Editing J. P. Morgan (section)

===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}}