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When the market collapsed in 1929, Morgan tried to stop the panic as it had managed to do before. It headed a pool that put up a reputed $240 million to support the market. But the move had little effect. While Morgan's interests were relatively unscathed by the crash, the Depression spelled the end of concentrated banking power. The New Deal launched a campaign against "the princes of privilege." J. P. Morgan II was hauled down to Washington to appear before a whole series of investigations. Control of U.S. finance passed from Wall Street to Washington. Regulatory bodies were established, restrictive bills passed, the Federal Reserve strengthened. The Banking Act of 1933 forced Morgan to split off its investment-banking activities, and a group of partners left to form the separate investment house of Morgan, Stanley & Co.
From the Maelstrom. An era had ended, and many of the oldtime bankers had gone with it. For the new type of bank that emerged from the maelstrom, a new type of banker was needed. One of the new bankers was Henry Clay Alexander. He was not saddled with the marks of wealth, caste and privilege. He was born in humble circumstances, the son of a grain and feed merchant in Murfreesboro, Tenn. He did not attend the best Eastern prep schools, had worked his way through Vanderbilt University, saved enough to go on to Yale Law School. He had not been trained to be a banker, joined the Manhattan law firm of Davis, Polk, Wardwell, Gardiner & Reed as a promising trainee, did so well that he became a partner at 32.
One day he was sent to explain a legal problem to the younger J. P. Morgan. After he left, Morgan said: "I like that young man." Alexander's law firm assigned him to work as counsel for Morgan in the congressional investigations, and he became Morgan's chief counsel at the Nye munitions hearing, stayed by his side through his entire testimony. On Christmas Eve in 1938, Morgan summoned Alexander to his Wall Street office and invited him into partnership. After agonizing for more than a month about leaving the active practice of law, Alexander became a Morgan partner at 36.
One of his first jobs was to work out a plan to help the House of Morgan meet the new conditions. Its assets had fallen from $118.6 million in 1929 to $39.2 million in 1940, as steep inheritance and income taxes ate away its strength. To save the firm from faltering, Morgan and Alexander worked out a plan to incorporate the old partnership, make it a public bank. In 1940 the firm changed its name to J. P. Morgan & Co., Inc.
After Morgan's death in 1943, Henry Alexander went off to war as a vice chairman of the U.S. Strategic Bombing Survey in Europe, came back to begin his swift rise to the top. He became the protege of President George Whitney, who had foresightedly launched a recruiting drive for the young men who later became the bank's postwar bird dogs. Less than ten years after he joined the firm, Alexander was made executive vice president. Following in Whitney's footsteps, he moved up to the presidency in 1950, when Whitney became chairman, took over the firm in 1955, when Whitney retired to head the advisory board.