The Death of the Banker: The Decline and Fall of the Great Financial Dynasties and the Triumph of the Small Investor

by Ron Chernow

"For anyone interested in the world behind the business-page headlines, this is the book to read." --Publishers Weekly

With the same breadth of vision and narrative élan he brought to his monumental biographies of the great financiers, Ron Chernow examines the forces that made dynasties like the Morgans, the Warburgs, and the Rothschilds the financial arbiters of the early twentieth century and then rendered them virtually obsolete by the century's end.

As he traces the shifting balance of power among investors, borrowers, and bankers, Chernow evokes both the grand theater of capital and the personal dramas of its most fascinating protagonists. Here is Siegmund Warburg, who dropped a client in the heat of a takeover deal because the man wore monogrammed shirt cuffs, as well as the imperious J. P. Morgan, who, when faced with a federal antitrust suit, admonished Theodore Roosevelt to "send your man to my man and they can fix it up."  And here are the men who usurped their power, from the go-getters of the 1920s to the masters of the universe of the 1980s. Glittering with perception and anecdote, The Death of the Banker is at once a panorama of twentieth-century finance and a guide to the new era of giant mutual funds on Wall Street.

"Chernow . . . delivers a sound, accessible account of the forces shaping capital, credit, currency, and securities markets on the eve of a new millennium. "
--Kirkus Reviews

Genres: History, Nonfiction, Business, Economics, Finance, Biography, Audiobook

130 pages, Paperback

First published March 25, 1997

About the author

Ron Chernow was born in 1949 in Brooklyn, New York. After graduating with honors from Yale College and Cambridge University with degrees in English Literature, he began a prolific career as a freelance journalist. Between 1973 and 1982, Chernow published over sixty articles in national publications, including numerous cover stories. In the mid-80s Chernow went to work at the Twentieth Century Fund, a prestigious New York think tank, where he served as director of financial policy studies and received what he described as “a crash course in economics and financial history.”

Chernow’s journalistic talents combined with his experience studying financial policy culminated in the writing of his extraordinary first book, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance (1990). Winner of the 1990 National Book Award for Nonfiction, The House of Morgan traces the amazing history of four generations of the J.P. Morgan empire. The New York Times Book Review wrote, “As a portrait of finance, politics and the world of avarice and ambition on Wall Street, the book has the movement and tension of an epic novel. It is, quite simply, a tour de force.” Chernow continued his exploration of famous financial dynasties with his second book, The Warburgs (1994), the story of a remarkable Jewish family. The book traces Hamburg’s most influential banking family of the 18th century from their successful beginnings to when Hitler’s Third Reich forced them to give up their business, and ultimately to their regained prosperity in America on Wall Street.

Described by Time as “one of the great American biographies,” Chernow’s Titan: The Life of John D. Rockefeller, Sr. (1998) brilliantly reveals the complexities of America’s first billionaire. Rockefeller was known as a Robber Baron, whose Standard Oil Company monopolized an entire industry before it was broken up by the famous Supreme Court anti-trust decision in 1911. At the same time, Rockefeller was one of the century’s greatest philanthropists donating enormous sums to universities and medical institutions. Chernow is the Secretary of PEN American Center, the country’s most prominent writers’ organization, and is currently at work on a biography of Alexander Hamilton. He lives in Brooklyn Heights, New York.

In addition to writing biographies, Chernow is a book reviewer, essayist, and radio commentator. His book reviews and op-ed articles appear frequently in The New York Times and The Wall Street Journal. He comments regularly on business and finance for National Public Radio and for many shows on CNBC, CNN, and the Fox News Channel. In addition, he served as the principal expert on the A&E biography of J.P. Morgan and will be featured as the key Rockefeller expert on an upcoming CNBC documentary.

Reviews

[Darwin8u · Rating 3 out of 5]

"As we have seen repeatedly in our own day, any successful business that engendersa a large surplus is, potentially, an embryonic bank."
- Ron Chernow, The Death of the Banker



A more accurate title might be "Death of Banking", or "The Death of Pimp Merchant Bankers", or perhaps ... "A Chronicle of an Almost Banking Death Foretold Far To0 Early" or "The Democratization of Money and the Rise of Mutual Funds". Interestingly, this book was published in 1997 right before banks enjoyed their CMO/securritization/post Glass–Steagall ressurrection. Everytime someone predicts banking/bankers are about to die, they get bailed-out, patched-up, mutates, and grows again. For this reason, this book hasn't aged well. It missed the biggest story about finance in the last 50 years (the Financial boom and bust of 2007/8).

