J.P. Morgan’s Influence on Banking Today (2024)

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• Published On:June 28, 2024

Earning an online Master of Business Administration (MBA) with a Concentration in Finance from a reputable, AACSB-accredited institution like Texas A&M University-Corpus Christi (TAMU-CC) will prepare working and aspiring financial professionals for a rewarding career in the sector. To fully understand the subsectors of financial services and the innovations that spurred related economic growth and development, students must also understand the history of the field, including the pioneers who shaped it — for better or worse.

One such figure is the financial magnate and well-known financier, John Pierpont Morgan, known the world over as J.P. Morgan. Morgan was born into a wealthy family in 1837 in New England. He went on to become one of the wealthiest businesspeople in the world through his efforts in industrial consolidation and the founding of private banks and financial institutions in the late 1800s and early 1900s.

Early Life

His father, Junius Spencer Morgan, was a successful businessperson and financier. His mother, Juliet Pierpont, was the daughter of a poet and preacher. J.P., known as Pierpoint or “Pip” in his early life, was a sickly child and spent most of his formative days indoors, visiting art galleries, no doubt where his appreciation for the arts developed. This love of the arts led to one of the largest private art collections in the world.

Marriage and Children

At the age of 24, Morgan married Amelia Sturges, the daughter of a wealthy businessperson from New York. Unfortunately, Amelia died of tuberculosis just four months later. In 1865, Morgan married Frances Louisa Tracy. The couple would go on to have four children.

Early Success

After spending much of his schooling in Europe, learning to speak both French and German, Morgan returned to the States where he began work as a clerk at Duncan, Sherman, & Co., the U.S. branch of his father’s firm. Morgan was a calculated risk-taker and never missed an opportunity. Morgan found success leveraging risk, capital and opportunities, giving him the confidence to launch his own company, J. Pierpont Morgan & Co. in the early 1860s.

He was then able to take advantage of the boom in railroad expansion; companies were in over their heads with their finances stretched to the limit. Morgan managed to consolidate several railroads such as the New York Central Railroad, gaining control of railroad stocks and, in time, claiming ownership of a sizable portion of all U.S. railroads — roughly 5,000 miles of them by 1902.

In the 1890s, Morgan completed a secret purchase of Carnegie Steel for nearly $500 million — more money than the annual budget of the U.S. federal government. He merged Carnegie Steel with his other steel company acquisitions to become U.S. Steel, creating the first billion-dollar corporation. J.P. Morgan also successfully oversaw the merging of Edison General Electric and Thomson-Houston Company to form General Electric.

Savior or Sinner?

Morgan helped bail out the United States several times, including in 1895 when he was instrumental in saving America’s gold standard and arranged loans to the federal government. He also managed to convince other wealthy patrons to bail out several financial institutions, including the U.S treasury in 1895 and the “panic of 1907,” bringing stability to the market and spurring the future establishment of the Federal Reserve System.

Due to these actions, Morgan was lauded and celebrated, but the praise was short-lived. Morgan received criticism from the public, press and government with accusations of impropriety and the control of financial markets, culminating in a call to testify before a congressional committee in 1912. Public opinion often shifted between blaming Morgan when the economy dipped and accusing him of unfairly taking advantage of his position and wealth when the economy swelled.

He was an alleged kingpin or “robber baron” of Wall Street, a progenitor of the age of so-called “gentlemen’s business” that, at least to some degree, ruled over wealth and credit in the U.S. While Morgan’s reputation had plenty of ups and downs, his company has a long, rich history, merging with Chase Manhattan Corporation to form JP Morgan Chase in 2000. JP Morgan Chase is currently the biggest bank in the world by market cap.

Later Years and Death

J.P. Morgan died in Rome, Italy in 1913. The New York Stock Exchange closed for a period on the day of his funeral to honor an icon of finance. He left behind a financial success story in his international banking firm JPMorgan Chase.

Learn more about theTAMU-CC online MBA in Finance program.