How John Morgan achieved success: speculation and manipulation
John Morgan was a remarkable man who helped the United States survive the Great Depression. He was an excellent manager and economist, a generous philanthropist, and a patron of museums. For history, however, he is mostly remembered as the man who took the glory away from Nikola Tesla.
John Morgan was born in 1837 into a family of bankers, so the baby’s future activities were predestined. As a young man, he worked in his father’s bank, learned how to run a business, and later used the family money to open his own firm, J. Pierpont Morgan & Co. And while the elder Morgan was respected by colleagues and competitors, speaking of his integrity and transparency in business, John was often suspected of speculation and dubious schemes.
To avoid serving in the Civil War, Morgan paid off the army and was later implicated in a scandal involving the resale of inoperable Southern rifles to Northerners. John was saved from prosecution by the fact that he was only the formalizer of the transaction, and of course by his father’s authority. Several more questionable cases followed, after which Morgan Senior began to control his son’s activities.
John was tracking the market companies that can be profitable to acquire and carried out “morganization”-combining several weak companies, or even competing in a holding. To achieve profit, the businessman did not shy away from anything – degrading working conditions for employees, increasing working hours and reducing wages. Such management methods yielded results; Morgan had great power in the railroad industry, banking and others.
In the late 1870s, electricity began to develop, and Thomas Edison was an active player in this field. It is believed that it was he who came to Morgan with a proposal to invest in direct current technology. The financier became interested in the project, and the first house in the United States to have electric lighting was Morgan’s mansion. The partners founded Edison General Electric. However, the prosperity of the project was prevented by the discovery of Nikola Tesla, who proposed the technology of alternating current, which was more convenient and cheaper than using direct current. Edison failed to take the patent for his invention through the courts, but he tried to smear Tesla’s name everywhere. At the same time Morgan was influencing Nikola’s investor, George Westinghouse, and through speculation drove the latter into bankruptcy. In order to win the tender to build the Niagara Falls power plant, Tesla gave his patents to Westinghouse, but Morgan sued the investor and took his patents and other property. John then bought Edison’s share of the joint company and renamed it General Electric.
Interestingly enough, John Morgan’s grandson became one of the founders of Morgan Stanley.