Institutional Investor Review: Documenting the most prominent investment figures and events
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Morgan Stanley isn't just a leading global international financial services firm, it's now transitioning to fintech.
It has always believed that data is the most important asset and believes in the importance of data-driven and digital transformation. Today, Morgan Stanley has its own data lake and relies on massive data to publish about 55,000 research reports a year.
Recently, their reports have been swept away again.
This spirit of conforming to the trend of the times, tracing back to the roots, comes from the Morgan family, which rose up in response to the times and fell in response to the times.
Edison and Carnegie's "angel investors," the "founding fathers" of mergers and acquisitions
There are all kinds of prestigious families in the world, and Morgan is the only one.
The Morgan family was largely in the hands of four generations, rising from prominence to glory and decline, with the first generation of Joseph Morgan, the second generation of Junius Spencer Morgan (also transliterated as Genos Spencer Morgan), the third generation of John Pierpont Morgan (also known as "Old Morgan"), abbreviated as J.P. Morgan, and the fourth generation of John Jack Pierpont Morgan (also known as "Morgan Jr.").
Among them, the third generation of John Pierpont Morgan was the founder and integrator of the glory days of the Morgan consortium, ushering in an era in which financial oligarchs dominated the joining of enterprises.
In 1636, Morgan's ancestors followed the gold rush and came from England to Massachusetts in the United States, becoming a "beauty drift".
From farming to animal husbandry, the Morgan family completed the primitive accumulation of wealth. Beginning with Joseph Morgan, the Morgan family began to expand their investments and industries, starting with hotels and coffee, and then buying shares in the Connecticut Steamship Company and buying shares in the Erie Canal and Railroad.
After the death of the first generation of leaders, Joseph Morgan left behind about $1 million in property. Of that, about $92,000 in real estate and stakes in various banks, steamship companies, canal companies, bridge companies and two railroad bureaus, and more importantly, Itner Insurance Company — almost all of his work for the rest of his life.
The second generation of the Morgan family, Joseph Morgan's son, Junius Spencer Morgan (hereinafter referred to as Juners), founded J.S. Morgan by inheriting the British legacy of George Peabody, considered the "public relations agent" of Nathan Rothschild (The Rothschild family).
In addition to J.S. Morgan,Juniors relied on the wealth left to him by his father and his own efforts to open trading companies, buy shares in several banks, insurance companies, and railroad companies, and hold directorships in companies such as New Haven, the Hartford Railroad Bureau, and Hartford Fire Insurance.
The third-generation head of the Morgan family, John Pierpont Morgan, or J. Morgan, was the first of the morgans. P. Morgan (hereinafter referred to as Pierpont). With the financial support of his father, morgan firms were established in New York in 1861, specializing in the trading of government bonds or foreign exchange.
Morgan's first business, which was intended to become a proxy seller of U.S. government bonds, was eventually taken over by another company, and Pierpont retreated to the second place, eating first-hand bonds and selling them in the secondary market, making a profit of $83,000 from the sale of bonds in New York alone.
During the American Civil War in the 1960s, Pierpont used the opportunity to hoard gold and sell the gold he had hoarded for a lucrative profit by taking advantage of the agreement between Britain and the United States to resolve frictions.
After the Civil War, American railroad construction entered a period of rapid development. In 1868, Pierpont began to involve the American railroad business, ending the chaos caused by disorderly competition in American railways by buying troubled railroads, mergers and reorganizations, or "Morganization", including the New York Central Railroad, the Southern Railroad Network, the Erie Railroad, the Reading Railroad, the Baltimore and Ohio Corporation, and the Chespik and Ohio Corporation, the North Pacific Corporation, and the Great Northern Railroad.
By 1910, U.S. railroads had finally merged into six major systems, four of which were under the control or influence of the Morgan family.
After that, Pierpont began to turn his attention to the steel industry, funding carnegie, who was in trouble at the time.
In 1901, Morgan paid $480 million to buy Carnegie's steel company, plus several iron mines bought from Rockefeller, and eventually formed 33 companies into the American Steel Company, the first company to exceed $1 billion at the time.
Pierpont became the "founding father of mergers and reorganizations", and there is a saying that "God created the world in 4000 BC, but was reorganized by Morgan in 1901." In addition, another case of Pierponte's mergers and acquisitions is GM – also a product of Morganization.
Pierponte was not only an angel investor in Edison, but also funded the formation of the Edison Electric Lighting Company at the end of 1880, and then facilitated the merger of Edison General Electric Company and Thomson-Houston Electric Company to become General Electric Company, and later saved GM in a crisis, and GM has been loyal to the Morgan consortium ever since.
As the founding father of mergers and acquisitions, Pierpont perfectly realized the "financial + industrial" asset portfolio, and the Wall Street he represented was no longer a servant of American industry, but became the master of American industry.
