The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance, by Ron Chernow

Nine stars

In his first massive biographical tome, Ron Chernow definitely takes up an undertaking that proves daunting and yet highly interesting. Chernow sought to explore not only financial ties in America through the ages, but to explore a powerful financial, business, and political force that has lasted for more than a few decades. The Morgan name has been deeply ensconced in the American fabric (the international one as well) for well over a century, helping to steer world events and political ideals one way or another. In his exploration of the House of Morgan–more than a familial biography in the true sense–Chernow examines the entity during three distinct epochs: the Baronial Age, the Diplomatic Era, and the Casino Period. Readers can marvel not only at the power held by these multi-millionaires, but how the House survived many a plight (both political and economic) and remains as strong as ever. While I am not one who is well-versed in finances or who can attest to being the greatest handler of money, I feel any reader with patience and a passion to learn will devour this and see just how powerful and corrupt money can be, no matter the holder.

Chernow first examines the House of Morgan by exploring the lives and ventures of Junius and Pierpont Morgan in what he coins as the Baronial Age. This father and son duo sought to forge greatness in an era when the American aristocracy was finding its feet. As Chernow lays the groundwork for his entire piece, the House set up its own foundations, whereby the elite nature became the basis for future Morgan enterprising. The Morgans sought not to be a bank in the traditional sense, with tellers and small accounts, but to offer services to the uppermost crust of society, requiring inflated minimal deposits and refusing to publicise their services. Chernow touches on this in the preface, but does explore how Junius wanted to use the mid-nineteenth century to develop a core group by which he could make sizeable investments and see his own profits soar. By the time Pierpont took over daily running of the House, banking became but one of the ventures undertaken to produce great wealth. Railroads were coming into vogue and their development as more than regional entities could be seen by amalgamating companies into monopolising monstrosities. The House of Morgan had capital for those who wished to expand holdings, but also elbowed their way onto the board of many companies. The rise in rail importance created a strong upswing in the Morgan profits and thereby helped earn Pierpont Morgan the title of Robber Barron in the late nineteenth century. At the dawn of the early twentieth century, the House of Morgan found itself firmly rooted in America’s upper class and became the go-to lenders of the top tier. When Wall Street felt tremors of a crash in the first decade of that century, it was the House that held firm and weathered the storm. Pierpont did all he could to keep things running effectively, leaving a powerful and influential House of Morgan for his son, Jack, after his death in 1913. Creating a financial aristocracy in America and laying the groundwork for international importance, the baronial age ushered in some of the most trying and successful years of the House of Morgan. 

In the lead-up to major political changes on the world scene, the House of Morgan undertook using their strong voice in what Chernow titles the Diplomatic Era. Divesting its monetary policy outside of America, the Morgans had enterprises in London and Paris, two key areas in Europe with long reaches across the continent and around the world. The House used its significant influence to help foster stability within the European countries, providing key loans and, at times, propping up their national currencies to the point of steering away from significant devaluation. With strong diplomatic intentions, the House was not overly picky about their clients for a time and would help wherever they could. Even after the Great War commenced, the House of Morgan invested heavily in munitions and metals that became essential to the war effort. Chernow goes so far as to discuss how the Morgans were seemingly war profiteers by investing in both sides without outwardly supporting the Axis. This was precarious territory and could flirt with treasonous activity. But, the House of Morgan sought to invest in what would bring profit and did so effectively. In those inter-war years, the House began seeing itself managed more by US administrations, through legislation. President Wilson passed income tax laws and tried to limit control of the Morgans with the creation of a Federal Reserve. Wilson received much pushback and watched the House do all they could to react. With the arrival of the Depression, Jack Morgan, now at the helm, sought to push through as panic enveloped the world, steadying the financial markets and remaining above the fray. The European situation brought dual concern to the Morgans, who watched the reparations of the Great War cripple Germany and the rise of the Nazis, fuelled by that resentment. As Chernow explains, the House could strike to aid with reparation stability and prop-up the German economy, which might prevent the need for war. There was much to be done with these sorts of monetary policies, but the House was kept from offering complete assistance, with pressure from both FDR and Churchill on both sides of the Atlantic. Trying to keep from sullying their reputation and steering away from treasonous activities, the Morgans would not allow themselves to make concrete ties with the Nazis or the extermination policies enacted throughout the concentration camps. The House remained firmly rooted in the American camp, though financial potentials surely crossed political ideologies in the 1930s and 40s. The diplomatic era saw the House of Morgan hold onto much power around the world, though they were not able to prevent some of the major political skirmishes. The profits they reaped allowed them to divest from national government concerns and focus solely on the personal investor.

Chernow’s third era of the House of Morgan, which he calls the Casino Period, proved to be one in which gambles in finances were precipitated by a loss of control by the House at a time when multinational corporations were the new Goliaths. With the onset of the Cold War, the world proved divided along ideological lines, but this did not force the House of Morgan to shy away from their business ventures. Using corporations as clients, the House sought to bridge financial wealth with the acquisition of key businesses all over the world, though they were more a servant to aid in the diversification of business interests. The American presidents tried to turn away from some of the ventures being undertaken, but those heading up various investment branches of Morgan were able to turn politics on its head with bold and daring moves. Be it subsidizing means to acquire and monopolize Japanese high tech firms or foster third-party fiscal exchanges so as not to violate embargoes in the Middle East, the House of Morgan was there through it all. Chernow offers numerous concrete examples of how the House tried to keep itself one step ahead of the precarious markets while also pushing the limits with offering seed money for hostile takeovers. Whatever it was, it brought things into the late 20th century at a time when financial security was rare, even with relative peace on the political front. Hedging bets for their clients proved to be the effective means of creating a relatively effective House of Morgan in the latter part of the century and into the twenty-first, after Chernow’s narrative comes to a close. 

As the political and economic world remains balanced on the head of a needle, Chernow exemplifies how the diverse and risky approaches of the House of Morgan keep their financial prowess effective. I am no money man, nor do I feel I learned enough in these pages to expound much on the subject. However, Chernow’s strong ability to lay out a thought-provoking and timely narrative pushes the reader through the various situations with ease. Political, economic and personal grief pepper the story throughout and Chernow is able to draw them all together. His focus has to be varied as he handles a number of people and their personal stories, but he does so effectively and to the point that the reader is sure to want to know more. This is the sign of a good historian and biographer, something that I know Chernow has fostered after reading a number of his works. There is more to the House of Morgan than money, but it is their passion for it that shaped them as men and a family (both blood and business) for so long. While Chernow sought to find a family whose influence on worldwide banking lasted long enough to write about its development, he has done so in spades with this exploration of the Morgans.

Kudos, Mr. Chernow for shedding so much light on these men and their empire, which showed numerous changes over its development. Your books always leave me wanting more and curious as to what else you have in store. What a wonderful way to begin your life-long journey of writing.