Editing J. P. Morgan (section)

==J.S. Morgan & Co.: 1858–1871==
[[File:231 Madison Avenue 1855.jpg|thumb|upright|left|Early view (c. 1855) of 229, 225 and 219 Madison Avenue before the street was paved]]
{{Main|J.S. Morgan & Co.}}
After completing his education, Morgan went to [[London]] in August 1857 to join his father, now a partner in the [[merchant banking]] firm [[George Peabody & Co.]]{{efn|The firm was later renamed J.S. Morgan & Co. upon [[George Peabody]]'s retirement in 1864.}}{{sfn|Carosso|1987|pp=63–67}} For the next fourteen years, he worked as his father's American representative in a series of affiliated New York City banking houses, learning the trade and lifestyle of a bank partner: [[Duncan, Sherman & Company]] (1858–1861), his own firm J. Pierpont Morgan & Co. (1861–1864), and finally Dabney Morgan (1864–1872).{{citation needed|date=March 2024}} Dabney, Morgan & Company was co-founded by Charles H. Dabney and Jim Goodwin.<ref>{{Cite book |last=Burgan |first=Michael |title=J. Pierpont Morgan: Industrialist and Financier |publisher=Capstone |year=2006 |isbn=978-0-7565-1890-5 |location=Minneapolis, Minnesota |pages=36 |language=en}}</ref>

===Duncan, Sherman & Company: 1858–1861===
Morgan soon moved on to New York City to begin work at Duncan Sherman as a junior clerk.{{sfn|Carosso|1987|pp=83–91}} Through his father's reputation and his position as the obvious successor to the Peabody house, he was among the most sought-after young men on Wall Street and enjoyed the company of many of New York's leading citizens.{{sfn|Carosso|1987|pp=83–91}} Morgan held a great deal of independence in both his investment decisions and lifestyle, owing partly to his father's faith in Morgan's austere religious discipline. "Remember," J.S. Morgan wrote his son, "that there is an Eye above that is ever upon you and that for every act, word, and deed you will one day be called to give account."{{sfn|Carosso|1987|pp=83–91}} He adopted a serious, energetic approach to his work and was praised by his father's friends for his work ethic and capacity for business.{{sfn|Carosso|1987|pp=83–91}}

At the time Morgan entered the firm, Peabody & Co. was struggling in the wake of the [[Panic of 1857]], a rash of business failures which dramatically damaged investor confidence in American securities. Peabody & Co., whose business was focused on the United States, was particularly threatened when a few of its American correspondent banks were forced to suspend operations.{{sfn|Carosso|1987|pp=63–67}} The house's creditors, including [[Baring Brothers]], demanded payment; Peabody defied them, daring his rivals to put him out of business, and turned to the [[Bank of England]] for a loan in November 1857. Morgan himself expressed surprise that the famed Barings house was not more accommodating.{{sfn|Carosso|1987|pp=63–67}} The loan secured the house's survival and the London office was stabilized, but Duncan Sherman came under criticism on Wall Street, and the Mercantile Agency recommended its dissolution. J. P. Morgan urged his father to stand by Duncan Sherman in the face of "outrageous" reports "of Browns & Barings getting the credit for what they never did."{{sfn|Carosso|1987|pp=63–67}}

While at Duncan Sherman, Morgan acquired experience in the financing and reorganization of railroads, including the major Ohio & Mississippi and Illinois Central lines, for which he personally negotiated the loans. Most of his work involved collecting and transmitting interest and dividend payments, executing orders on the [[New York Stock Exchange]], and conducting credit checks on mercantile houses doing business with Peabody & Co.{{sfn|Carosso|1987|p=78}}{{sfn|Carosso|1987|pp=83–91}}

Starting in early January 1859, Morgan spent several months in the South to visit the firm's correspondents in Georgia, Alabama, and Louisiana and to improve his knowledge of the cotton trade.{{sfn|Carosso|1987|pp=87–88}} He briefly visited Cuba, where he developed a lifelong taste for [[Cuban cigars]].{{sfn|Carosso|1987|pp=83–91}} Most of his time in the South was spent in [[New Orleans]], a leading cotton export hub. He received a stern warning from Duncan Sherman when he conducted an unauthorized trade of coffee at a profit, which he considered his first totally independent transaction.{{sfn|Carosso|1987|pp=83–91}} Later that summer, he visited his father in London. They discussed the prospects of Morgan's going into business for himself, and Morgan courted Amelia Sturges, whom he later married.{{sfn|Carosso|1987|pp=83–91}}