The first 2/3 of the book is basically a lecture Chernow delivered in Toronto (the Barbara Frum Lecture sponsored by the University of Toronto History Department and the CBC). Chernow added two essays (the last 1/3) totalling about 45 pages on J.P. Morgan and the Warburgs. These are basically extended summaries of Chernow's earlier Banking Dynasty books: "House of Morgan" and "The Warburgs". Not included (because the book came later) was Chernow's third Banking Dynasty book on the Rockefeller family.

So, it is hard for me to like this as a book. It is a good, if out-dated, essay and summaries of 2/3 books Chernow's banking books I've recently read. I would recommend anyone interested in this topic to simply read Chernow's three banking books. But, if you have read everything else Chernow is published and you want to be a completist because you are kinda/sorta A.D.D., go ahead. You can read it in a couple hours. It is more conversational than his histories and you've heard most of the stories, quotes, and themes before.

[Maynard Handley · Rating 2 out of 5]

I'm giving this book a low rating. Nonetheless I think it's worth reading as an intellectual exercise.

Ron Chernow, in page after page, parrots the American elite consensus of the post-Reagan years --- the glorification of finance, the value of financial innovation, how Germany and Japan are lagging behind (those stupid countries aren't aware of the glories of such new financial products as derivatives), etc etc.
Well, we all know how that turned out.

And while one might try to justify Chernow by saying that he's not expected to be an expert in modern finance, one can ask why he was so willing to drink the kool-aid of the times. In particular, why was he willing to take it just for granted that maximizing return on investment and the allocation of capital is a goal for which *society*, as opposed to banks, should be striving? Warping society around the needs of capital may perhaps have made sense up till, maybe, the 1970s, when capital was still scarce. But in a world awash with capital, to maintain this perverse ideal rather than pivoting to a broader set of goals seems the mark of the intellectually dead.
This is obvious in 2017, but it should have been obvious twenty years ago, especially to someone who has spent his life following the history of this field.

[Mehrsa · Rating 3 out of 5]

It's funny, when I picked it up I assumed it was written recently and I kept thinking in his analysis section--this is wrong. But then I realized it was written in the late 1990s and realized that at the time it did seem right that the role of the banker was in decline. The story needs an update post-crisis as bankers are back at the helm. The book has some interesting historical tidbits about Morgan, the Warburgs, and the Rothchilds, but not enough to create a coherent narrative. I enjoyed reading this short book, but I wanted/expected more from it.

[Bill Yeadon · Rating 4 out of 5]

Almost unfair to give this 3 stars due to it being written in the late 90's. Chernow is one of our great authors and I have read several of his books. If I read this at the time it was written it would have been an easy 4 stars.

Even though so much has happened in the financial world this book still gives an excellent history of how banking has changed in the past 150 years.

But now that we are looking at Bitcoin the financial world may change more in the next decade than in the last century.

Even though the book is dated it is still a pleasurable read.

[Seth Kenvin · Rating 4 out of 5]

4+ {8/10)

[Jan · Rating 2 out of 5]

Being a fan of Ron Chernow I read his two major works on banking dynasties The House of Morgan and The Warburgs: The Twentieth-Century Odyssey of a Remarkable Jewish Family. The Death of the Banker does not at all represent what I hold Chernow brilliant for in his biographical works. This small book (130 p.) is a collection of an expanded lecture on financial history and two biographical sketches on J. Pierpont Morgan and the Warburg family. The first part tries to show, how the role of the banker changed over time. While the approach Chernow takes, is quite interesting, his remarks remain superficial from the start and, having finished the first part of the book, I felt, I learnt nothing new while reading it. The views Chernow proclaimed in this part are amazingly not outdated, even though the book was written in 1997, well before the banking crises of 2008. However, you feel that Chernow is no economist at heart.
My problem with part two and three of this book (these being the biographical sketches) is of the same sort. Telling a story of a person's life on only 20 pages or that of a whole family on 24 pages left me with the impression that this part of the book is a mere advertisment for Chernow's works on The House of Morgan and The Warburgs.

[Diana Long · Rating 5 out of 5]

Author of two extensive biographies The House of Morgan and The Warburgs, this book is basically a condensed version of the two, or a summation. None the less it is interesting and informative detailing the history of investment banking and the great financial empires. It also concludes with a short biography on the subjects of the two biographies. I will not go into detail on the contents as the synopsis has done that for this work.

[John · Rating 3 out of 5]

Listened to on audible. The narrator read very slowly; I was able to increase to 2x speed and not miss anything.

This is the shortest Ron Chernow book you will probably ever read. This book was adapted from a Lecture and 2 essays. The title accurately describes his thesis. I found his discussion of the Warburgs to be the most interesting.

