The House of Morgan

by Ron Chernow

So many things came together while reading this book. J.P.Morgan created and consolidated economic sectors from railroads, steel, energy, and autos just to name a few. A precursor of modern M&A Advisory and Private Equity investing.

In a way, it is a history on the evolution of financial regulation targeting conflicts of interest, market manipulation, risk and curtailing economic power. It became a de facto central bank to the USA with overwhelming power in politics and foreign policy.

While reading the book we were watching (again) the History Channel series: “The Men That Built America”, “The Story of Us” and the more recent one, “The Titans that Built America”. It is a journey through US economic history since the Civil War, seen from diverse points of view. Messy, imperfect, and Darwinian for its creative destruction, the US it is still the most successful experiment at creating, democratizing wealth, providing equal opportunity, and delivering individual freedom.

It is a fascinating travel through history seen from the eyes of the World’s most successful bank of scale. JPMorgan survived (and financed) wars, brutal economic crises, stock market crashes, bank runs, sovereign debt defaults – you name it. It also endured the never-ending populist political bashing by Congress and laws that emerge after each crisis, some good like Glass-Steagall, some reasonable like Sarbanes-Oxley and some that that turned out to be a very mixed bag like Dodd-Frank. How can a business organization successfully survive more than 150 years after all this? It was always about talent that made power and money work, not otherwise.

The recount ends before the end of the 20th Century. A lot happened after that, and JPMorgan continues to lead with its "Fortress Balance Sheet" and elite management team.

A more disturbing message emerges when you compare the striking similarities between the issues and discourse of the 1920-30s and what you hear almost one hundred years later: the anti-bank and anti-capitalist populist rhetoric. Today the press talks again about the “Roaring Twenties”, “no need to worry about debt exceeding WWII levels”, “the US can print as much money as they want because there are no alternatives to the Dollar”, “no need to worry about deficits”. We all know how those experiments ended, still many seem to feel that “this time is different”.