A Private Bank at War: J.P Morgan & Co. and France, 1914-1918

Source: Business History Review, Spring 2000. Author: Horn, Martin

From U.S. History in Context

This article examines the relationship between J.P. Morgan & Co. and France during the First World War. It argues that the dealings between the French government and the partners of J.P. Morgan & Co. from 1914 to 1918 were characterized by personal difficulties between successive French representatives and the partners of J.P. Morgan & Co. Contributing to a strained relationship was the place of Morgan, Harjes, the French affiliate of J.P. Morgan & Co., within the House of Morgan. Herman Harjes, the senior partner in Morgan, Harjes, though a proponent of Franco-American amity, became disenchanted with his New York partners as the war continued. The feeling was shared by those in New York, who reevaluated the role of Morgan, Harjes within the House of Morgan–until the French affiliate’s eventual disappearance in 1926. While sympathetic to France, and instrumental in sustaining French credit during the war, the partners of J.P. Morgan & Co. conceived of the Allied cause as the British cause, a perspective that led them to rebuff calls for greater Franco-American financial cooperation.

The role played by the House of Morgan–consisting of J.P. Morgan & Co. in New York, Morgan Grenfell & Co. in London, Drexel & Go. in Philadelphia, and Morgan, Harjes in Paris–during World War I is well known. From August 1914 to April 1917, while the United States was neutral, the Morgan banks worked assiduously to further the Allied cause. Once it was apparent that the war was not going to end imminently, a formal relationship was established linking the House of Morgan and two of the principal Allies. In January 1915, J.P. Morgan & Go. was appointed the British government’s purchasing agent in the U.S.; some months later, in May 1915, they assumed the same position for the French government. Acting through its Export Department, J.P. Morgan & Co. coordinated the purchasing requirements of the Allies in the United States, a task that became progressively larger as the scope of Allied buying increased. [1]

While J.P. Morgan & Co. was never designated Allied financial agent in the United States, the bank floated loans for Britain and France, handled foreign exchange operations, and advised British and French officials. J.P. Morgan & Co. developed a cordial relationship with Britain, but its dealings with France became strained over the course of the war. Once the U.S. entered the war as an associated belligerent, easing the acute dollar shortage facing the Allies, J.P. Morgan & Co. gradually withdrew from its former role. By 1918, the firm’s work was confined to the liquidation of unsettled matters. As the war came to a close, it was apparent that the conflict had benefited the United States financially. Pre-war a debtor nation, the U.S. emerged as the strongest financial power in the world. J.P. Morgan & Co., the dominant Wall Street bank, was especially favored by this outcome.

Since its rise to prominence in the last quarter of the nineteenth century, the bank has attracted the attention of essayists, polemicists, Senate commissions, and historians. Much of this attention derived from three developments: first, Pierpont Morgan’s role in the transformation of American finance and industry in the decades before World War I; second, the aforementioned involvement with the Allies, which led to charges that the bank, along with other financial institutions, conspired to maneuver the U.S. into the war on the Allied side to rescue its loans; and finally, the bank’s role in postwar European reconstruction, which has attracted the attention of scholars interested in both the failure of stabilization and in Anglo-American rivalry.

The resulting historiography is lengthy but has omissions. There is no scholarly monograph devoted solely to the history of J.P. Morgan & Co. after 1913, and in particular to its relations with France. [2] Ron Chernow’s The House of Morgan, a sweeping, popular history, discusses World War I in only one chapter, since the book is concerned with tracing the evolution of the modern bank in its entirety. [3] Vincent Carosso’s The Morgans: Private International Bankers, 1854-1913, an exhaustive work, draws upon the full range of archival material, but ends with the death of Pierpont Morgan in 1913. [4]

Kathleen Burk has written important studies on Morgan Grenfell & Co. and on the Anglo-American financial relationship from 1914 to 1918. [5] Morgan Crenfell, 1838-1988 (1989), which covers the long history of the firm, mentions World War I briefly. Britain, America and the Sinews of War (1985), while dealing extensively with J.P. Morgan & Co. and Britain, does so in the framework of Anglo-American diplomacy. Likewise, Burk’s 1988 article on the House of Morgan at war rests on Anglo-American archival research and does not incorporate any French material. [6] Priscilla Roberts has written an article on the quixotic figure of Willard D. Straight, a Morgan employee in 1914-1915. [7] As Roberts put it recently, these works stress the “Anglo-American theme.” [8]

Examinations of the wartime relationship between France and J.P. Morgan & Co. have remained almost entirely the province of historians based in France, from Pierre Renouvin’s article in the 1950s, through the work of Andr[acute{e}] Kaspi, Yves-Henri Nouailhat, and Georges-Henri Soutou. [9] With the exception of Soutou, this literature is written from a French archival perspective, coloring the portrait that has emerged. This has resulted partly from limitations of archival access and partly from a desire to explore how French policies were shaped by interaction with the Morgan bank, rather than considering how the relationship affected the bank as well. In fairness, none of this work was explicitly concerned with J.P. Morgan & Co. and France, instead delving into broader issues of Franco-American relations or, in Soutou’s case, the question of the economic war aims of Germany, France, the United Kingdom, and the United States.

The wartime experience, which is often interpreted as broadening the outlook of the partners of J.P. Morgan & Co. and thus contributing to an internationalist perspective, was actually more ambiguous–a theme which is reflected in the work of Dan P. Silverman. Silverman has argued that what transpired early in 1919 was the transformation of the wartime Allied financial coalition into “a wavering but nonetheless clear Anglo-American financial entente in which the French found themselves the chief victim.” Thomas W. Lamont, a leading Morgan partner, was party to this change. [10] At the same time the Morgan partners shared a “spiritual kinship” with France, Silverman asserts. [11] While this argument captures the fluid, complex nature of the relationship between J.P. Morgan & Co. and France, it overstates the degree to which developments in 1919 were novel. The war fostered a more insular Morgan partnership, less open to views that ran counter to its dominant Anglo-American culture. It was during the conflict that the partners of J.P. Morgan & Co. decided that their future prosperity lay in closer ties with Great Britain, despite sympathy for France, opposition from within the House of Morgan to this choice, and the desire of the French government for a continuation of wartime Franco-American cooperation.

Morgan, Harjes and the House of Morgan

While the existence of Morgan, Harjes demonstrated that the House of Morgan endeavored to cultivate business beyond the confines of New York and London, the Paris affiliate of the firm had been acquired more as a product of happenstance than conscious planning. When J. Pierpont Morgan had merged his operations in the U.S. in 1871 with Drexel & Co. to form Morgan, Drexel–the precursor to J.P. Morgan & Co.–the associated Drexel firm of Drexel, Harjes was absorbed. The participation of Morgan, Drexel in the syndicate, which allowed the French government to discharge its obligations to Germany following defeat in the Franco-Prussian War in 1870-71, was a coup; though Morgan, Harjes remained the smallest branch of the House of Morgan. Of the four firms constituting the House of Morgan in 1914, J.P. Morgan & Co. in New York and Morgan Grenfell & Co. in London were the best-capitalized, generated the greatest volume of business, and were responsible for the bulk of the House of Morgan’s profits. There were more partners in New York and London than there were in Paris. In 1913 Morgan, Harjes had two resident partners, while Morgan Grenfell had three and J.P. Morgan & Co. in New York had ten. [12]

For much of its pre-war history, Morgan, Harjes was a small, complacent organization. This changed in 1908 when H. Herman Harjes succeeded his father John H. Harjes as the senior partner in the firm. Harjes, who was born in Paris in 1875, was privately educated in England and the U.S. and briefly worked for J.P. Morgan & Co. in New York. [13] He was a dynamic businessman with close ties to the French financial and political elite. At his prompting, Morgan, Harjes became a more aggressive, less insular institution. Harjes sought to take advantage of Paris’ stature as a European financial center. Blessed with abundant capital, but lacking the intricate network of accepting houses, discount houses, and bill brokers that allowed the City of London to dominate the financing of global trade, the leading Parisian banking institutions tended to concentrate on loans within Europe, an inclination which was encouraged by successive French governments seeking to supplement French diplomacy with French money. [14] In kee ping with this general orientation, Harjes expanded Morgan, Harjes’ European presence.

