I just finished H.W. Brands’ new book on early U.S. monetary history, The Money Men: Capitalism, Democracy, and the Hundred Years’ War Over the American Dollar (Atlas/Norton, 2006).
Brands — a University of Texas history professor — presents a generally evenhanded account of some of the giants in American economic history: Alexander Hamilton, Nicholas Biddle, Jay Cooke, Jay Gould, and J.P. Morgan.
The Morgan story is especially interesting, including this account of the way in which the financial genius rescued the U.S. government’s finances in 1895:
Morgan stated the matter as starkly as he could. He had learned that a single investor held a draft for $10 million against the Treasury’s gold reserve, which currently hovered around $9 million. “If that $10 million draft is presented, you can’t meet it,” Morgan told [President Grover] Cleveland. “It will be all over before three o’clock.”
Cleveland now understood. “What suggestions have you to make, Mr. Morgan?” he replied.
Morgan explained that a public bond offering, toward which some in the Treasury were leaning, would fail, as it would take too long. Something swifter was necessary. Morgan recommended a private sale, to a syndicate headed by himself, which would pay for the bonds in gold coin.
Cleveland didn’t like Morgan, and didn’t particularly like meeting with him. So he “pressed Morgan for assurance the bond sale would accomplish what it was supposed to.”
Cleveland was asking a lot — in essence, that Morgan stand against the world to defend the credit of the United States. Morgan didn’t flinch. “Yes, sir,” he said. “I will guarantee it during the life of the syndicate, and that means until the contract has been concluded and the goal has been reached.”
It was a breathtaking promise, one only Morgan among American financiers could give with a straight face.
Yes, reading has been a better option than watching my Buckeyes stink up the BCS championship game.
