John Pierpont (J.P.) Morgan

DEFINITION of 'John Pierpont (J.P.) Morgan'

A financier, philanthropist and one of the fathers of corporate finance in the United States, John Pierpont Morgan started his career in 1857 at his father's bank, J.S. Morgan & Co., taking it over in 1890 after his father's death. He died on March 31, 1913, in Rome as one of the richest men in the world.

A leader in corporate finance, J.P. Morgan was famous for mergers, such as bringing Edison General Electric and Thompson-Houston Electric Company together to form the company General Electric. He also formed the first billion-dollar company in the world, United States Steel Corporation.

BREAKING DOWN 'John Pierpont (J.P.) Morgan'

Working in a time before modern financial regulations, Morgan applied his considerable energy and innovative mind to the task of building up huge monopolies in every industry he invested in. By consolidating local railroad carriers and small banks into larger trusts, Morgan brought large economies of scale to every company he took a hand in managing.

Morgan's business ventures were often complementary. Running a railroad as he did, Morgan needed large quantities of steel and substantial financing. These could be easily supplied by both the bank and the steel mills he owned in addition to the railroads. By bringing together multiple companies into a larger corporate family, Morgan greatly reduced the cost of doing business and built up his billion-dollar fortune.

Like many of the era's so-called robber barons, Morgan seems to have considered himself a public benefactor. His consolidation of railroads, for example, while it drove many smaller carriers out of business, ultimately made scheduling and safety standards uniform across the nation and greatly improved rail service to every corner of the country. Morgan was also generous with the national government. Twice in his lifetime, the U. S. government borrowed gold bullion from his huge stockpile to stabilize the flagging dollar and stave off financial panics.

By the early 20th century, J.P. Morgan had become the leading light of the trusts. As either the direct controller or a prominent member of multiple boards and corporate governance committees, Morgan exercised control over railroads, electric utilities and much of the domestic steel industry. This concentration of power and money inspired resistance, and eventually most of the big trusts were broken up by government action. Morgan's many business ventures, including the bank that bore his name, continued well into the next century and eventually grew into many separate, very successful finance and heavy industry concerns.

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