capital was injected back into the economy public confidence was restored in America's banking system and yet another economic disaster was averted thanks to John's wheelings and dealings but whilst he was once again briefly labeled as a hero almost immediately people began to realize just how dependent they had become on one single man something needed to change now so far we've heard how JP Morgan revolutionized the railroads which changed the way people transported Goods but what about right now with so many different shipping services available these days how do you know where to get the best deal that's where our video sponsorship station comes in they make it easy to compare prices and delivery times from different carriers and even help you get huge discounts like up to 84 of USPS and UPS rates normally it's only the big companies that can benefit from economies of scale like this but thanks to ship station e-commerce businesses of any size can get the best shipping deals too plus shipstation saves you so much time it effortlessly integrates everywhere you sell online including Amazon Etsy eBay Shopify and more that way you can manage every order from one simple dashboard as well as automate routine shipping tasks and print shipping labels and as if that wasn't enough if you use my link below you'll get two months completely free so keep growing your business all year long with ship station go to shipstation. com magnates today and sign up for your free 60-day trial that's shipstation.