Books: A nose for business

STEPHEN FAY Morgan: American Financier by Jean Strouse Harvill pounds 25

A great deal of money has been spent lately branding J P Morgan, the Wall Street investment bank, which is anxious to become a familiar and trusted name among potential British clients. John Pierpont Morgan, from whom the bank originally took its name, must be turning in his grave. He never needed to purchase space in newspapers to register an image or establish a reputation. He was the greatest of the Robber Barons, the unreconstructed capitalists whose money, energy and entrepreneurial genius transformed the United States into the world's leading economy and the epicentre of finance.

Morgan was known as "the field-marshal of industry"; called "the financial Moses of America"; and compared to Alexander the Great by the Yale professor from whom he received an honorary doctorate. But those were minority views, and they became not so much unfashionable as intolerable. Most 20th-century historians characterise J P Morgan as one of the original unacceptable faces of capitalism. Before his death he was excoriated as "a beefy red- faced, thick-necked financial bully [who] bawls his orders to stock markets, directors, courts, governments and nations". Since then, his reputation has lain mostly in the hands of historians who were not enthusiastic about the process of capital accumulation.

Jean Strouse, who works for the New York Review of Books and has written a prize-winning biography of Alice James (sister of Henry), is not an obvious candidate to tell the story of J P Morgan. Partly because she carries no political baggage, but principally because she has rummaged through more documents than any of her predecessors, she draws a compelling new portrait of a singular man who used his wealth to lead a remarkably rich life.

Strouse's Morgan is brusque, publicity-shy, neither introspective nor articulate, entirely lacking a coherent philosophy. He is also the individual merchant banker who deployed the power of his personality and the considerable resources of his bank to act as the US's lender of last resort, and to prevent a catastrophe on Wall Street in 1907 which could have tumbled the world economy into recession. Thomas Edison developed electric lighting, and Andrew Carnegie created US Steel, with money lent by Morgan.

As a banker who was the son of a banker, Morgan had an inherited distaste for competition. Disorderly markets only endangered profits and created bankruptcies. Consequently, Morgan was an enthusiastic supporter of trusts, in which companies in the same industry formed cartels to control prices, and guarantee profits. Trusts were a fine thing for the industrialists who were protected by them, and for their bankers. Politically they were poison: classic examples of capitalist manipulation, and irresistible targets for shrewd populist politicians like Theodore Roosevelt.

Strouse makes this arrogant and daring capitalist an intriguing case of historical revisionism. For most of this century, when the prevailing political philosophy was centre-left, stone-faced capitalists like Morgan were written off as the architects of depression and unemployment rather than of an industrial expansion which created millions of new jobs. In the 1990s, capitalists and entrepreneurs like Bill Gates and the Silicon Valley billionaires are playing a similar crucial role to J P Morgan's in the transformation of the economy. Just like Morgan, their power and wealth creates an undercurrent of hostility as well as bemused admiration. But to be able to speak of them in the same breath shows how much Strouse has helped to rehabilitate Morgan's dire reputation.

Morgan's women are as interesting as his money. A sick, depressive mother, a lively first wife who died after four months of marriage, a sick, depressive second wife, a much loved lesbian daughter, a string of mistresses, the greatest of whom was the best friend of her predecessor as his mistress, and a final fling, aged 75, with Victoria Sackville, mother of Vita Sackville- West, who married Harold Nicolson and begot the Nicolsons.

The most glamorous of them all was his librarian, Bella da Costa Greene, who cut a swathe through the art world as the lover of luminaries like Bernard Berenson and Sidney Cokerell, director of the Fitzwilliam in Cambridge, Morgan was one of the great collectors of his or any other age, and his librarian wielded power and influence in the rare book and manuscript market. A heady mixture of wit and sex was made irresistible by her access to Morgan's presence and his wealth.

Whether they were lovers is not known, but they were certainly intimates. Strouse writes: "He entrusted her not only with his literary masterpieces, but also with intimate secrets. She ghost-wrote some of his letters, ran his private errands, helped him draw up guest lists, saw to it (she claimed) that he was regularly shaved, manicured and pedicured, opened his mail - except when the handwriting looked unmistakably `blonde' - and arranged the schedule of his female callers at the library so that one wouldn't run into the next." What none of them knew was that Bella's father was black - the first black to graduate from Harvard.

Everyone knew about J P Morgan's nose. In his 50s he developed rhinophyma which turned his nose into a large, glowing purple bulb. When a European visitor told Morgan of a cure - administered by a celebrated Berlin professor - Morgan replied that he knew about the professor, but he could not possibly avail himself of the treatment: "If I come to New York with my nose cured, every street boy will point to me and split his sides laughing. Everybody knows my nose and it would be impossible for me to appear on the streets of New York without it."

Oh, the price of fame.