Harjes combined business acumen with a deep-seated love of France and a firm conviction that Franco-American concord was in the interests of both France and the United States. A leading figure in the American community in Paris, Harjes and his wife were founding members of the American Hospital in Paris. After the outbreak of the war, he acted as the head of the American Relief Clearing House, an agency devoted to coordinating American contributions of money and goods to France. Until 1917, Harjes was the official representative of the American Red Cross in Paris. He and his wife were also pioneers in providing ambulance services, Which were staffed by young American volunteers. In the fall of 1914 Harjes not only established the first organized American ambulance service but also a hospital to which the wounded were brought. Over time, the Harjes’ ambulance sections were merged into the American Red Cross apparatus, while the hospital had a short life span, closing early in 1915 as medical facilities improved behind the front. [15] These services were appreciated by the French government, which awarded Hales the Legion of Honor after the war. Underpinning these activities was a fervent belief in a Franco-American community. In a letter to his sons shortly before his death in 1926, he urged them to become partners in Morgan, Harjes: “I hope that you will beat me at it and that thanks to your efforts the business will become even more prosperous, more truly representative of Franco-American finance than I was able to make it.” [16]

The regret expressed in these words was well founded. Vincent Carosso has observed that “No American private banking house was more deeply rooted in the traditions of London’s merchant bankers, its transatlantic connection more firmly entrenched, than the Morgan firm.” [17] While Harjes harbored dreams of closer Franco-American ties, the New York partners were more interested in working with London. With the death of J. Pierpont Morgan in 1913, J.P. Morgan, Jr., (hereafter Jack Morgan) became head of the House of Morgan. Jack Morgan was less Continental and more British in his enthusiasms than his father had been, though like his father he spoke French and German. Jack Morgan was fond of France; he served as treasurer of the France-America Society in New York from 1913 to 1926, and during the war regularly donated money to French causes ranging from help for war orphans to reconstruction purposes. These gifts could be quite substantial. In December 1916, J.P. Morgan & Co. gave the American Society for the Relief of French War Orphans a check for $50,000, and, moreover, he solicited contributions for France from wealthy Americans. [18]

But it was Britain that Jack Morgan loved. A resident partner in J.S. Morgan & Co. in London from 1898 until 1906, Jack Morgan was thoroughly Anglophile when he returned to New York. [19] He was well known in London establishment circles, maintained residences there, and spent half of each year in Britain. As he told Vivian Smith of Morgan Grenfell, “I often wish I was living at Aldenham or at Grosvenor Square instead of in this half-paved and half-finished City.” [20] Jack Morgan’s feelings for Britain translated into a remarkable generosity during the war that overshadowed his bequests to France. He placed personal property at the disposal of the British government and lavishly subscribed to a wide variety of wartime causes. Moreover, his business training in London and New York naturally furnished him with a greater sensitivity to the concerns of the London partners.

Jack Morgan was an accomplished financier, well schooled in the intricacies of merchant banking. In his early years as the head of the bank, Jack Morgan tended to operate by consensus, relying on a series of able lieutenants. [21] The most influential of these during the war years was Henry P. Davison and Thomas W. Lamont. Both Davison and Lamont had attracted the attention of Pierpont Morgan and had been recruited to J.P. Morgan & Co. by him. The two men knew each other well; Lamont was Davison’s prot[acute{e}]g[acute{e}], following him to Banker’s Trust and then to J.P. Morgan & Co. Davison was an aggressive, hard-working individual with a commanding personality. These traits occasioned some difficulties with the French and British governments, particularly in 1916 when Davison’s pugnaciousness alienated even his transatlantic admirers. [22] But in the years before the war, his reputation on Wall Street rose steadily. Davison’s pre-war international experience was limited and he neither spoke nor understood French. While he had served on the Aldrich Commission which toured Europe in 1908, questioning European bankers about monetary systems in the wake of the financial panic of 1907 in the United States, this was the exception in a career which was otherwise made on Wall Street. Upon becoming a Morgan partner in 1909, Davison imbibed the bank’s Anglo-American ethos. Davison was not hostile to France. In 1917 he became the head of the American Red Cross in France, taking a leave from the firm. But he drew a distinction between sympathy for France and business with the French government. The latter, while desirable, was secondary to the tie with Britain. [23]

Lamont was a natural diplomat, less abrasive than Davison, and more at ease abroad. While Lamont’s influence was growing, it was not until the post-war years, with the death of Davison and the quasi-retirement of Jack Morgan, that his views became predominant within the bank. [24] Lamont had first visited London in 1896. He later remembered that “[f]or me London was the most thrilling spot that I had ever known or could imagine existed.” [25] His biographer has commented that he “contracted a severe case of Anglophilia” which lasted a lifetime. [26] Lamont’s affections for Paris were more guarded. In his memoirs he commented that “[a]s compared to London which has always seemed to me like a friend, Paris was more like a delightful acquaintance whose charm was unending, but with whom I should never wish to make my home.” [27]

Although the Paris partners of Morgan, Harjes were excluded from the sense of Anglo-American comity that animated the New York partners, all of the Morgan partners shared in common their status as private merchant bankers. These bankers tended to regard their calling as “more than a profession–it was a way of life.” [28] At the core of the private banker’s world was an emphasis upon character. Probity and integrity were essential traits. Jack Morgan, in testimony to the Nye Commission in 1933 described “credit,” by which he meant personal integrity, as the “most valuable possession” of the private merchant banker. [29] His father, testifying to the Pujo Committee in 1912, was asked if the extension of credit was “based primarily on money or property.” Pierpont Morgan replied, “No Sir, the first thing is character.” [30] As Kathleen Burk has observed, “the highest praise of a man was that his character was sound: no matter how promising the enterprise seemed, a first-class banker would not lend to anyone he did not trust.” [31] The partners of the House of Morgan accepted this tenet as the way in which business ought to be conducted.

Character was prized because private merchant banking necessitated the cultivation of individual relationships. David Landes in his study of the Parisian haute banque has commented on “the importance of the human element [which] led to an exceptional emphasis on personal character.” [32] Bankers often dealt with individuals and firms they knew little about, save for their reputation. What was true for the City of London extended to the Rothschilds, the Warburgs, and other Continental firms, all of whom lived by a common, cosmopolitan private merchant bankers’ code. Years after the war, Jack Morgan acknowledged this publicly, commenting that “in every profession also there is, and must be, a code of ethics, the result of years of experience.” [33] It was on the basis of this understood code that decisions to lend were made. When asked by a former classmate to provide him with a letter of reference, Jack Morgan complied, vouching for him in the following terms: “I have known Mr. Morris Whitridge for many years, and am able to say that he is a gentleman of moral character and integrity. I am not acquainted with the other members of his firm, but, from my knowledge of Mr. Whitridge, my opinion would be that every confidence might be placed in their carrying out any undertakings or agreements whic h they might enter into with you.” [34]

The Wartime Relationship with France

For the Morgan partners, good personal relations and good business went hand in hand. [35] In dealing with French emissaries, the former was all too often absent to the detriment of the latter. The importance of personal relationships was heightened by the unexpected duration of the war, its unforeseen costs, and the complications which followed from American neutrality Jack Morgan, Davison and Lamont, occasionally assisted by Dwight Morrow, a Morgan partner since 1914, dealt with a series of French officials. From the outbreak of the war until the spring of 1915, the French ambassador to the U.S., Jean Jules Jusserand, played the primary role in money raising activities. [36] Thereafter, a French financial representative to the United States, Octave Homberg, was appointed and a French financial agency based in New York was established. J. F. Bloch replaced Homberg in the summer of 1916 as French financial agent.

Formally the structure of French financial representation in the United States was clear, but practically the authority vested in the various French delegates in the U.S. was dependent upon the whim of the minister of finance. Throughout the period of American neutrality, Alexandre Ribot, the French minister of finance from August 1914 to March 1917, could, and did, make his wishes known to J.P. Morgan & Co. through Morgan, Harjes–thus circumventing his representatives in the United States. [37] On occasion, missions empowered by Ribot were dispatched to survey the situation in the United States. Their mandate was often unclear, their activities mysterious, and their impact negligible, save for the irritation their presence engendered. The Bank of France also had an agent, Jacques de Neuflize, operating in New York, whose activities were not necessarily coordinated with other French delegates. It was not until 1917 and the establishment of the French High Commission in the U.S. headed by Andr[acute{e}] Tard ieu, following the American entry into the war, that a more coherent French financial structure was in place.

