The Corner for March 28, 2014

Last week’s column covered a little history on John Pierpont Morgan, otherwise known as J.P. Morgan. Here is a little background on his company.

For many years during the 1990s there were numerous large bank mergers in New York. However, J.P. Morgan & Company and Chase Manhattan Corporation sat on the sidelines. Then in 2000, Morgan and Chase announced that they were going to merge. The merger of these two giants created J.P. Morgan Chase & Company, the large New York “money center bank.”

J.P. Morgan & Company had its origins in the securities and commercial credit businesses that existed between the U.S. and England. From its 1850s roots it was a conduit for English money to the U.S. This came about by J.P. Morgan’s father, Junius Morgan and a former American by the name of George Peabody who started George Peabody and Company in London. When Junius Morgan left America to join Peabody, the company was then called Peabody, Morgan & Company. After Peabody retired in 1864, Junius Morgan renamed the bank J.S. Morgan & Company. In 1895 J.P. Morgan himself, operating in the Wall Street District had taken his father’s former English firm and the N.Y. remnants of Drexel Morgan & Company, turning them into what would essentially be known as J.P. Morgan & Company. Morgan would build his bank into an international powerhouse as a wholesale financial institution, capable of combining the interests of many of the world’s most wealthy individuals, major corporations and heads of state.

For many years J.P. Morgan & Company was located at 23 Wall St., across from the New York Stock Exchange where 23 Wall was referred to as “The Corner” and “The House of Morgan.”

The history of Chase can be traced to back to over 215 years ago, when The Manhattan Company was founded by Arron Burr during the financial crisis of 1799. It was originally created to provide clean water to Lower Manhattan. Eventually the Manhattan Company would get into the retail bank business “through a clause in its charter granted to it by the state that allowed it to use surplus capital for banking transactions.” Through the ups and downs of the early, middle and later 1800s, The Manhattan Company established itself as a premier east coast retail bank. By the turn of the 20th century it was also a leading commercial bank via its national and international pacesetting. It was in 1877 that the Chase National Bank was formed. Like The Manhattan, it was conceived during a financial crises and was primary a retail New York bank. More aggressive than The Manhattan, Chase grew in the 1920s by absorbing other banks. In 1955, the acquisition of Chase by The Manhattan was effected, and The Chase Manhattan Bank was born. Eventually the bank was strongly influenced by David Rockefeller.

The 2000 merger between Chase and Morgan was second to none, especially in an era when there were too many mergers of excess and luxury that did not pan out so well in the future. As a result, the combination put to rest the speculation that Morgan would become something other than an American based institution by being absorbed by a foreign bank. The “par excellence” was that these two institutions, following their long traditions of merging themselves with top shelf colleagues, once again demonstrated their prowess as very exclusive, American based, world class financial institutions. The final outcome was a retail and wholesale business that is now known as J.P. Morgan Chase & Company. The bank encompasses investment banking, operating services, wealth management, institutional asset management and private equity. The retail bank business is known as Chase, consisting of credit cards, regional consumer banking in the New York tri-state area and mortgage banking, diversified consumer lending, insurance and middle-market banking.

While the word Manhattan disappeared from the new name, J.P. Morgan Chase has kept its headquarters in Manhattan, at 270 Park Avenue. If names tell you anything about survivability, then the post merger name of J.P. Morgan Chase & Company says it all. Some 101 years after John Pierpont Morgan’s death his name recognition is as entrenched as ever.

Quote of the Week: “Go as far as you can see; when you get there, you’ll be able to see farther.”—J.P. Morgan

Bart Ward is the chief executive officer of Ward & Co. Ltd., an Anoka-based registered investment adviser – specializing in the management of stock and bond portfolios in companies which are listed on the NYSE.

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