J.P. Morgan to Pay $1.42 Billion to Settle Most Lehman Claims
Deal doesn’t resolve all of failed investment bank’s claims against J.P. Morgan
J.P. Morgan Chase & Co. has agreed to pay the remnants of Lehman
Brothers Holdings Inc. $1.42 billion in cash to settle most of the
failed investment bank’s lawsuit over claims that J.P. Morgan illegally siphoned billion of dollars from Lehman before its collapse.
Representatives from Lehman and JP Morgans declined to comment.
This is JP Morgan for you
His millionaire father, Junius, made his fortune by investing other
people’s money and helped found modern investment banking. When John
Pierpont, or JP, is a child, Junius has him handle a million dollars in
cash so he knows what it feels like. JP Morgan is taught early to avoid
risk.
Morgan escapes military service during the Civil War by paying $300
to a substitute to fight for him. During the war he buys five thousand
rifles at $3.50 each and sells them on at $22 apiece. The rifles are
defective and some shoot off the thumbs of the soldiers firing them.
Later, a congressional committee notes this but a federal judge upholds
the deal and Morgan is exonerated.Dominated by his father, JP is 40 before he ignores his father’s
business lessons. He wants to be synonymous with an industry, like
Rockefeller is with oil, and Carnegie is with steel.
Like the discovery of fire and the invention of the wheel, electric
light will revolutionise mankind and Morgan believes, make him rich, and
crucially, richer than his rivals. Morgan hires Thomas Edison, a
telegraph boy turned inventor, to install electricity in his 5th avenue
Manhattan mansion. Morgan’s home becomes a lab for Edison’s experiments
and a small generator is installed to power the home’s 400 light bulbs.
Though his father Junius believes it a fad, electric light becomes a
must have modern utility for the city’s elite. Against his father’s
advice, Morgan invests everything in Edison to form the Edison
Electricity Company.
They create the world’s first power station and
soon half of Manhattan’s connected. But every home and business lit
electrically is a lost customer to Rockefeller who supplies kerosene to
the oil powered lamps. So he starts planting scare stories in the press.An apprentice of Edison, Tesla, creates alternating current, or AC, but
Edison believes its higher voltage unsafe, so sticks to direct current,
or DC. But electrical pioneer George Westinghouse invests in Tesla. And
to disprove suggestions that AC is dangerous, Tesla stages magical light
shows where electricity harmlessly crackles around him. Orders for
Westinghouse power stations pour in. Edison tries to discredit AC by
using it in his new creation, the electric chair. The first execution
goes horribly wrong and instead of killing the man quickly, it slowly
roasts him alive. The resultant publicity damages Edison, not Tesla.
The
Niagara Falls contract opens for bids. It could light the entire North
East and the only real choice is between Morgan and Westinghouse. And
Morgan desperately wanted to replace Rockefeller as the man who lit
America.
In 1890, Morgan’s father dies after a horse carriage accident. It
instantly quadruples Morgan’s wealth. The 1893 World Fair is to be held
in Chicago and organisers want the entire event lit with electricity.
Westinghouse underbids at a quarter of the cost offered by Morgan. Over
27 million people flock to see the 200,000 light bulbs that illuminate
the event, powered by Westinghouse generators. And in 1895, it’s the
Westinghouse AC electric generating plant that is built at Niagara. It
seems it will be him, not Morgan who will light America. In 1897, Tesla
tears up his patent claim on his AC design, reducing his rights to
profits which immediately attracts investment into the
Westinghouse/Tesla Company.
So Morgan threatens Westinghouse with patent infringement. Few could
afford to fight a lengthy lawsuit with Morgan. Westinghouse, stretched
to breaking point is forced to sign over Tesla’s patents. Morgan’s
consolidated electric company (minus Edison and operating on AC) General
Electric, will become one of America’s biggest corporations.
Morgan now heads the biggest investment bank in America, and has
consolidated both the electricity and rail-road industries. By 1900,
Morgan controls 100,000 miles of railroad, half the country’s mileage.
When, after a two year depression, the US Treasury becomes desperate,
Morgan, a private individual guarantees them a $100m ($3bn today) and
bails out the federal government, effectively bailing out the country
from collapse. Morgan virtually single handily saves the US economy in
both 1895 and 1907.
MORGANISATION
The process of creating a monopoly through the elimination of
competition and the maximisation of profits by slashing the workforce
and reducing their wages is named after JP Morgan.
But as profits soar, working conditions sink. Pay reduces so that the
average worker earns barely a dollar a day, Over 90% of Americans
survive on less than $100 per month. Working hours and workplace
fatalities increase.
In a single year, more men die inside a steel mill than died at the Battle of Gettysburg.
Monopolies, cartels and trusts dominate everyday life. Popular
disgust at such unregulated capitalism leads to the rise of politicians
such as Democrat Williams Jennings Bryan. He promises an end to the
excesses of big business characterising the bosses as ‘robber barons’.
WALL ST V MAIN STREET
Sensing a common threat, Morgan, Carnegie, and Rockefeller, put aside
their bitter rivalry to ensure their man, William McKinley sits in the
White House. Bryan criss-crosses the country in the nation’s first press
tour giving over 500 speeches. But he can’t compete against the robber
barons contributions. McKinley outspends Bryan by a factor of five to
one.
