John Pierpont Morgan was by now 70 years old, semi-retired, long a Wall Street legend founder of J.P. Morgan & Co., underwriter of U.S. Steel, patron of one of the world's largest private art collections. As the Panic of 1907 began to shake the foundations of global finance, his greatest moment was yet to come.
During two dramatic weeks in October, the great financier singlehandedly put down the calamity. By himself he prevented the stock market from crashing. By himself he saved banks from failing. By himself he restored public confidence in The Street.
He did it all through simple force of personality. Overpowered by Morgan's formidable physical presence, steely eyes and commanding voice, some of the biggest names in finance and industry bowed to his will.
At one critical moment, as the New York Stock Exchange teetered near collapse for lack of capital, he instantly raised $25 million to keep it open. At another, he kept several of the nation's top bankers all but prisoners in the library of his home at Madison Ave. and 36th St. refusing to let them leave until they hammered out a deal to save key trust companies.
"People believed in him," George Perkins, a Morgan partner, later explained to a congressional committee.
The spectacular rescue crowned a storied career that mirrored New York City's rise as a financial powerhouse. J.P. Morgan became a Wall Street titan not only because he was brilliant and breathed fire but also because he had the good fortune to live during gilded times that rewarded those traits with riches.
When Morgan was born in Hartford in 1837, New York was still struggling with Philadelphia for supremacy as the nation's business capital. The New York Stock Exchange, then just two decades old, listed no industrial companies. Fewer than 10,000 shares traded a day.
But as Morgan grew into a powerful financier, so did New York grow into the unchallenged center of capitalism.
With the opening of the Erie Canal in 1825, New York had become the young nation's most important seaport, gateway to the Great Lakes and the boundless West. With such access to the waterways, the city spawned America's largest exporting and trade businesses. The merchants who ran those companies went on to become leading stock traders and financiers, flourishing particularly in the mid-19th century as railroads began tapping into Wall Street capital to surge westward.
The railroads drove the national destiny, setting the stage of the upcoming Industrial Age. In New York, they created a new generation of millionaire robber barons: Andrew Carnegie, Jay Gould, "Commodore" Cornelius Vanderbilt.
Morgan flourished in this new world of unlimited opportunity. Born into a wealthy family that had made its fortune financing the cotton trade, he showed at an early age a genius for mathematics, a love of business and a willingness to take high-stakes risks. After graduating from schools in England, Switzerland and Germany, he got his first Wall Street job in 1857 as a junior accountant. Five years later he founded his own firm.
His timing was perfect. Wall St. was booming in the 1860s, the Civil War having created an insatiable demand for goods and capital. Financiers like Morgan made fortunes by filling that demand. By the time he was 27 years old, Morgan was making more than $53,000 a year about 53 times what the average skilled worker then earned.
That was only the beginning. After the war, Morgan emerged as the key player in the booming but chaotic railroad industry; believing that bigger was always better, he engineered the mergers of numerous competing roads. His bank, meanwhile, renamed J.P. Morgan & Co. in 1895, became the principal financier for the huge corporations that were transforming the U.S. into an industrial dreadnought: American Telephone and Telegraph, General Electric, International Harvester and America's first billion-dollar company U.S. Steel.
As the new century dawned, Morgan was the city's first business celebrity, a larger-than-life man whose houses and steam yachts and lavish parties became symbols of the opulent day. But far more important to Morgan than riches was his power to direct the growth of America's burgeoning economy, well on its way to becoming the mightiest in the world. On several occasions he used his enormous influence to rescue the financial system from crises: In 1895 he organized a group of financiers to resupply the Treasury's depleted gold reserve.
With that power, of course, came controversy: Morgan's railroad interests were among President Theodore Roosevelt's primary trust-busting targets. But in October 1907, when the threatened failure of a chain of banks triggered the Panic, Morgan was the only man who could lead the effort to restore public confidence and prevent a massive bank run that could have toppled the nation's entire financial system.
Attending an Episcopal convention in Virginia at the time, Morgan returned at once to New York, and for the next two weeks he cajoled, lobbied and browbeat leaders of finance and industry to step forward with their money and influence to save institutions facing imminent collapse. By putting out one fire after another, he doused the Panic. His actions also helped set the stage six years later for the creation of the Federal Reserve, the country's first central bank, designed to prevent such panics from occurring in the future.
There would be, of course, future panics. But there would be no more J.P. Morgans to contain them. The Panic of 1907 marked the last time in history that one individual wielded so much power. Never again would any one man be bigger than The Street.
First published on March 20, 1998 as part of the "Big Town" series on old New York. Find more stories about the city's epic history here.