Walking on thin ice: become in the government, subject to the government
In addition, Pierpont is particularly good at dealing with the relationship with the government and various countries, and has been involved in high-level political circles for a long time, twice saving the United States from financial crises.
The Morgan consortium was the main financial adviser to President Cleveland, and after the rise to power of Theodore Roosevelt, President Woodrow Wilson, and President Herbert Hoover, they were all supported by the Morgan consortium, and in the Truman administration, the three successive secretaries of state were related to the Morgan consortium, and the three secretaries of defense of the Eisenhower administration were also closely related to the Morgan consortium.
It can be said that the Morgan consortium and the government have a close relationship, but in the end, under the control of the US government, they went into decline and eventually split into three.
In 1870, during the Franco-Prussian War, the French government raised funds to form an army, and turned to the Rothschilds, the Bahraini family, etc., but they were eventually rejected. Only, the Morgan family was willing to take great risks to issue bonds and raise funds for them.
In 1877, in a U.S. veto, the government was reluctant to allocate funds to pay the salaries of American soldiers, and Pierpont took out $2.5 million in cash to pay the U.S. troops, and also sent personnel to more than a dozen cities at his own expense to manage the payroll work.
Through this payroll, the Morgan family's political and social status in the United States was further enhanced.
In 1877, the U.S. government passed the Gold Dollar Restoration Act, which began to use gold to pay off debts. Beginning in 1890, in order to reduce the outflow of gold, the United States introduced a "double standard" system (paper money and dollars can be supported by both gold and silver), but it was resisted by creditors, european governments, who only wanted gold.
By 1894, the U.S. government's gold reserves were in jeopardy and on the verge of bankruptcy. At the invitation of the President of the United States, the Morgan consortium finally saved the US government from the crisis and also saved the "gold standard" system, and the treasury gold reserves resumed growth.
By 1895, Pierponte had completed his defense of the "gold standard" in a short period of time. This was the morgan consortium's first rescue from the U.S. financial crisis.
In addition to the United States, the Morgan consortium has a huge international business, undertaking the issuance of Mexican government bonds in 1899; after 1890, Morgan Bank also became a major investor in the Argentine government and corporate; once assumed the share of Chinese government bond issuance; and once refused the Japanese government's request for Morgan to help it issue government concession bonds.
It was not until 1901 that the Morgan consortium began to turn.
In that year, President McKinley was assassinated, and during his reign he had very good relations with the Morgan family and always supported Morgan's business empire. With the appointment of Vice President Theodore Roosevelt, the relationship between the Morgan consortium and the U.S. government began to become very sensitive. The government both suppressed and supported the Morgan consortium.
The first contest was when Northern Securities was split. In 1902, Roosevelt announced that he would conduct an investigation into the Northern Securities Company under the Sherman Act into illegally curbing the development of the industry.
For President Roosevelt's power, the Morgan consortium ultimately chose respect. In 1904, Northern Securities, which had only been established for three years, was split.
Even so, the Morgan consortium continued to do its part to help the U.S. government through the storm. In 1907, Wall Street suffered a financial crisis, and the government wanted the Morgan family to come forward to solve the crisis.
At this time, Pierponte was already a 70-year-old man, suffering from a cold, working with super intensity, and finally completed the rescue of the Great Panic. This is the second time Pierpont has saved America, and it is also his last glory.
Roosevelt was not always suppressive against Morgan. For example, Morgan formed the International Commercial Shipping Corporation, which Roosevelt agreed with, arguing that establishing trusts in the maritime industry would be of great help to the U.S. economy. Among them, the construction of the Titanic, which began construction in 1909, was funded by J. P. Morgan and his International Commercial Shipping Company.
However, with the sinking of the Titanic in 1912, the fate of the Morgan consortium also sank.
In 1912, the merger of the Morgan-controlled American Steel Company with the Tennessee Coal and Iron Company became the fuse, and Pierpont was again called to a hearing by the Commission of Inquiry, along with financiers such as William Rockefeller, but they all pretended to be ill or did not attend at all.
Only Pierponte participated, convinced that he was law-abiding and willing to face the government. As a result of this meeting, in December 1913, President Wilson signed the Federal Reserve Act, establishing a new Federal Reserve, hoping to free itself from the control of Morgan Bank. Nevertheless, the new Fed remained an ally of the Morgan family, which enjoyed 20 years of de facto power in the financial system.
But the hearing had a huge impact on Pierponte, who felt the pressure of the times and couldn't figure out why he had been working all his life to promote American prosperity and was now being held accountable by the government and the public.
In order to get rid of his troubles, Pierpont embarked on a journey to relax, and eventually died during the journey.