In the 1896 election, 90% of the electorate vote, double today’s
turnouts. But back then voting was a public affair and workers know they
may be fired if seen to be voting for Bryan. McKinley wins. He rolls
back regulations.
THE FIRST BILLION DOLLAR COMPANY
Carnegie agrees to sell out to Morgan for the equivalent of four
hundred billion dollars nowadays (or $480 back then). This is more than
the entire budget of the US federal government. It gives Carnegie the
largest private fortune the world has ever seen.
It allows Morgan, in 1901, to create US Steel, the first billion
dollar company in history. It will dominate the steel business for
almost a hundred years. At his peak Morgan will sit on the board of 48
corporations.
ROOSEVELT: THE ROBBER BARON BUSTER
But Morgan’s power drew the attention of New York City police
commissioner turned politician, Theodore Roosevelt. Born into a wealthy
family, Roosevelt entered public life after an image makeover from New
York aristocrat to man of the people. He joins the army and serves
during Spanish-American war. Back in New York as governor, he clamps
down on the abuses of big business. The Robber Barons hope making
Roosevelt into the Vice President will silence him.
"The vice presidency in those days was a place where people went to
disappear. They became vice president, were never heard from again. It
was almost like a modern witness protection program."
H.W. BRANDS , Historian
But in 1901, President McKinley is shot by Leon Czolgosz, a factory
worker who lost his job in a JP Morgan takeover. Czolgosz had joined the
growing anarchist movement and McKinley’s big business ties made him a
target.
Roosevelt, impotent as McKinley’s number two, now becomes President.
Just five months into office he targets the Morgan owned railroad
consortium. Morgan is furious. He sees the President of the United
States as just another business rival to be bested, or bought off. The
Government sues the rail consortium in the first antitrust case filed
against a major consortium. The case goes to the Supreme Court.
Roosevelt wins and JP Morgan’s rail monopoly is broken.
MORGAN MONEY MAKES OCEANS MEET
Undaunted, Morgan invests in the new canal project in Panama that
hopes to link the Atlantic and Pacific Oceans. Morgan acts as the middle
man for the government and raises $40m ($70billion today) to get the
project started. Over 75,000 workers labour in brutal heat, under the
threat of deadly diseases, digging a 51 mile long canal. But in 1913, a
year before it’s completed, Morgan dies in his sleep aged 75. The New
York Stock Exchange shuts down for 2 hours in remembrance; an honour
normally reserved for the passing of a president.
Fast Facts:
James Pierpont, JP Morgan’s uncle, wrote “Jingle Bells” in 1857.
Morgan’s first marriage was very
brief. He married his first love despite the fact that she had a severe
cough. Just four months after their wedding, his wife, after being
diagnosed with tuberculosis, died.
A saying from the age of Morgan the robber barons is that an honest man is defined as one who, when bought, stays bought.
"While some multimillionaires robber
barons started in poverty, most did not. A study of the origins of 303
textile, railroad and steel executives of the 1870s showed that 90% came
from middle or upper class families."
Howard Zinn: A People’s History of the USA
Quotes :
Whitman scholar Horace Traubel’s obituary for Morgan
“He
was a brute. His code was barbarous...He walked over rather than round
the humanities… (but) I am not satisfied when he is discredited…. He was
a certain civilization.
What the
power of wealth stood for: he was that. He was stocks, bonds, banks,
railroads, trusts, financiering, chicanery, profit. He was success. We
put his age away in the hole in the ground with him.”
Assistant Treasury Secretary William Curtis
“U.S.
finances (are) being controlled by a committee, of which JP Morgan is
the chairman… while the Secretary of Treasury sits, practically
powerless in his office.”
Morgan’s inscription on his young first wife’s grave.
“Not Lost but Gone Before”
Morgan’s alleged reply to a journalist asking the cost of his yacht.
"If you have to ask, you can’t afford it.”
What Morgan is actually recorded as having said and the basis for the often misquoted aphorism above.
“You have no right to own a yacht if you ask that question”
Great Men Talk Of morgan
Whitman scholar Horace Traubel’s obituary for Morgan
“He
was a brute. His code was barbarous...He walked over rather than round
the humanities… (but) I am not satisfied when he is discredited…. He was
a certain civilization.
What the
power of wealth stood for: he was that. He was stocks, bonds, banks,
railroads, trusts, financiering, chicanery, profit. He was success. We
put his age away in the hole in the ground with him.”
Assistant Treasury Secretary William Curtis
“U.S.
finances (are) being controlled by a committee, of which JP Morgan is
the chairman… while the Secretary of Treasury sits, practically
powerless in his office.”
Morgan’s inscription on his young first wife’s grave.
“Not Lost but Gone Before”
Morgan’s alleged reply to a journalist asking the cost of his yacht.
"If you have to ask, you can’t afford it.”
What Morgan is actually recorded as having said and the basis for the often misquoted aphorism above.
“You have no right to own a yacht if you ask that question”