J.P. Morgan Joins With Guaranty Trust

BANK MERGER

SINCE 1873 the most famed address in the U.S. financial world has been "The Corner" at 23 Wall Street, home of the House of Morgan. From The Corner last week came news that J. P. Morgan & Co.. Inc. will merge with Guaranty Trust Co. of New York, provided the trustbusters approve, to form the fourth largest bank in the U.S., with resources of $4 billion, capital funds of more than $500 million.

Though J. P. Morgan is synonymous with big banking, the Morgan bank is actually only 22nd in the U.S., with deposits of $790.8 million; the Guaranty is ninth, with deposits of $2.5 billion. The merger, said Morgan Board Chairman Henry Clay Alexander, 56, will enable both banks "to serve our clients' increasing needs and our country's growth even better." The merger was characterized in Wall Street as "Jonah swallowing the whale," since Alexander will be chairman and chief executive officer of the Morgan Guaranty Trust Co of New York; Guaranty President Dale E. Sharp, 55, becomes president.

Two from One. Though other banks have outstripped J. P. Morgan & Co. in total deposits, it has never lost the patrician air of leadership it gained virtually at its founding in 1862. It still does what the elder J. Pierpont Morgan called "only a first-class business and that in a first-class way," serving such blue-chip firms as Du Pont, General Motors, International Harvester, American Telephone & Telegraph and U.S. Steel, many of which it had a hand in building. The bank began by marketing U.S. railroad securities abroad, took the lead in consolidating and merging railroads toward the turn of the century. From 23 Wall Street the elder J. P. Morgan stopped a run on the U.S. Treasury in 1895 by putting up gold for the Treasury, quelled the panic in 1907 by forcing leading bankers to produce enough cash to shore up shaky New York banks, put together a number of independent companies in 1901 to form the $1.4 billion United States Steel Corp. During World War I J. P. Morgan & Co. was the banker for the British government, raised $3 billion to buy war supplies.

In 1933, when the Federal Banking Act compelled the separation of investment and commercial banking, J. P. Morgan Jr. elected to continue in commercial banking; his son formed the investment house of Morgan Stanley & Co.

The Country Cousin. Morgan & Co. has left the elder Morgan's imperiousness far behind. It is a publicly held corporation, owned by 2,070 stockholders who saw their stock rise from $345 to $395 in the over-the-counter market when the merger news was announced (one share of Morgan for 4.4 of Morgan Guaranty). Under able Chairman Alexander, the bank has made no bones about its competitiveness, trains young men nicknamed "bird dogs" to go out and hunt for business. For the Guaranty Trust, one of the impelling reasons for the merger was to get Morgan's bright young executives.

Alexander is not the Eastern, blue-blooded banker once associated with the idea of Morgan & Co. He was born in Murfreesboro, Tenn., son of a grain and feed merchant, went to Vanderbilt ('23) and Yale Law School. He worked on Morgan affairs as a partner of the giant Wall Street law firm of Davis Polk, so impressed J. P. Morgan Jr. that he became a Morgan partner in 1939. He became chairman in 1955, with a reputation for topflight banking and for building Morgan's staff. In line with Morgan's new look, Alexander does a lot of traveling, tells prospects: "When you decide to borrow money, do not forget your country cousin at 23 Wall."

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