[Lis Carey · Rating 3 out of 5]

Ron Chernow is one of the great historians of banking and finance, and this is a look at one of the great transitions in that history: the death of what was for a long time the dominant kind of banking, the fall of the great financial dynasties.

Many of those dynasties were born originally as merchant families. Successful merchant families tended to accumulate capital, and they had to do something with that capital--and rulers wanted money to field armies and live in a style befitting rulers, without raising taxes to the point that their subjects rebel.

Lending money to other businesses took longer.

Over time, the relationships among bankers, businesses, and investors changed, with the relative power of each rising and falling over time and changing economic realities.

In the nineteenth century, bankers were at the height of their power.

By the time Chernow wrote this book, in the late 1990s, investment bankers, though wealthy and influential, had fallen dramatically compared to both major corporations, and the small investor.

I had initially not noticed the original publication date on this book, and was surprised as I gradually realized that Chernow seemed not just to be not discussing events of the last decade, but seemed to be unaware of them. Then I checked, and realized that, why, yes, he didn't know about the events of the last decade, because the book was written twenty years ago.

It's good. It's thoughtful. It's interesting.

But if you're looking for history and analysis that includes the financial industry events that have disrupted our lives over the last decade, you'll need to look for a more recent book.

With that caveat, recommended.

I bought this audiobook.

[Leah Angstman · Rating 4 out of 5]

This is a collection of essays about the banking dynasties (Morgan, Rockefeller, Rothschild, etc.) that is just fascinating. Ron Chernow is a great nonfiction writer, giving you plenty of facts, but making them palatable and not overdry. This has lost a tiny bit of its relevancy because it was published before the latest recession, but his foreshadowing of the recession and what will happen to the bubbles that were just beginning to expand at the time the book was written were rather haunting. If only people had listened to him, sigh (or paid attention to history). This is, nonetheless, an incredibly fascinating read that won't take you but a night or two to breeze through.

[Lyle · Rating 4 out of 5]

A good read. A short read.

I think this is a good overview of the banking situation over the past 200 years. It highlights how the world of finance developed, the international markets, and the major world players and tycoons, but also how they fell under the thumb of the rise of the small investors and mutual funds.

It is also the only overview I have read, so it many be considered very poor by some, but it is still worth a gander.

[Ian · Rating 4 out of 5]

This short book acts like a summary of The House of Morgan, The Warburgs, and Titan. It briefly covers the main points of those books, and adds in a few other anecdotes of note. Chernow writes is a much more informal style than in his longer works and lets a little more of his personality shine through. Lacking the length, the book also lacks the depth that makes so many of his other books wonderful, but I would still recommend this one.

[Thomas · Rating 3 out of 5]

This book didn't quite come together. The first two-thirds focus on the evolution that occurred mid-20th century in the banking space -- the fall of the classic "banker" whose personality and power created some true Titans in the industry (Morgan, Rothschild, etc al) to being replaced by transactional soul-less mutual fund machines that gave the "every man" an opportunity to invest. This section is interesting, but brief and now somewhat outdated as a lot has happened in banking since it was written in 1997. The two sections are short, "teasers" for his much longer biographies on Morgan and the Warburgs. I haven't yet read either of his epic works on these men, and look forward to doing so. In the end, I think Chernow cobbled together a book out of a few essays he'd written and the net result is underwhelming, but educational.

[Gergely Szabo · Rating 4 out of 5]

I can't recommend it to anyone who is already familiar with the author's 800-page monstrosity of "The House of Morgan" (which I thoroughly enjoyed). Otherwise, it's an interesting little book about banking and finance characters and the sector's changes throughout the years.

[Chris Loveless · Rating 2 out of 5]

I think a dud. Somewhat interesting to read about some of the early famous bankers like Morgan, warburgs and Rockefeller. Bankers had a lot more power back in the day to influence financial decisions and perform manipulation.

[Tirath · Rating 5 out of 5]

The book is richer than the title.
- How banking used to be a private affair and a wholesale affair
- How countries relied on them to finance their deeds, because taxing was too taxing...
- JPM was not as wealthy as he was powerful
- The Warburgs were in business for close to 300 years
- Great stuff on the German economy and culture and on the Japanese economy and the bubble
- How America(n states) was once a Third World country, and a serial defaulter

Very fun book.
Remember: When bankers forget their main function, a crisis is around the corner. (When their clients get their money elsewhere and push banks to take other risks)

[David Ball · Rating 4 out of 5]

