The first page of James Eads ’ s prospectus , February 1869 .
Box 14 , folder 2 , Terminal Railroad Association of St . Louis Records , 94-0011 , Missouri Historical Society
Morgans knew a lot about St . Louis Bridge . Junius wrote to Pierpont on March 24 , “ There can , we think , be but little doubt that it will be a financial success .” Even so , he worried the bridge was “ liable to great risks which cannot be provided for .”
Weighing the unknowns , Morgan initially thought to underwrite only $ 1 million of the first mortgage bonds , demanding a stiff discount : just 70 % of face value . His bank might earn a fat mark-up when selling the bonds to investors . Or his wealthy British clients might spurn the offering , leaving Morgan stuck with unsold securities . Back in St . Louis , the bridge company achieved milestones in contracts with railroads and in building the stone piers — good tidings dispatched by telegram across the Atlantic .
By March 31 , Junius agreed to take all the first mortgage bonds in three tranches . A $ 1 million tranche would net 70 ; a second tranche of $ 1.5 million paid 72 , both in gold . The final $ 1.5 million tranche would yield 90 in US currency . Junius Morgan went all-in on St . Louis Bridge .
Initially , he profited handsomely from the deal . In early April 1870 , British investors paid an average of 90 for the two tranches ( face value of $ 2.5 million ), yielding gross profits of $ 470,000 for the bank . The bonds did well thereafter , trading at 99 in April 1872 .
34 FINANCIAL HISTORY | Summer 2024 | www . MoAF . org