JP Morgan Becomes Allied War Financier: $3 Billion in Loans and Munitions Contracts, Abandons Neutrality for Profit

In August 1914, as World War I erupted in Europe, JP Morgan & Co. approached the U.S. government about making loans to the French Government and the Rothschilds. Despite Secretary of State William Jennings Bryan’s principled position that “loans by American bankers to any foreign nation which is at war are inconsistent with the true spirit of neutrality,” President Woodrow Wilson rejected Bryan’s advice and declined to prohibit U.S. citizens from lending to belligerents. Wilson urged Americans to be “impartial in thought as well as in action,” but American banks and investors ignored this advice and bought billions of dollars of British and French government bonds. JP Morgan & Co. marketed those bonds to U.S. citizens and served as sole purchasing agent for British and French governments when they purchased billions in war supplies from U.S. producers—earning an 8.3 percent commission that netted over $200 million in profits. As Morgan partner Thomas Lamont later candidly admitted: “At the outbreak of the war in Europe, American citizens were urged to remain neutral in action, in word, and even in thought. Our firm had never for one moment been neutral; we didn’t know how to be. From the very start we did everything we could to contribute to the cause of the Allies.”

The scale of Morgan’s war profiteering proved staggering. In January 1915, the young Morgan signed the first commercial agreement with the British Army Council—a $12 million purchase of horses. By the end of the war, the Morgan bank had brokered $3 billion in transactions for the British military, equal to almost half of all American supplies sold to the Allies during the entire war. In 1915, the Anglo-French Financial Commission agreed to a $500 million loan from private American banks—the largest single loan in financial history at that point. Morgan representatives forged a syndicate of some 2,200 banks that extended this loan to France and Britain, supported by a five-year, five percent bond issue. JP Morgan & Co. underwrote $1.5 billion in war loans to London over the course of the war. Once Russia also selected Morgan as intermediary for its American borrowings, the House of Morgan had become credit-broker to the entire Entente alliance. By the end of 1915, exports of American-made munitions to Great Britain totaled $199,627,324, with monthly averages exceeding $74 million. By U.S. entry into World War I in 1917, munitions exports had passed $1 billion. Morgan served as sole purchasing agent at 1 percent of all these orders.

The Morgan war profiteering created a dangerous financial entanglement that helped drag America into the war. By spring 1917, the overdraft on Morgans reached nearly $400 million—France had reached the end of its financial tether. Wilson’s efforts to force mediation failed, but allied financial precariousness was exposed. Just eight days after the U.S. declared war on Germany in April 1917, Congress passed the War Loan Act extending $1 billion in credit to the Allies. The first payment of $200 million went to the British and was immediately handed over to Morgan as partial payment on their debt. When $100 million was parceled out to France, it too was promptly returned to Morgan’s coffers. This episode established the template for 20th century war profiteering: private financial institutions lent to belligerents, created economic dependencies that threatened American financial interests, then used those dependencies to lobby for U.S. military intervention to protect their investments—privatizing profits while socializing the costs of war through American blood and taxpayer-funded bailouts.