On a whim, I picked this up at my children’s school book fare for 50 cents. It’s a bit dated - it was written back in the nineties, so it’s missing twenty years of financial booms and busts - but it’s focus is on the the banking clans of the nineteenth century: Morgans, Warburgs, and to a lesser degree, Rothschilds, so it doesn’t need to be that current. It’s only 130 pages long so Chernow doesn’t have much time to go into depth, but these are fascinating stories, about big dominating personalities, at a time when the financial markets were in their infancy and thus in a prime position to be shaped. It’s a period of history I don’t know much about. Apparently in the eighteenth century, to Brits with capital, the US was the world’s dodgy emerging market; the railroad industry, in particular, was an investment sinkhole until JP Morgan began exerting control, improving both the industry’s financial prospects and its credibility. Chernow argues, that for a brief time, prior to industrial companies becoming global behemoths, and prior to the growth of individual investors and their burgeoning pots of institutional savings, the US banker, and his club of well mannered friends and associates, held all the cards. Chernow goes on to critique the Japanese and German banking industries - to explain how their culture and history held them back from achieving the influence of their US colleagues - and then squeezes in some thoughts on the disproportionate influence of Jews in banking world. It’s a well written, thought provoking, surprisingly readable primer on the history of the banking industry. I can’t wait to sink my teeth into some of Chernow’s meatier fare.

[Kumail Akbar · Rating 5 out of 5]

I tried my level best to complete all of this years' reviews before new year's eve, however I find myself failing to do so primarily due to circumstances completely in my control (I got lazy). This is why I am posting a placeholder review here, apologies for this. I will be completing and posting the complete review in a week or so

Key takeaways from this book were: this was written in the early 90s so is fascinating from the perspective of banking then, v what has entailed in the decades following this book.

[Arminius · Rating 4 out of 5]

What I have learned from this book:

Banks are needed by business.

Banks evolved out of the necessity of government to gain revenue.

Banks were not liked by most of America.

The Federal Reserve is a necessary evil.

The Glass-Steagall Act separated banks from security trading which curbed banking power.

Investment houses then overtook banks as the money power center.

Mutual funds created a way for most ordinary people to gain a "piece of the pie."

[Addi · Rating 2 out of 5]

A bit too dated, and quite a bit too in love with the monsters of the market.

[Carl Palmateer · Rating 2 out of 5]

This is three lectures put in book format. The last two seem tacked on to add length and mainly seem to be short summations of the author's two books on the subject: The Warburgs and The House of Morgan. There is a decent amount of overlap with the first lecture.

The meat is the first lecture and it starts well and is done well for a lecture. It covers the rise of the banker, the financial colossus who rules financial markets and his fall examining the reasons for both. On this it is very good especially in linking the changing nature of finance to creating and then ending the conditions for entities like Morgan, the Warburgs and Rothschilds.

However, as a lecture, the people to whom it was addressed were also looking for insight on the "current" trends and situations and it starts to fall flat. It doesn't help that current is the mid to late '90s. If it had stopped before addressing the current situation it would have been a good overview and broad history, an excellent lecture but still not a book.

[Jonathan Birnbaum · Rating 3 out of 5]

Chernow is really good at telling histories of people. Having recently read Hamilton, I stumbled across this on Scribd audiobooks. It's a short collection of essays that cover the people behind prominent banking families, and the role that banking has played throughout history.

The big takeaway is Chernow's mental map for how to conceptualize the power of the banking establishment: a 3 part model whereby you have suppliers of capital, consumers of capital, and bankers in the middle. To the extent it's difficult for the capital providers/consumers to meet directly, the banker prospers.

Boy has banking history evolved, where investment banks have turned sharply towards servicing smaller and smaller clientele. This was written pre-crisis, but it seems that the conversion of MS/GS to bank holding companies and creating robust franchises for retail wealth management is a continuation of a megatrend that is happening where individuals control more and more capital, are living longer, and need to invest more.

[Dao Le · Rating 4 out of 5]

If you have read Chernow's Warburgs and The House of Morgan , this book may seem superfluous as it effectively is a summary of those two books. Nevertheless, it is still an enjoyable (and short) read about the financial history of the late 19th century to end of 20th century.

It describes and explains the gradual shift of power from the quintessential banker (i.e., JP Morgan) and his pivotal yet dictatorial role he played in allocating capital throughout Europe and North America, towards the small investors who pool their capital through pension and mutual funds. Through his proprietary access to information, the banker once drew his power from playing the dual roles of both capital provider and financial intermediary, forming the clubby, relationship-oriented world of banking. In the 20th century, such a world was increasingly disrupted by two forces: (i) the disruptive rigors of competition turns capital into a commodity (which it is), and (ii) the technological advance & regulation policy that democratize access to information.

