MORGAN, J. PIERPONT.   Term Paper ID:18851 Click to get this paper

Essay Subject: Life & career of Amer. businessman. Reasons for his success, obstacles he overcame, failures, management style, partnerships, personality.... More...

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Paper Abstract: Life & career of Amer. businessman. Reasons for his success, obstacles he overcame, failures, management style, partnerships, personality. Paper Introduction: John Pierpont Morgan (1837-1913) was arguably one of America's most successful financiers. During his career, he prospered during two financial panics, floated two bond issues during the Cleveland administration to help the American government maintain its gold reserves, organized one of the largest corporations in the world (United States Steel, now USX) and reorganized and consolidated railroads and other industrial interests. In the tradition of wealthy men of his time, he contributed significant amounts to various charities, amassed a large art and manuscript collection, and was active in his church. A yachting enthusiast, his yacht "Columbia" won the America's Cup in 1899 and 1901. This research examines the factors that contributed to Morgan's success, obstacles he overcame, failures he encountered and the management style he Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. government for $3.5 each. His companybegan accumulating interest in railroads as early as 1869, when they gainedcontrol of the Albany and Susquehanna, and again in 1878, when they pickedup parts of the Long Island Railroad (Moody 21). The securities market ishighly regulated, as is the banking industry, and the Federal Reserve nowcontrols the currency in ways that Morgan could not have approached. Morgan understood money, capital and the markets of his time.Multinational organizations were rare in the middle and late nineteenthcenturies; Morgan helped establish the modern multinational company. He was not interested in publicity. He considered discretion a great virtue,though he himself was not particularly discreet in his extramaritalaffairs, which were legion (Winkler 1 ). But no longer is it possible for one individual to manipulate theeconomy of the United States, nor does the personal power that Morganwielded carry the same weight as it once did. 865."Morgan, John Pierpont." Dictionary of American Biography. It was during the Civil War that John Pierpont's shrewdness, and lackof judgment, began to surface. He felt noparticular affinity for the "common" man and was not interested in socialreform. As a result,banks would purchase government bonds with gold, but between the time thegold was to be delivered and the time the purchase was made, they wouldredeem currency for gold, thus defeating the entire enterprise (Winkler142). Themedia, for example, have assumed a much more active role in business andimproved communications have enabled more people to have access to greateramounts of information than Morgan could have imagined. Cleveland refused tonegotiate directly with Morgan. His library has grown from 25, books and manuscripts at hisdeath to more than 9 , books, 12 , manuscripts and 9, drawings in1988. There was a tendency towardoverbuilding, and the operations themselves were filled with waste andinefficiency. His partnership was in an American bankbased in London, and styled in the manner of the Rothschilds and Barings,though on a much smaller scale (Chernow 1 ). The entire transaction was conducted in adiscreet manner in the tradition of the finest European private banks.Vanderbilt further gained public favor when it was announced that thelargest part of the funds he received from the European investors wasreinvested in U.S. The most obvious solution forVanderbilt was to rid himself of the bulk of his railroad holdings, but todo so on the open market would likely result in a panic because Vanderbiltcontrolled so much of the stock (Moody 22). John Pierpont Morgan (1837-1913) was arguably one of America's mostsuccessful financiers. A yachtingenthusiast, his yacht "Columbia" won the America's Cup in 1899 and 19 1.This research examines the factors that contributed to Morgan's success,obstacles he overcame, failures he encountered and the management style hepracticed as discerned by various accounts. When the New York Treasury reserves fellto $9 million in gold, and Morgan observed that there was a single checkoutstanding for $12 million, Cleveland agreed to meet with Morgan. He had, however, no tolerance for failure among hissubordinates, and was uninterested in excuses. While the transaction itselfwas legal, and there was certainly a great deal of profiteering during thewar, the transaction had the appearance of being highly questionable. What Morgan had amassed in addition to his own personal fortune,however, was control of vast resources, estimated at more than $7 millionin his day. This ledto the establishment of J. Oneof the key features that Morgan introduced was the concept of the "votingtrust." Such an arrangement put the entire voting power of a company'sstock in a group of