In a span of a few weeks Richmond's daily headlines had grown increasingly ominous: “Precipitate Declines in Prices on the Stock Market,” “Gloomy Day on Wall Street” and “Bank Closes Doors.”
However unsettlingly familiar, these aren't contemporary pronouncements of tumbling stock prices, foreclosures, bank failures or financial villainy. They're headlines from a century ago foretelling what became known as the Panic of 1907.
Today, a cluster of federal entities — Congress, the Treasury Department, the Federal Deposit Insurance Corp. and the Federal Reserve — fumble to formulate a rubric to stem the economic freefall. But a century ago, none of these entities, if they even existed, possessed much clout during a financial crisis. Times were simple. There was one Mr. Fix-it — autocratic, aristocratic and munificent J. Pierpont Morgan.
But when the Panic of 1907 erupted he was missing in action. During three critical weeks, most evenings Morgan was enjoying an expensive cigar on a private porch in downtown Richmond.
By 1907 the American economy was marked by fast-changing factors that strained and afflicted the financial system. Beginning in the late 1860s, after the Civil War, the United States moved dramatically more swiftly from an agrarian to an industrial economy. By 1900 less than 40 percent of Americans were involved in farming, while 40 percent of families lived in urban areas. By the turn of the 20th century, the United States produced about a third of the world's coal, iron and steel.
If the United States was the world's industrial juggernaut, its preening businessmen were its sex symbols. Men such as Ford, Flagler, Rockefeller, Carnegie, Harriman, McCormick, Mellon, Guggenheim and Frick were household names. Their actions affected the livelihoods of almost the entire population through corporate tentacles that clutched the steel, automobile, oil, mining, farm equipment and public transit industries — sometimes in unlikely combinations.
These titans neither paid personal income taxes nor faced significant government regulation. A national banking system was nonexistent and there were few checks and balances on corporate activity. But despite their competitiveness, these titans shared some common characteristics: They built their wealth on the backs of working people; they relied on railroads for raw materials and the delivery of finished products; and they needed a flow of financial backing.
For the latter they inevitably turned to Wall Street, where New York investment banks acted on behalf of individuals and corporations that possessed billions of dollars for investment. Often, however, instead of waiting for such investment opportunities, these bankers created them, establishing railroad, mining, gas and streetcar or subway operations in new configurations and often with the intent of destroying the competition.
The investment banker who reined supreme was J. Pierpont Morgan (1837-1913), the head of J. P. Morgan and Co. He was an intelligent, educated, cultured and confident man — and a devout Episcopalian. By 1907 he'd become the most powerful man in America. He believed in consolidating competing forces and operations within any given industry. And while Morgan was statesmanlike, he kept a wary eye on the freewheeling ways of his colleagues, who were often his competitors and customers.
Key to establishing his empire was that he seldom invested in anything in which he didn't have a voice or vote. Among the railroads he controlled were the New York, New Haven and Hartford, the New York Central, the Chesapeake and Ohio, the Erie, and the Northern Pacific. He created General Electric, AT&T and International Harvester corporations. The crowning achievement of his corporate alchemy was establishing the world's first $1 billion corporation, United States Steel Corp.
While his power and influence grew in the last decades of the 19th century, Morgan virtually controlled Wall Street. In 1895 President Grover Cleveland sought and received an emergency loan from him of $65 million in gold to avert a national financial crisis.
But the period that followed the 1890s depression was a boom time economically, and in 1907 Morgan, then 70, enjoyed what began as a fulfilling year. The architectural firm of McKim, Mead and White redesigned his home on New York's Madison Avenue and 36th Street, now the Morgan Library and Museum, to accommodate his internationally celebrated and growing collection of books and medieval and Renaissance art. Morgan was also generous: In 1907 he purchased a major coin collection for the Metropolitan Museum, which he'd help establish, and built a wing at Hartford's Wadsworth Athenaeum in memory of his father, Junius S. Morgan, an American-born London financier, who'd paved the way for his son's successes.