The contours of the problem facing France in purchasing and paying for American goods between August 1914 and April 1917 are readily sketched. As orders for war materiel in the United States climbed, the volume of French imports from the United States rapidly outpaced French exports. The trade deficit widened inexorably, placing greater pressure upon the dollar-franc exchange rate. Beginning late in 1914 and then accelerating in 1915, the franc steadily depreciated against the dollar. This development, which was worsened by the uncertainties surrounding the outcome of the war in American eyes, precluded financing the trade deficit through sales of the franc in New York, for fear in Paris that it would intensify a dangerous downward spiral in the purchasing power of the franc. Instead, precious dollars had to be devoted to propping up the franc. Other possible means of paying for American goods had their disadvantages. French policy makers strenuously resisted shipping gold from the Bank of France and French holdings of American investments, which might be sold to pay for American goods. [38]

While French investments abroad were substantial, the distribution of this capital was heavily weighted toward Europe, notably Russia. In 1914 the French external investment portfolio amounted to some 40 to 45 billion francs, or $7.7 to 8.7 billion at the pre-war exchange of 5.18 francs to the dollar. Morgan, Harjes reckoned French investments of specifically American securities in September 1914 to be $250 million. [39] Though these totals might appear impressive, not all of these investments were disposable on the American market. Acquisition of American securities from their French owners was also a problem. Successive French governments were reluctant to sequester American investments, fearing the political costs of any such action. Blandishments, rather than coercion, typified efforts to induce French citizens to part with their holdings. In contrast, British investors possessed much larger, more salable American holdings, roughly ten times those available to France. [40]

The magnitude of the French trade deficit with the U.S. soon dwarfed any possible relief that could be obtained from selling French investments. There remained financial assistance from Great Britain–after 1915 increasingly important to France–and borrowing in the United States. [41] As the latter was imperative, the connection with J.P. Morgan & Co. became more important. But the French dilemma was a painful one; as the war lengthened and its outcome grew less certain, the French ability to borrow weakened. American lenders were willing to provide funds, but at the price of exacting higher fees and levying higher interest rates. Ribot knew that in his dealings with J.P. Morgan & Co. his bargaining position was eroding with each month the conflict continued.

At the outset of the war, these developments lay in the future. Early in August 1914, acting through the Rothschilds, the French government broached the possibility of a large loan with J.P. Morgan & Co. Faced with an American financial crisis occasioned by the coming of the conflict, the firm was unable to comply. The U.S. was at this juncture a debtor nation, heavily dependent upon foreign capital, principally British, for its financial needs. As creditors abroad clamored for the repatriation of money lent, it was impossible to contemplate a loan to the French government. However, a partial solution was found. The Bank of France placed funds at the disposal of Morgan, Harjes in Paris that were disbursed to assist Americans trapped in Europe by hostilities, while a similar account was opened in New York at J.P. Morgan & Co. that allowed the French consul-general in New York to make needed payments in the United States. This idea was the inspiration of Herman Harjes. [42]

This auspicious beginning proved misleading as the first sustained negotiations between J.P. Morgan & Co. and France, conducted between Jack Morgan, Davison, and Lamont on the one hand, and Jusserand on the other, were marked by tensions. The principal obstacle facing the French government to borrowing in the United States was the edict of William Jennings Bryan, the secretary of state, banning loans to the belligerents in August 1914. With French requirements for American dollars already pressing, Jusserand made sustained efforts to find a means of circumventing the Bryan ban. Ultimately these were rewarded, in the shape of a $10 million bond issue that was led by National City Bank and to which J.P. Morgan & Co. subscribed. [43] In these intricate discussions, which involved not only National City Bank and J.P. Morgan & Co., but also Robert Lansing, the counselor to the State Department, and President Woodrow Wilson, Jusserand developed a strong distaste for J.P. Morgan & Co. [44] Jusserand believed that France would be better served by National City Bank. He was assisted by Maurice L[acute{e}]on, an international lawyer based in New York, who had frequently represented French financial interests in the United States before the war. Jusserand and L[acute{e}]on campaigned in favor of centralizing French financial operations in the U.S. with National City Bank, denigrating J.P. Morgan & Co. whenever possible. [45] The Morgan partners reciprocated these feelings. Jack Morgan’s verdict was straightforward: “from what I have been able to see here, I do not think that the average French official understands the sort of language all of us talk-certainly, what I have seen of Leon [sic], and even of Jusserand, has not filled me with confidence in them or their methods.” [46]

Perhaps inevitably, maintaining good relations with J.P. Morgan & Co. meant that Jusserand was dispensable. Once it was apparent that Jusserand was a liability, he was sacrificed. Pierre de Margerie, the directeur politique at the French foreign ministry, informed J.P. Morgan & Co. that Jusserand was unqualified to handle negotiations as he knew nothing about finance. [47] Following the appearance of a loan for France by a Morgan-led syndicate in the spring of 1915, Jusserand and L[acute{e}]on were eased out of financial matters.

Late in November 1914, Davison undertook an extended visit to London and Paris. The purpose of the trip was to meet with the London and Paris houses and to solicit support for the appointment of J.P. Morgan & Co. as financial agent to the British government. While Davison spent the majority of his time in London-itself a signal of where the firm believed its priorities lay-he did make a number of journeys to France. Willard P. Straight, who acted as interpreter and diarist, accompanied Davison. Davison’s discussions in London and Paris impressed upon him two beliefs: French finance was badly handled, and the French political and financial leadership was incompetent and possibly corrupt.

The idea that French finances were in a perilous state derived from Davison’s meeting with Harjes at Boulogne on 13 December 1914 and was strengthened in subsequent discussions in London and Paris. At Boulogne, Harjes attacked the direction of French financial policy as “opportunist.” It was agreed that the French “had shown a lack both of judgement and courage.” This opinion was shared in London, where the Morgan Grenfell partners believed that French finances had been mishandled. [48] Harjes was apparently dismayed by Ribot’s failure to launch a major long-term internal loan. Instead the French government was relying for its funds mainly upon short-term bond issues and advances from the Bank of France. This contrasted with Great Britain, where the first of the large, long-term funding operations had debuted in November 1914.

Equally alarming were the verdicts on the French leadership articulated by various informants. Gabriel Hanotaux, the one-time minister of foreign affairs, derided Ribot and Georges Pallain, the governor of the Bank of France. He told Davison that they had conducted French finance poorly, but “you could not expect Napoleonic action from a couple of old women.” [49] At Boulogne, Harjes charged that leading politicians were “much more concerned with their own petty political squabbles than with doing the thing in a big way.” He painted, as Straight recorded, “a very gloomy portrait of French politics.” [50] Following his and Davison’s return to London, Straight commented that: “The whole atmosphere of London, the manner of doing business, the possibility of getting close to the principals and of commanding confidence and trust was borned [sic] in upon one just returned from Paris where all was formality, sham, graft, as far as Government business is concerned.” [51]

These warnings did not mean that J.P. Morgan & Co. refrained from seeking French business, or from aiding France, but they did make the partners more cautious and fed their tendency to compare French financial practices negatively with British ones. In March 1915, J.P. Morgan & Co. issued a loan for France, but its half-hearted reception by American investors led to recriminations between Paris and New York. Jack Morgan, Davison, and Lamont were convinced that the problem lay in French unwillingness to ship gold to reassure the New York money market. Davison and Lamont harped on the theme of French untrustworthiness, complaining that “we are disgusted at slack methods of payment due to us on purchases made for them and apparent disregard of obligations.” Why could France not emulate Britain, Davison queried, and face “up to their commitments here as does Great Britain so nobly.” [52] Consistently, Bank of England and Treasury officials trumpeted the virtues of allowing Britain to employ French gold in the best interests of the alliance. [53] Behind these urgings was a drive to support sterling and the desire to preserve London as an international financial center. When Jack Morgan told Harjes that a “gold reserve made into a fetish ceases to be a reserve and becomes a liability instead of an asset” he was subscribing to this viewpoint. [54]

In the fall of 1915, Octave Homberg became the first French financial representative in the United States. Before the war; Homberg had served in the French foreign ministry as well as the Banque d’Indochine and the Banque de l’Union Parisienne. Once hostilities began, he was a logical choice to assist Ribot with the problems of external finance. Homberg not only advised Ribot, but also frequently served as his delegate on missions to Britain and the U.S. There is some reason to suspect that Homberg was anti-American. Following the war, he published a short tract warning of the dangers of American imperialism, a common view in French circles in the 1920s, but which might have owed something to personal experience. [55] Homberg was aggressive, possessed of a fertile mind, and constantly prodded J.P. Morgan & Co. to explore all the possible avenues for French financial operations. Nouailhat has argued strongly that Homberg deserves most of the credit for the success of French financial operations in the U.S. In his view it was Homberg’s dynamism which overcame the innate sluggishness of the Morgans. [56] But he did not possess the trust of the New York partners.

Harjes and John R. Carter; the two resident Paris partners, had informed Davison that they thought “Hombert [sic] crooked,” though Maurice Casenave, a former French diplomat with connections to J.P. Morgan & Co., believed otherwise. [57] Harjes was engaged in a struggle with Homberg for influence with Ribot and his assessment was far from impartial. This negative appraisal perhaps influenced the New York partners, whose dealings with Homberg were acrimonious. Homberg was one of two French delegates involved in the talks among France, Britain and a syndicate of banks headed by J.P. Morgan & Co. in September and October 1915. These discussions yielded the Anglo-French Loan of 1915, a $500 million dollar issue which was the single largest Allied borrowing in the U.S. prior to the American entry into the war. A joint Anglo-French commission led by Lord Reading, the Lord Chief Justice of Great Britain, and including Homberg as the lead French representative, bargained with the J.P. Morgan & Co. syndicate.

