Book Review by Greg Lubrano (Masters Student, St. John's University)
Susie J. Pak. Gentlemen Bankers: The World of J.P. Morgan. Cambridge: Harvard University Press, 2013. ISBN: 9780674073036. $55.00. 368pp.
In her detailed analysis of J.P. Morgan & Co. in Gentlemen Bankers: The World of J.P. Morgan, Susie Pak examines the late-nineteenth and early-twentieth-century banking community and the intricate subtleties that underlie the changes that the firm underwent in this firm in this period. Discussing the multiple relationships that J.P. Morgan & Co had with other banks or financial groups, and the people who headed them, Pak explores how the firm conducted business with those from significantly different ethno-cultural social spheres. Her conclusion argues that the nature of the American banking system at this time was based not only on the separation of the private and professional worlds of individual bankers, it was also predicated on formally established relationships founded on trust, “that character and confidence were the foundations of their business”(p.2). Providing a new outlook with which to view financial institutions, Pak asserts that banks such as Morgan are part of a complex network of interactions, and it is necessary to carefully investigate these relationships in order to understand this community.
In her introduction to Gentlemen Bankers, Pak establishes why J.P. Morgan & Co., and the banking community of the early-twentieth century, possessed relationships with firms or groups separate from their social sphere. Explaining how such rules of banking etiquette were developed, Chapter One examines not only the creation of the House of Morgan as a private and commercial bank but also the ‘gentlemen banker’s code.’ This code established the premise of the banking community’s standard of relations, basing it on a banker’s reputation (p.20). Chapter Two analyzes the social interests of the Morgan partners, including the social clubs they belonged to, as well as the nature of high-society marriages. All of this centered on the public image that bankers aspired to demonstrate amongst the members of their community and society at large. The subsequent chapter discussed the social separation of J.P. Morgan & Co. and German Jewish bankers, particularly the firm of Kuhn, Loeb & Co. Although possessing many structural similarities in their banking methods, the ethno-cultural distinction between the two firms demonstrated that if such barriers were present, “Financial efficiency was not the goal of all economic decisions” (p.84).
The remaining chapters of Pak’s work concern the successive issues that gradually changed the nature and structure of the Morgan’s business model. In Chapter Four, Pak describes how the shift in leadership from Pierpont Morgan to his son Jack mirrored the changes that occurred in the United States with the First World War. This conflict had a fundamental influence on how J.P. Morgan & Co. would conduct business and its relation to the authority of the United States government. Chapter Five examines the increase in the Morgan firm’s inclusivity after the war, admitting men who lacked any kinship relationship to the firm but who had managed to achieve success through elite university education. Desirous of preserving their exclusive public appearance and the networks where future partners were produced, however, the Morgans made sure to maintain the segregationist standards at Harvard University and other schools to keep these groups socially separate. Chapter Six explains the conflict that the Morgan firm faced in doing business with Japan, including suppressing their racial beliefs and dealing with the belligerent actions of the nation prior to the Second World War. In her final chapter, Pak asserts that the apparent change in J.P. Morgan & Co.’s role from private bank to “public servant” benefitted the firm, gaining the, “formal backing of their government” (p.218). In her conclusion, Pak contends that while many changes had affected the Morgans, the firm was able to preserve such aspects of their community as the distinction between the private and public sphere and the importance of trust, which remained central to the complex network of banking (p.225).
In revealing how J.P. Morgan & Co. and the American banking community was able to alter its structure, while at the same time preserving the essential facets of its business relationships, Pak has produced a work that displays how the private and professional worlds of these bankers were completely distinct from each other. Despite this separation, the means with which they kept these pillars in place reveals the morally objectionable ideology of America’s elite businessmen. Nevertheless, Pak, through her impressive use of quantitative history, demonstrates how the Morgan firm was not impervious to the changes of history, such as the greater public awareness and responsibility that New Deal politics fomented; in the end, though, their private ideology remained. This book would appeal to a wide general readership; not only to those who wish to know more about the nature of one of the financial community’s most famous banks, but also those interested in the structure of elite society at the turn of the twentieth century.