trustees, generally hand picked by Morgan. Morgan was not universally successful in his undertakings, however.During his tenure as director and banker of the New York, New Haven andHartford railroad, the company underwent an extremely costly expansionprogram that was not successful. He also founded the InternationalMercantile Marine, comprised of largely British shipping interests. Morgan's intent was tosell the bonds to European investors. Thereare still men of great wealth who exact a high level of influence on theworld's economy, but no one man who holds the level of influence thatMorgan did in his time. It was after his father'sdeath that Pierpont came into his own. 175-18 .Wheeler, George. As the government reeled toward disaster, Morgan approachedPresident Cleveland with a plan to privately supply gold to the governmentin exchange for bonds, but the bonds were to be purchased at a rate belowthat which the government traditionally accepted. New York: United States Publishers, 1974."Morgan, John Pierpont." Who Was Who in America. In addition, JayGould was threatening to blackmail Vanderbilt in order to gain a director'sposition on the New York Central railroad. The antitrustsentiment which swept the country under Teddy Roosevelt, and which beganshortly before Morgan's death, precludes the establishment of companiessuch as US Steel. At that time, the United States would redeem currency for gold upondemand. Chicago: Marquis Who's Who, 1981. While he was considered amongthe greatest art collectors of his time, and while his personal library(later made public) is compared with that of Huntington, his acquisitionsdid not have an overall strategy to them. Duringthis time, Junius Morgan's reputation and fortune grew. The House of Morgan. The Masters of Capital. Junius was no longer inthe dry-goods business, however. It was his firm that financed the initial purchase at $3.5 ,his firm that financed the rifling, and his firm which facilitated thefinal deal with the government (Chernow 22). If there is a collection of letters, it has not been published(American Biography 18 ). In fact, some analysts suggest thatif the automobile had not assumed its prominence in American society, USSteel would have been heralded as a failure, not as the success as it isgenerally regarded (5). Those who were loyal, hard working and discreet reapedbenefits. During the 188 s, Morgan worked to reorganize American railroads,primarily to restore European investors' faith in them as investmentvehicles (American Biography 176). He was not a popular man during his ownlifetime, and some biographers find his methods for doing business not onlydistasteful, but immoral (Wheeler 2). Today's investment bankers and multinational corporations wereforeshadowed by Morgan, who helped shape both financial and corporateAmerica. These were bought by amerchant for $11.5 each; this merchant rifled the smooth-bore barrels toincrease their range and accuracy and render them useful again. Thecompany suffered losses from the time of its inception, and Morgan had theunusual duty of overseeing its dismantling, including selling thecomponents of the business back to their original owners at a considerableloss (Wheeler 258). Competition was cutthroat and theprofits to be made were substantial. Pierpont Morgan and Friends: The Anatomy of a Myth. Despite these figures, he was not at the samefinancial level as Carnegie, Rockefeller, Ford, Harriman, or even JayGould. "The Pierpont Morgan Library: Changing of the Guard." Wilson Library Bulletin 62 (Apr. Newspapers gained some information regarding the negotiations andspeculated on the profit at stake for Morgan. At the same time, the currency was backed by the gold thegovernment held in reserve. It is inconceivable that asingle man could, today, secretly negotiate the deals that Morgan did. During his career, he prospered during twofinancial panics, floated two bond issues during the Clevelandadministration to help the American government maintain its gold reserves,organized one of the largest corporations in the world (United StatesSteel, now USX) and reorganized and consolidated railroads and otherindustrial interests. The result was that more than $62million in gold was provided to the government at bond rates that werefavorable to Morgan. Banks, however, were insecure following the panic two yearsearlier in which hundreds of financial institutions failed. Vol 7. Of course, it must be remembered that Morgan lived at a time whencompanies and governments were considerably less sophisticated than theyare today. In 1879, William Vanderbilt found himself facing an increasinglyhostile public which questioned his large (more than $1 million) personalwealth, gained primarily from railroads. He also made a profitof more than three million dollars for his company as a result of thetransaction (Moody 23). He apparently collected art andmanuscripts because he had the means, and men of means did such things(Bleier 41). government bonds. Young John Pierpont Morgan was dispatched to the United States in1861 to maintain a close eye on the London house's investments. The