Wednesday, June 12, 2013

The Strouse Morgan

Note to self: quit reading all those hot-off-the-press must reads.  A few of them are good and original: a lot of them just recycle stuff you've been reading on the blogs, etc.  A lot re good 35-paage longreads tucked inside 180 pages of hard cover.Stick to stuff a few years, maybe a few centuries, old. 

Case in point: Jean Strouse's biography of JP Morgan.  I read Ron Chernow's doorstopper about the House of Morgan a few years ago and figured I could skip Strouse.  Not sure what changed my mind: perhaps Chernow had faded enough in my memory that I was ready for refresher.  Anyway, the takeaway: I'm not sorry to have read Chernow but I am delighted to have read Strouse.  For understanding how 19th Century finance worked, it's one of the best things I've run across so far.  Some critics complain that it is too thick with detail and that might be true.  But the details are still the natural venue of the devil and I don't know anybody (including Chernow) who walks you through so many individual deals in a way that makes you understand what the players were trying to accomplish and how they did it.   

That' last is particularly true of what I suppose you'd have to say is a hobbyhorse: railroad reorganization: the salvaging and refinancing of rail projects in boom years from the end of the Civil War to the end of the Century.   Among many other virtues, Strouse does an admirable job of putting the rail problem in context: vastly excessive overbuilding, "ruinous competition," (as they so loved to call it) and the exquisite challenge of nurturing investors, particularly foreign investors who still saw America as a cowboys-and-injuns show.  Strouse shows that not the least of Morgan's achievements is how he made the American market plausible: a place where you could put your money knowing that a deal was a deal.  And that may be the core point of the Morgan story: difficult, irascible, self-absorbed, unreflective though he have been, still Morgan was a man who wanted things to work.  He saw every project as an occasion, not just to make money (though he made plenty) but to put together a project with a result: a railroad, a power company, a sovereign government, whatever.

 Another reason Strouse is so good at her job is that she seems to understand the complexities and ambiguities of a competitive market place, together with the problem of (as the 19C liked to call it) "the trusts."  She makes it clear (how could she not?) that concentrated power may confer unimaginable wealth on the lucky holder of the winning ticket.  But she just as well shows how colossally wasteful the 19th-Century investment casino might be.

A bit of more general reflection: I suspect one reason why there isn't more good business-financial history is that most people who tackle these projects really don't have much of a feel for their task.  I liked Chernow because I felt he did seem to know what he was doing. I like Strouse better.  That might be partly a matter of coverage: Chernow was trying to cover the whole history of the firm, not just a single lifetime--and in fewer pages--so naturally he was a bit thinner on the ground.  But here;s the thing: much as I liked the Chernow Morgan book, I felt his later effort on Alexander Hamilton was far better (I haven't read his others).  Could it be that he learned from experience?

2 comments:

Ebenezer Scrooge said...

I'm not sure so much that Morgan made the American market plausible--his accomplishment was more limited. He made the American market plausible to English investors. Kuhn Loeb worked in parallel, making the American market plausible to German investors. Morgan's story, of course, is the better one.

Buce said...

Well, I can't say no. Or rather I can say that I do not know. I guess there is a little bit about Kuhn Loeb in one of the Steven Birmingham books. German finance does appear in a small way in the Morgan book. Also some discussion of Jewish finance, mainly in the form of flaming paranoid anti-Semitism. Strouse does mention incidentally the Seligmans who apparently deployed German connections.