Later, during a summer of 1907 European trip, Morgan was received by King Victor Emmanuel III in Rome and greeted warmly by Pope Pius X as if he were an old friend. Morgan invited King Edward VII to his London town house and, over iced coffee (Morgan was not adverse to spirits, but drank moderately), to show the monarch his art collection. At one point Edward asked, “The ceiling is too low for that work, why do you hang it there?” Pausing for a moment, Morgan replied: “Because I like it there, sir.”
But returning to New York in early autumn, Morgan eagerly anticipated what he believed would be the highlight of his year, an October visit to Richmond for the triennial meeting of the Episcopal Church as a lay representative of New York. He'd enjoyed these conventions immensely over the years.
In the fall of 1907, however, storm clouds had gathered over Wall Street. His colleagues urged him to stay in New York.
For months the stock market had tottered. But the spark that ignited the panic was set by an unscrupulous engineer, Frederick A. Heinze, who had amassed considerable wealth from copper mining. He'd purchased control of a bank to use its assets to back continued stock speculations. When his investments failed, his bank collapsed after depositors made a run on its holdings. This closure triggered runs on other banks and the financial crisis became full-blown. When New York's second largest bank, Knickerbocker Trust, ran out of cash and other banks refused to shore it up, it closed. In October 1907 the streets of New York's financial district were flooded with frantic and angry customers and investors withdrawing their holdings.
Who to call? President Theodore Roosevelt was in the wilds of Louisiana at the time hunting black bears — but could have done little anyway. The secretary of the Treasury rushed to New York but there was no central national bank and no Federal Reserve system in place at that time to offer stability.
The one man with the clout, intelligence, resources and moxie to restore order was J. Pierpont Morgan.
So where was he while banking was under siege? Morgan had arrived in Richmond Oct. 1, becoming comfortably ensconced for three weeks at the Episcopal convention. America's most powerful man didn't intend to interrupt his church work. As much as he loved lording over Wall Street or collecting rare books and old-master art, he was above all else an ecclesiastical groupie. He couldn't get his fill of the Episcopal Church, whether sitting alone in a darkened corner of his own understated, St. George's Episcopal Church in New York listening to an organist practice, or debating with high-ranking clergy an arcane point of church governance.
Autumn of 1907 was high season in Virginia. The year marked not only the 300th anniversary of the Jamestown settlement, but also the tercentenary of the Episcopal church, which established Christianity in the English-speaking New World. In October, while the eyes of the world were on the World's Fair in Norfolk, Richmond was host to one of the largest and most prestigious gatherings in its history. One hundred Episcopalian bishops from around the world were among some 1,000 delegates at the three-week conference.
“Prelates Arrive for Convention … Bishop of London and J. P. Morgan at Cynosure,” a News Leader headline announced in the Oct. 1 afternoon edition. The newspaper would cover the proceedings breathlessly until adjournment.
En route to Richmond many clergy and delegates stopped briefly in Washington for the cornerstone-laying of the Cathedral of St. Peter and St. Paul, the National Cathedral. A special nine-car train slowly proceeded southward, allowing passengers to view such attractions as the Episcopal seminary in Alexandria and, down the tracks, the house where Thomas “Stonewall” Jackson died. A lively Confederate veteran entertained the captive audience of Northerners with vividly nostalgic stories of the Lost Cause.
The train arrived at Elba Station — on West Broad at Laurel near the site of a current Virginia Commonwealth University dormitory — in early afternoon. A crowd of some 1,000 people welcomed the train, straining to catch a glimpse of the famous financier. But Morgan stayed aboard and dined with guests in a private car, he'd named Ajax, the last car of the train. His immediate party included high-profile Bishop P.H. Mayo of London, the parish of which Jamestown was once a part. According to one local account, the bishop “looks young enough to be a schoolboy, [his] face has a perpetual smile.” Evidently he was also an athlete, having once beat President Roosevelt at tennis.
