Research Paper on The Banking Industry's Revolutionary History in the U.S.

Introduction

Date In U.S. history, the banking industry has been revolutionized with influence from financiers such as J.P. Morgan, who were focused on ensuring profitability in the U.S. steel industry during the period and the success of the banking history. Within the past, economic growth was sparked by the influence posed by the series of railroads. However, the banking sector forms the backbone of most economies since it is ever devoted to holding individual financial assets to create more wealth on the delivered regulations. Even though the industry has evolved from the traditional setup encompassing of gold coins and other monetary elements, individuals like J.P. Morgan have delivered tremendous developments to the industry by revolutionizing more of the practices.

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According to the primary source by Grey Sabin (2009), he provides details on the different times the United States economy sank, leading to a crisis. In most cases, when talking about Americans' economic crisis, most individuals only view the Great Depression; however, there are recessions caused by bankers in the U.S. economy. The article by Sabin of considerable significance to the study since it provides the basis of the research pointing out the different occurrences when the economy ailed and offer the various ways through which J.P. Morgan contributed to the revolutionization of the banking sector. However, not much is known about Grey Sabin, although he provides a significant historical discourse about the different recession in the United States economy. Through the creation of primary sources within this paper, the primary aim was to ensure that people remain informed of the different times that the U.S. stock market crashed mainly caused by reckless banking behavior. In consideration of the intended audience, the article targeted individuals interested in the United States economic position since it first appeared in the 2009 mental floss magazine. Also, history students could be amongst the audience since the journal is a significant historical discourse. However, in the article, there are substantial conventions in the paper. For example, the journal offers reliable information by providing a specific timeline concerning the different events and occasions of recession in the United States economy. Within the journal, social and various legal issues govern it as it is based on the general structure and composition of events in America as underlying opinions. These influences assisted in the construction and implementation of the document based on the fact that attempts to gather information based on historical data.

However, from the journal concerning the American recessions, one can conclude the different effects of the stock exchange crisis on the economy. Based on the arguments, the article offers the assumption concerning the involvement of various financiers and bankers in the banking sector as most of the recessions are connected to unfair and greedy practices. As the articles talk about the four times the U.S economy collapsed, it begins by discussing the 1873 panic with horses contracting equine influenza, Black Tuesday, and Black Friday. During the period in the 19th century, horses dominated the United States economy as the power engine of the economy in different ways. Second, the article discusses the case of the 1886 winter, which was focusing on the cattle ranches. Within this discussion, the report elaborates on the issue concerning how cow in the West froze to death an occurrence that impaired the economic structure posing a threat up the end of 1887. Third, this writing described the 1907 panic that involved problems posed by greedy capitalists. Within this section, it outlines the involvement of J.P. Morgan in the crisis in different ways as he rescued the United States economy. Later on, it concludes by giving details on the whale of a crisis marked by the collapse of the first oil industry in the United States.

The different details offer in the article provide a significant opportunity for discussions concerning the economic structure in America as well as the involvement of banks. Since the paper seeks to discuss the John Pierpont Morgan and the different ways, J.P. Morgan revolutionized the banking industry in the United States. It is critical first to understand his life and the contributions as well.

John Pierpont Morgan Life

Born in 1837, Hartford, Connecticut, in the United States, John Pierpont Morgan is one of the renowned financial figures and industrial organizer during the World Wars period. Within his influence in the United States economy, J.P. Morgan reorganized major railroads alongside the financing of industrial consolidations that shaped the United States steel industry, Electric Corporation, among other fundamental sectors in the United States. However, J.P. Morgan's significant contribution is projected towards the development of the banking industry in the U.S. banking being his first business, J.P Morgan had already established his own foreign exchange office by 1860 since he was aware of the power within the banking sector. During the events of the Civil War, J.P. Morgan made the legal fee to acquire a substituted soldier evading military service and garnered a large sum of profits from war materials he sold. Between 1860 and 1864, J.P. Morgan acted as an agent for the J. Pierpont Morgan and Company in New York, which was later renamed after his father's retirement to (J.S Morgan and Co).

Within the years from 1864 to 1872, J.P. Morgan became a member of the Dabney, Morgan, and Company as he partnered with the Philadelphia Drexel in 1871, forming Drexel, Morgan, and Company. The period is marked by Anthony Drexel's role as he was Pierpont's mentor. After Drexel's death, the firm was converted to "J.P. Morgan and Company." Still, the close relationship with Philadelphia's Drexel and Company, London's J.S. Morgan and Company, and Paris's Morgan, Harjes, and Company was retained. Even though J.P. Morgan had numerous partners through the years, he remained in control of the business since he was well versed with the organization of companies turning them into profitable avenues. Such traits by trait J.P. Morgan earned him the reputation as a financier and banker that helped companies grow and make a profit.

