| Jay Cooke | |
|---|---|
| Born | August 10, 1821 Sandusky, Ohio |
| Died | February 16, 1905 (aged 83) Ogontz, Pennsylvania |
Jay Cooke (August 10, 1821 – February 16, 1905) was an American financier. Cooke and his firm Jay Cooke & Company were most notable for their role in financing the Union's war effort during the American Civil War. In his later career, Cooke was noted for his role in the financing of railroads in the northwestern United States.
Cooke owned a summer home, constructed in 1864-65, on the small Lake Erie island Gibraltar, located in the harbor of Put-in-Bay, Ohio. The island was a lookout for Commodore Perry during the Battle of Lake Erie in 1813. The home still stands.
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Cooke was born at Sandusky, Ohio, the son of Eleutheros Cooke (1787–1864) and Martha Carswell Cooke. Eleutheros Cooke was a pioneer Ohio lawyer and Whig, a member of the Ohio General Assembly and member of Congress from Ohio in 1831-1833.
On January 1, 1861, just months before the start of the American Civil War, Cooke opened the private banking house of Jay Cooke & Company in Philadelphia. Soon after the war began, the new firm floated a war loan of $3,000,000 for the state of Pennsylvania.
In the early months of the American Civil War, Cooke collaborated with the secretary of the treasury Salmon P. Chase in securing loans from the leading bankers in the Northern cities; his own firm was so successful in distributing treasury notes that Chase engaged him as special agent for the sale of the $500,000,000 of so-called "five-twenty" bonds—which were callable in 5 years and matured in 20 years—authorized by Congress on February 25, 1862. The treasury department had previously failed in selling these bonds. (Cooke and his brother a newspaper editor had helped Chase get his job by lobbying for him, even though all were former Democrats.)
Cooke was granted a commission of one half of 1 percent of the revenue generated from the first $10 million worth of bonds, and three-eighths percent of all subsequent bond sales. With these funds, Cooke financed a nationwide bond-marketing campaign. Cooke appointed approximately 2,500 sub-agents who traveled through every northern and western state and territory, as well as the Southern states as they came under control of the Union Army. In addition to his far-reaching band of agents, Cooke secured the support of most Northern newspapers. He not only purchased ads through advertising agencies, but often worked directly with editors who were willing to feature lengthy articles extolling the virtues of buying government bonds. In his effort to drum up a popular market for the bonds, Cooke heralded a particular type of patriotism based on classical liberalist notions of self-interest. His editorials, articles, handbills, circulars, and signs most often appealed to Americans' desire to turn a profit, while simultaneously aiding the war effort.[1]
Cooke quickly sold $11,000,000 more in bonds than had been authorized. Congress immediately sanctioned the excess. At the same time, Cooke influenced the establishment of national banks, and organized a national bank at Washington and another at Philadelphia almost as quickly as Congress could authorize the institutions.
In the early months of 1865, with the government facing pressing financial needs in the wake of disappointing sales of the new "seven-thirty" notes by the national banks, Cooke's services were again secured. He sent agents into remote villages and hamlets, and even into isolated mining camps in the west, and persuaded rural newspapers to praise the loan. Between February and July 1865 he disposed of three series of the notes, reaching a total of $830,000,000. This allowed the Union soldiers to be supplied and paid during the final months of the war.
It was in this effort that he pioneered the use of price stabilization. This practice, whereby bankers stabilize the price of a new issue, is still in use by investment bankers in IPOs and other security issuances. (Source: Wall Street by Charles Geisst)
Although Cooke's bond campaigns were widely praised as a patriotic contribution to the Union cause, his huge personal financial gains did not go unnoticed. Notorious for stalling the deposit of bond proceeds into federal coffers, he was accused of corruption, and on December 22, 1862, Representative Charles A. Train proposed a Congressional investigation of the Treasury—though the investigation was never realized. [1]
In the Republican nominating process of 1868, which eventually saw Ulysses S. Grant as the Republican party standard-bearer, Cooke backed Radical Republican Chief Justice Salmon P. Chase for President.
After the war, Cooke became interested in the development of the northwest, and in 1870 his firm financed the construction of the Northern Pacific Railway. Cooke fell in love with Duluth, Minnesota, and decided he must make it successful, the new Chicago. To this end he began purchasing railways with the dream of reaching the Pacific to bring goods through Duluth into the Great Lakes shipping system and on to the markets of Europe. In advancing the money for the work, the firm overestimated its capital, and at the approach of the Panic of 1873 it was forced to suspend operations. Cooke himself was forced into bankruptcy. Jay Cooke was heavily involved in financial scandals with the Canadian Government and caused the Prime Minister Sir John A. Macdonald to lose his office in the 1873 election. Cooke's shares in the Northern Pacific Railway were purchased for pennies on the dollar by George Stephen and Donald Smith who then finished building the Canadian Pacific Railway.
In the mid-1860s, Cooke took his son-in-law, Charles D. Barney, into the firm. With the onset of the Panic of 1873, Jay Cooke & Company collapsed and Barney led a reorganization of the firm as Chas. D. Barney & Co.[2] Cooke's son and Barney's brother-in-law, Jay Cooke, Jr., joined the new firm as a minority partner.[3][4]
By 1880 Cooke had met all his financial obligations, and through an investment in a silver mine in Utah, had again become wealthy. He died in the Ogontz (now Elkins Park) section of Cheltenham Township, Pennsylvania, on February 8, 1905.
A devout Christian, Cooke regularly gave 10 percent (or a tithe) of his income for religious and charitable purposes. He donated funds for the building of a number of Episcopal churches. After he had been forced to give up his Ogontz estate in bankruptcy, he later repurchased it and converted it into a school for girls.
Cooke's legacy is honored in the name of Jay Cooke State Park, a large state park located near Duluth, Minnesota, and the name of the village of Cooke City, Montana.
His name was also used for Cooke Township in Cumberland County, Pennsylvania. Jay Cooke was among the investors who in 1864 purchased the South Mountain Iron Company at Pine Grove Furnace,[5] a charcoal-fired iron operation dating to 1764. The specific reason that Cooke Township was created in 1872 out of previously existing Penn Township (established 1860) is unclear. Jay Cooke lost the company in the Panic of 1873, but bought back a major portion of it four years later with a group of investors as the South Mountain Mining and Iron Company. He was still a co-owner at the time of his death. According to the biography by Oberholtzer (who Cooke and his family assisted), Jay Cooke visited Pine Grove Furnace repeatedly. Cooke fished for trout there—he was an avid outdoorsman throughout his life—and he annually brought gifts such as pocket knives and scissors to the small school established there for the workers' children. Cooke Township continues to this day as a very lightly populated but heavily forested area, while the center of the iron industry within it is now Pine Grove Furnace State Park.
The School District of Philadelphia's Jay Cooke Elementary School is named in his honor.
Jay Cooke also has a street named after him in Cheltenham Township, Cooke Rd.
A statue of Jay Cooke is located in Jay Cooke Plaza near the intersection of 9th Avenue East and Superior Street in Duluth, Minnesota.[6]
Jay, Pitt, and Cooke Streets in the Lakeside neighborhood of Duluth, Minnesota are named after Cooke.[7]