===J. Pierpont Morgan & Co.: 1861–1864===
As the [[American Civil War]] began, business slowed, delaying Morgan's efforts to open his own office.{{sfn|Carosso|1987|pp=83–91}} He opened J. Pierpont Morgan & Company some time between April and July 1861,{{sfn|Carosso|1987|pp=83–91}} conducting operations out of a one-room office at 53 Exchange Place. As he anticipated, most of his business was for his father and consistent with the work he had managed at Duncan Sherman.{{sfn|Carosso|1987|pp=91–92}} Morgan avoided serving during the war by [[Conscription in the United States#Civil War|paying a substitute]] $300 to take his place.{{sfn|Carosso|1987|pp=95–97}}

The Civil War radically altered Morgan's focus by virtually eliminating his cotton business and drastically reducing iron imports for American railroads in favor of securities and foreign exchange operations.{{sfn|Carosso|1987|pp=95–97}} The Morgans, trading through J. P.'s New York office, made a large profit in the purchase and sale of Union bonds once the [[Battle of Antietam]] turned the war in the Union's favor.{{sfn|Carosso|1987|pp=98–100}} The Morgans also expanded their trade in European securities during a period of industrial expansion, financed by a large deposit from [[William Wilson Corcoran|W. W. Corcoran]] after he liquidated his American holdings out of sympathy for the Confederate cause.{{Sfn|Carosso|1987|p=100}}

Morgan also profited in gold after specie payments were suspended in 1862; its price was largely pegged to the possibility of a Union victory. In October 1863, he and Edward B. Ketchum transferred $1.15 million (equivalent to ${{Format price|{{Inflation|index=US-GDP|value=1,150,000|start_year=1863|r=-5}}}} in {{Inflation/year|US-GDP}}) in gold to England, forcing a price spike and allowing both men to sell their holdings at a large profit. Critics have long considered the deal a speculative effort to corner the American gold market and evidence of Morgan's insensitivity to the nation's financial situation, although the economic consequences were ultimately minor.{{sfn|Carosso|1987|pp=101–03}}

In 1862, Morgan made his cousin, James Goodwin, a partner. The firm received a serious boost when Morgan's father succeeded George Peabody as head of the London office. J.S. Morgan transferred all of the firm's remaining commercial credit and securities accounts from Duncan Sherman, and by the end of 1862, J. Pierpont Morgan & Co. was considered one of the stronger private banking houses on Wall Street.{{sfn|Carosso|1987|pp=95–97}}

====Hall Carbine Affair====
{{Main|Hall Carbine Affair}}
In August 1861, Morgan lent $20,000 (equivalent to ${{Format price|{{Inflation|index=US-GDP|value=20,000|start_year=1861|r=-4}}}} in {{Inflation/year|US-GDP}}) to Simon Stevens, a well-connected New York City attorney and former secretary to [[Thaddeus Stevens]]. Stevens used the money to purchase five thousand carbines for resale to General [[John C. Frémont]], commander of the Department of the West.{{sfn|Carosso|1987|pp=92–94}} The carbines in question were developed by John H. Hall and manufactured by Simeon North, purchased by the U.S. government, and resold to arms dealer Arthur M. Eastman for $3.50 apiece in June 1861 ({{Inflation|index=US|value=3.50|start_year=1861|r=0|fmt=eq}}). After [[First Battle of Bull Run|the Union defeat at Bull Run]] placed a premium on arms, Stevens used the Morgan loan to purchase the rifles from Eastman at $11.50 apiece and immediately resold them to Frémont, a longtime acquaintance, at $22 each.{{sfn|Carosso|1987|pp=92–94}}

During the loan's thirty-eight day duration, Morgan held title to the carbines and assumed responsibility for having their barrels replaced with rifled ones before shipment to Frémont. Stevens approached Morgan for another loan, which Morgan refused, instead asking Stevens for the $20,000 on the original loan and attempting to remove himself from the transaction. On September 14, Morgan received $55,000 from the Army for the carbines, deducted the face value of the loan plus expenses and interest, and passed the remainder to Stevens.{{sfn|Carosso|1987|pp=92–94}}

By September, when Morgan received payment, the deal was already controversial. Military officials felt Frémont had overpaid, and an 1863 House of Representatives report indicted the profiteers as "worse than traitors in arms." Though Morgan was neither criticized nor censured during contemporary investigations, his name remained connected with the [[Hall Carbine Affair]] for many years.{{citation needed|date=March 2024}}

