Jekyll_text

236 THE CREATURE FROM JEKYLL ISLAND
SINK THE LUSITANIA! 237
quickly returned to the United States to acquire war-sensitive materials,
and Morgan was selected as the U.S. purchase agent for those
as well. A commission was paid on all
transactions in both directions:
once when the money was borrowed and again when it was
spent. Furthermore, many of the companies receiving production
contracts were either owned outright by Morgan holding companies
or were securely within his orbit of bank control- Under such an
arrangement it will not be surprising to learn, as we shall in a
moment, that Morgan was not overly anxious to see hostilities come
to a close. Even the most honorable of men can be corrupted by the
temptation of such gigantic flows of cash.
Writing in the year 1919, just a few months after the end of the
war, John Moody says:
Not only did England and France pay for their supplies with
money furnished by Wall Street, but they made their purchases
through the same medium.... Inevitably the house of Morgan was
selected for this important task Thus the war had given Wall Street an
entirely new role. Hitherto it has been exclusively the headquarters of
finance; now it became the greatest industrial mart the world had ever
known. In addition to selling stocks and bonds, financing railroads,
and performing the other tasks of a great banking center, Wall Street
began to deal in shells, cannon, submarines, blankets, clothing, shoes,
canned meats, wheat and the thousands of other articles needed for
the prosecution of a great war.
The money began to flow in January of 1915 when the Hduse of
Morgan signed a contract with the British Army Council and the
Admiralty. The first purchase, curiously, was for horses, and the
amount tendered was $12 million. But that was but the first drop of
rain before the deluge. Total purchases would eventually climb to
an astronomical $3 billion. The firm became the largest consumer on
earth, spending up to $10 million per day. Morgan offices at 23 Wall
Street were mobbed by brokers and manufacturers seeking to cut a
deal The bank had to post guards at every door and at the partners'
homes as well. Each month, Morgan presided over purchases which
were equal to the gross national product of the entire world just one
generation before.
1. John Moody, The Masters of Capital (New Haven: Yale University Press, 1919),
pp. 164-165.
2. Chemow, pp. 187-89.
1
Throughout all this, Morgan vigorously claimed to be a pacifist.
"Nobody could hate war more than I do/' he told the Senate
Munitions Committee. But such professions of righteousness were
difficult to accept. Lewinsohn comments:
The 500 million dollar loan contracted in autumn 1915 brought to
the group of bankers, at whose head Morgan was, a net profit of 9
million dollars.... Again, in 1917, the French government paid to
Morgan's and other banks a commission of 1,500,000 dollars, and a
further million in 1918.
Besides the issue of loans there was another source of profit: the
purchase and sale of American stock which the Allies surrendered so
that they could buy munitions in the States. It is estimated that in the
course of the war some 2000 million [two billion] dollars passed in this
way through Morgan's hands. Even if the commission was very small,
transactions of such dimensions would give him an influence on the
stock market which would carry very real advantages.. .
His hatred against war did not prevent him, citizen of a neutral
country, from furnishing belligerent powers with 4,400,000 rifles for a
matter of $194,000,000.... The profits were such as to compensate to
some degree his hatred of warfare. According to his own account, he
received, as agent of the English and French governments, a
commission of 1% on orders totalling $3,000,000,000. That is, he
received some $30,000,000.... Besides these two chief principals,
Morgan, however, also acted for Russia (for whom he did business
amounting to $412,000,000) and for Italy and Canada (figures for his
business with the last two not having been published).. .
J.P. Morgan, and some of his partners in the bank, were at the time
shareholders in companies that were ... concerns which made
substantial profits from the orders he placed with them.... It is really
astonishing that a central buying organization should have been
confided to one who was buyer and seller at the same time.
GERMANY'S U-BOATS ALMOST WON THE WAR
But there were dark clouds gathering above Wall Street as the
war began to go badly for the Allies. With the passage of time and
the condensing of history, it is easy to forget that Germany and the
Central Powers almost won the war prior to U.S. entry. Employing
a small fleet of newly developed submarines, Germany was well on
her way to cutting off England and her allies from all outside help.
It was an amazing feat and it changed forever the concept of naval
warfare. Germany had a total of twenty-one U-boats, but, because
1- Lewinsohn, pp. 103-4, 222-24.