How the Modern U.S. Economy Was Launched
John Pierpont Morgan

The merger wave of the late 1890s and early 1900s launched the modern American economy.

Fomented by John Pierpont Morgan, John D. Rockefeller, and their peers, the boom created many of the companies that would dominate the business world for decades to come.

The scale still staggers.

When Andrew Carnegie combined Carnegie Steel with a Morgan-engineered amalgamation of rivals to form U.S. Steel in 1901, he received $480 million in newly issued U.S. Steel stock at a time when the annual federal budget was $350 million.

The first great merger craze is a staple of M&A scholarship and a focus in American business history, but Mike Wallace uses it to a different end in his new book "Greater Gotham: A History of New York from 1898 to 1919," the sequel to "Gotham: A History of New York to 1898," for which Wallace and Edwin Burroughs won a Pulitzer Prize in 1999.

Wallace follows several themes in "Greater Gotham," but in "Mergers," the first chapter of the 1,200 page volume, he offers a brisk overview of the consolidation that ensured Manhattan would continue to be the capital of American business.

The creation of corporate colossuses had its political analog in the 1898 combination of Manhattan, Brooklyn, Queens, Staten Island and the Bronx into the nation's largest city and the second-largest in the world at the time behind London.

Andrew Haskell Green, who as the law partner of Samuel Tilden specialized in reorganizing and merging railroads, had begun advocating for the formation of a super-city to allow for the more efficient management of resources in 1868, Gotham's business elite didn't get behind the proposal for 20 years, and it took them another decade to achieve their goal.

The timing, Wallace writes, "overlapped precisely with the emergence of an American overseas empire" with the conquest of Cuba, Guam, the Philippines and Puerto Rico and the plans for the Panama Canal, for which William Nelson Cromwell, co-founder of Sullivan & Cromwell LLP, successfully lobbied Congress.

The emergence of business trusts and the Crisis of 1907, which J.P. Morgan and friends quieted, created a political backlash that was stirred by New York journalists like Lincoln Steffens and politicians like Theodore Roosevelt.

From there, Wallace's narrative spins out in ever-widening circles to tell the stories not just of corporate lawyers, but of "actors, ad men, anarchists, Coney Island barkers, Ellis Island officials, fight fans, settlement workers, slaughterhouse workers, union organizers, vaudevillians, and zookeepers," the author writes in a partial list of his dramatis personae—a parade led by J.P. Morgan himself, the first person we meet, portly, pin-striped, a cigar in one hand and American industry in the other, striding into the 20th century.

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