Also in Morgan's party were the bishops of Massachusetts and Albany and their wives, a lady friend from Philadelphia, Mrs. John Markoe, who some historians suggest was Morgan's mistress, and one of Morgan's daughters, Louisa, who served as her father's hostess while in Richmond. Mrs. Morgan, who apparently didn't share her husband's keen interest in church matters, was touring in the south of France.
Awaiting Morgan at the depot were two French-made automobiles brought to Richmond to convey him and his guests during their stay. One was a 14-horsepower, red and gray Renault limousine; the other a 22-horsepower, bright red Leon Boiler, both driven by French chauffeurs.
As Morgan settled into the open Boiler, a news photographer set up his bulky apparatus. But just as he was about to snap the shutter, Morgan turned his face away from the camera. Nonplussed, the photographer lugged his equipment around the car. Again, Morgan turned away. Finally, after such torture, Morgan cooperated (he famously hated having his picture taken, probably because of a disfiguringly bulbous nose, a longtime affliction from untreated acne rosacea, an inflammatory skin condition).
The entourage made its way to 112 E. Grace St. Having deposited the luminaries, the cars returned to the station to retrieve the maids and valets plus 21 pieces of luggage.
The house Morgan had rented for his extended Richmond stay boasted excellent provenance. It belonged to Mrs. Thomas Rutherfoord, a daughter of its builder, James Thomas, a wealthy tobacconist before and during the Civil War and a generous contributor to Baptist causes (Thomas Hall at the University of Richmond is named for him).
“Imposing rather than beautiful … rather pretentious” is how Richmond architectural historian Mary Wingfield Scott later described the Italianate three story house. And though it was an impeccable address — Grace and Franklin streets were the most fashionable in town — it was a bit threadbare for Morgan. He had it brought up to his high standards prior to arrival with the main staircase and hallways laid with new wall-to-wall carpet and the installation of a modern bathroom.
To oversee the household Morgan imported one of New York's most in-demand caterers, Louis Sherry. Although he served as concierge, planned meals and attended to a myriad of household matters, Sherry lodged at the Jefferson, just a few blocks away, not on Grace Street. Although the Jefferson had been opened in 1895, it had recently been remodeled after a major fire in 1901 destroyed significant parts of the interior.
While in Richmond, Morgan preferred the privacy of Rutherfoord place, with surroundings and hospitality he controlled rather than attending the convention's dizzying round of social functions. He usually invited guests back from the convention to the house for lunch and dinners. The meals, however, were considerably more sedate affairs than what Sherry was capable of providing his fancy patrons at his Fifth Avenue establishment. Once in his ballroom, the caterer infamously served dinner to members of the New York Hunt Club as they sat on horseback.
After dinner, Morgan enjoyed a post mortem of the day's convention activities followed by cards or dominoes. If no one was available, so much the better. Solitaire was his favorite game.
The banker chain-smoked from morning to bedtime and during his Richmond stay often repaired to the porch overlooking Grace Street to enjoy a cigar. Most evenings Richmonders promenaded back and forth in front of the house hoping to catch a glimpse of the famous guest but the house was set back far enough from the city sidewalk that the gawkers weren't obnoxious even if they were obvious.
Apparently Morgan made little, if any contact with local financiers or businessmen during his stay here.
As the three-week convention wore on, however, Morgan's days were increasingly occupied by responding to troubling telegrams from New York that kept him abreast of deteriorating financial conditions and associates imploring him to return. On occasion he sat up all night contemplating the financial situation. But he had no intention of returning to Wall Street until after the convention.
He believed that if he left the convention early, it would only set off additional alarms.
On October 1, the day Morgan and his party had created a stir at Elba Station, just a few blocks south a crowd also gathered in front of Holy Trinity Church (it would later be renamed Grace and Holy Trinity) on Laurel Street for the dedication of its expanded and handsome granite-faced sanctuary. Construction was completed just in time to provide an up-to-date and sizable venue for the convention. Other Episcopal churches that were convention sites included St. Paul's; All Saints (at that time located on Grace Street); Monumental; St. James's (then on Marshall Street); St. Andrews in Oregon Hill and Grace (now demolished). Additional assemblies were held at the Masonic Lodge at Broad and Adams (now the Renaissance); the City Auditorium (VCU's Cary Street Recreation Center) and the House of Delegates chamber in the Capitol.
