8 - The Coming of War and the End of the Partnership, 1937–1940

Summary

The years between 1937 and 1940 were dominated by two themes: the future of the bank and the move to war. With their investment business gone, the partners retreated into inertia, an inclination deepened by the sharp contraction of 193–38. Against Wall Street opinion, and Federal Reserve Board policy, the partners argued that tightening monetary policy was unsound. As the recession deepened, the White House reached out to J.P. Morgan & Co. This feeler ended in disharmony. When it did, confronted with the subsequent death of their partner Charles Steele, the partners decided that survival required incorporating. Making this decision easier was the European war. J.P. Morgan & Co. was of modest consequence as war loomed. Supporters of appeasement, the partners tried to help France in the late 1930s but their timidity was marked enough that the French had recourse to others. Across the Channel, Neville Chamberlain’s government ignored the Morgan partners. With war, the Morgan partners moved closer in their embrace of Roosevelt. Ardent supporters of Britain and France, J.P. Morgan & Co. was not in the interventionist camp. They argued for aid to the Western democracies but not American belligerency, a posture that aligned with the president.