The Man Who Made Wall Street: Anthony J. Drexel and the Rise of Modern Finance
by Dan Rottenberg
University of Pennsylvania Press, 2001
While the lives of the great philanthropists are well documented, there are scores of lesser, but nonetheless important, donors whose lives remain untold. Such is the case with Anthony Drexel.
Most people will find the Drexel name vaguely familiar. Some may know him because of the college he created (now called Drexel University). Catholics know about Drexel’s niece, St. Katharine Drexel of Philadelphia. More infamously, the investment house Drexel, created after several mergers, concluded its existence in the 1980s as Drexel Burnham Lambert, the junk-bond kings.
But as Dan Rottenberg points out in the first life of Drexel, the main reason few people know anything about Anthony J. Drexel is that the man wanted to be obscure. He “rarely posed for pictures, never gave interviews to newspapers, declined public office, and destroyed his personal papers.”
Rottenberg, a Philadelphia-based journalist, has long been interested in philanthropy; his 1975 Philadelphia Magazine article “The Sun Gods” remains one of the most important articles about the Pew Charitable Trusts. He is a competent and industrious writer who did a great deal of digging in archives in the United States and England in order to discover everything that could be found out about Drexel’s life and career. His hard work pays off, as Drexel’s life is one that deserves to be told.
Born in 1826, Anthony J. Drexel was a man who, like J. Paul Getty or Bill Gates, turned his father’s small fortune into a large one. Drexel’s father, Francis Drexel, fled Napoleon’s tyranny to arrive in America with little more than his talent. After failing as a portrait painter, Francis Drexel drifted into a career in finance, helping to fund railroads and other new enterprises through bond-selling. By 1860, Drexel & Co. was America’s oldest and most reliable firm of bond-sellers.
But the business of bond-selling changed dramatically during the Civil War. The Union Army had massive bills; to pay them, the U.S. government launched bond-selling on a massive scale. Francis and Anthony Drexel did not want to risk selling U.S. bonds; they chose to back Jay Cooke, who turned out to sell bonds with such energy that he made a large fortune for himself and a small fortune for the Drexels. (In the 1870s, Cooke used his flamboyance and drive to promote dubious railroad stock; his financial collapse in 1873 plunged America into a depression.)
After the war, Anthony Drexel adopted a similar strategy with J. P. Morgan. The Drexels had a long working relationship with Morgan’s father, J. S. Morgan, and knew that Morgan was worth backing. So in 1871 Drexel created what was to become J. P. Morgan & Company. In return for putting up all the initial investment capital, the Drexels received half the profits.
With Drexel’s capital, Morgan became one of the world’s greatest financiers. As with Cooke, Drexel’s partnership with Morgan made Drexel a small fortune.
But though obscure, Drexel had a great deal of power, both in his own right and as J. P. Morgan’s closest advisor. In a telling incident, President Ulysses S. Grant once called on Drexel—and because Grant was five minutes late, Drexel made the President wait an entire hour before seeing him. President Grant, needing Drexel’s bond-selling expertise, was not insulted by the delay.
Late in his career, Drexel turned to philanthropy. Rottenberg credits Drexel with two philanthropic achievements: founding a university and inspiring his niece.
Drexel had long been a generous—but always anonymous—contributor to worthy Philadelphia organizations. At one point, a hospital proposed changing its name to Drexel Hospital but changed its mind after Drexel’s loud protests.
In the 1880s, Drexel decided to invest in education. He purchased property in the Philadelphia suburbs for a women’s school, but after Bryn Mawr College opened in 1885, Drexel decided to open an inner-city school devoted to teaching the poor some useful trades. When the Drexel Institute opened in 1891, two years before Drexel’s death, Drexel imposed no restrictions on how the school could change, stating “I know the world is going to change and, therefore, the institute must change with it, and I do not want to tie it up.” Drexel University thus became a more conventional university, although Rottenberg notes that it is one of only five American schools (Brown, Duke, Rutgers, and Vanderbilt are the others) to have descendants of its founder on its board.
Anthony J. Drexel’s other achievement was inspiring his niece, St. Katharine Drexel (1858-1955). Nearly all of the Drexel heirs spent their inheritance in indolent pleasures. Katharine Drexel was the great exception. “Far more than Tony’s three sons,” Rottenberg writes, “Kate seemed eager to learn from her Uncle Anthony about the relative value of investments and the creditworthiness of specific bonds.” But she wanted to use this knowledge not to create wealth, but to do good deeds.
When her father died in 1885, Katharine Drexel inherited about $5 million. But her inheritance had a “spendthrift clause” that provided her with a lifetime income, but barred her from touching the principal. Her inheritance, if she had no children, was to go to charity upon her death.
Like most of her family (except for Anthony Drexel, who was an Episcopalian), Katharine Drexel was a Catholic. After a western trip in 1884, she decided she wanted to help American Indians. In 1887, she traveled to Rome, where she demanded—and received—an audience with Pope Leo XIII. After questioning him closely about what the Catholic Church was going to do about the Indians, the pope suggested she consider a career as a missionary.
“The Church,” Rottenberg writes, “was one of the few institutions where an ambitious entrepreneurial woman like Kate Drexel could exercise her talents.” But if Drexel joined another order, she would have to surrender her income. So she created her own order, the Sisters of the Blessed Sacrament, which succeeded “largely because of Mother Katharine’s hardnosed financial acumen.” At its peak, the sisters operated 60 schools for the poor, including Xavier University in New Orleans. Using the skills taught her by her uncle, Katharine Drexel created $15 million—all of which went to charity.
In hindsight, Anthony J. Drexel was an important financier and a second-tier philanthropist. He is nonetheless worth knowing about, and readers interested in knowing who Drexel was will find The Man Who Made Wall Street a worthwhile book.
Martin Morse Wooster is a contributing editory of Philanthropy and author of The Foundation Builders.