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The Pecora banking investigation was a series of field days. When someone used the word "circus," a pressagent had an idea that made photographic history—planting a midget on dignified Banker Morgan's lap, while flash bulbs flared. From their three floors in the Carlton Hotel, the Morgan partners were brought again & again to the committee room. Up came the charge of the "preferred list" —which Morgan held to be an honest practice but which he certainly regretted having tolerated. There was the charge that the partners failed to pay income taxes in 1930, 1931 and 1932—a charge which Morgan countered with the fact that in those years the partnership had suffered large losses, directly deductible from personal income. "The fault," growled Virginia's Senator Carter Glass, "is with the law."
Finally, there was the charge that the firm exerted too much influence through its directorships in 167 companies. Said Mr. Morgan: "I cannot remember any partner of the house taking a directorship except at the earnest request of the board of directors of the company in question. ... If friends in whom we have confidence ask us to serve them, we are bound to give them the best advice we can."
Like his father at the 1912 Pujo investigation, Morgan stressed always that if the private banker had power, it was because of his reputation for integrity. But the Pecora investigation spelled the end of the Morgan power in the old sense. Came the Banking Act of 1933, splitting apart the business of deposit and investment banking. Result: Morgan's son Harry and two other partners formed the separate investment firm of Morgan, Stanley & Co., Inc. Son Junius Morgan stuck with the bank, which now became merely the 18th largest bank of deposit in the U.S. By 1940 the firm's net worth, which had stood at $118,600,000 in 1929, was down to $39,156,000. At that point Morgan took a final step. The partnership of J. P. Morgan & Co. was dissolved in the formation of a stock corporation, J. P. Morgan & Co., Inc. The era of "personal" banking, and with it the great Morgan tradition, was over.
New World. For J. P. Morgan himself the incorporation may have been something of a relief. After a heart attack in 1936 he spent more time in his gardens at Glen Cove and the magnificent 400-acre estate, Wall Hall in Hertfordshire, England. He read and played backgammon of an evening, surrounded by the collections which he had inherited and expanded. There were the grouse-shooting trips to Scotland (once Morgan said that the only thing as lovely as grouse shooting was duck shooting), Mediterranean cruises and other absences. The firm of Morgan has never been a one-man show. Jack Morgan's greatest inheritance was the tradition which his father had built up of getting able men into the firm who would be able to carry on under their own steam. By the '303, Thomas W. Lamont (now 72), along with such men as Russell Leffingwell and George Whitney, carried the main burden.