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Monday, September 5, 2011

The passions and tragedy of the bankers: Morgan, Burr, Hamilton and the American Way

by John MacBeath Watkins

If you banked with Washington Mutual before the 2008 banking crisis, and haven't moved your accounts, you now bank with Chase. Now here's a curious thing about Chase. The bank owns and displays the dueling pistols used by Alexander Hamilton and Aaron Burr when Burr, our third vice president, killed Hamilton, our first Secretary of the Treasury and the man most responsible for the institutional structures that allowed the young republic to prosper. And if that wasn't enough, Hamilton was an early advocate for the policies known as the American Way.

In a nation that shows nearly religious reverence for founding fathers, J.P. Morgan Chase displays the weapon that was used to murder one of them at its New York headquarters building.

Burr founded the bank in 1799 as the Manhattan Company, supposedly to bring fresh water to New York from the Bronx River. New York had extremely unhealthy water, as we discussed in this post, and had in 1798 suffered an epidemic of yellow fever. Really, it was a front for starting a bank to compete with Hamilton's Bank of  New York.

The bank was a success, and in 1955 merged with Chase Bank (founded in 1877), then in 2000 acquired J.P. Morgan Co., founded in 1871 by J. Pierpont Morgan, whose name was synonymous with the robber baron capitalists of the Gilded Age. Was he ruthless? Well, in the Civil War, he financed the purchase of 5,000 dangerously defective Hall carbines, which were known to blow up and maim the men using them, for $3.50 each, then sold them back to the military for $22 each as the improved, not-blowing-up model. Morgan paid $300 to get someone else to serve in the military for him during the conflict, so there was no chance of him being blown up by one of these guns.

Edward Steichen photographed Morgan in 1903, in one of the most famous portraits of a capitalist of all time. Morgan was sitting in a chair, grasping its arm, but the camera never lies, right? He was a cutthroat businessman, and the fact that the way Steichen chose to print the photograph portrays him as such is no accident.

Of course, Morgan managed to steer a great deal of European capital into the American economy, financed the construction of many of our railroads, and through his contacts, political and financial and acumen, and force of personality quelled the Panic of 1907. The realization that Morgan would not always be there caused Congress to set up the Federal Reserve system.

Burr and Morgan were grasping, ambitious men who were ready and willing to see others hurt to advance their careers. Banks may want you to forget this, because their reputation is enhanced by creating the illusion that they are the keepers of respectability, but business is often more full of drama and tragedy than politics. Shakespeare understood that Shylock could be as good a character as any king, so he took what was then a stock villain -- the Jewish moneylender -- and gave him human and rather tragic motivations, allowing the audience to identify with his hurts and humiliations.

I can't claim knowing that your bank has a dramatic, sometimes tragic history will make you feel better about where you keep your money, but knowing that its founders were characters of Shakespearean complexity and passion might make the state of business in this country a little easier to understand.


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