Jack Morgan, in a long letter to Edward Grenfell, the senior partner in Morgan Grenfell, recounting the course of the negotiations, was dismissive: “The Frenchmen do not amount to very much.” Credit for the successful conclusion of the loan was given to Reading. [58] Relations did not improve thereafter. Homberg stayed on in New York as the first head of the French financial agency in the United States. Jack Morgan was allowed to see some of the cables Homberg filed to Paris and, as he told the New York partners, Homberg “makes it very clear he does not like us and does not understand lithe] basis on which we do business.”[59]

Personality clashes were partially responsible for the prolonged negotiations surrounding the American Foreign Securities Company [AFSC] loan for the French government which was first mooted in January 1916 and not consummated until July 1916. [60] The Morgan partners resented that they were often forced to deal with Ribot and Homberg simultaneously, and that Homberg, so they believed, was working against their interests. Shortly after the loan was floated, James Brown, the head of Brown Brothers, wrote Benjamin Strong, the governor of the Federal Reserve Bank of New York, that “Morgan and I agreed the other day that we would have saved ourselves much trouble and many difficulties, if, as early as last February, we had insisted upon the French government recalling their then representatives in this country and substituting men of character.” [61] Homberg lacked that “most valuable possession” of the private merchant banker-credit.

Ribot was aware of the uneasy interaction between Homberg and the Morgan partners in New York. Throughout his tenure, Homberg bombarded Ribot with missives attacking J.P. Morgan & Co. as dilatory, overly cautious and dedicated to serving British requirements first–a set of complaints remarkably similar to those voiced earlier by Jusserand. Ribot was at length forced to caution Homberg, urging him to modify his rhetoric with the goal of cultivating a better working relationship with New York. It was essential that J.P. Morgan & Co. not be permanently alienated. Through its Export Department, J.P. Morgan & Co. was coordinating French and British purchasing in the U.S., while their assistance in raising dollars was a necessity for Allied financial stability. [82] Homberg’s recall in the summer of 1916, like the earlier shunting aside of Jusserand and L[acute{e}]on, was an effort to placate J.P. Morgan & Co.

Clashes between the Morgan partners and the French were soothed through reliance upon personal contacts between Jack Morgan and Ribot. Gables were supplemented with visits to Paris, which Jack Morgan undertook in 1915 and 1916, in each instance stopping first, and staying longest, in Britain. These exchanges allowed both sides to vent their dissatisfaction about worrisome matters. Ribot attributed French difficulties in raising money in the U.S. to the malign influence of Davison, whom Ribot mistakenly believed was anti-French. This conviction allowed Ribot to claim that the refusal of J.P. Morgan & Co. to move more quickly was due to Jack Morgan’s absence, or lack of knowledge of the partner’s doings. If Jack Morgan had been present, Ribot asserted, then these niggling matters would be swept aside. [83] The New York partners reciprocated this convenient fiction. Ribot was not tarred with the same allegations of corruption so liberally applied to other French politicians and officials. [64] At worst he was an “exceedingly kindly old gentleman,” somewhat out of his depth in the eyes of Morgan observers. [65] Ribot, Jack Morgan commented early in 1916, “is dealing perfectly loyally with us.” [66] That this portrayal was as inaccurate as Ribot’s idealized vision of Jack Morgan was immaterial–it allowed for reconciliation when recurrent difficulties threatened to jeopardize the relationship.

This unspoken accord foundered in the fall of 1916. From August 1916 onwards Allied finance in the U.S. entered a period of perpetual crisis which was not resolved until the entry of America into the war in April 1917. The desperate Allied need for dollars allowed J.P. Morgan & Co. to dominate British and French external financial policy. In addition to overseeing Allied loans in the United States, by the fall of 1916 J.P. Morgan & Co. was providing the Allies with an overdraft in excess of $100 million. The ceding of financial control to a private, neutral bank was viewed unhappily in both Paris and London, but it was the French who actively sought other options. Though he was wary of offending J.P. Morgan & Co., Ribot retained Homberg as a close advisor following his recall from New York. The latter conferred with Davison during his visit to Europe in September 1916 and subsequently was the lead French negotiator in tripartite talks held in London in October 1916. [67] In the course of these discussions, Homberg argued strongly for a policy that would have reduced Allied dependence on J.P. Morgan & Co. He advocated that the Allies throw caution to the winds and issue a massive loan backed only by their own name, in stark contrast to a recent British government loan in the United States that had been issued with collateral backing on the advice of J.P. Morgan & Co. The reluctance of the British to consent to any scheme along these lines dashed French hopes. Lord Cunliffe, the governor of the Bank of England, and Reginald McKenna, the Chancellor of the Exchequer, believed that the tie with J.P. Morgan & Co. was too solid to sever now. [68]

Ribot had already provided evidence of his willingness to explore other possibilities. Through de Neuflize, he issued a loan for the City of Paris in September 1916 in the United States which was handled by Kuhn, Loeb & Co. The Kuhn, Loeb & Co. loan shocked the New York partners, destroying the image they had constructed of Ribot’s fidelity. [69] The nearly hysterical reaction that followed this episode derived from the interaction of several considerations. Kuhn, Loeb & Co. with its German roots, was seen as pro-German in its loyalties, a suspicion that had been given added credence when Kuhn, Loeb & Co. refused to participate in the Anglo-French loan syndicate. Since the attempt on Jack Morgan’s life in 1915 by a deranged German-American, he had become progressively more anti-German in his sentiments and could not understand the French recourse to Kuhn, Loeb & Co. [70] Equally alarming was the prospect that J.P. Morgan & Co. might lose their quasi-monopoly on Allied financial operations–a fear given credence by the galling knowledge that Ribot intended to utilize Kuhn, Loeb & Co. again to issue a projected tri-city loan for Lyons, Bordeaux and Marseilles. National City Bank was another rival. Willard Straight, by 1916 an employee of National City, had approached Homberg with an offer to handle what became the American Foreign Securities Corporation loan. [71]

This turmoil was mirrored by internal strife within the House of Morgan. Since 1914 Harjes had become progressively more sympathetic toward the problems Ribot faced. Conscious of the enormous effort France was making in waging the war; and frequently reminded of its direct human costs through his ambulance service, his proximity to the war reinforced his pro-French leanings. Working closely with Ribot expedited this process. Ever the partisan of close Franco-American bonds, Harjes was disturbed by the ambivalence of his New York associates. He feared that they did not appreciate France, or understand the French perspective. In a private letter to Jack Carter in November 1916, Harjes attacked Davison’s handling of Allied finance:

Davy really makes me tired at times. He claims he cannot come over here first because he has got other urgent business to transact in London and now he wants me to go over there. The main reason to my mind for this action on his part is that he wants to get his views out and tried and decided upon while in London and quite in accord with the British point of view. This is just what I do not think is right. . . What I want to do is get him over here and get him to realize things for himself as they exist here and not merely as they will be described to him by Lord C. [Cunliffe] . . . or Teddy [Edward Grenfell] or anybody else. [72]

These concerns crystallized in two lengthy cables Harjes dispatched to Jack Morgan. Surveying relations between France and J.P. Morgan & Co., Harjes concluded that J.P. Morgan & Co. was in danger of losing the confidence of Ribot. J.P. Morgan & Co. was perceived in French financial circles as promoting British loans at the expense of France. Harjes admitted that, reluctantly, he shared these views. [73]

There was some substance to these charges. The long delay associated with the AFSC loan was unfavorably illuminated by the rapidity with which Kuhn, Loeb & Co. had planned and implemented the City of Paris operation. J.P. Morgan & Co. had demonstrated greater alacrity with regard to British issues. Following the appearance of the AFSC loan in August 1916, three British government loans were floated by J.P. Morgan & Co. in New York between October 1916 and January 1917, while no new French loan appeared. [74] While it is true that British credit was better than French, it was not markedly so. All of these British borrowing operations were backed by securities pledged as collateral. The British Treasury did have greater access to marketable securities, but even here the British were encountering growing difficulties. [75]

The New York partners were stung by Harjes’ accusations. An embittered Davison wrote Harjes a personal letter in December 1916. “I believe it is impossible for you in Paris to appreciate the situation here, as I believe it would be impossible for me, if I were in Paris, to appreciate the situation in New York,” Davison noted. “Personally, I have given up all hope of the slightest appreciation on the part of the French Government of any service we have or may render.” [76]

Jack Morgan felt it necessary to upbraid Harjes, sharply reminding him that his loyalties were to the House of Morgan, not France. [77] Yet neither Ribot nor the Morgan partners wanted, or could afford, a rupture in relations. Ribot needed the dollars J.P. Morgan & Co. supplied and he was determined to avoid a situation where a financially enfeebled France was shunted aside by an Anglo-American financial partnership. J.P. Morgan & Co. was equally bound. Allowing French credit to break in New York would irreparably damage Allied credit, shatter Morgan prestige, and possibly endanger the bank itself.

