As he testified before a House committee that was investigating his economic dominance over America, J.P. Morgan was asked whether commercial credit was based more on money or property. Morgan replied, “The first thing is character…before money or anything else. Money cannot buy it.”
Throughout Wall Street, Morgan had a reputation for being an efficient, trustworthy and serious businessman. When people wanted a deal made as effectively as possible, they would turn to Morgan. It is a reputation that he had spent decades slowly building and cultivating, and one that would serve him well throughout the rest of his career. He recognized that it was primarily his reputation that would make or break his career. And, he looked for certain characteristics and a strong reputation among others with whom he was considering doing business.
“A man I do not trust could not get money from me on all bonds in Christendom,” Morgan once said. For Morgan, a solid reputation was the basis of all negotiations and relationships in the business world. “Money equals business which equals power, all of which come from character and trust,” he said. Like the strong mahogany cane that he had a penchant for walking with, Morgan stood firm in his conviction that belief and trust in the character of others was at the basis of all economic transactions, and more broadly, the force behind a stable and strong economy.
It was the reputation that Morgan had built up over the years that allowed him to achieve the monopoly that he did by the end of his career. He had earned the trust of businessmen, politicians and the public alike. It was for this reason that the U.S. government chose time after time to turn to Morgan for assistance when it found itself in the direst of situations.
When the U.S. Army asked for a loan from Morgan in 1877 in order to fight in the Western Indian Wars, the Army knew it was walking on dangerous ground. With no real resources to be able to pay back the loan, Morgan was chosen as the man for the job because he had a trusted business record and reputation. The government knew that Morgan could get the job done in an efficient, as well as profitable, manner.
Similarly, the U.S. government turned to Morgan in 1895 to rescue the Treasury, which had no way of paying off the large debts that it owed. Morgan carefully took to investing what remained of the government’s money into a select few extremely risky stocks. But, eventually, it paid off. Morgan had been the right man for the job and he did, in effect, save the U.S. government from crumbling.
The government, much like all of the businessmen with whom Morgan carried out transactions, knew they could rely on Morgan for his trustworthiness, directness and his prudence. In the end, Morgan’s reputation proved to be one of the secret and most valuable keys to his success.
Lesson #2: Build a Strong Reputation
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