How John Payrpont Morgan Saviour of the USA?
the Founder of huge corporations, J. Payrpont Morgan was an opponent of the market competition. He considered that fight for the market distracts the companies from the main thing - earning money. And here, strangely enough, he was in accord with the most ardent opponents of capitalism seeing a way to association of proletarians and approach of the bright communistic future in integration of capitalist production.
However not socialists were the main enemies of Morgan, and the native state. Politicians of the USA perfectly saw that emergence of monopolies leads to crash of the main basis of the American way of life - free competition. Besides, in a kingdom of monopolies the unenviable share was allocated for politicians. From masters of the state they turned into servants Morganov and Rokfellerov.
Reasons for such fears were considerable. According to historians, at the end of 19 - go centuries at the disposal of J. Morgan of money was more, than at the disposal of all United States of America. About what it was written in an entertaining book “Capitalist sharks“ which the underground millionaire Alexander Ivanovich Koreyko surely would buy, be at him spare cash. By the way, J. Payrpont Morgan`s nickname in business (and not only business) circles was “Shark“ (“Shark“). Because he could swallow anyone, without having choked.
The state as far as could, limited boundless appetites of “shark“ - Morgan, and it is natural, that answered with mutual hostility to the government and government structures. But to Morgan it was already necessary to save in the twilight of the life the country from terrible accident - a collapse of stock markets.
Historians call this crisis “exchange panic of 1907“ . Everything began with the fact that in 1906 Great Britain increased discount rate. Outflow of the capitals from the USA to Great Britain began. The law of the nature - fish looks for where is deeper, and money wanders there where they pay for a loan more. It is necessary to tell that the channel of pumping of gold from the USA to England even since Civil war was reliably controlled by Morgan`s bank. And Morgan received considerable benefit from this control.
Outflow of the capitals worsened a financial situation in the USA. But the trouble does not go one. In the middle of 1907 in the world market there was a falling of copper prices. As a result strongly stocks of copper concern “United Cupper“ depreciated. It was one of those giants - monopolists whose creation was so welcomed by Morgan. “United Cupper“ was considered as absolutely “unsinkable“. Financiers regarded stocks of this concern as the most reliable means of an investment of money, along with the state bonds of the developed industrial countries. The shares “United Cupper“ were taken by many broker firms and commercial banks to give solidity to the investment portfolios.
As we see, the American politicians trying to limit monopolization of national economy were right. Crash of one of monopolies turned back chain reaction of ruins of the large and small enterprises. Bulk selling of the securities which appeared trust began. As a result the share price for New - York stock exchange catastrophically fell. The indicator of exchange activity, Dow`s index - Jones, in the second half of October, 1907 for several days decreased by 30-40%.
Securities instantly lost the value. Investors lost trust to banks and began to take away from them the money. Banks did not have cash for payment of all the debts. One by one they began to declare bankruptcy. Bank checks instantly ceased to accept over all country. Nobody was sure that the received check will manage to be cashed. As for everything and everywhere began to demand cash payment, there was an acute shortage of cash. Began not to get money, and interest rates for the credits flew up on celestial height.
The U.S. Treasury Department entered fight against accident too late. The considerable sums of cash were allocated to the main banks of the country. But this money was not enough for extinguishing panic any more. The state lacked own money! It could not pay off according to the obligations! It is difficult to expect what accident could be disorder of a financial system of the USA.
And then in the battlefield there was aged John Payrpont Morgan. Money at it on hand as it was already told, was more, than at the state. At the crucial moment it sent this money to the necessary course. Morgan granted to group of the central banks the loan from own means on very preferential terms. Besides, to those enterprises whose money was stored in Morgan`s bank, percent and dividends were ahead of schedule paid. Panic was extinguished, the trust to banks began to be restored.
Morgan made one more thing which could not and had no right to do the state. He asked large exchange speculators to stop the auction in the exchange for some time and not to play on decrease in stocks. Morgan`s request at that time was more powerful, than the order. Hardly anyone - nibud would like to contradict it. To the Nye - the York stock exchange - the main source of market panic - for several days stopped the work.
With great difficulty order in the market of share papers was restored.
J. Morgan`s feat can fully be estimated as the patriotic act. He acted, apparently, to the detriment of himself, rescuing from death of the main enemy - the U.S. Government. Without counting that figures from Washington will decide to deliver it a gilded monument.
What there monument! The government did not even terminate the investigation begun against Morgan in violation of the antitrust law. And only the death of the banker relieved it if not of court, then of long judicial proceedings.