The Gothic revival-styled Holy Trinity Church fronted Monroe Park and was situated in the block south of the glorious Catholic cathedral that had been built through the generosity of Virginia-born robber baron Thomas Fortune Ryan and dedicated the previous Thanksgiving. Both parishes symbolized that Richmond was expanding westward, residential growth spurred in part by the city's popular streetcar system.
On the morning of Holy Trinity's dedication, a number of Richmonders set up camp, some with chairs, in the park to view the proceedings. During the bishops' procession, before the sermon by Bishop George Peterkin of West Virginia, one of the colorfully robed prelates broke formation to place a $5 bill in the hand of a picturesque, one-armed Confederate veteran who had stumbled over from the Confederate veterans' home at Boulevard and Grove to watch the proceedings.
While the convention wore on, the all-male House of Bishops and House of Deputies discussed church governance. Meanwhile, various women's auxiliary groups met separately at various locations around town to discuss and develop social ministry and missionary programs.
Locals were dazzled by the ongoing parade of large and flamboyant hats worn by these female visitors. The headgear was considerably more fashionable than what many Richmond and Manchester women could afford, with the two cities still recovering from the war years. Prior to one evening program, at which 4,000 people had jammed into the City Auditorium, the Bishop of Brazil instructed the ladies to remove their hats to allow more space and better sight lines of the stage.
Among the issues hotly debated at the convention were the church's stances on marriage and divorce and “the colored man's condition and uplift,” (as one newspaper put it) and blacks' role in the hierarchal church structure.
Among the most recognizable conference delegates was Bishop Samuel D. Ferguson, an African from Liberia. His quarters were neither the Morgan residence nor the Jefferson but the much plainer Miller's Hotel at 139 N. Second St. (along with the Reformers Hotel on North Sixth Street, one of the city's two listed black hotels).
Toward the end of the convention, an editorial in the News Leader chastised Bishop Henry Codman Potter of New York for dining privately with Ferguson, but rationalized: “If Bishop Potter saw fit to step a little beyond the line which we of the South regard as possible in our intercourse with colored people, it is his affair and none of ours. And the less we say about and think about it the better.”
Among the ways J. P. Morgan took an active part in the convention was his introduction of a measure seeking to limit the number of delegates at future assemblies. When debate took an acrimonious turn and the chair couldn't restore order, Morgan instinctively took charge. He stood up and began singing a hymn at full voice, “O Zion, Haste, Thy Mission High Fulfilling.” Gradually the other delegates joined him until there was music resounding from the Capitol chamber. His bill was defeated, but he'd gracefully brought decorum to a testy situation.
Two out-of-town excursions were highlights of the convention.
About 75 delegates boarded a chartered train to Williamsburg on Oct. 5 for a special service at the recently restored Bruton Parish Church. A highlight was the dedication of a podium given by President Roosevelt and the presentation of an elegantly bound Bible sent via the Bishop of London by King Edward VII.
Of course Morgan, as the personal host of the London bishop, was included in the select Williamsburg delegation — and he was ensured of inclusion in the ceremonies. Morgan took it upon himself to become keeper of the royal Bible until it found its place near the altar.
When the special train arrived in Williamsburg, however, no one had arranged for carriages to meet the party. So amid the swarm of clergy and pooh-bahs, Morgan took charge. He commandeered a worn, pre-Civil War horse cart with a young boy at the reigns. Morgan reportedly tossed the Bible up onto the front seat, shoved his party into the rear and hoisted himself up next to the driver. They were off to the church. And yes, Morgan proudly carried the Bible in the procession.
