Name: _________________________________________ Date: ___________________________ Class: ______

J.P. Morgan and Finance Capitalism

The

rise

of

American

industry

only managed the securities that underwrote

required more than great industrialists. Big

many important corporate consolidations, it

industry required big amounts of capital;

actually originated some of them. The most

headlong economic growth required foreign

stunning of these was the U.S. Steel

investors. John Pierpont (J.P.) Morgan was

Corporation, which combined Carnegie

the

Steel with several other companies.

most important of

financiers

who

the American

underwrote

both

requirements.

Its

corporate stock and bonds were sold to

investors at the then-unprecedented sum of
$1.4 billion.

1. Who was the most important American

financier at the end of the 1800s?

2. J.P.

Morgan

worked

to

keep

the

a. Andrew Carnegie

American dollar tied to its legal value in

b. Cornelius Vanderbilt

_____.

c. John D. Rockefeller

a. gold

d. John Pierpont Morgan

b. platinum
c. silver

During the late 19th and early 20th

d. steel

centuries, Morgan headed the nation's

largest investment banking firm. It brokered

Morgan originated, and made large

American securities to wealthy elites at

profits from, numerous other mergers.

home and abroad. Since foreigners needed

Acting as primary banker to numerous

assurance that their investments were in a

railroads, moreover, he effectively muted

stable currency, Morgan had a strong

competition among them. His organizational

interest in keeping the dollar tied to its legal

efforts

value in gold. In the absence of an official

industry by ending price wars to the

U.S. central bank, he became the de facto

disadvantage

manager of the task.

manufacturers,

brought

stability

of

farmers

who

saw

to

American
and

him

small
as

an

From the 1880s through the early

oppressor. In 1901, when he established the

20th century, Morgan and Company not

Northern Securities Company to control a

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group

of

major

railroads,

President

distrusted and disliked him.

With some

Theodore Roosevelt authorized a successful

exaggeration, reformers depicted him as the

Sherman Antitrust Act suit to break up the

director of a money trust that controlled

merger.

America. By the time of his death in 1913,

the country was in the final stages of at last

3. Why

did

farmers

and

small

reestablishing a central bank, the Federal

manufacturers see J.P. Morgan as an

Reserve System, that would assume much of

oppressor?

the

_________________________________

unofficially.

responsibility

he

had

exercised

_________________________________
_________________________________

4. What governmental entity would assume

_________________________________

much of the financial responsibility that

_________________________________

J.P. Morgan had exercised unofficially?

_________________________________
_________________________________
_________________________________

a. Federal

Deposit

Insurance

Corporation
b. Federal Reserve System
c. Internal Revenue Service

Acting

as

an

unofficial

central

d. Interstate Commerce Commission

banker, Morgan took the lead in supporting

the dollar during the economic depression of
the

mid-1890s

by marketing a

5. Do you believe that J.P. Morgan was

large

right to assume such a large role in

government bond issue that raised funds to

directing the U.S. economy? Why or

replenish Treasury gold supplies.

why not?

At the

same time, his firm undertook a short-term

_________________________________

guarantee of the nation's gold reserves. In

_________________________________

1907, he took the lead in organizing the

_________________________________

New York financial community to prevent a

_________________________________

potentially ruinous string of bankruptcies.

_________________________________

In the process, his own firm acquired a large

_________________________________

independent

it

_________________________________

President

_________________________________

Roosevelt personally approved the action in

_________________________________

order to avert a serious depression.

_________________________________

steel

company,

which

amalgamated with U.S. Steel.

By then, Morgan's power was so

_________________________________

great that most Americans instinctively

_________________________________

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