The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance.

• Author: Bivin, David G.

Ron Chernow's book describes the evolution of financial markets from the perspective of one of its most enduring institutions, "The House of Morgan." His approach is apt: in its early years, Morgan's played a major role in defining the nature of investment banking. More recently, government intervention and increased competition have led the bank to diversify into more speculative activities such as trading and hostile takeovers. The author exploits the interesting contrast between earlier years when banking, conducted under the "Gentleman Banker's Code," was governed by propriety and today's environment of hostile takeovers where the bank's loyalties are more transient and scandals are a common occurrence. The contrast between these eras is particularly evident with Morgan's because of J. P. Morgan's aversion to speculative ventures.

As one might imagine, the history of the House of Morgan involves many controversies. These revolve around issues such as the abuse of market power, war-time loyalties and ethics. The author deals with the controversies in an even-handed way. His in-depth character studies provide a motivation for the behavior of the people involved and permit the reader to draw his or her own judgments. The characterizations also lend continuity to the bank's story and provide a vivid means of understanding the evolution of the bank. Chernow has clearly devoted a lot of effort to understanding the people about whom he was writing. The larger-than-life characters involved in the bank are one of the features which make the book so enjoyable.

The Morgan investment bank was conceived in 1838 in London by George Peabody. In fact, the first Morgan, Junius, did not become a partner until 1854. His son, John Pierpont (J. P.), commenced operations in New York a few years later. He quickly established himself through his dealings with the railroad industry. Eventually, a good portion of his power derived from the variety of trusts over which he exercised control. J. P. emerges from the book as a gruff banker with a keen eye for profit. His sense of social responsibility was well-developed, if somewhat anachronistic: he opposed both socialism and competition and, through this philosophy, saw many of his actions as a service to society. The public, of course, took a dim view of his dealings. To the end, he was baffled at the public's mistrust. Nevertheless, he was respected by other businessmen for his integrity and honesty.

Pierpont...