In the Pierpont era, it was the era when the United States moved from "chaos" to "order", from mergers and reorganizations of railways in crisis, to Morganization, to the steel industry, the financial industry, and so on. Pierpont believed that only "strong unification" could bring about a good operation of the economy, while the US government believed that only under the strong management of the government could the United States develop steadily.
They all firmly believe that they are defending the long-term interests of the United States. In the end, the Morgan consortium chose to respect "government and power."
Since then, the Morgan consortium has begun to decline.
The Collapse and Continuation of the Morgan Consortium: From "One Mo" to "Sam Mo"
From the time of Pierpont's son, John Jack Pierpont Morgan, the Morgan family moved towards the fourth generation of the era of helm.
In 1933, the Glass-Steagall Act was introduced, which required the separation of commercial and investment banking operations. With the enactment of this bill, this old bank with a glorious history has become an illegal enterprise. (But the bill was later opposed by many.) Finally, in 1998, marked by the merger of Citibank and Travelers Group, the Glass-Steagall Act survived in name only. ）
In 1933, the Morgan Consortium divided its Morgan Bank into three:
“J· P. Morgan's body became a pure commercial bank;
Let a small number of people go out from J.P. Morgan and set up the "Morgan Stanley" investment bank;
The other is London's Morgan Jianfu (the predecessor of J.S. Morgan).
Goldman Sachs Was also spun off that year.
The three children who came out of the Morgan family later fell in love and killed each other (the exact evolution is shown in the picture).
In 1962, Morgan Stanley and Morgan Jianfu and J.P. Morgan,P. Morgan's parent company, Morgan Guarantees, joined hands with the Vatican Bank to form the "Origa" investment bank. After the new policy was introduced again, these "Morgans" were forced to separate.
With the internationalization of competition in the financial industry, the three businesses partially overlapped, and competition intensified. They later held a meeting in Bermuda, but because of the huge differences, after this meeting, the three families officially ended their ties with each other and gradually became competitors.
With the acquisition of JPMorgan by Deutsche Bank in November 1989, it has been operating under the name of Deutsche Bank JPMorgan, and the 151-year-old JPMorgan Company has disappeared.
And the competition between JPMorgan Chase and Morgan Stanley has only just begun. In the 2008 US financial crisis, Morgan Stanley encountered a crisis, and the US government twice hoped that JPMorgan Chase would acquire Morgan Stanley, and finally gave up. In the end, Morgan Stanley survived on his own.
Today, Morgan Stanley and JPMorgan Chase, which once belonged to the same family, are often compared. In the Chinese market, Morgan Stanley is slightly superior, so that it is commonly known as "Da Mo" in Chinese financial circles, and JPMorgan Chase is correspondingly called "Xiao Mo".
Among them, some people say that "Morgan Stanley inherits most of the aristocratic blood of the Morgan Consortium, the most powerful financial group in American history, and represents the glorious history of American financial giants dominating modern global financial markets." ”
On September 16, 1933, Damo officially opened at Wall Street 2, and Wall Street looked at Morgan Stanley, a child who had "escaped" from the Morgan family, with a welcoming and wary gaze.
At first, J.P. Morgan and Damo encouraged each other's employees to build goodwill with each other and introduce business to each other. Damo and J.P. Morgan share a restaurant at 120 Wall Street. Damo's partners have private accounts at 23 Wall Street, the home of the Morgan family, and are one of the few people with J.P. Morgan residential mortgages.
Damo also undertook a large number of corporate bond issuances of original Morgan Group customers, with a market share of up to a quarter, including General Motors.
From 1935 to 1970, the power of the Great Mo to dominate the world was eye-catching. Inheriting the aristocratic pedigree and arrogant posture of the Morgan family, Damo has the title of "Rolls-Royce of investment bankers", and its customers are basically top customers, including 6 of the world's top ten oil giants and 7 of the top ten companies in the United States. The only advertising slogan at the time was "If God wants to raise money, He will also go to Morgan Stanley." ”
Thus, the Book of Morgan argues that "Morgan's strategy is to make the client feel that he is admitted to a private club, and his account is equivalent to a membership card of an aristocratic society." ”
When listing stocks or issuing bonds, Damo had insisted that it be the only one that took the lead and led the way, and if other banks joined, Damo would abandon the business.
At that time, Damo was the well-deserved underwriter of Wall Street's No. 1 securities, and at the peak of the company, more than 200 companies participated in the "Underwriting Club".
However, with the transformation of Damo, the spirit passed down from generation to generation by the Morgan family has already broken through the restrictions of blood, and the wisdom of the Morgan family and enterprises continues to attract more and more identities to join and share.
In the 1970s, Damo was very conservative, and then in the 1970s, it broke many taboos and began to make a big deal of mergers and acquisitions, becoming very aggressive and risky.
In 1971, Damo began trading bonds, which they had been extremely reluctant to.
