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Response to Review of Gentlemen Bankers: The World of J. P. Morgan

I would like to express my deep appreciation to Andrew Smith for his time and consideration in reviewing Gentlemen Bankers. I would also like to thank Reviews in History for the opportunity to continue the discussion that Professor Smith began in his review. In my response, I will discuss a few stories that might be of interest, which are not available in the text and may provide additional background to some of the points that he raised.

In the introduction to the book, I briefly mention that Gentlemen Bankers began as a study of American empire in East Asia. I first discovered the Morgans when I was researching the International Banking Consortium to China (IBC), an organization whose ostensible purpose was to lend money to China for the development of its national railways. In practice, the IBC did not further China’s national development. It was an instrument of western imperial power and a prime example of the alliance between private capital and government known as ‘dollar diplomacy’.

In addition to the Morgans, there was one other private American bank in the original IBC agreement and that was Kuhn, Loeb & Co. Because J. P. Morgan and Kuhn, Loeb were united in their support of expanding American and Japanese interests in China, I had originally assumed that the common commitment to empire overcame any personal differences caused by ethno-religious conflict. Over time, it became clear that this was at best a partial explanation, and as I kept returning to this question, it became a dominant theme of the book, superseding other questions. (An entire chapter on the politics of Chinese railway financing, for example, was eventually cut from the book due to considerations of length and readability).

In a business like private banking, which was and is defined by close, personal interaction, Kuhn, Loeb’s relationship with the Morgans stood out because they had strong working ties but were socially very separate. Thus, the presence of Kuhn, Loeb in the Morgans’ network made it necessary to question several basic assumptions about private banking networks. A major question the book asks and answers is how Anglo-American and German-Jewish bankers were able to work together and trust each other despite the hostility created by the anti-Semitism of the day.

As Professor Smith stated, the book shows how the search for the answer led in unexpected ways to the consideration of the role that other groups, such as women and African Americans, did or did not play in the lives of private bankers. In the process, the book addresses larger issues, namely the relationship between business and society and the role of social networks (broadly defined) in the functioning of economic markets. The book makes a point of studying the banks as financial institutions within their social and historical context. It sees culture as playing an important role in the world of finance, which in the case of international bankers, was both domestic and global in nature.

In many ways, the focus on culture contradicts the prevalent view that relationships between Jews and WASPs were simply based on money or economic gain. The challenge then was to unpack the historical process through which such an idea could achieve the status of accepted common sense. Pre-existing paradigms demonstrate considerable inertia unless compelling evidence can be introduced to destabilize them. That is in part why the book demonstrates a strong bias towards archival and empirical research and why I embarked upon the task of translating the Morgans’ 12 syndicate books, which are housed in the Pierpont Morgan Library. I did not want to rely on anecdotes to determine the degree to which Kuhn, Loeb and the Morgans worked together relative to other banks and financial institutions. I believed that a more thorough quantitative assessment of their relationships could be known given the availability of archival data.

At the time I did not know, however, that the process of translating the syndicate books would take about two to three years. Going through the process, which required some serious digital hardware, shed some light on why it had never been done before. But in the end, the archival analysis allowed me to write with confidence about the position of Kuhn, Loeb (or any bank or financial actor) in the Morgan network during the time J. P. Morgan & Co. was a private unlimited liability partnership. The same kind of method was repeated for mapping the banks’ social networks, which were based on the Social Register, census data, obituaries, partnership agreements, and geographic maps that were derived from 19th- and early 20th-century map data. Only six maps eventually made it into the book, but the arguments presented were based on substantially more data than even included in the notes. Hundreds more locations were identified, including those from ten years of Pierpont Morgan’s datebooks and the homes of the directors of First National Bank and National City Bank over a 40-year period, which were then used to put Morgan and Kuhn, Loeb partners’ residences into a relative context.

I make the point about empirical research because it speaks to Professor Smith’s discussion about Alexander Tabarrok’s 1998 article in the Quarterly Journal of Austrian Economics regarding the alleged conflict between Morgan and Rockefeller interests in the early 1930s. I cannot confirm or disprove Professor Tabarrok’s thesis because such a project would require more careful analysis, and, as Professor Smith suggests, would involve archival research, most likely at the Rhode Island Historical Society and Baker Library at Harvard Business School where Winthrop Aldrich’s papers are kept. (Aldrich seems to play a major role in the article). One point I would make is that during the time the Glass-Steagall act was being debated and submitted for Congressional consideration, Kuhn, Loeb was suffering a general crisis in leadership due to the serious illness and death of the senior partners, starting with the death of Mortimer Schiff in June 1931. Any archival research would first have to establish who at the firm would have been spearheading any such alliance with outside interests and to what degree.

To address Professor Smith’s larger concern, stories of historical figures can achieve the status of truth if they are repeated often enough despite conflicting evidence. In my research, I encountered several stories of this nature, such as a persistent rumor that Jacob Schiff threatened to disown any of his descendants who married out of the Jewish faith. (Schiff’s will, which is available in the papers of Dorothy Schiff, his granddaughter, at the New York Public Library Manuscripts and Archives division, contradicts this claim). Others stories remain the subject of speculation because the evidence is not there or that which remains requires greater interpretation. An example would be the question of whether or not Pierpont Morgan had a private understanding with Belle Greene, his librarian, about her being of African descent. (Based on a letter she wrote him in 1913, I would argue that this was not the case). The more important point is that often even the strongest of evidence can have little impact on widely held and accepted narratives. This does not stop us from doing the work that we do as historians, but it certainly makes it more difficult. In many ways, that is the challenge of the book with regard to the study of social relations in relation to the world of finance.

In conclusion, I would like to thank Professor Smith for his generous and detailed review of Gentlemen Bankers. My hope is that readers will find the book useful for historical research and for the teaching of American history.