George F. Baker (1840–1931) banker
Born in Troy, New York, on March 27, 1840, Baker went to live with relatives in Massachusetts when his family moved to Brooklyn and his father became a newspaperman. While living with relatives, the young boy noticed that an uncle did no apparent work, preferring to live off interest income instead. From an early age, he, too, decided that he would live off interest despite his middle-class background.
After attending the Seward Institute in Florida, a private school, Baker became a clerk in the New York State Banking Department. While working there, he became familiar with a New York banker, John Thompson, who invited him to join in a new banking venture established during the Civil War in New York City. The new institution was established in order to participate in the sale of TREASURY BONDS during the war through the national banks newly created by the National Banking Act. The bond program was run by Salmon Chase, secretary of the Treasury, who used Jay Cooke & Co. as his primary selling agent. The First National Bank of New York was established on Wall Street in 1863, and the young Baker bought shares in the company with his savings. He became its cashier and a board member in 1865 and quickly began to work his way to the top of the bank’s management. During the Panic of 1873, the bank’s president, Samuel Thompson, feared for the bank’s survival, and Baker decided to begin buying his stock, having faith that the bank would weather the storm. As a result, he became the major figure at the bank, and in 1877 he became its president.
In the early 1880s, firmly established, Baker began buying shares in various railroad companies. He specialized in buying and selling companies after helping reorganize them and earned a good deal of his fortune in that manner. He also had extensive holdings in other banks and insurance companies. By the turn of the 20th century, he held directorships in 43 banks and corporations, making him a charter member of what became known as the “money trust” in New York banking circles. He was also the largest shareholder in the U.S. STEEL CORP. after it was organized by J. P. Morgan in 1901. He remained a close associate and confidant of Morgan. He retired from active management of the bank in 1909 but remained as its chairman. Because of his banking connections and affiliation with Morgan, he became a star witness at the Pujo hearings conducted by Congress in 1911, investigating what was known as the “money trust,” the close relationships among New York bankers and their role in allocating credit and capital.
During World War I, Baker helped Benjamin STRONG of the New York Federal Reserve Bank manage operations in the money market, which included determining how much call money would be made available to the stock market. In 1916, he was indicted along with others for looting the New York, New Haven, and Hartford Railroad, but the charge was ultimately dismissed when his attorney proved that while he attended directors’ meetings, he usually slept through most of them and took no part in their deliberations. Unlike many other bankers, Baker kept some distance between his bank and the securities business directly, establishing an untarnished reputation that earned him the honorary title the “Dean of Wall Street” during the 1920s. At his death, his estate was valued at $75 million, making him one of the richest bankers in the country. He also gave substantial sums to many colleges and universities, including the Harvard Graduate School of Business Administration. His son, George F. Baker Jr., succeeded him as chairman at the bank, which was a major New York City institution before later merging with the National City Bank. After other MERGERS, it is a part of Citigroup today.
See also CITIBANK; MORGAN, JOHN PIERPONT.
Further reading
- Chernow, Ron. The House of Morgan: An American Banking Dynasty and the Rise of Modern Corporate Finance. New York: Simon & Schuster, 1990.
- Logan, Sheridan A. George F. Baker & His Bank, 1840–1955. New York: privately published, 1981.