Jp Morgan bankers history’s not editing just pay attentions #capitalism #energy #education #listen

Hinzugefügt: 2026-05-19

[00:00:00]And on the morning of the 5th of February, 1895, J.P. Morgan walked into Grover Cleveland's office and told the president his government was already in default. The Treasury had roughly $9 million in gold. A single investor held a draft for $10 million against it. "If that $10 million draft is presented," Morgan said, "it will all be over before 3:00."

[00:00:20]Cleveland asked, "What do you What suggestion do you have to make, Mr. Morgan?"

[00:00:25]The crisis had been building for 2 years. Foreign investors, afraid the US would abandon the gold standard for silver, had been liquidating American securities since 1890. Between 1890 and 1894, they pulled $300 million in gold out of the country. By January 1895, the Treasury reserve had fallen to $45 million, less than half the $100 million floor the government was expected to maintain. It was losing more than $2 million a day.

[00:00:49]Cleveland could not get Congress to authorize new gold bonds. His own Treasury Secretary, John Carlisle, had canceled negotiations with private bankers on the 4th of February. One day before, Morgan showed up uninvited.

[00:01:04]Morgan brought a lawyer named Frank Stetson, who had found a statute from 1862.

[00:01:11]During the Civil War, Congress had authorized the Treasury Secretary to purchase coin with any of the bonds or notes of the United States upon such terms as he may deem most advantageous to the public interest. That law had never been repealed. If the gold rescue could be framed as the purchase of coin rather than the sale of gold bonds, it required no congressional approval.

[00:01:35]Attorney General Richard Olney created the statute on the spot and confirmed it.

[00:01:42]The Morgan-Belmont Syndicate, if you remember my Q series, um Morgan's firm, August Belmont & Co., the American arm of the Rothschilds, J.S. Morgan & Co. of London, and N.M. Rothschild of London would supply 3.5 million ounces of gold coin. The US government would receive $65.1 million in gold and pay back 62.3 million in 30-year bonds at 4%.

[00:02:09]Gold was trading at $18.60 per ounce.

[00:02:12]The government was buying it at $17.80.

[00:02:15]It paid a $3 million premium on the transaction. At least half the gold had to come from abroad, delivered at no more than 300,000 ounces per month.

[00:02:27]Cleveland extracted one further guarantee that Morgan would prevent gold from flowing back out of the country for the life of the contract. Morgan agreed.

[00:02:38]Jean Strouse in her biography Morgan, American Financier, notes that the that this amounted to Morgan controlling the international markets for gold and foreign exchange during the life of the contract. So, we had eight months of private sovereignty. The contract ran from February to September 1895. For those eight months, the private syndicate, including the Rothschilds and J.P. Morgan, held the responsibility and the machinery for the maintaining of the stability of the entire American monetary system.

[00:03:10]The Cambridge academic Matthew Simon, in a paper for the Business History Review, described it plainly. The American government subcontracted its responsibility for the maintenance of the monetary stability to a private syndicate of businessmen.

[00:03:26]The bond issue sold out in 20 minutes when it was offered to the public.

[00:03:29]Morgan then used that investor enthusiasm to sell a further $70 million in American railroad bonds in London.

[00:03:38]Morgan refused to disclose how much profit the syndicate made. When congressional investigators asked, he said, "I am perfectly ready to state every detail of the negotiation up to the time that the bonds became my property and were paid for. What I did with my own property subsequent to that purchase, I decline to state.

[00:03:57]The committee had no power to compel him.

[00:04:01]What came after for Cleveland was total political destroy destroyal?

[00:04:07]It's not a word.

[00:04:08]He was destroyed.

[00:04:10]His own party accused him, the Democrats, of handing the national finances to the very symbol of capitalist power.

[00:04:25]The Democrats said Cleveland had made the credit of the United States dependent on the cooperation of a private banker.

[00:04:35]>> [snorts] >> Um J.P. Morgan's grip on American finance has only tightened since.

[00:04:46]He repeated this role informally in the panic of 1907, personally organizing bank bailouts from his Madison Avenue library while locking bank presidents in the room until they agreed to his terms.

[00:04:59]The spectacle of this one man stabilizing the financial system twice was exactly what pushed Congress then towards the Federal Reserve Act, which was passed in December 1913.

[00:05:10]And it's bad.

[00:05:12]Uh the Fed was, in structural terms, the government's answer to having needed J.P. Morgan.

[00:05:20]Huh?