longer than a few months. A self-organized assemblage of agents, the syndicate formed their own rules each time an opportunity to raise funds for an entity arose. Rules were adapted to fit each situation.
Throughout his career, Morgan progressed from simpler transactions to more complex, syndicated ones, starting with a trade credit crisis in 1857, and advancing to funding short-term credit shortfalls for customers in the 1873 and 1893 panics. He orchestrated collateral swaps, extended maturities and constructed bridge loans, too, before dealing with a systemic currency crisis in 1895 and a shadow banking crisis in 1907, all of which tested his powers of persuasion to motivate collective action when his primary tools boiled down to profit and reputation.
While syndicated loans had been organized by many bankers in the United States, at least since 1812, unlike many others, Morgan invited subject matter experts as members of his routine loan syndicates that raised capital for corporations, primarily the railroads. The experts provided valuable information in a time preceding detailed financial statements, such as estimating cash flows to fund subordinated debt or equity dividends. Indeed, the riskier the syndication— be it lower-ranked debt, a reorganization or a flotation of equity capital— the more likely Morgan was to include subject matter experts, or at least to include individuals with interests aligned with the issuer.
James Roosevelt, father of Franklin Delano Roosevelt, was one of Morgan’ s subject matter experts. James was included in the syndicated loan to the reorganized Philadelphia and Reading Railroad. He served on the Board of Directors of his law firm’ s client, Consolidated Coal Company of Maryland, one of the largest anthracite coal mines that shipped on the Reading Railroad. This put Roosevelt in a position to know if Consolidated would continue to ship on the newly reorganized railroad, which was helpful for predicting the cash flow from the enterprise. As one would expect of hyper-localized experts, James only appeared in syndicates Morgan organized for the Philly Reading reorganization.
It is plausible that Morgan’ s recurring ability to include subject matter experts in routine syndicates could have been applied to the task of coordinating lender of last resort facilities. He included cordage
Franklin Delano Roosevelt with his father, James Roosevelt, in 1895. James was one of Morgan’ s subject matter experts and was included in the syndicated loan to the reorganized Philadelphia and Reading Railroad.
experts in the loan to National Cordage in 1893, gold shippers in the Gold loan to the US Treasury in 1895, and recruited trust company presidents to resolve the Trust Company Panic of 1907. Morgan described how he customized syndicates when questioned about his routine practices during the Congressional investigation of 1912:“ We distribute participations to those that we think will help the issue. Names that appear on one list will not appear on another.”
To elicit participation in his last resort loans, Morgan had to price the risk of the syndicate loans in accordance with prevailing risk-free interest rates. As many of the participants were private sector actors, getting the pricing correct was vital for Morgan in the absence of a formal central bank backstop. His telegrams, syndicate books and testimony to Congress reveal that not all the crises he addressed were equally risky, and therefore, not surprisingly, he priced the bailouts differently.
Unlike the almost unlimited supply of 0 % funding from the Fed today, Morgan faced a steep supply curve for crisis funding. The least expensive last resort loans were priced at the prevailing, albeit elevated, risk-free discount rate during a crisis of about 6 % and were arranged when there was adequate time to produce exactly the type of collateral lenders required, such as bills of exchange to the Bank of England.
The middle type of loan was priced at a rate higher than the prevailing risk-free discount rate, by negotiation with lenders when collateral alone was not adequate to remove all risk. An example is the Gold loan
30 FINANCIAL HISTORY | Winter 2026 | www. MoAF. org