The Morgan partners comforted themselves with a distinction drawn early in the war. As Davison commented, “I cannot but believe France inherently very strong, and all that is needed is courage and a wise leader. As yet they have not given evidence of being possessed of either.” [78] Wanting to help France, but unsettled by their encounters with French officials, the Morgan partners persuaded themselves that their prescriptions were best suited to help the French people. This outlook drew inspiration from the Morgan view of the American investor whom, Morgan partners frequently claimed, needed to be educated about the value of foreign investments, [79] Through careful promotion of Allied issues, J.P. Morgan & Co. was engaged in this pedagogical task. Less openly voiced was the corollary to this proposition–like the American investor, French officials had to be tutored in the ways of the American marketplace. The impatience French representatives exhibited, their desire to try more adventurous means of raising money, was attributed to an imperfect understanding of what the American investor wanted. It was J.P. Morgan & Co.’s task to educate both the American people and the French government.

Competing Visions of the Post-War World

Sympathy for France, and self-interest, ensured that J.P. Morgan & Co. continued to work on the French behalf. In March 1917, another slice of the AFSC loan appeared. With the declaration of American belligerency in April of that year, the relationship between France and J.P. Morgan & Co. changed. The issue of the post-war world loomed larger as J.P. Morgan & Co. disengaged from direct involvement in allied finance. Perhaps unsurprisingly, the partners of J.P. Morgan & Co. and French officials had differing ideas. Ribot hoped to forge genuine wartime collaboration between France and Britain on financial matters. While Soutou has remarked on the hesitancy of the ministry of finance to formulate post-war economic aims, by 1917 Ribot had embraced the notion of continuing the wartime alliance into the post-war world. [80] Lie was keenly aware of the limited nature of French financial resources. France must manage its resources carefully he argued, so that “we will be able to dictate the conditions of the peace.” [81] In this regard Ribot was nor alone in France, nor was he the leading exponent of such ideas. A number of French politicians were advocating a continuation of the wartime economic alliance into the post-war world. This would not only assist in the maintenance of Allied unity, it would ensure French security as well as offering a means to integrate a defeated Germany into a reborn Europe. Etienne Clementel, the minister of commerce, was promoting ongoing Allied economic cooperation after the war, a vision shared, or at least sympathized with, by Georges Clemenceau, who had become premier in November 1917. [82]

Andre Tardieu, who was appointed French High Commissioner to the U.S. in April 1917, understood the need for American financial assistance. Tardieu worked diligently to ensure that France received favorable treatment from the American Treasury. He soon discovered that while the United States was willing to extend credits to France, that assistance was not without strings attached. American policy makers, naturally enough, sought to capitalize upon their much-improved economic situation. Appeals to the memory of Lafayette carried little weight when measured against the desire to strengthen the dollar, promote American trade, and foster more open markets. These aims potentially threatened the franc after the war. [83]

In defending the post-war franc and rebuilding the French economy, the possible assistance of the House of Morgan was not forgotten. It was realized in Paris that the cooperation of J.P. Morgan & Co. would be immensely helpful. As early as August 1917, the Ministry of Commerce approached J.P. Morgan & Co. regarding possible credits for reconstruction. Jack Morgan was cool to this idea, believing that discussion along these lines was premature. [84] For the remainder of the war, J.P. Morgan & Co. declined to commit itself to post-war credits for France. While this refusal was rooted in business reasons, with worries about the chaotic state of the financial markets uppermost in Jack Morgan’s mind, there was another consideration at work. The idea of continuing the wartime alliance amongst Britain, France, and the U.S. in the post-war world was alien to the Morgan partners. They anticipated a return to pre-war normalcy once hostilities ceased. The apparatus of government regulation and control would be dismantled–an expectation they shared with the Wilson administration that took a dim view of ideas which either openly or obliquely promised to restrain the workings of a free market. As Jack Morgan remarked to Jack Carter of Morgan, Harjes just days after the armistice: “I have great hopes that the paternalistic feeling in the Government will now begin to fade away a little and that we shall begin to get back to the normal condition of affairs where the American mercantile and producing public is not directed in all its actions by government authorities.” [85]

When Jack Morgan, Davison, and Lamont envisaged the post-war world, they anticipated a return to unfettered markets in which the House of Morgan would play a leading role. It was confidently expected that this would rest firmly on the axis of Anglo-American cooperation. As Davison remarked in 1914: “Great Britain is going to emerge from this situation grander and more powerful than ever before, and I feel, therefore, the closer the relations we establish, the better it will be in the long run.” [86] While wartime disputes could, and did, arise between the New York and London partners, they never threatened the power of a common language, banking heritage, and the sense of a shared Anglo-American destiny. In a cable to Edward Grenfell of Morgan Grenfell in December 1918, Jack Morgan commented on his hope that Anglo-American cooperation would continue into the post-war world. [87] Lamont’s unhappiness with the British following his participation in the Paris Peace negotiations, which led him to complain bitterly about their selfishness, did not betoken a fundamental shift in the attitudes of the Morgan partners. [88] Four days after Lamont railed that “I came over here pro-British, but I go back anything but that,” he told another correspondent: “America has ample credit resources, Great Britain has wonderful credit machinery all over the world. Why not make a combination of the two?” [89] Echoing Lamont, Stettinius remarked shortly thereafter, “I think that the very best way of insuring peace in the future is for England and America to establish the closest possible business relations and partnerships.” [90] As Roberts has pointed out, there was not necessarily any incompatibility between pro-British attitudes and tensions that arose between Britain and the United States as a consequence of the changes wrought by the war. [91]

J.P. Morgan & Co. did not turn its back on France after 1918–far from it. The bank continued to assist the French government, raising money in 1919 and 1920, aiding in the stabilization of the franc in 1924 and again in 1926. [92] Within its ranks, the partners remained sensitive to France and in the case of Dwight Morrow, Francophile. [93] There existed a genuine affinity within J.P. Morgan & Co. for France. It rested partially upon admiration for the French effort. The visible suffering, the devastation, and the determination of the French people moved the American partners. The visceral anti-Germanism exhibited by Jack Morgan fed it. But there was evidently a disjuncture between French hopes for a continuation of the wartime alliance after the war and the expectation of the partners of J.P. Morgan & Co. that their future prosperity was linked with Great Britain and not necessarily France. This raised the matter of the place of Morgan, Harjes in the post-war House of Morgan. Throughout the war, Herman Harjes had argued for equivalency of borrowing for France, a view that found little backing among the New York partners. Harjes’ decision in 1917, following the American declaration of war on Germany, to enter the American army removed the one consistent proponent of this position within the House of Morgan.

Harjes’ absence from Morgan, Harjes from 1917 to 1919 disturbed the partners of J.P. Morgan & Co. Jack Morgan was later to claim that Morgan, Harjes had fallen under the sway of subordinates in these years. [94] Stettinius commented while on a tour of Europe in April 1919, “Davy Tom and I all agree [Morgan, Harjes] requires new blood.” [95] Two months later, Stettinius voiced his belief that “the situation will never be put in satisfactory shape until we shall have permanently, at the head of the Paris house, a real leader who can with dignity and ability properly represent J.P. Morgan & Company in international negotiations.” [96] With this conviction animating him, Stettinius cast about for means to reshape Morgan, Harjes. One idea that was entertained, and discarded because of its tax implications, was having the partners of Morgan Grenfell take an interest in Morgan, Harjes. [97] Stationing a New York partner in Europe for a portion of each year was considered, but rejected on the grounds that the partners were needed in New York. It was decided that the most sensible solution was to admit new partners into Morgan, Harjes. Nelson Dean Jay joined Morgan, Harjes in 1919, becoming a partner on 1 January 1920. He had formerly been with Guaranty Trust and had served in the United States Army as Assistant General Purchasing Agent. [98] This outcome was a compromise, falling short of what Stettinius had hoped, as he admitted in September 1919. [99] Jack Morgan had made it clear that “we must not try to move so rapidly that we destroy the present organization before we have another one ready to take its place.” He insisted that he wanted Morgan, Harjes to remain independent. [100] Thus, while Stettinius, Lamont, and Davison were in favor of radical change, Jack Morgan’s opposition postponed matters for some years. It was not until the death of Herman Harjes in a polo accident in 1926 that an opportunity presented itself to wind up Morgan, Harjes. The Morgan, Harjes partnership was dissolved and replaced with an offi ce controlled from New York. [101]

As the landscape of international finance was changed by the war, so too was the relative standing of the French government and J.P. Morgan & Co. Before 1914, France had little need of J.P. Morgan & Co., save in the extremis of defeat in 1870-71. In victory in 1918-1919, France needed J.P. Morgan & Co. once again, but this time the French position was weaker. While it is tempting to argue that the post-war restructuring of the House of Morgan that resulted in the disappearance of Morgan, Harjes was a symptom of a broader international transformation–the decline of France–this is mistaken. There were many factors involved in French international travails after 1870, of which finance was only one. [102] Nor should it be forgotten that this decline was not unrelieved. In 1914 France was the second leading global power financially, despite defeat in 1870. Following the First World War, French financial power was at length restored to the point that by the late 1920s France was again a major player in international finance, an achievement J.P. Morgan & Co. had materially assisted. [103]

