It was 1912 — and a tumultuous time in world history. It was the year the Titanic sank, the last Emperor of China abdicated, Serbia and Greece declared War on the Ottoman Empire, and Woodrow Wilson was elected U.S. President in a landslide.
It was also a time when many began to question the concentration of money and power among the privileged few, particularly in the U.S. financial system which was run by a coterie of wealthy bankers, traders and power brokers who had free reign over the ‘money trust’ and all forms of credit.
“Money is gold, and nothing else”
In May of 1912, a U.S. Congressional Sub-Committee (the Pujo Committee) was assembled to investigate influence peddling, conflicts of interest, price manipulation, and lack of oversight within the banking sector. The head of major banks and financial institutions were called to testify including representatives from National City Bank of New York, Lee, Higginson & Co., Kidder, Peabody & Co., Kuhn, Loeb & Co. as well as the Chairman of the First National Bank of New York, George F. Baker and the head of J.P. Morgan & Company, John Pierpont Morgan.
SUBCOMITTEE OF THE COMMITTEE ON BANKING AND CURRENCY, HOUSE OF REPRESENTATIVES, WASHINGTON, D.C., THURSDAY, DECEMBER 19, 1912, 10:30am Mr. Morgan: What I call money is the basis of banking. Mr. Untermyer: But the basis of banking is credit, is it not? Mr. Morgan: Not always. That is an evidence of banking, but it is not the money itself. Money is gold, and nothing else. Mr. Untermyer: Do you not know that the basis of banking all over the world is credit rather than gold? Mr. Morgan. It is the basis of credit, but it is not the basis of money.
In a famous exchange with Samuel Untermyer, chief counsel for the government, financier J.P. Morgan makes a clear distinction between gold, a tangible asset with intrinsic value — and fiat currency, paper money, and all forms of credit.[1]
What Did Morgan Mean?
J.P. Morgan was among the most powerful and prominent figures of his day. The Library of Congress described him as a titan of American business whose position and connections put him squarely in the middle of the development of American industry.[2]
Morgan actually used his wealth and influence to save the U.S. from several financial disasters:
“The commonly known story of the Panic of 1907 is that in October of 1907 an attempt by F. Augustus Heinze, an overzealous Wall Street banker, to corner the copper market led to a run on many major banks. The effects of the run caused a panic that reverberated throughout Wall Street, New York City banks and ultimately, many of the U.S. banking and manufacturing industries. At the height of the Panic, J.P. Morgan stepped in to aid the banking community and quell the massive drop in bank reserves and market collapse.”[3]
Morgan’s position on gold was quite clear. He believed it was the only form of real money — a physical asset with intrinsic value that was not government-issued, credit-based, subject to mismanagement, or devaluation. Some, 110 years later the JP Morgan Private Bank concurs with its namesake about the historical importance of gold and its contemporary benefits.
“Gold has been a sought-after commodity for centuries, and a popular component in investment portfolios in modern times. The metal has historically delivered attractive long-term returns … gold has exhibited a low, or sometimes negative correlation to traditional asset classes, such as equities and bonds. In our view, having gold as a part of your asset allocation makes sense as a portfolio ballast that helps to enhance the risk-return profile.”[4]
Why Gold is More Relevant than Ever
Today, there are many different ways to pay for things: credit cards, debit cards, bank transfers, mobile payments, digital wallets, bitcoin, checks and of course cash. But J.P. Morgan would argue that none of them are real money precisely because they’re either a representation of money, an electronic transfer of credit, a digital ledger balance, or a promise to pay at a later date.
And all of them lack intrinsic value or inherent and objective worth that is not imparted by any country, financial institution, technology network, banking entity, or outside entity.
According to Investopedia, gold’s enduring strength and relevance come from its rich history:
“Like no other commodity, gold has held the fascination of human societies since the beginning of recorded time. Empires and kingdoms were built and destroyed over gold and mercantilism. As societies developed, gold was universally accepted as a satisfactory form of payment. In short, history has given gold a power surpassing that of any other commodity on the planet, and that power has never really disappeared.”[5]
For J.P. Morgan, holding gold instilled power, stability, predictability, and protection from financial crisis. Amid the Panic of 1893, as unemployment soared, businesses closed, banks failed, and as U.S. gold reserves became dangerously depleted — it was J.P. Morgan who stepped in to help the federal government replenish its gold supply to help stabilize the economy.
According to investment research firm ByteTree, gold remains more important than ever and the evidence of an “undeclared gold standard” is now mounting.
“The remarkable thing is that the gold standard withered in the 1970s, and other than the recent rumors surrounding a gold-backed BRICS currency, there has been no official need for central banks to own gold. They do so out of choice. It is remarkable how an informal gold standard of sorts is returning despite it being formally vanquished half a century ago. It means that gold is once again relevant despite that not being written down in the statute books.”[6]
The Apple Did Not Fall Far …
It’s interesting how much the world of finance has changed and yet the importance of gold has not. J.P. Morgan would likely be quite pleased by the “Key Takeaways” of the 2025 Global Research Commodities Report of JP Morgan Chase & Co, now one of the oldest and largest global financial services firm in the world:
“Given gold’s diverse and fluid drivers of demand at the moment, the metal has recently served both as a debasement hedge — or a form of protection against the loss of a currency’s purchasing power due to inflation or currency debasement — and in its more traditional role as a non-yielding competitor to U.S. Treasuries and money market funds.
- Gold prices have surged in 2025, with President Trump’s focus on tariffs pushing the metal to fresh highs.
- Longer term, the 2025 and 2026 outlook for the metal remains bullish. Prices are expected to average $3,675/oz by the fourth quarter of 2025 and climb toward $4,000 by mid-2026.
- Central bank and investor demand for gold is set to remain strong, averaging around 710 tonnes a quarter this year.”[7]
[1] https://www.sechistorical.org/collection/papers/1910/1912_12_19_Morgan_at_Pujo_C_t.pdf
[2] https://guides.loc.gov/this-month-in-business-history/april/jp-morgan-born
[3] https://www.gothamcenter.org/blog/the-panic-of-1907-how-jp-morgan-took-over-wall-street
[4] https://privatebank.jpmorgan.com/nam/en/insights/markets-and-investing/is-it-a-golden-era-for-gold
[5] https://www.investopedia.com/articles/economics/09/why-gold-matters.asp
[6] https://www.bytetree.com/research/2023/07/understanding-golds-intrinsic-value/
[7] https://www.jpmorgan.com/insights/global-research/commodities/gold-prices