The American banking story is a little different from the British history, for the new country lacked landed wealth and trading was largely by exports of agricultural products; the London merchant banks largely controlled their finance. Especially following the Civil War, America was about building a new country with the fruits of manufacturing and the very significant reserves of raw materials: coal, iron ore and oil. So we have names like Carnegie with steel and Rockefeller with oil. We have the building of the railways and the introduction of electricity with Edison, Thomson-Houston and Westinghouse. You can follow these links to read about American steel and American electricity.
The banking name that stands out is J.P. Morgan and I refer to the intriguing biography by J.R. Macgregor. John Pierpont was born into a banking dynasty founded by his father Junius Spencer Morgan which had a strong connection with the British banker Peabody, now better known for his philanthropy through London’s Peabody buildings. There is the later connection which became Morgan Grenfell.
J.P. Morgan had an instinctive understanding of money which he viewed as simply a resource with which to harness other resources. He was astonishingly numerate which enabled him to see through the financial fog that during his long and influential career would from time to time engulf American business. Interestingly it was only in the last thirteen years of his life that the empire that would be known for decades as JP Morgan was really created. Before then he, like men in business at the time, would try and sometimes fail as the new world of industry grew.
He was the man behind the building of the Panama Canal. He financed the growth of many American businesses. But he believed in the benefit of monopolies and companies working closely to mutual advantage. Politicians didn’t share this view and the president, Roosevelt, embarked on a ‘trust-busting’ crusade. This came to a crisis point in 1907. Macgregor tells how this came about and this is significant in understanding later legislation aimed at avoiding such crashes. The stock market plays a central role and in 1907 was being manipulated and this caused a rumour that those involved could become the subject of attack by President Roosevelt in his anti-trust campaign. This triggered a run on one of the banks involved, the Knickerbocker Trust, which ran out of cash to pay its depositors. All this set in train a downward spiral with other failures. With some irony Roosevelt asked JPM to help which he did using his extraordinary connections with wealthy businessmen including Rockefeller. They injected liquidity into the system and stability returned.
JP Morgan would play a vital role in the First World War acting as Britain’s agent in buying the war materiel it needed. I write of this in my book Ordnance.
British Manufacturing History 