The history of J.P. Morgan Bank is one that is lengthy and filled with mergers and other business deals. J.P. Morgan was a United States financial institution that was founded by J. Pierpont Morgan. It was also known as the House of Morgan. J.P. Morgan was obtained by Chase Manhattan Bank, and they are now known as JPMorgan Chase & Company. These two financial institutions merged to create one of the largest banking institutions in the world. In the following article, we will review more about the history of J.P. Morgan Bank before it was obtained by Chase Manhattan Bank.
In 1854, Junius Morgan joined a London based banking business known as George Peabody and Company. Within the next decade, Junius Morgan took over George Peabody & Company and changed the name to J.S. Morgan & Company. It was Junius’s son, J. Pierpont Morgan, who would later establish the institute that was known as J.P. Morgan. J. Pierpont Morgan founded his company in New York in the year of 1871. When this company was first established, it was known as Drexel, Morgan & Company. J. Pierpont and Anthony J. Drexel founded it together. Their partnership created a bank that was used as an agent for Europeans that were investing in the United States. Twenty-four years later, in 1895, the company became J.P. Morgan & Company. This company would finance the United States Steel Corporation, which was the first billion dollar corporation. In 1895, J.P. Morgan & Company would also supply the government of the United States with sixty-two million dollars in gold to replenish the national treasury and float a bond.
“The Corner” and “The House of Morgan” were built in 1914 on Wall Street. For many years, J.P. Morgan & Company was the most important institution in American finance. In 1914, J.P. Morgan sent a partner to the United Kingdom where they made a deal with the Bank of England to make the company the underwriter of war bonds for the United Kingdom and France. J.P. Morgan & Company profited a great deal during the war from financing the two European governments. However, after the stock market crash in 1929, J.P. Morgan & Company along with other investment banking companies lost a large margin of their profits. In 1933, J.P. Morgan was forced to separate its commercial banking operations from its investment banking operations due to the Glass Steagall Act. When this happened, J.P. Morgan chose to operate as a commercial bank. Since the stock market crash, investment banking was not looked upon as well as commercial banking. Commercial banking was starting to become far more profitable during this time. In 1935, the heads of the J.P. Morgan company decided to spin off their investment banking operations. Henry S. Morgan and Harold Stanley founded Morgan Stanley in September of 1935. The spin off security company did quite well. Their prestigious name brought prestigious clients in for business. Throughout the 1940s, 1950s and on, Morgan Stanley would continue to flourish until they took on the name of J.P. Morgan again.
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