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In 1914 the isolationist opposition ran strong. The House of Morgan offered to float a French loan in 1914—Secretary of State William Jennings Bryan turned the idea down cold. By 1915, as the gold stocks of the Allies ran low, the Administration changed heart: Robert Lansing replaced Bryan, and the Morgan firm floated a $500,000,000 loan for both France and Britain, an act roughly corresponding to the first Lend-Lease aid in this war.
The House of Morgan also acted as purchasing agents for the British and the French—a function fulfilled in this war by the Anglo-French Purchasing Board. When the U.S. entered the war in 1917, purchasing was turned over to the U.S. Government, which also took responsibility for further loans to the Allies. Up to 1917, Morgan's played the same role the Roosevelt administration did in 1939-41, in helping the Allies "short of war."
The '20s. On the strength of its war record the firm of Morgan bestrode the postwar world. Between Jan. 1, 1920 and Dec. 15, 1931, the firm floated 39 separate issues for Argentina, Australia, Belgium, Canada and other countries, totaling $1.8 billions, on which the firm made a net of about $9.5 millions. In addition it arranged $68,000,000 of loans for foreign corporations. Yet even at the very pit of the depression these loans stood up with remarkable strength. By 1933 40% of them had been redeemed or retired, 33% of them were selling above the offering price, and none was in default.
Domestically the record of the firm was also strong: few of its railroad, public utility or industrial bonds ever defaulted. The heart of the great prosperity of the '20s, in which the national income pushed up from $66 billions in 1919 to $83 billions in 1929, was based on a strong private capital market in which the Morgan firm led. But in the end The Corner was sucked into dabbling in the stocks of holding companies such as Standard Brands, United Corp. and the hapless Alleghany Corp. Though the Federal Reserve authorities were to blame in not clamping down on the excesses of 1929, the Morgan outfit, as the most responsible house on the Street, also had to take the rap.
Into the New Deal. When the crash came, Morgan joined with other bankers to stem the tide. A $240,000,000 pool was formed to bolster the market—a gesture which failed. "There is no man nor group of men," said the top-ranking Morgan partner, realistic Thomas W. Lament, "who can buy all the stocks that the American public can sell." The market crashed on down. In 1933 came the New Deal, and with it the campaign against "princes of privilege" and "economic royalists."