In other developments, J.P. Morgan focused on the railroads, which was the most significant business organization in the United States during the time. Through various interventions, he steered a syndicate that destroyed the American government financing privileges connected to Ray Cooke. In his dealing involving the railroad, they helped him develop a chain of companies as he consolidated and acquired small and mismanaged companies, which resulted in reliable services. In 1885, as J.P. Morgan began reorganizing railroads, he developed an agreement between the Pennsylvania Railroad and New York Central Railroad, which helped reduce the destructive rate war and rail-line competition between the two rails. In the following year, J.P. Morgan reorganized more railroads as he focused on ensuring that their financial base was stabilized, which pushed him to the board of directors managing railroads. As J.P. Morgan's influence extended, he was approached to help deal, reorganize, and rehabilitate railroad in after the 1893 financial panic.

By 1902, John Pierpont Morgan had gained control over many railroads, which made him one of the most potent individuals to control a large number of stocks of the railroads. Based on the fact that the railroad system was one of the leading companies in the United States, there was a high flow of money, which in different ways influenced the American economy. Most of the significant railways offered a significant platform meant to promote liquidity in the economy as it involved the U. S banks mainly through stocks. According to J.P. Morgan, he provides that if it were not of his father's friend, he possibly would not be as wealthy as he is. As he merged the railroad companies, J.P Morgan became a stockholder in all the companies which delivers the indication about how he acquired his wealth.

Revolutionization of the U.S. Banking Industry

In the revolution of the banking industry, it was critical to ensure that the different co-operations and institutions worked as expected of them. During the period, different companies operating in the railroad sector fell under the financial crisis, among other negative impacts that posed a challenge to the banking sector. In the U.S. banking sector, most of the operations were conducted under private banking, whereby it involved unincorporated people and partnerships, particularly by individuals starting their careers. During the period, banking consisted of a mixture of other activities such as finance, industry, and trade as the involved individuals conducted the operations. However, in the 19th and 20th centuries, J.P. Morgan had occupied a dominant position in the banking sector as it was associated both directly and indirectly with numerous government transactions and companies throughout the United States. Within the Morgan companies, they were owned privately in that they provided a multiplicity of investment services to selected clients establishing a banking dynasty. With a focus on the different developments fostered by J.P. Morgan, the company delivered a significant milestone in the American banking systems as the primary focus was on the American economy as J.P. Morgan's great interest lay in steel manufacturing among other sectors serving as the U.S. engine.

In the years before the events of the first World War that saw the creation of a significant market in the industrial setup, the living standards had multiplied fourfold, which saw the economy's capital intensify. Within the period before 1890, the bond markets and stock markets were significantly dominated by government loans and railroads the Morgan company took the responsibility of raising, controlling, and channeling more to fund the new wave of industrial development. In the period following the age after J.P. Morgan took over the company, significant wealth inequalities were resulting from the industrial and political conflicts between parties and classes. These developments are a substantial indication of J.P. Morgan's prowess in handling finances and ensuring that the banking industry remained stable and protected from the influence of immigrants. In different extents, there are numerous occasions where J.P. Morgan was involved with significant events in the United States history of the U.S. economy, such as the Panic of 1907, the Panic of 1873, the whale of crisis, among others.

The Panic of 1907

The 1907 panic is one of the most remarkable and severe occurrences in the Great Depression. The extent of the severe consequences of the Panic led to the review of the preexisting policies of the Federal Reserve System. Trust companies suffered the most, which led to the perception of the New York Clearing House to change completely among bankers. Augustus Heinze attempted to purchase the entire shares of the United Copper and control the copper industry in the process. The result was a failure of United Copper, banks, Heinze's fortune, and other shareholders. J.P. Morgan, the company that had relatively recently been named after John Pierpont Morgan, would become the most critical funder of many trusts at the time.

The National Bank of Commerce, which had suffered the negative consequences of the Panic, borrowed money from J.P. Morgan through the former's chairperson, Charles T. Barney. However, Morgan declined the request to fund the bank because it was run primarily by Knickerbocker, a trust company that would not establish the financial condition of the Trust and the factors that would influence the latter's...