Aspire | Action | Acquire
Aspire | Action | Acquire

Casino Capitalists

According to a forgotten source, Morgan’s enjoyment of solitaire was to create order from disorder, just as he had sought to do in the electrical, rail, and steel industries. What is striking about this observation, found from research conducted by Martin Fridson, is the popularity of card games, especially poker, amongst billionaires.[1] Card games involve what Matthew Lieberman, author and professor of neurosciences, terms ‘mentalizing’ skills: “to figure out the psychological characteristics of people.”[2]

It should be no surprise that mentalizing skills are important in business; as Fridson wrote of card games. In Morgan’s library to discuss acquiring Carnegie Steel was “Bet-a-Million” gates, whom J P Morgan precluded from a directorship in US Steel. John W Gates, earned a reputation as a constant gambler, once losing a quarter of a million dollars in a poker game at the Waldorf-Astoria.[3] His son Charles unsuccessfully played at the table of Arnold Rothstein: “the [J.P.] Morgan of the underworld; its banker and master of strategy.”[4]

Charles Schwab who, after becoming president of US Steel, gambled in Monte Carlo with Baron Henri de Rothschild.[5]This was to the chagrin of Schwab’s mentor, Andrew Carnegie, who’d spent a lifetime assuaging the notion that capitalists are gamblers.[6] To the contrary, Joseph Schumpeter likened capitalism’s “promises of wealth and threats of destitution” to a game of poker.[7] That was the fate of the Corneil Vanderbilt, the Columbia College educated son of Cornelius who was unable to live up to the expectations of his father.

Schwab, whom historian Charles Morris points out, “stressed that the biggest companies were run by specialist managers trained in “the science of business”: “Nothing is left to chance. Every step of the process is carefully worked out in advance[8].” Herein lies the link between education and professional management; for which the twentieth century records the DuPont Company, and not Carnegie or U.S. Steel, as its progenitor. 

Morgan’s play, described by Frederick Lewis Allen, involved bringing business competitors together and persuading them to trade their shares for stock in a new holding company. He would also load the holding company with debt. The House of Morgan would profit from a generous assignment of stock in the holding company.[9] For his syndication of U.S. Steel, Morgan and his associates would reap a profit of around $62.5 million,[10] compared to a inflated stock price bonus of $92 million shared by Carnegie’s former partners.[11]

The university educated Morgan was by all accounts a “promotor” of the kind despised by Andrew Carnegie. Both men were polar opposites. Morgan was the son of a second-generation banker who had migrated from New York to London and had a university education. Born to poverty in Scotland, Carnegie attained little formal schooling and emigrated to America at his mother’s instigation. Morgan was a philandering church goer. Carnegie was neither. Morgan was of robust physical appearance and Carnegie was not.

[1] Martin S. Fridson, How to be a Billionaire: Proven Strategies from the Titans of Wealth (New York: Wiley, 2000), 21.

[2] Matthew D. Lieberman, Social: Why Our Brains Are Wired to Connect (New York: Broadway Books, 2013), 126.

[3] Frederick L. Allen, The Lords of Creation: The History of America’s 1 Percent, ed. Mark C. Miller (New York: Open Road Integrated Media, 2017), 22.

[4] Leo Katcher, The Big Bankroll: The Life and Times of Arnold Rothstein (New York: Da Capo Press, 1994), 8.

[5] David S. Landes, Dynasties: Fortune and Misfortune of the World’s Great Family Businesses (New York: Penguin Group, 2007), 81.

[6] David Nasaw, Andrew Carnegie (London: Penguin, 2008), 638.

[7] Joseph Schumpeter, J. A., Can Capitalism Survive? (New York: Harper Perennial Modern Thought, 2009), 24.

[8] Charles Morris, The Tycoons How Andrew Carnegie John D. Rockefeller, Jay Gould, and J.P. Morgan Invented the American Supereconomy, (New York: Owl Books, impr. 2006), 295.

[9] Frederick L. Allen, The Lords of Creation: The History of America’s 1 Percent, ed. Mark C. Miller (New York: Open Road Integrated Media, 2017), 10, 143.

[10] Frederick L. Allen, The Lords of Creation: The History of America’s 1 Percent, ed. Mark C. Miller (New York: Open Road Integrated Media, 2017), 143.

[11] Burton J. Hendrick, The Life of Andrew Carnegie (London: William Heinemann Ltd, 1933), 498.