Jay Cooke
Encyclopedia
Jay Cooke 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.
, 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.
, 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.
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.
as the Republican party standard-bearer, Cooke backed Radical Republican Chief Justice Salmon P. Chase
for President.
. 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. Cooke's son and Barney's brother-in-law, Jay Cooke, Jr., joined the new firm as a minority partner.
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.
) 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.
, 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, 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.
Jay Cooke & Company
Jay Cooke & Company was a U.S. bank from 1861 to 1873. It was the first brokerage house to use telegraph messages to confirm with clients the purchase and sale of securities. Headquartered in Philadelphia, Pennsylvania, it had branches in New York City and Washington, DC...
were most notable for their role in financing the Union's war effort during the American Civil War
American Civil War
The American Civil War was a civil war fought in the United States of America. In response to the election of Abraham Lincoln as President of the United States, 11 southern slave states declared their secession from the United States and formed the Confederate States of America ; the other 25...
. 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
Jay Cooke House
Jay Cooke House was the summer home of Jay Cooke, a financial magnate involved in financing the union during the American Civil War, and whose failure caused the panic of 1873. The house is located at Put-in-Bay, Ohio on Gibraltar Island, Ohio....
, constructed in 1864-65, on the small Lake Erie island Gibraltar, located in the harbor of Put-in-Bay, Ohio
Put-in-Bay, Ohio
Put-in-Bay is a village located on South Bass Island in Put-in-Bay Township, Ottawa County, Ohio, United States. Many believe that the name originates from some early maps of South Bass Island that showed the harbor being named Pudding Bay, probably because it was shaped like a pudding sack. The...
. The island was a lookout for Commodore Perry during the Battle of Lake Erie in 1813. The home still stands.
Early life
Cooke was born at Sandusky, OhioSandusky, Ohio
Sandusky is a city in the U.S. state of Ohio and the county seat of Erie County. It is located in northern Ohio and is situated on the shores of Lake Erie, almost exactly half-way between Toledo to the west and Cleveland to the east....
, the son of Eleutheros Cooke (1787–1864) and Martha Carswell Cooke. Eleutheros Cooke was a pioneer Ohio
Ohio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...
lawyer and Whig
Whig Party (United States)
The Whig Party was a political party of the United States during the era of Jacksonian democracy. Considered integral to the Second Party System and operating from the early 1830s to the mid-1850s, the party was formed in opposition to the policies of President Andrew Jackson and his Democratic...
, a member of the Ohio General Assembly and member of Congress from Ohio in 1831-1833.
Financier of the Civil War
On January 1, 1861, just months before the start of the American Civil WarAmerican Civil War
The American Civil War was a civil war fought in the United States of America. In response to the election of Abraham Lincoln as President of the United States, 11 southern slave states declared their secession from the United States and formed the Confederate States of America ; the other 25...
, Cooke opened the private banking house of Jay Cooke & Company
Jay Cooke & Company
Jay Cooke & Company was a U.S. bank from 1861 to 1873. It was the first brokerage house to use telegraph messages to confirm with clients the purchase and sale of securities. Headquartered in Philadelphia, Pennsylvania, it had branches in New York City and Washington, DC...
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
American Civil War
The American Civil War was a civil war fought in the United States of America. In response to the election of Abraham Lincoln as President of the United States, 11 southern slave states declared their secession from the United States and formed the Confederate States of America ; the other 25...
, Cooke collaborated with the secretary of the treasury Salmon P. Chase
Salmon P. Chase
Salmon Portland Chase was an American politician and jurist who served as U.S. Senator from Ohio and the 23rd Governor of Ohio; as U.S. Treasury Secretary under President Abraham Lincoln; and as the sixth Chief Justice of the United States Supreme Court.Chase was one of the most prominent members...
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.
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
National Banking Act
The National Banking Acts of 1863 and 1864 were two United States federal laws that established a system of national charters for banks, and created the United States National Banking System. They encouraged development of a national currency backed by bank holdings of U.S...
, 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.
Radical Republicans
In the Republican nominating process of 1868, which eventually saw Ulysses S. GrantUlysses S. Grant
Ulysses S. Grant was the 18th President of the United States as well as military commander during the Civil War and post-war Reconstruction periods. Under Grant's command, the Union Army defeated the Confederate military and ended the Confederate States of America...
as the Republican party standard-bearer, Cooke backed Radical Republican Chief Justice Salmon P. Chase
Salmon P. Chase
Salmon Portland Chase was an American politician and jurist who served as U.S. Senator from Ohio and the 23rd Governor of Ohio; as U.S. Treasury Secretary under President Abraham Lincoln; and as the sixth Chief Justice of the United States Supreme Court.Chase was one of the most prominent members...
for President.
