he relationship between government and business used to be more conciliatory than predatory. When Laissez-faire economics ruled the day, politicians were far less willing to regulate either the generally honest financiers or the unscrupulous robber barons.
This imaginary barrier shattered when Theodore Roosevelt unexpectedly became president following William McKinley’s assassination on Sep. 14, 1901. Roosevelt was worried about the growth of big business, Wall Street’s influential hand, and financial takeovers by large companies that threatened the existence of their smaller counterparts. He wanted to reshape business through government regulation, and his first target was one of America’s great entrepreneurs, John Pierpont (J.P.) Morgan.
Yet there was more to this story than meets the eye. Gerard Helferich’s book, An Unlikely Trust: Theodore Roosevelt, J.P. Morgan and the Improbable Partnership That Remade American Business, shines an impressive light on the ability of a progressive, right-leaning president and a capitalist businessman to work together toward a common goal: protecting the American economy from impending disaster.
The Roosevelts and Morgans travelled in similar social circles. The two families shared several traits, including their wealth, philanthropy, and business acumen. Both were “lifelong Republican” families and Union League Club members. And though their soon-to-be famous offspring had different priorities and upbringings, they shared some unique traits.
Roosevelt “had not been bred for the presidency,” wrote Helferich. He was a “delicate” and “sickly” child, and even described himself as “nervous and timid.” This started to change when his father encouraged him to take up sports like boxing and weightlifting. He was interested in history and natural history, and initially considered a scientific career. He was also extremely close to his father, who preferred philanthropy over commerce, emphasized morality, and was described by Helferich as “strong, handsome, fun-loving, [and] unpretentious despite his wealth.”
Morgan, on the other hand, was raised to be a banker. Like Roosevelt, he was a sickly child. Although he would “mature into an imposing figure,” he would never be able to “throw off his childhood sense of infirmity” and suffered from depression and nervous exhaustion. He wasn’t a scholar, but was well served by his strong interest and aptitude in math and business. His father, like Roosevelt’s, was an influential figure, a determined man who “strove to impress on Pierpont the importance of hard work, frugality, and above all, uncompromising integrity.”
Here’s another strange similarity that Roosevelt and Morgan shared: their first wives both died tragically. The former was married to Alice between 1880 and 1884. She passed away two days after giving birth to their only child, a daughter who shared her first name. The latter married Amelia (or “Memie”) in 1861, but she died the following year from tuberculosis contracted on their honeymoon.
It was the vicious, cutthroat arena of American business where these two powerful men would be indelibly tied as rivals and partners.
Helferich points out that “most Americans” agreed with Roosevelt that “corporations should be regulated and that, since they operated across state borders, the task must fall to the federal government.” The president’s first target was trusts, but not all of them, because “he saw that the corporations had already become a permanent feature of the business landscape, and he welcomed the increased productivity, higher standard of living, and international competitiveness they brought.” Indeed, Roosevelt’s internal battle between his political progressivism and his natural conservatism is one of the this era’s enduring contradictions. It caused members of his own party—and the financial community—to grow frustrated with the war hero’s exasperating views.
Morgan had even admitted to a reporter, “I am afraid of Mr. Roosevelt, because I don’t know what he’ll do.” When Roosevelt caught wind of this remark, he quickly retorted, “Mr. Morgan is afraid of me because he does know what I’ll do.”
Nevertheless, Morgan sent two business partners to meet with the new, ex-cowboy president in the White House in Oct. 1901. One of them was Robert Bacon, a friend and former classmate of Roosevelt’s who had earned both men’s trust. The other was George Perkins, who would later become Morgan’s unofficial “secretary of state.” Both men suggested Roosevelt “go slow” on the trusts and avoid the temptation of turning a “searchlight” on this industry.
Roosevelt, as history as shown, had two modes: overdrive and faster than the speed of light. His annual message to Congress the following month made several suggestions, including “trusts must be forced to open their records to government inspection,” the federal government “must regulate interstate business,” and the creation of a “Cabinet-level position of secretary of commerce and industries.” Some financiers nodded approvingly at these measures, but Morgan “was not among them.”
Helferich notes that Morgan was not a laissez-faire economist any more than Roosevelt: he looked at business “through the prism of Victorian morality” and agreed with the president that “individuals and corporations behaved sinfully, and that they must be compelled to act honorably.” But the two men disagreed substantively on what form regulations should take. Roosevelt “considered the president the natural authority to cull the sinners from the corporate saints,” whereas Morgan viewed “government’s role as simply supportive, such as maintaining the gold standard and the tariff and preserving the stable political and financial climate needed for business to thrive.”
Even so, they found ways to work together.
Striking union workers in the mines and railroads caused them both headaches, albeit for different reasons. Prominent union leader Samuel Gompers called the 1902 Coal Strike “the most important single incident in the labor movement in the United States”; the 1903 Northern Securities suit ended a railroad monopoly that threatened the very nature of free market competition. Morgan, who was the “ultimate authority behind the coal mines,” was initially left out of the negotiation process but supported the White House’s involvement. As the two strikes and legal battles waged on, Morgan played a crucial role in helping find an equitable resolution, which led Roosevelt to express his “highest respect and admiration” for the financier’s involvement.
These matters proved to be a “watershed” moment in the once-volatile Roosevelt-Morgan relationship. Although the president would file more than 40 anti-trust suits against prominent corporations while in office, “he would never again prosecute a firm controlled by the House of Morgan.”
Another significant moment between Roosevelt and Morgan in An Unlikely Trust involved the Panama Canal. The Panamanian Revolution and eventual separation from Colombia was a huge headache for Roosevelt, who was working closely with French engineer Philippe Bunau-Varilla to ensure the canal’s success. Roosevelt asked Morgan to help secure the U.S.’s $40 million payment to France because of “his ability to transfer enormous quantities of cash without ruffling world money markets.” It was a favor few people could grant, and one that Roosevelt desperately needed. The president would later call the canal “by far the most important action I took in foreign affairs during the time I was president,” and he knew that the financial giant had served an important role in this regard.
Roosevelt and Morgan would never be called BFFs (best friends forever, as the kids often say), but An Unlikely Trust emphatically proves that their collaboration “established a new paradigm for how business and government would work together.” It may have been unlikely and unexpected, but it has clearly stood the test of time.