Ron Chernow is likely more well known today for his biography of Alexander Hamilton, which was adapted by Lin-Manuel Miranda into the musical Hamilton. However, I find his account of the Morgan banking dynasty in The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance far more compelling; indeed, I would say it is a “must-read” for anyone seeking to understand the history of Anglo-American finance.

The decoration in J.P. Morgan’s library

Picture 1: The magnificent interior of the Morgan Library, John Pierpont Morgan’s private library. Photograph taken by Lucas K.T. Lee.

Chernow does an exemplary job of capturing the personalities of his subjects: he brings to vivid life such individuals as Junius Spencer Morgan, George Peabody, and of course, John Pierpont Morgan himself. The account is full of little details that highlight that these people were human: Peabody’s vindictiveness and miserliness towards specific individuals while pursuing grand acts of philanthropy, the way that Junius Spencer Morgan had all his son Pierpont’s letters on political and economic conditions in America bound and set on his shelf, Pierpont’s attention to appropriate attire (a bowler in winter, a Panama hat in summer), and Jack’s retainers snipping Franklin Delano Roosevelt’s photos from Jack’s morning paper, in deference to his high blood pressure and hatred of Roosevelt.

Chernow is, however, less adroit at delving into the economic and financial millieu that these individuals inhabited. There is something almost too facile in his descriptions of the 19th century, described simply as an era of new businesses that required capital far beyond the resources of any wealthy individual or family. This period deserves more than what Chernow is able to devote to it. To be fair to Chernow, he is writing about an incredible span of history, one that filled some 850 pages in the paperback edition, and this magisterial account was written in approximately two and a half years, which certainly does not allow for an in-depth examination of the economic and financial millieu.

Yet, I cannot help but feel that the modern reader, unless aware of the broad sweep of financial history, will be at a loss. Most readers, especially those who grew up in the developed world in the late twentieth century, are likely to find alien the idea of a world in which capital is scarce, financial markets are shallow and regional, and in which almost insurmountable information asymmetries exist. This is a weakness of Chernow’s account, which paints this world in only the broadest of brushstrokes.

Moreover, one cannot help but feel that Chernow exercises an unreasonable measure of moral judgment on the subjects of his account, notably in his account of Pierpont’s charitable endeavors:

He preferred to give to religious, cultural, and educational causes, not to social welfare agencies. He never tried to solve the problem of poverty. He wanted to build institutions that were private and elite. He was an original patron of the Metropolitan Museum of Art and the American Museum of Natural History, had a box within the Metropolitan Opera’s Golden Horseshoe…

One might ask why Pierpont should have endeavored to solve the problem of poverty, a problem that has existed since time immemorial and is likely to persist for so long as we live in a scarcity economy. One might also ask why giving to religious, cultural or educational causes is any less worthy than giving to social welfare agencies. It might have been preferable—and more objective—to simply state that Pierpont preferred to donate to religious, cultural and educational causes, without the need to mention not to social welfare agencies.

One interesting observation that I would make is that history may not precisely repeat itself, but it does have a fractal form, with broad patterns and themes that recur. When one is looking at modern finance, one cannot help but note the parallels between events in the 1840s, 1900s, 1920s, 1930s, and the present. The defaults of certain American states on their sovereign debt in the 1840s invite comparisons with certain European countries (and Puerto Rico) in the 2010s. The villification of bankers by the public in the 1930s finds its parallels in the villification of bankers in the aftermath of the 2010s. The question of whether bankers such as J.P. Morgan, Jr. had paid their fair share of taxes after availing themselves of capital losses from stock write-offs in the early 1930s to minimize their income taxes sees parallels in the American preoccupation with the use of legal methods of tax minimization by wealthy individuals today.

Perhaps the most interesting aspect of this book, in my view, is Chernow’s elegiac third part, titled the “Casino Age”. Here, we see the true end of an era: the ending of a time when erudite Renaissance men dominated the upper echelons of “high finance”. One cannot help but compare the description of Russell Leffingwell, Bookish and witty, a master rhetorician, he could write a trenchant essay or speak extemporaneously on any subject with the majority of individuals in “high finance” today. Leffingwell, a lawyer, banker and public servant, exemplified the caliber of the partners at J.P. Morgan & Company in the inter-War period, but he was not the only such individual to be a partner at the House of Morgan, the ranks included such notable Renaissance men as Tom Lamont and Dwight W. Morrow.

It is clear, as one looks at the sweep of history, that the confluence of events that created the House of Morgan will never come again. History may be fractal, may offer up permutations of old stories in new forms, but the era when individuals could amass—singly—the power and prestige that the House of Morgan did under Junius, Pierpont and Jack will not recur.