Debate over Morgan's knowledge and involvement became a ''[[cause célèbre]]'' within his lifetime, attracting a wide range of commentary, and the debate has persisted long after his death.<ref name=Wasson>{{Cite book|title=The Hall Carbine Affair: A Study in Contemporary Folklore|last=Wasson|first=R. Gordon|publisher=Pandick Press|year=1943}}</ref><ref name=":2">{{Cite web|url=http://ww2.rediscov.com/spring/VFPCGI.exe?IDCFile=/spring/DETAILS.IDC,SPECIFIC=14871,DATABASE=objects|title=U.S. Carbine Model 1843 Breechloading Percussion Hall-North .52|website=Springfield Armory Museum collection record|publisher=Springfield Armory Museum|access-date=May 20, 2016}}</ref> Interest in Morgan's role in the affair was rekindled in 1910 with the publication of [[Gustavus Myers]]' ''History of the Great American Fortunes''.<ref>{{Cite book|title=History of the Great American Fortunes, V. 3|last=Myers|first=Gustavus|publisher=Charles H. Kerr|year=1910|location=Chicago|pages=146–176}}</ref> Myers claimed the rifles were more likely to blow the rifleman's thumb off than they were to cause any damage to the enemy. An earlier version of the carbine rifle was known to be subject to this problem.<ref name=":2"/> [[R. Gordon Wasson]], later the head of public relations for J.P. Morgan & Co., argued that there was no evidence Morgan knew that he was participating in a scheme to profit.<ref name=Wasson/> Vincent Carosso, author of an academic history of the Morgan house, concurs that Stevens "used Morgan's name" to cover his greed and that "none of the evidence suggested that Morgan himself had been a party to the shabby contract or had participated in its profits," though he "failed to exercise the care and caution that he had demonstrated two years earlier in the New Orleans coffee deal."{{sfn|Carosso|1987|pp=92–94}} [[Matthew Josephson]], who popularized the term "robber baron", asserted that Morgan certainly did know of the scheme, because he had presented the government with a bill for $58,175 before he delivered the remaining rifles that were being held as collateral.<ref>{{Cite book|title=The Robber Barons|last=Josephson|first=Matthew|publisher=Harcourt, Brace & Co.|year=1934|isbn=978-0-15-676790-3|edition=Mariner Books 1962|pages=[https://archive.org/details/robberbaronsg00jose/page/61 61ff]|url-access=registration|url=https://archive.org/details/robberbaronsg00jose/page/61}}</ref> Reviewing the evidence, Charles Morris also concluded that it was "implausible" that Morgan did not know about the source of his profits.{{sfn|Morris|2006|p=337}}

===Dabney, Morgan & Co.: 1864–1872===
[[File:J Pierpont Morgan, c 1870.jpg|thumb|upright=.8|left|Morgan photographed {{circa|1870}}]]
On October 1, 1864, George Peabody retired completely from the rechristened [[J. S. Morgan & Co.]] and agreed to reinvest his share of the partnership with the firm. In an effort to expand the business internationally, Junius Morgan hired Dabney on November 15 as a senior partner. Dabney, a fifty-seven-year-old partner at Duncan Sherman, was widely respected in the business community for his accounting skill and integrity. In the reconfigured firm, J. P. Morgan took on primary responsibility for recruiting new business.{{Sfn|Carosso|1987|pp=106–08}}

Both Dabney Morgan and J.S. Morgan & Co. remained focused on [[merchant bank]]ing and [[Commodity market|commodities]] into the 1870s. Between 1863 and 1873, the firm's profits from its [[Securities market|securities business]] only exceeded its commissions on trade in 1865.{{Sfn|Carosso|1987|p=115}} Dabney Morgan traded globally in a variety of commodities, including iron rails, American cotton, Philippine tobacco, Brazilian coffee, and Peruvian [[guano]]. Beginning on the advice of [[Levi P. Morton]] in 1865, J. P. Morgan secured an exclusive four-year contract with the Peruvian government to export guano, used in the production of fertilizer and gunpowder, at a two-and-a-half percent commission.{{citation needed|date=March 2024}}

To the extent the firm engaged in securities trading, the focus was railroad stock and government bonds. However, railroad construction had halted during the Civil War. Construction did not recover until after 1867, when the firm of [[Jay Cooke & Company]] in Philadelphia dominated in getting American government financing.{{Sfn|Carosso|1987|p=115}} In 1866, J. S. Morgan & Co. did make a "considerable sum" selling shares of the [[Atlantic Telegraph Company]] after the trans-Atlantic telegraph wire was laid. Despite this success, the firm's creditor, [[Brown Shipley]], declined to expand Morgan's [[line of credit]], stating the company was no better than a [[Speculation|speculative]] trader in securities.{{citation needed|date=March 2024}}