financial panic of 1893 was followed by Morgan'scompleting the reorganization of the largest railroads in the country. Joseph used his influence to purchase apartnership for his son, Junius Spencer Morgan, in a dry-goods store.Junius prospered in dry-goods and later moved to Boston where he became apartner in one of the leading dry-goods stores. Railroads at the beginning of thatdecade were in need of reorganization. The goal was to keep $1 million in reserveat all times. Morganhad found an obscure statute which empowered the president to negotiatebond rates independent of Congress. Morgan was most definitely a man of his times. He thrived on results, andexpected those around him to do likewise (Winkler 12). Hisrole in the gold crisis is indicative of the immense personal power that hewielded: a single private individual was able to put together a syndicatewhich preserved the financial structure of the U.S. To some degree, the sophistication they enjoy now is a resultof the relationships that Morgan forged then. Morgan had a keen intellect and surrounded himself with ablepartners. government. The 11 partners in the Morgan companies were directors in 47of the largest American corporations offering considerable influence(American Biography 178). New York: Charles Scribner's, 1964. Morgan was an intensely private individual: he did not often speakin public, he rarely granted interviews, and he did not write articles orbooks. A private sale on Wall Streetwould likely have similar results. New York: Atlantic Monthly, 199 .Moody, John. When Morgan died in 1913, his estate totalled $68.3 million, notincluding his art collection, which was estimated at another $5 million.In 1989 dollars, his estate would be worth $8 2 million excluding his artcollection (Chernow 158). Rate wars raged along the mostpopular routes, and the government, responding to pressures from thepublic, was considering severe control of the railroads. He was physically a large and imposing man who demanded the bestfrom those who worked with him. He was also, despitebeing American, an aristocrat in the European sense of his day. Englewood Cliffs, NJ: Prentice-Hall, 1973.Winkler, John. New York: Vanguard, 193 .----------------------- 1 A merchant purchased 5, obsolete carbineguns from the U.S. It was at this point that Vanderbilt contacted Morgan, who arranged asale to European investors. Morgan and Company, a short-lived enterprisesucceeded in 1864 by Dabney, Morgan and Company and in 1871 by Drexel,Morgan and Company. Pierpont's rashness and shrewd business acumen served him well in hisefforts to consolidate and reorganize the nation's railroads. Here, as in other areas of hislife, he behaved with characteristic Morgan flair: he once attended aconference of the leaders of the church and had his then-current mistressin his private railroad car on an adjoining siding (Winkler 11). Morgan was successful in alleviatingVanderbilt's problems, enhanced Vanderbilt's public image, and enhanced hisown company's reputation for discretion and success. He was active in the Episcopal Church, and his religion was animportant, if private part of his life. Junius Morgan died in 189 , leaving $12.4 million, a considerable sumfor the times, to John Pierpont (Chernow 6 ). Morgan the Magnificent. As a manager, Morgan foreshadowed today's successful managers. However, Morgan was notknown as a railroad banker at this time. Morgan personally guaranteed that his syndicate wouldnot export gold to Europe, which would have diluted the success of theventure (Moody 155). He soldthem back to the government for $22 each. Hissource of power came from himself and he believed in top-down, autocraticmanagement. Hisgrandfather, Joseph Morgan made the family fortune in stage coaches, hotelsand insurance companies: Joseph Morgan was one of the founders of theAetna Fire Insurance Company. In 1854, Junius moved his family to London and took up partnershipwith another dry-goods veteran, George Peabody. In the tradition of wealthy men of his time, hecontributed significant amounts to various charities, amassed a large artand manuscript collection, and was active in his church. Junius prospered in Londonand his son John Pierpont studied at the University of Gottingen. By the timePeabody retired in 1864, the American banking firm in London had a firmlyestablished reputation as a bank the Europeans could trust and do businesswith, and one which provided a good way to invest in the United States(Moody 12). 1988): 41-44.Chernow, Ron. In 1895, his efforts wereinstrumental in saving the gold standard in the United States. Itwas this transaction which prompted Junius Morgan to assign a seniorpartner to oversee Pierpont's activities (23). The entire operation took onlythree months, and resulted in the government buying their own rifles,granted improved, for six times their original price. Morgan's family heritage played a large role in his success. P. Works CitedBleier, Carol. Pierpont'sinvolvement in this deal was that his firm financed each step of theoperation. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.