Tuesday, January 10, 2017

The House of Morgan

Picture yourself as the owner of a promising business in early 20th century America. How do you finance your expansion? There are no capital markets you can tap. Your business, like pretty much every business, is too small to develop its own financing capabilities. (The transportation and communication networks we take for granted today didn't exist, making businesses much more local in nature than they are today.) Most of the money available for this sort of thing comes from Europe anyway. Who is your master in such an environment? Your banker!

Such were the conditions under which bankers became some of the most powerful businesses on the planet. An argument can be made that they still are, with the bailouts following The Great Recession serving as evidence. But what they are today is nothing compared to what they were in the past. In The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance, famed biographer Ron Chernow takes the reader on a multi-century journey into the history of American banking, with a primary focus on the people and circumstances associated with the Morgans, the name behind JP Morgan Chase and Morgan Stanley.

Because Morgan banks have played such a large role in American history, at times the book felt like it was about American history rather than Morgan banks. Several generations of Morgans have played important roles in market crashes (before The Fed existed and got any teeth, it was JP Morgan that was counted on to save the economy!), world wars and politics. A multi-generational, highly informative book like this comes at a cost though: it clocks in at 1000 pages!

Personally, I would have liked more details on how the original Morgan brokerage developed and grew its moat, but this is not that kind of book. Most of the time is spent on issues affecting the already-gargantuan businesses spawned by the Morgans, touching many facets of American history.


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