Nonetheless, the partners of J.P. Morgan & Co. conceived of Franco-American relations through the prism of London. There were good reasons for the Morgan partners to favor Britain. History, tradition, language, culture all pointed in this direction. During the war British credit was better in the United States than French, while London always remained a greater source of revenue for the firm. Yet the war years raised the possibility of broadening cooperation with France. Herman Harjes hoped that J.P. Morgan & Co. would proceed in this direction. As the war lengthened, Harjes’ influence with Ribot increased, but this did not improve his stature with J.P. Morgan & Co. The opposite was true: Harjes’ ability to mold the opinion of his American partners declined. Certainly the personal tensions evident between successive French representatives in the U.S. and the partners of J.P. Morgan & Co. played some part in this outcome. But there was more at work than clashing business practices overlaid with personal animo sities. Harjes’ perceptions were Franco-American rather than Anglo-American. In a milieu where the dominant ethos was the latter, he was marginalized. When Lamont recollected of his partners that “[w]e were pro-Ally by inheritance, by instinct, by opinion,” he would have perhaps been more accurate in stating that the inheritance was Anglo-American, the instinct Anglophile, and the opinion pro-British. [104]

The partners of J.P. Morgan & Co. identified the British cause as the Allied cause and on this basis they proceeded. When they thought of the post-war world, their eyes inexorably turned to Britain and not to France. The “Americanization” of Morgan, Harjes in the wake of the war, and its subsequent disappearance, marked the transformation of the House of Morgan into a bank that was both more international in its preoccupations and less international in structure. Shorn of Morgan, Harjes, the bank was what its partners wanted it to be–an Anglo-American institution which reflected the new international financial order.

Martin Horn is an assistant professor of history at McMaster University, Hamilton, Canada. He received his Ph.D. from the University of Toronto. Professor Horn is currently finishing a book on Britain, France, and the financing of the First World War.

(1.) Edward R. Stettinius was recruited as a partner to bead the Export Department. Reflecting the divide within the bank between the purchasing and financing functions from 1924 to 1917, Stettinius was not involved in questions of international finance. See John Douglas Forbes, Stettinius, Sr.; Portrait of a Morgan Partner (Charlottesville, Va., 1974), 44-64. Not all British and French purchases made in the United States were handled by J.P. Morgan & Co. However, the firm did handle the bulk of British and French buying in the United States. Purchasing issues could on occasion create disputes. A good example is the British purchase of rifles in 1916 which eventually had to be referred to the Cabinet for resolution. See Kathleen Burk, Britain, America and the Sinews of War (Boston, 1985), 41-42.

(2.) Difficulties associated with archival materials have probably played some part in producing this situation. Of the leading wartime figures in the bank, the Lamont collection at the Baker Library is well known to historians. Henry P. Davison left no private papers; the existence of the J.P. Morgan, Jr., papers in the Pierpont Morgan Library was denied for decades, and these were opened to scholars only in the 1980s; the Morgan Grenfell papers are deposited in the Guildhall Library but restrictions remain in place; and little survived in the way of Morgan, Harjes documents.

(3.) Ron Chernow, The House of Morgan (New York, 1990). Pages 183-204 cover the wartime period.

(4.) Vincent Carosso, The Morgans: Private International Bankers, 1854-1913 (Cambridge, Mass., 1987). Carosso’s papers were bequeathed to the Pierpont Morgan Library and now form a part of the archival collection. A number of typescript chapters dealing with the First World War exist in what was apparently planned as a study reaching into the interwar period. I would like to thank Mr. David Wright, formerly the archivist at the Pierpont Morgan Library, for this information. There is a substantial literature on the twin themes of European reconstruction and American involvement therein and Anglo-American relations in the postwar world. Among the more important works are Stephen Schuker, the End of French Predominance in Europe (Chapel Hill, N.C., 1976); Dan P. Silverman, Reconstructing Europe after tire Great War (Cambridge, Mass., 1982); Michael Hogan, Informal Entente: the Private Structure of Cooperation in Anglo-American Economic Diplomacy, 1918-1928 (Columbia, S.C., 1977); and Frank Costigliola, Awkward Dominion: American Political, Economic, and Cultural Relations with Europe, 1919-1933 (Ithaca, N.Y., 1984).

(5.) Kathleen Burk, Britain, America and tire Sinews of War and Morgan Grenfell, 1838- 1988: The Biography of a Merchant Bank (Oxford, 1989).

(6.) Kathleen Burk, “A Merchant Bank at War: The House of Morgan, 1914-1918,” in Money and Power, ed. P. L. Cottrell and D.E. Moggridge (London, 1988). Roberta Dayer, in a similar vein, assessed J.P. Morgan’s ties to the British government. Roberta Dayer, “Strange Bedfellows: J. P. Morgan & Co., Whitehall and the Wilson Administration During World War I,” Business History 18 (July 1976): 127-151.

(7.) Priscilla Roberts, “Willard D. Straight and the Diplomacy of International Finance during the First World War,” Business History 40 (July 1998): 27-32.

(8.) Priscilla Roberts, “The Anglo-American Theme: American Visions of an Atlantic Alliance, 1914-1933,” Diplomatic History 21 (Summer 1997): 333-364.

(9.) Dan P. Silverman is an exception. On his work see the discussion below. Pierre Renouvin, “La Politique des emprunts [acute{e}]trangers aux [acute{E}]tats-Unis de 1914 [grave{a}] 1917,” Annales 6 (1951): 289-305; Andr[acute{e}] Kaspi, Le Temps des Am[acute{e}]ricains 1917-1918 (Paris, 1976); Yves-Henri Nouailhat, France et [acute{E}]tats-Unis, a[hat{o}]ut 1914-avril 1917 (Paris, 1979); Georges-Henri Soutou, L’Or et le sang (Paris, 1989).

(10.) Silverman, Reconstructing Europe after the Great War, 19, 38-39.

(11.) Ibid., 227.

(12.) On the pre-war history of the House of Morgan, Carosso, The Morgans, is authoritative. See as well Jean Strouse, Morgan: American Financier (New York, 1999). Unfortunately, no substantive body of Morgan, Harjes archival material has survived. It seems likely that the records of the firm were dispersed with the German occupation during the Second World War and never reconstituted. The few papers held at the Morgan Guaranty offices in Paris, formerly the Morgan, Harjes offices, are unhelpful. The correspondence of Herman Harjes, business and otherwise, is sparse, with occasional pieces surfacing in the J.P. Morgan, Jr., papers, the Morgan Grenfell papers in the Guildhall Library, London and the Thomas W. Lamont papers in the Baker Library at Harvard University. A typescript history of Morgan, Harjes written in 1933 by H. O. Loderhose, A History of Morgan, Harjes et Cie, 1872 -1932, can be found in the J.P. Morgan, Jr., papers, Box 116.

(13.) No scholarly study of Harjes exists. The paucity of material regarding his life and career is striking. Harjes’ obituary in The New York Times, 22 Aug. 1926, page 1 provides an outline.

(14.) A good overview of the connection between French finance and foreign relations can be found in Raymond Poidevin, Finances et relations internationales 1887-1914 (Paris, 1970).

(15.) This paragraph is drawn from Arlen J. Hansen, Gentlemen Volunteers: The Story of the American Ambulance Drivers in the Great War (New York, 1996), 3-20. I would like to thank Mr. H. Herman Harjes III for this reference.

(16.) Quotation provided courtesy of Dr. Alan Albright. The original remains in possession of the family.

(17.) Carosso, The Morgans, 12.

(18.) J.P. Morgan, Jr., papers, Pierpont Morgan Library, Box 92, folder 464.

(19.) J.S. Morgan & Co. was the precursor to Morgan Grenfell. The latter firm was formed in 1910.

(20.) Jack Morgan to Vivian Smith, 16 Jan. 1906, J.P. Morgan, Jr., Papers, Pierpont Morgan Library, Box 4/1. Aldenham was Jack Morgan’s three hundred acre country estate in Hertfordshire.

(21.) There is a biography of Jack Morgan: John D. Forbes, J.P. Morgan, Jr., 1867-1943 (Charlottesville, Va., 1981).

(22.) His admirers were almost exclusively in London in the 1914-1917 years. It was widely believed in Paris and London that Davison’s personal failings had goaded the Federal Reserve Board to issue a warning to American investors regarding the credit worthiness of Allied plans to sell short term bonds in Nov. 1916. This action, which was undertaken at the behest of President Woodrow Wilson for reasons connected to his plan to mediate in the war, provoked a crisis in Allied finance. Accounts of the affair are found in Burk, Britain, America, and the Sinews of War, 83-90; Nouailhat, France et [acute{E}]tats-Unis, 374-378; Souton, L’Or et le sang, 375-378.

