How the House of Morgan Cooperated to Develop the Large-Cap US Multinational Corporation, 1895-1913

Abstract

The following investigation is intended to determine how the large-cap US multinational corporation was further advanced during the pivotal years of 1895-1913 by a leading private unincorporated institution—House of Morgan. Historical review and assessment focused on the broader US society, government, monetary landscape, the House of Morgan, leading large cap US multinationals; looking at both the key organizations and underlying people in power. The report framework focuses upon the development of the US super structure within which all major companies work down to the way actual institutions organize economic assets in the form of a multinational corporation. Questions that have been considered include: how was business conducted globally with so little formal mechanisms in place, the importance of the various forms of capital for business, and the various roles politics played in business development. Other areas include how owners and managers were effectively separated, how these same companies were able to branch out its product offering and the importance of providing corporate incentives.

The House of Morgan cooperated with leading merchant banks, governments, foundations in developing an over-arching environment that was better adapted to the realities of the recent agricultural, industrial, and transportation revolutions that had brought about an integrated world. To organize economic assets in a more efficient and stable manner, large-cap multinationals were the preferred alternative, with a wave of consolidation across industries, underpinned by the pristine Morgan name. Strong board presence, interlocking corporate representation, active role in strategic planning, and management selection ensured that not only were new corporations molded in the design of the House of Morgan but also that they would stay committed to the far-reaching objectives.

The House of Morgan took on more than just a focus of increasing shareholder value. They were driven by lofty ambitions of providing comprehensive stability within society at large in a rapidly changing world. The partners of the House of Morgan families had for generations been at the vanguard for providing the highest level of leadership throughout society in areas including business, politics, finance, and religion. These leading families were instrumental in providing the backbone of American society including founding the US Republic, developing the most venerable education institutions, and providing a moral compass through religious revival movements. The House of Morgan would help bring about generally larger and more institutionalized solutions from preceding generations that were conducive for multinational corporations to operate within. This ranges from a US central bank, developing modern non-profits structure, and funding the transportation network making the world more integrated. In helping organize broader US society, the House of Morgan would interlock different subsystems, including finance, charity, and politics with business in promotion of a more harmonious, predictable and productive society. The House of Morgan development of leading US large-cap multinationals, including General Electric, International Harvester, International Mercantile Marine and US Steel illustrates how it not only provided for the macro landscape to operate within, but also developed the leading companies of the era.