Morgan Stanley can trace its roots in the history of J.P. Morgan & Co. Following the Glass-Steagall Act it became no longer possible for a corporation to have investment banking and retail banking businesses under a single holding entity. J.P. Morgan & Co. chose the retail banking business over the investment banking business. As a result some of the employees of J.P. Morgan & Co., most notably Henry S. Morgan and Harold Stanley left J.P. Morgan & Co. and joined some other from the Drexel partners to form Morgan Stanley. The firm, formally opened the doors for business on September 16, 1935 at Floor 19, 2 Wall Street, New York City, United States. Within its first year it achieved 24% of market share ($1.1 billion) among public offerings. The firm was involved with the distribution of 1938 $100 million of debentures for the United States Steel Corporation as the lead underwriter. The firm also obtained the distinction of being the lead syndicate in the 1939 U.S. rail financing. The firm went through a major reorganization in 1941 to allow for more activity in its securities business.
The firm was lead by Parry Hall, the last founder to lead Morgan Stanley, from 1951-1961. During this period the firm co-managed the famous World Bank's $50 million tripe-A-rated bonds offering of 1952. The firm, in this period, also came up with the General Motor's $300 million debt issue, $231 million IBM stock offering, the $250 million AT&T's debt offering.
In 1962, Morgan Stanley created the first viable computer model for financial analysis[citation needed], thereby starting a new trend in the field of financial analysis. In 1967 it established the Morgan & Cie, International in Paris in attempt to enter the European securities market. It acquired Brooks, Harvey & Co., Inc. in 1967 and established a presence in the real state business. By 1971 the firm had established its Mergers & Acquisitions business along with Sales & Trading. The sales and trading business is believed to be the brainchild of Bob Baldwin. In 1970 Morgan Stanley opened a representative office in Tokyo and formally entered the Japanese markets. In 1975 Morgan Stanley established Morgan Stanley International Inc. in London. The private wealth management department was added into the firm's business units by 1977 when Morgan Stanley established Morgan Stanley Realty Inc. In the same year Morgan Stanley merged with Shuman, Agnew & Co. Morgan Stanley lead the Apple common stock IPO on December 12, 1980. The firm entered the Prime Brokerage business in 1984. In 1986, Morgan Stanley Group, Inc., was publicly listed on the New York Stock Exchange. By 1990 Morgan Stanley had its regional offices in Frankfurt, Hong Kong, Luxembourg, Melbourne, Milan, Sydney and Zurich and had regional headquarters in London and Tokyo.
In 1996, Morgan Stanley acquired Van Kampen American Capital. On February 5, 1997, the company merged with Dean Witter Reynolds, and Discover & Co. the spun-off financial services business of Sears Roebuck. The merged company was briefly known as "Morgan Stanley Dean Witter Discover & Co." until 1998 when it was known as "Morgan Stanley Dean Witter & Co." until late 2001. To foster brand recognition and marketing the Dean Witter name was dropped and the firm became "Morgan Stanley". Morgan Stanley acquired AB Asesores of Spain and entered India in a joint venture with JM Financials in 1999.
In 2001, Morgan Stanley lost 13 employees in the September 11, 2001 attacks.
In 2004, Morgan Stanley co-managed the Google IPO which is the largest internet IPO in the U.S. history. In the same year Morgan Stanley acquired the Canary Wharf Group. On December 19, 2006, after reporting 4th quarter earnings, Morgan Stanley announced the spin-off of its Discover Card unit. In order to cope up with the write-downs during the Subprime mortgage crisis, Morgan Stanley announced on December 19, 2007 that it would receive a $5 billion capital infusion from the China Investment Corporation in exchange for securities that would be convertible to 9.9% of its shares in 2010.