> Just out of curiousity, what loan was this? Was it associated with the
> Allegheny Corporation?
>
Yeah. Actually the total loan in question was for $200 mln (or $2 billion in today's terms). Morgan had lent this to the Van Sweringen brothers, the 1920's equivalent of the 1990's venture capitalists, for railroad speculation.
The original $200 million was used to buy up stock in Allegheny and Missouri Pacific railroad even while it was plummeting. In order for the brothers to make the margin call on this stock backed loan from Morgan, they had to borrow an additional $40 million rescue loan.
When the overleveraged brothers couldn't back anything, Morgan foreclosed on Allegheny and took a $100 million hit.
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