On the night of November 2, 1907, J.P. Morgan locked forty bankers in his private library and refused to let them leave until they agreed to save each other. At 4:45 in the morning, the last holdout signed. The doors were unlocked. The American financial system survived. This is the story of what that night revealed, and why we have never escaped its shadow.
We begin with the run on the Knickerbocker Trust. The rumors. The lines of depositors demanding their money. The decision—Morgan's decision—to let it fail. Then comes the cascade: the Trust Company of America hemorrhaging deposits, the stock exchange minutes from closing, brokers pacing the floor waiting for money that wasn't coming. And Morgan, seventy years old, summoning the bank presidents to his office and informing them what they would do.
The night in the library was something that had never happened before: one man holding the presidents of America's largest financial institutions prisoner until they agreed to cooperate. It raised a question that still haunts us. In a democracy, who should have the power to decide which institutions live and which die?
The Federal Reserve was supposed to be the answer. Created in 1913, designed by Morgan's own men, it was meant to do institutionally what Morgan had done personally—to ensure no private citizen would ever again wield such power. But when the tests came, in 1929 and again in 2008, the institution either failed catastrophically or found itself calling Jamie Dimon, asking the man who runs JPMorgan Chase to do exactly what Morgan did a century before.
This episode traces a pattern that refuses to break: from Morgan's library to the Pecora hearings, from Glass-Steagall to its repeal, from Bear Stearns to Lehman Brothers, from a circus performer placed on a banker's lap to a system still too big to fail. Along the way: the suicide of Charles Barney, the photograph that destroyed the House of Morgan, the secret meeting at Jekyll Island, and the question Morgan posed that democracy has never answered.
The library is a museum now. The tourists take photographs. They do not know they are standing on sacred ground.
But somewhere, right now, someone is preparing to lock the doors. The pattern holds. It has always held.