(23.) On Davison’s life and career, see the account penned by Thomas W. Lamont, Henry Pomeroy Davison, The Record of a Useful Life (New York, 1933).

(24.) For Lamont’s career, Edward W. Lamont, The Ambassador from Wall Street (Madison, 1994); and Michael J. Hogan, “Thomas W. Lamont and European Recovery: The Diplomacy of Privatism in a Corporatist Age,” in U.S. Diplomats in Europe, 1919-1941, ed. Kenneth Paul Jones (reprint ed., Santa Barbara: 1983), 5-22 are useful. The Lamont papers in the Baker Library of Harvard University are extensive, though less so on the wartime period. Moreover, there is considerable duplication of the J.P. Morgan, Jr., collection.

(25.) Quoted in Chernow, The House of Morgan, 430.

(26.) Lamont, The Ambassador from Wall Street, 28.

(27.) Thomas W. Lamont, Across World Frontiers (New York, 1951), 14.

(28.) David Landes, Bankers & Pashas, 2nd ed. (Cambridge, Mass., 1979), 33.

(29.) Quoted in Carosso, The Morgans, 2.

(30.) Quoted in Lamont, Henry Pomeroy Davison, 136.

(31.) Burk Morgan Grenfell, 29.

(32.) Landes, Bankers & Pashas, 33.

(33.) Speech by Jack Morgan in honor of George F. Baker at the Waldorf-Astoria Hotel, 12 Jan. 1925, J.P. Morgan, Jr., papers, Pierpont Morgan Library, Box 101/folder 280, #2. Remarkably, this was apparently Jack Morgan’s first public address.

(34.) Jack Morgan, 28 Apr. 1916, J.P. Morgan, Jr., papers, Pierpont Morgan Library, Box 71/folder 153/4.

(35.) The phrases “Morgan partners” or “New York partners” refer to Jack Morgan, Henry Davison, Thomas Lamont, and Dwight Morrow. While there were other Morgan partners in New York, it was these men who conducted all of the financial business with France. Morrow, as the most junior of the four, was involved much less frequently than his senior colleagues.

(36.) On Jusserand see Andre de Laboulaye, “J. J. Jusserand, Ambassadeur de France,” Redes Deux Mondes, 1 July 1949; and Kaspi, Le Temps des Americains, 10u11.

(37.) Ribot was appointed minister of finance in the cabinet shuffle which produced the Union Sacr[acute{e}]e 26 Aug. 1914. His tenure in this office lasted until 18 March 1917, when he formed a new government as premier of France in the wake of the resignation of Aristide Briand. Ribot then assumed the portfolio of foreign affairs in addition to the presidency of the council of ministers. His successor as finance minister was Joseph Thierry who was in turn replaced in Sept. 1917 by Lucien Klotz. Ribot is thus the central political figure for French wartime finance. For his career, see Martin E. Schmidt, Alexandre Ribot: Odyssey of a Liberal in the Third Republic (The Hague, 1974).

(38.) The best overview of French external finance during the war remains Petit, Histoire des finances ext[acute{e}]rieures de la France pendant la guerre 1914-1918 (Paris, 1929). See too, Albert Goute, Des Principals op[acute{e}]rations du tr[acute{e}]sor francais depuis le (debut de la guerre de 1914 jusqu’a l’intercention des [acute{E}]tats-Unis (Paris, 1923) and Gaston J[grave{e}]ze and Henri Truchy, The War Finance of France (New Haven, 1927).

(39.) Alan Milward, “Les Placements francais [grave{a}] l'[acute{e}]tranger et les Deux Cuerres Mondiales,” in La Position internationale de la France, ed. Maurice Levy-Leboyer (Paris, 1977), 301. Morgan, Harjes, provided the Morgans estimate in response to a query from the Wilson administration. J.P. Morgan & Co. to William C. McAdoo (secretary of the treasury in the Wilson administration, 1913-1918), 24 Sept. 1914, Library of Congress, William C. McAdoo Mss, box 123.

(40.) Charles Feinstein, “Britain’s Overseas Investments in 1913,” Economic History Review, 2nd series (May 1990): 288-295.

(41.) In a note drafted for Lord Cunliffe, who was shortly to head to the United States to assist in coordinating American dollar credits, John Maynard Keynes, then the bead of the Treasury department dealing with international finance, pointed out that direct credits to France in 1915-1916 amounted to [pounds]20,000,000, a figure that climbed in 1916-1917 to [pounds]243,000,000. Keynes to Cunliffe, 9 Apr. 1917, “Note on the Financial Arrangements between the United Kingdom and the Allies,” Public Record Office, T 172/422.

(42.) Loderhose, A History of Morgan, Harjes et Cie, 1872-1932, J.P. Morgan, Jr., papers, Pierpont Morgan Library, Box 116, 38-42.

(43.) These developments can be traced in the Nye Committee report. U.S. Senate, Special Committee investigating the Munitions Industry, 74th Congress, 2nd session, 1936, report no. 944, part 6, chapter one, 9-29.

(44.) Jusserand to minist[grave{e}]re des affaires [acute{e}]trang[grave{e}]res, 27 Sept. 1914, Archives du minist[grave{e}]re des affaires [acute{e}]trang[grave{e}]res, Cuerre 1914-1918/1456/368.

(45.) See Jusserand’s report to Th[acute{e}]ophile Delcass[acute{e}], the minister of foreign affairs, 29 Oct. 1914, Archives du minist[grave{e}]re des finances, MF B 31.717, [acute{E}]tats-Unis 1914/597.

(46.) Jack Morgan to J. Ridgely Carter, 3 Feb. 1915, J.P. Morgan, Jr., papers, Pierpont Morgan Library, Box 190. Carter was the junior partner in Morgan, Harjes, having been admitted to the partnership in 1914.

(47.) J.P. Morgan, Jr., papers, Pierpont Morgan Library Box 41, Day to Day Memorandum, 26 Dec. 1914.

(48.) J.P. Morgan, Jr., papers, Pierpont Morgan Library Box 41, Day to Day Memorandum, 13 Dec. 1914.

(49.) J.P. Morgan, Jr., Papers, Pierpont Morgan Library, Box 41, Day to Day Memorandum, 11 Jan. 1915.

(50.) J.P. Morgan, Jr., Papers, Pierpont Morgan Library, Box 41, Day to Day Memorandum, 13 Dec. 1914,

(51.) J.P. Morgan, Jr., Papers, Pierpont Morgan Library, Box 41, Day to Day Memorandum, 12 Jan. 1915.

(52.) Jack Morgan to Herman Harjes, 22 Apr. 1915, Morgan Bank Papers, Pierpont Morgan Library, Apr. 1915 visit of J.P. Morgan, Jr., to England, folder 1; Davison and Lamont to Jack Morgan, 20 Apr. 1915, Morgan Bank Papers, Pierpont Morgan Library, Apr. 1915 visit of J.P. Morgan, Jr., to England, folder 3; Davison to Jack Morgan, 20 Apr. 1915, Morgan Bank Papers, Pierpont Morgan Library, Apr. 1915 visit of J.P Morgan, Jr., to England, folder 2.

(53.) Horn, “External Finance in Anglo-French Relations, 1914-1917,” International History Review 17 (Feb. 1995): 60-62.

(54.) Jack Morgan to Harjes, 22 Apr. 1915, Morgan Bank Papers, Pierpont Morgan Library folder 1.

(55.) Homberg published his memoirs under the title Les Coulisses de l’histoire, 1898-1920 (Paris, 1938). See also Octave Homberg, L’Imperialisme americain (Paris, 1929).

(56.) Nouailhat, France et Etats-Unis, 295.

(57.) J.P. Morgan, Jr., Papers, Pierpont Morgan Library 11 Jan. 1915, Day to Day Memorandum, Box 41.

(58.) The letter is nine typed pages long in which there are only three references to Homberg and Earnest Mallet, the delegate representing the Bank of France. They are never referred to by name, while the British delegates are referred to frequently and always by name. Jack Morgan to E. C. Grenfell, 12 Nov. 1915, J.P. Morgan, Jr., papers, Pierpont Morgan Library, Box 12.

(59.) Jack Morgan to J.P. Morgan & Co., 21 Feb. 1916, J.P. Morgan, Jr., papers, Pierpont Morgan Library, Box 35. See also the cables from the British ambassador at Washington, Sir Cecil Spring-Rice to the foreign secretary, Sir Edward Grey, describing the clash between Homberg and the Morgan partners. Spring-Rice to Grey, 2 and 5 Dec. 1915, Public Record Office, Foreign Office 800/85.