In the 1980s, Damo dabbled in junk securities and amassed a huge special fund of up to $1.2 billion for leveraged buyouts. Morgan laid down his position to join the company's aggregators, much to the surprise of Wall Street, and later it personally launched and bought shares in 40 companies.
On September 22, 2008, Morgan Stanley transformed into a commercial bank holding company.
Post-Damo is transforming into a fintech strategy and its fintech-based wealth management. Past investment in technology in the field of trading has made Damo the world's largest stock trading company. Since Damo established the goal of wealth management transformation, its IT budget has also focused on wealth management business.
Nowadays, Damo has basically realized the transformation from a "trading center" to a "wealth management" center with the help of financial technology, and established a strong moat, which is also a strong competitor faced by domestic securities fund operators in the future.
Today, Damo has become an international financial services company, covering investment banking, securities, investment management and wealth management, with a number of departments, including stock research department, investment banking department, private wealth management department, investment management department, etc.
In China, Damo founded Morgan Stanley International Bank (China) in 2007, formerly known as Zhuhai Nantong Bank.
In May 2011, Morgan Stanley (China) Equity Investment Management Company was established, jointly invested by Damo and Hangzhou Industrial and Commercial Trust Company. The investment company launched the first and second phases of RMB private equity investment funds in November 2011 and September 2016 respectively.
The concession of power, the change of management system and the code of wealth
In the Morgan Alliance of the Morgan Consortium, it was the name of J. P. Morgan is the axis, the director chain leadership, so that more than 200,000 of the main financial institutions are interconnected, forming a large structure, well-organized "Morgan system".
In the early days, the Morgan consortium was deeply bound by the partnership system, and the Morgan family was the most unquestionable authority and core. The Morgan family chose partners not to look at wealth or assets, but at their talents and abilities. The names of Harry Davidson, Tom Lamont, Charles Steele, and others, while unfamiliar, all played different roles in the major events of the year as top partners.
In the hands of the fourth generation, the partnership system began to be abolished, and in 1940, Jack launched a reform, changing the original partner leadership system to a board leadership system, and he served as the first chairman of the board of directors.
After the death of the fourth generation of the head jack Morgan, the Morgan consortium at that time was no longer the direct blood of the Morgan family, but a partner bound to the interests of the Morgan family. In the context of the change of times, this company, which emphasizes family inheritance, will also consider modern corporatization, IPO and the introduction of professional managers.
Since then, the board leadership system has been continued, and the same is true for Damo.
James Gorman has been MORGAN STANLEY's CEO since 2010 and Chairman of the Board of Directors since 2012. Damo has six board committees, including the Audit Committee, the Risk Committee, the Nomination and Governance Committee, and the Operations and Technical Committee.
Each of the six board committees has its own charter and rules.
In terms of corporate governance decisions of the board of directors, the top board of directors of Damo has an independent chief director and five main standing committees. The Board will regularly discuss the leadership structure, with the Independent Directors appointing an Independent Principal Director who will serve as an Independent Principal Director for approximately 3-5 years. The role of the Nominating and Governance Committee is to recommend to the Board candidates for directors who meet the criteria for board membership.
The Board of Directors shall exercise the principle of majority votes at the time of election and shall not be more than 72 years of age.
In addition, directors may not serve on the boards of more than four listed companies, including the company; at the same time, directors who are the current CEO of another listed company may not serve on the boards of directors of two or more listed companies, including the company. Members of the Audit Committee shall not serve on the audit committees of three or more listed companies, including companies, at the same time.
Although there are no morgan family members on the board of directors of Damo today, the spirit and culture of the Morgan family have always influenced Damo. The Morgan family has two very famous family mottos, "It is not the law that drives history, but money, money" and "information is the magic weapon to make money", and the latter is still applicable in our country today.
In addition, the secret of his wealth can be glimpsed in Pierponte's letter to his son:
First, be a person who dares to try new things, meet challenges, act positively, and be ambitious;
Second, don't be afraid of failure, be good at learning from experience. Believe that you can succeed and can only rely on yourself;
Third, manage friendship with heart (choose the right partner), master the way of employment, and become friends with the bank;
Fourth, care about respecting employees, achieve efficient management, and become an excellent and virtuous leader;
Fifth, we must adopt a diversified business strategy and beware of the temptation of risk-taking;
Sixth, marriage is like an investment, to choose the right person;
Seventh, pay attention to reading, become an elegant person, and learn to save health and so on.
It can be seen that the Morgan family can be said to have devoted themselves to cultivating family heirs, constantly cultivating the concept of wealth and cultivating personality.
Perhaps, for the world, more precious than the entire wealth of the Morgan family, which is rich and invincible, is the secret and wisdom of life created by the Morgan family, especially in the cultivation of heirs, teaching them to behave, do things and manage. Cultivating an entrepreneurial ability and spirit may be more important than giving him a fortune.