On Oct. 12 a much larger group of 1,500 conventioneers boarded a flotilla of steamboats for a cruise to Jamestown. Richmond civic leaders Henry Lee Valentine and Jonathan Bryan, respectively, served as hosts on the boats, the Pocahontas and the Berkeley. Guests were served a picnic lunch on board that included Brunswick stew, ham sandwiches and a selection of homemade relishes. On the Pocahontas, Polk Miller and His Negro Quartet, sang “old plantation” melodies which, according to one Richmond newspaper, “were appreciated by the northern folk.”
The same paper also reported: “It was a thrilling sight, the great religious service under the capacious awning with the thousands gathered. This contrasted with the first service, which was the first act of the settlers 300 years ago, which was under a small awning of sailcloth.”
Morgan skipped the Jamestown excursion, finding it a bit too festive and far too public for his tastes.
If Virginians were giving the conventioneers a dose of old Virginia, it was probably fine with Morgan. This was the birthplace of the Episcopal church in the United States. And this faith had given him solace throughout his life.
Morgan was born in Connecticut and educated in Boston and Europe. He was brilliant at mathematics and might have become a professor. It was in London, where his father has established himself as a prominent banker, that the younger Morgan became immersed in Anglican worship services, with a special love of hymns and religious music.
Morgan worked with his father, who financed many American businesses during the heady American expansionist period of the late 1800s, and a number of other banks. Eventually he became his father's representative in New York, seizing business opportunities, building wealth and making his own name.
In 1868 Morgan was elected to the vestry of St. George's Episcopal Church in Stuyvesant Square, the church where he was also married. Throughout his life he was supportive of his church's activities, especially its social ministry and its innovative programs to address training, employment and assimilation for the growing immigrant population on Manhattan's lower East Side.
It also speaks to Morgan's values that he never left the neighborhood where he'd first settled upon moving to New York in the 1850s. He didn't follow the Vanderbilts, Astors or Rockefellers to more stylish neighborhoods uptown, but stayed in the old neighborhood. He preferred the company of his family. During the summer months when his wife, children and grandchildren went to the family's Hudson River estate, he lived on the Corsair, his ocean-going yacht, docked in the East River not far from his home.
While Morgan's art and book holdings grew, he hired Belle da Costa Greene, a librarian from Princeton University, as curator. They worked together closely and she became one of the most respected rare book and European painting authorities in the country. Remarkable for the era was that although she passed herself as Portuguese, she was the daughter of African-Americans. Was there more to her relationship with Morgan? “We tried,” she told an interviewer later in her life.
Was Morgan concerned about the state of the economy when he arrived in Richmond in October 1907? Definitely. In January he'd traveled to Washington to discuss financial regulations and changes to the banking system with federal officials. And when he'd returned to New York from his summer abroad the market had lost $1 billion in value. A similar slice of the U.S. economy today would be $421 billion.
During his three-week stay in Richmond the telegrams came in faster and their messages were longer.
The convention finally adjourned Saturday, Oct. 19. Morgan and party took a late train to New York. “Residences which had been illuminated for these three weeks of the convention were nearly all dark last night,” the News Leader reported.
The next day, Sunday, uncharacteristically he did not attend services at St. George's but stayed home to receive a constant flow of financiers and banking officials. Lights burned around the clock for the next few days at Morgan's New York mansion. He avoided the press that had encamped at his front door.
Occasionally he'd sneak out of the house to be driven to his offices on Wall Street, meeting with such financial wheels as Thomas Fortune Ryan, H.C. Frick and E.H. Harriman.
With additional banks on the verge of collapse, his remedy to the panic was that the largest banks would take the shares of the small banks. He basically herded the heads of the largest banks in a parlor in his house, locked the door, and told them they had 10 minutes to agree. “This is the place to stop the trouble,” he announced.
It took the Panic of 1907 to see that old banking methods had to be reworked for the modern age. Morgan would work with Sen. Nelson Aldrich of New York during the next two years, and later Virginia Sen. Carter Glass, to develop a new system, what would become the Federal Reserve.
Just as the response to the Panic of 1907 brought change, will recent financial events require new thinking and new systems in global finance and banking? S