John Pierpont Morgan, the preeminent finance capitalist of the late nineteenth century, loathed competition and sought whenever possible to eliminate it by substituting consolidation and central control. Morgan’s passion for order made him the architect of business mergers. At the turn of the twentieth century, he dominated American banking, exerting an influence so powerful that his critics charged he controlled a vast “money trust” even more insidious than Rockefeller’s Standard Oil.

Morgan acted as a power broker in the reorganization of the railroads and the creation of industrial giants such as General Electric. When the railroads collapsed, Morgan took over and eliminated competition by creating what he called “a community of interest.” By the time he finished “Morganizing” the railroads, a handful of directors controlled two-thirds of the nation’s track. Morgan’s directors were bankers, not railroad men, and they saw the roads as little more than “a set of books.” Their conservative approach aimed at short-term profit and discouraged the technological and organizational innovation necessary to run the railroads effectively.

In 1898, Morgan moved into the steel industry, directly challenging Andrew Carnegie. The pugnacious Carnegie cabled his partners in the summer of 1900: “Action essential: crisis has arrived . . . have no fear as to the result; victory certain.” The press trumpeted news of the impending fight between the feisty Scot and the haughty Wall Street banker. But for all his belligerence, the sixty-six-year-old Carnegie yearned to retire to Scotland. Morgan, who disdained haggling, agreed to pay Carnegie’s asking price, $480 million (the equivalent of about $10 billion in today’s currency). According to legend, when Carnegie later teased Morgan, saying that he should have asked $100 million more, Morgan replied, “You would have got it if you had.”[[LP Photo: P18.05 Homestead Steelworks/ROA_04224_18_P05.JPG]]

Morgan’s acquisition of Carnegie Steel signaled the passing of the old entrepreneurial order personified by Andrew Carnegie and the arrival of a new anonymous corporate world. Morgan quickly moved to pull together Carnegie’s chief competitors to form a huge new corporation, United States Steel, known today as USX. Created in 1901 and capitalized at $1.4 billion, U.S. Steel was the largest corporation in the world.

Even more than Carnegie or Rockefeller, Morgan left his stamp on the twentieth century and formed the model for corporate consolidation that economists and social scientists justified with a new social theory later called social Darwinism.