The Story of JPMorgan Chase & Co. (JPM), the Most Powerful Bank in America

Morgan’s advanced age, combined with his unprecedented degree of influence, made many on Wall Street and Washington realize that there had to be a more reliable backstop to the financial system. Six years later, the Federal Reserve was formed. Morgan died the same year, leaving behind a legacy of financial modernization and lumbering megacorporations that would define American business before the onset of the Great Depression. Morgan left behind an estate worth about $80 million (equal to nearly $2 billion today), and on hearing of this sum, oil baron John D. Rockefeller was heard to quip, “and to think, he wasn’t even a rich man.”

JPMorgan Chase & Co. (NYSE:JPM) continued to thrive after Morgan’s death, as John Pierpont Morgan Jr. stepped into leadership of his father’s bank. Under Junior’s leadership, the Morgan bank became a major financier of World War I, and after the war it assumed management of Germany’s reparation payments. The Great Depression and the subsequent sweeping financial reforms implemented during President Franklin D. Roosevelt’s first term severely eroded JPMorgan Chase & Co. (NYSE:JPM)’s power, particularly once the Glass-Steagall legislation forced it to get out of the investment-banking field. This led to the creation of Morgan Stanley (NYSE:MS) by J.P. Morgan’s grandson Henry Morgan and former Morgan investment banker Harold Stanley in 1935. The new investment bank immediately became a major player on Wall Street, gobbling up a quarter of the entire industry’s business during its first year.

Source: Michael Daddino via Flickr .

The JPMorgan Chase & Co. (NYSE:JPM) name was abandoned in the 1950s in favor “Morgan Guaranty Trust.” The bank used this name until 1988, and by the late ’90s J.P. Morgan had built itself into a respectable (but not dominant) bank with a sterling brand. The merger that re-established J.P. Morgan as the leading name of its industry took place in 2000, when Chase Manhattan merged with the House of Morgan to create JPMorgan Chase & Co. (NYSE:JPM). It is now the largest bank by assets in the world.

The article The Story of J.P. Morgan, the Most Powerful Bank in America originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter, @TMFBiggles, for more insight into markets, history, and technology.The Motley Fool owns shares of General Electric and JPMorgan Chase.

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