young j.p. morgan and anthony drexel -- 12/2/19
Today's selection -- from The Man Who Made Wall Street by Dan Rottenberg. In 1871, J.P. Morgan, who went by his middle name, "Pierpont," was a 34-year-old banker whose father was pushing him to greater achievement. To do so, he introduced him to the highly respected Philadelphia banker Anthony Drexel, with the idea that Drexel would take him as his New York-based partner and mentor young Pierpont. Drexel did exactly that, launching a banking partnership -- Drexel, Morgan & Company, which would be the country's most formidable -- and boosting Pierpont's career. As part of this, Drexel built the building that would become the most famous on Wall Street, the Drexel Building at 23 Wall Street, the corner of Wall and Broad. Though costly, it boosted the prestige of the firm and gave Pierpont heightened stature:
"Drexel, Morgan & Co. opened on July 1, 1871 in Pierpont's cramped old office at 53 Exchange Place. But Pierpont remained there only briefly. Two weeks later, as he and Tony Drexel had agreed, Pierpont left for an extended vacation in Europe with his wife and three young children. He would not return until late September 1872 -- an absence of nearly fifteen months. Meanwhile, Tony Drexel set out to provide the new firm with a suitable working environment for Pierpont's return.
"In the fall of 1871, while Pierpont was in Europe, Wall Street denizens began to notice an unfamiliar figure poking about among the financial district's narrow streets and crowded little Dickensian countinghouses: a stocky, well-dressed man of middle years, mutton-chop sideburns, and respectable bearing. It was George W. Childs, running another errand for his friend Tony Drexel -- in this case, investigating real estate locations. He had his eye on a jumble of two- and three-story houses at the corner of Broad and Wall, directly opposite Federal Hall, where George Washington had taken the oath as America's first president in 1789. Many of these hovels dated back almost to Washington's day; the building housing Delatour's soda-water shop at Numbers 3 and 5 Broad, for example, had gone up in 1808.
|23 Wall Street|
"So the provincial New Yorkers who had frequented these streets for generations were astonished to discover one morning in February 1872 that Childs, acting on behalf of the three Drexel brothers of Philadelphia, had assembled and purchased the entire corner lot for $945,000 in gold. For one of these acquired properties, the cost of the land worked out to $21 million per acre -- "the biggest transaction which has ever occurred in New York," said the broker who handled the sale. In fact, Harper's Weekly soon pointed out, it was "the highest price ever paid for land in the world, being about three times as much as the highest price ever paid for lots in the immediate vicinity of the Stock Exchange in London.'
"More daunting than the price was the complexity of assembling all the pieces. The small building on the exact corner of Broad and Wall, housing a soda fountain and a newsstand, was jointly owned by six siblings who had inherited it from their late father but could not agree among themselves on a cash price. The heirs were ardent Catholics, and the deadlock wasn't broken until Tony Drexel hit on the notion of bringing his Catholic brother Frank into the negotiations. The deal ultimately fashioned by Tony and Frank provided the heirs with six separate mortgages totaling $250,000 in gold, paying interest of 7 percent for the life of the mortgagees -- in effect, an annuity for all six heirs.
"This building predated indoor plumbing, but the property included an adjacent washroom and toilet that Tony now referred to as the world's costliest W.C. 'But I shouldn't mind the cost,' he jokingly added, "if I could only use it easily and regularly.'
"On this spot the Drexels proposed to erect what the broker called 'a magnificent architectural temple': a massive brownish-gray six-story fireproof granite-and-iron building topped by a two-story cupola. Its sheer size would rank it as a companion to the elegant Stock Exchange Building, the broad Sub-Treasury building, and the spire of Trinity Church. Among structures owned by private businesses, nothing would compare to it, with the possible exception of the Equitable Life Insurance Society at the corner of Broadway and Cedar. The structure would cost $800,000, bringing the total cost of the ground and building to nearly $1.8 million.
"To New Yorkers of 1872 this prospect was staggering. 'The brokers in the street ... were really astonished when the details of the purchase were known;' wrote the Journal of Commerce. 'Gentlemen would glance up at the old houses, whose many occupants they had known for years, and ask, "Is it really possible that Drexel, Morgan & Co. have bought all that ground."'Added the National Republican in Washington: 'In New York, it is regarded as somewhat an affront that Philadelphians, and not New York [sic], should be the men to make this bold venture. The great banking house of Drexel & Co. that is to rise upon the newly purchased site is to be a monument of Philadelphia enterprise, which fairly throws New York enterprise into the shade, in this case at least.'
"This was the building Tony Drexel was erecting for his new partner Pierpont Morgan. It would offer the young banker space, light, comfort, and prestige among his fellows. Just as it would cause bankers to raise their perception of Pierpont Morgan, so it would cause Pierpont to raise his perception of himself. Tony Drexel had demonstrated more confidence in Pierpont's future than Pierpont himself; he had demonstrated more confidence in New York's future than New Yorkers themselves. From the time the new building opened at the end of April 1873, its address -- 23 Wall Street -- would be as famous as the name of its principal tenant."