(60.) On the American Foreign Securities Company loan see Yves-Henri Nouailhat, “Un emprunt francais aux Etats-Unis en juillet 1916: l’emprunt de I’American Foreign Securities Company,” Revue d’Historie Moderne et Contemporaine 14 (Oct.-Dec. 1967): 356-374.

(61.) James Brown to Benjamin Strong, 4 Aug. 1916, Federal Reserve Bank of New York, Strong papers, 610.1. The reference was to Homberg and J. F. Bloch, who succeeded Homberg as the French financial representative in New York. Brown was referring to separate operations–Brown Brothers handled a commercial acceptance credit for France which appeared concurrently with the American Foreign Securities Company loan led by J.P. Morgan & Co.

(62.) Guy Rousseau, Le Conseil des ministres en 1916, d’apr[grave{e}]s Les notes d’Etienne Cl[acute{e}]mentel,” Guerres Mondiales et Conflits Contemporoins 171 (July 1993): 145

(63.) Herman Harjes to Jack Morgan, 23 Apr. 1915, Morgan Bank Papers, Pierpont Morgan Library, Herman Harjes file.

(64.) On which theme, see pages 98-99.

(65.) The phrase was Lamont’s. Lamont, Across World Frontiers, 79.

(66.) Jack Morgan to Davison, 21 Feb. 1916, J.P. Morgan, Jr., papers, Pierpont Morgan Library, Box 35/16646.

(67.) A transcript of the talks held in Paris is in Archives du minist[grave{e}]re des finances, MF B 31.622.

(68.) Two accounts of these discussions exist; first, the Report to the Chancellor of the Exchequer of the British Members of the Joint Anglo-French Financial Committee, Public Record Office, T 170/95; and second, Proc[grave{e}]s-Verbal, Archives du minist[grave{e}]re des finances, MF B 12.677 Al. The latter is the more complete of the two.

(69.) Other firms had handled the raising of funds for France outside of the House of Morgan–Brown Brothers for example provided commercial credit to France. However, the City of Paris loan was the first of its type that was not handled by J.P. Morgan & Co.

(70.) Chernow, The House of Morgan, 193-195.

(71.) Roberts, “Willard D. Straight,” 27-32.

(72.) Herman Harjes to Jack Carter, 9 Nov. 1916, Morgan Bank Papers, Pierpont Morgan Library, 312.

(73.) Herman Harjes to Jack Morgan, 3 Nov. 1916, Morgan Bank Papers, Pierpont Morgan Library, 312A/80095, 80096.

(74.) For details see E. V. Morgan, Studies in British Financial Policy, 1914-1925 (London, 1952), 324.

(75.) Until 1917 the British government obtained securities that were salable in the United States on a voluntary basis, offering various inducements to persuade investors to tender their shares. Not enough securities were being tendered, however, and early in 1917 the Treasury, through the Defence of the Realm Act, compelled investors to surrender securities which it deemed desirable. Full details can be found in Report of the American Dollar Securities Committee, 4 June 1919, Public Record Office, T 170/130.

(76.) Davison to Harjes, 20 Dec. 1916, Morgan Bank Papers, Pierpont Morgan Library, 312A.

(77.) J.P. Morgan & Co. to Harjes, 2 Nov. 1916, Morgan Bank papers, Pierpont Morgan Library, 312.

(78.) Davison to Jack Morgan, 23 Dec. 1914, J.P. Morgan, Jr., papers, Pierpont Morgan Library, Box 34, Cables relating to the Establishment of the Purchasing Agency in 1914-1915.

(79.) Davison to J.P. Morgan & Co., 9 Sept. 1916, Morgan Bank Papers, 312/472.

(80.) Soutou L’Or et le sang, 156-158.

(81.) Alexandre Ribot, Journal et correspondences in[acute{e}]dit[acute{e}]s 1914-1922 (Paris, 1936),

(82.) Soutou, L’Or et le sang, 501-519; Marc Trachtenberg, “‘A New Economic Order’: Etienne Cl[acute{e}]mentel and French Economic Diplomacy during the First World War,” French Historical Studies 10 (Fall 1977): 315-341.

(83.) Kaspi, Le Temps des Am[acute{e}]ricaians, 47-58; 330-334.

(84.) Jack Morgan to Jack Carter, 12 Sept. 1917, J.P. Morgan, Jr., papers, Pierpont Morgan Library, Box 14.

(85.) Jack Morgan to Jack Carter, 16 Nov. 1918, J.P. Morgan, Jr., papers, Pierpont Morgan Library, Box 15/24.

(86.) Davison to Jack Morgan, 23 Dec. 1914, J.P. Morgan, Jr., papers, Pierpont Morgan Library, Box 34.

(87.) Jack Morgan to E. C. Grenfell, 23 Dec. 1918, J.P. Morgan Jr. papers, Pierpont Morgan Library, Box 33/cables 1913-1921.

(88.) See the comments by Kathleen Burk, “The House of Morgan in Financial Diplomacy, 1920-1930,” in Anglo-American Relations in the 1920s, ed. B. J. C. McKercher (Edmonton, 1990), 126-127.

(89.) Lamont to Florence Lamont, 6 June 1919, quoted in Elisabeth Glaser, “The Making of the Economic Peace,” in The Treaty of Versailles: A Reassessment after 75 Years, ed. Manfred Boemeke, Gerald Feldman, and Elisabeth Glaser (Washington, 1998), 398-399; Lamont to R. H. Brand, 10 June 1919, quoted in Stephen Schuker, “The Origins of American Stabilization Policy in Europe,” in Confrontation and Cooperation: Germany anti the United States in the Era of World War I, 1900-1924, ed. Hans J[ddot{u}]rgen Schr[ddot{o}]dr (Oxford, 1993), 387.

(90.) Stettinius to Grayson Murphy, 20 July 1919, Edward R. Stettinius, Sr., papers, Alderman Library University of Virginia, RS Box 14, folder 243. Grayson Murphy was the vice president of Guaranty Trust at this time and subsequently president of the Foreign Commerce Corporation.

(91.) Roberts, “Willard Straight” 38-39.

(92.) Stephen Schuker, The End of French Predominance in Europe (Chapel Hill, 1976), and Silverman, Reconstructing Europe after the Great War, esp. chapter six, provide guides to the activities of J.P. Morgan & Co.

(93.) Burk “The House of Morgan in Financial Diplomacy, 1920-1930,” in Anglo-American Relations in the 1920s 129.

(94.) Jack Morgan to George Whitney, 5 Nov. 1921, J.P. Morgan, Jr., papers, Pierpont Morgan Library, Box 36.

(95.) Stettinius to Jack Morgan, 12 Apr. 1919, J.P. Morgan, Jr., papers, Pierpont Morgan Library Box 33, cables 1913-1921.

(96.) Quoted in Forbes, Stettinius, Sr., 109.

(97.) On the plan to have Morgan Grenfell take an interest in Morgan, Harjes, see Edward R. Stettinius, Sr., papers, RS Box 15, folder 246.

(98.) Other Americans subsequently became partners, including Bernard S. Carter, the son of John Ridgely Carter, in Jan. 1924 and Mr. Benjamin Joy in Jan. 1928. See J.P. Morgan, Jr., papers, Pierpont Morgan Library, Box 116, Morgan et Cie, historical data.

(99.) Stettinius to Martin Egan, 20 Sept. 1919, Edward R. Stettinius, Sr., papers, RS Box 8, folder 162. Egan handled publicity for J.P. Morgan & Co. along with a variety of tasks that would today be described as “dirty work.”

(100.) Jay to Stettinius, 13 Oct. 1919, Edward R. Stettinius, Sr., papers, RS Box 11, folder 206.

(101.) The firm was renamed Morgan et Cie. See J.P. Morgan, Jr., papers, Pierpont Morgan Library, Box 116, Morgan et Cie, historical data.

(102.) See the comments by Schuker, The End of French Predominance in Europe, 12-13. For a lively attack on the idea that a decadent France inexorably moved towards catastrophe in 1940, see Robert Young, France and the Origins of the Second World War (New York, 1996). A recent overview, which emphasizes the lack of consensus among scholars on the issue of the Fall of France in 1940, is Robert Boyce’s introduction to French Foreign and Defence Policy, 1918-1940, ed. Robert Boyce (London, 1998), 1-10.

(103.) Denise Artaud, “Reparations and War Debts: The Restoration of French Financial Power, 1919-1929,” in French Foreign and Defence Policy 1918-1940, 89-106.

(104.) Thomas W. Lamont, letter to the New York Times, 18 Oct. 1935, 22.


The history of the relations between J.P. Morgan and Co and France during the First World War is discussed.

Source Citation

Horn, Martin. “A Private Bank at War: J.P Morgan & Co. and France, 1914-1918.” Business History Review 74.1 (2000): 85. U.S. History in Context. Web. 11 June 2016.
Gale Document Number: GALE|A63820093

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