[Ian Mewhinney · Rating 3 out of 5]

A very good history book from Chernow. Great narration from Michael Kramer on the audiobook. This is a very enjoyable quick read, but it basically is just rehashing a lot of stuff from his House of Morgan book, which I finished recently. Well researched and detailed throughout. There were 2 essays in the book. First is The Death of the Banker, then a much shorter one called Tycoons. 3.5/5

Summary:

With the same breadth of vision and narrative élan he brought to his monumental biographies of the great financiers, Ron Chernow examines the forces that made dynasties like the Morgans, the Warburgs, and the Rothschilds the financial arbiters of the early 20th century and then rendered them virtually obsolete by the century's end. As he traces the shifting balance of power among investors, borrowers, and bankers, Chernow evokes both the grand theater of capital and the personal dramas of its most fascinating protagonists. Here is Siegmund Warburg, who dropped a client in the heat of a takeover deal because the man wore monogrammed shirt cuffs, as well as the imperious J. P. Morgan, who, when faced with a federal antitrust suit, admonished Theodore Roosevelt to "send your man to my man and they can fix it up". And here are the men who usurped their power, from the go-getters of the 1920s to the masters of the universe of the 1980s. Glittering with perception and anecdote, The Death of the Banker is at once a panorama of 20th-century finance and a guide to the new era of giant mutual funds on Wall Street.

[Cindy Leighton · Rating 4 out of 5]

For someone who knows little about history of banking and finance this was a great brief overview. I finally understand the Glass-Steagall Act - though because this book was published shortly before the repeal of the Act I wished for an afterward with updates after the tech bubble crash and other financial news.

I had not really thought about the shift from people starting businesses by borrowing money from banks and the rise of investment banking and businesses being beholden not to bankers but, theoretically at least, to the public stockholders. In theory - this makes for a nice blend with democracy - the possibility for regular people to impact their government through their vote and their businesses by buying stock and voting there as well. In practice, of course, we know that businesses are still largely controlled by the elite and in the hands of a very few - not that different from the days of JP Morgan and Rockefeller.

Worth a quick read.

[その人 · Rating 4 out of 5]

As someone who really enjoyed Chernow’s two banking biographies as a child, this book was a pleasure and brought about quite a bit of nostalgia.

Having actually experienced the financial world as a banker and also in institutional money management, I also found Chernow’s tripartite model of financial intermediation and how the relative strength of each party shaped banking quite insightful.

The book does show age in a sense it predates the next stage of evolution for the capital market - especially in low cost index funds usurping the mutual funds and also the rise of the private capital (private equity and credit) backpedaling the democratization of the market that Chernow praises in this volume.

[Sam · Rating 3 out of 5]

I got this on audible recently, and I think I was expecting it to relate to the 2008 financial crisis and aftermath. As I got about halfway through (rather short, especially compared to typical Chernow work), I realized that it wasn't that recent. In fact at the end I found that the original copyright was 1997, though the audio version is 2017. That's too bad because I'd really like to see him extend the narrative to include the rise of financial instruments of mass destruction that happened over the next decade from where he left off, and how that equates in graph of power between capital, middlemen, and borrowers.

[Pamela · Rating 3 out of 5]

Listened to this book and my mind was wavering in and out. It was difficult to concentrate on this material. Perhaps not a great pick for the current situation going on in the world right now. To be more fair to the book I should revisit this at another time.

The part I particularly enjoyed was about Aby Warbug, who was allowed funds to purchase any book he was interested in, as long as he kept out of the family business. Well, he took that and ran with it purchasing around 60,000 books and many rare items. Clearly he wasn't interested in the family business of finance and banking.

[Kate Hornstein · Rating 2 out of 5]

For Book Club...so this book was not really for me. I found the beginning (a lecture) ponderous and dull, not to mention confusing if you don't have the whole timeline of the history of banking in your head. Lots of Thurston Howell III language. Some good points about the rise of the power of the individual investor (a bit timely but keep in mind book was written in 1996, before the financial crisis, Bitcoin, stonks, etc.) The latter part of the book with bigger chunks of history about the great banking dynasties was better, but it moved along at such a rapid pace, it was hard to keep up. That's it in a nutshell: I couldn't keep up!

[Dan Berkowitz · Rating 3 out of 5]

A nice short read. The beginning is interesting, as the author talks about the history of banking and how it has morphed over the years. Then the timeline starts jumping around, and the message gets a bit muddled. Towards the end the book starts discussing issues with retirement savings and healthcare we may see coming up. Being that this book was written in 1997, some of that has started to come true. Reading a book on economics from 20 years ago is interesting; if the message was more organized it would have been better.