Northern Pacific Railway
After the war, Cooke became interested in the development of the northwest, and in 1870 his firm financed the construction of the Northern Pacific RailwayNorthern Pacific Railway
The Northern Pacific Railway was a railway that operated in the west along the Canadian border of the United States. Construction began in 1870 and the main line opened all the way from the Great Lakes to the Pacific when former president Ulysses S. Grant drove in the final "golden spike" in...
. Cooke fell in love with Duluth, Minnesota
Duluth, Minnesota
Duluth is a port city in the U.S. state of Minnesota and is the county seat of Saint Louis County. The fourth largest city in Minnesota, Duluth had a total population of 86,265 in the 2010 census. Duluth is also the second largest city that is located on Lake Superior after Thunder Bay, Ontario,...
, 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
Panic of 1873
The Panic of 1873 triggered a severe international economic depression in both Europe and the United States that lasted until 1879, and even longer in some countries. The depression was known as the Great Depression until the 1930s, but is now known as the Long Depression...
it was forced to suspend operations. Cooke himself was forced into bankruptcy
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
. 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
George Stephen, 1st Baron Mount Stephen
George Stephen, 1st Baron of Mount Stephen , known as Sir Stephen, between 1778 and 1891.-Canadian Pacific Railway syndicate:...
and Donald Smith
Donald Smith, 1st Baron Strathcona and Mount Royal
Sir Donald Alexander Smith, 1st Baron Strathcona and Mount Royal, GCMG, GCVO, PC, DL was a Scottish-born Canadian fur trader, financier, railroad baron and politician.-Early life:...
who then finished building the Canadian Pacific Railway.
In the mid-1860s, Cooke took his son-in-law, Charles D. Barney
Charles D. Barney
Charles Dennis Barney was an American stockbroker and founder of Charles D. Barney & Co., one of the predecessors of the brokerage and securities firm Smith Barney....
, into the firm. With the onset of the Panic of 1873
Panic of 1873
The Panic of 1873 triggered a severe international economic depression in both Europe and the United States that lasted until 1879, and even longer in some countries. The depression was known as the Great Depression until the 1930s, but is now known as the Long Depression...
, Jay Cooke & Company
Jay Cooke & Company
Jay Cooke & Company was a U.S. bank from 1861 to 1873. It was the first brokerage house to use telegraph messages to confirm with clients the purchase and sale of securities. Headquartered in Philadelphia, Pennsylvania, it had branches in New York City and Washington, DC...
collapsed and Barney led a reorganization of the firm as Chas. D. Barney & Co. Cooke's son and Barney's brother-in-law, Jay Cooke, Jr., joined the new firm as a minority partner.
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
Elkins Park, Pennsylvania
Elkins Park is an unincorporated community in Montgomery County, Pennsylvania, United States. It is split between Cheltenham and Abington Townships in the suburbs of Philadelphia, roughly from Center City, Philadelphia.-Points of interest:...
) section of Cheltenham Township, Pennsylvania
Pennsylvania
The Commonwealth of Pennsylvania is a U.S. state that is located in the Northeastern and Mid-Atlantic regions of the United States. The state borders Delaware and Maryland to the south, West Virginia to the southwest, Ohio to the west, New York and Ontario, Canada, to the north, and New Jersey to...
, on February 8, 1905.
Philanthropy
A devout Christian, Cooke regularly gave 10 percent (or a titheTithe
A tithe is a one-tenth part of something, paid as a contribution to a religious organization or compulsory tax to government. Today, tithes are normally voluntary and paid in cash, cheques, or stocks, whereas historically tithes were required and paid in kind, such as agricultural products...
) 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
Bankruptcy
Bankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
, he later repurchased it and converted it into a school for girls.
Legacy
Cooke's legacy is honored in the name of Jay Cooke State ParkJay Cooke State Park
Jay Cooke State Park is a Minnesota state park located about ten miles southwest of Duluth, just outside the small town of Thomson. Jay Cooke is situated on the St...
, a large state park located near Duluth
Duluth, Minnesota
Duluth is a port city in the U.S. state of Minnesota and is the county seat of Saint Louis County. The fourth largest city in Minnesota, Duluth had a total population of 86,265 in the 2010 census. Duluth is also the second largest city that is located on Lake Superior after Thunder Bay, Ontario,...
, Minnesota
Minnesota
Minnesota is a U.S. state located in the Midwestern United States. The twelfth largest state of the U.S., it is the twenty-first most populous, with 5.3 million residents. Minnesota was carved out of the eastern half of the Minnesota Territory and admitted to the Union as the thirty-second state...
, and the name of the village of Cooke City
Cooke City-Silver Gate, Montana
Cooke City-Silver Gate is a census-designated place in Park County, Montana, United States. The population was 140 at the 2000 census.-Geography:Cooke City-Silver Gate is located at ....
, Montana
Montana
Montana is a state in the Western United States. The western third of Montana contains numerous mountain ranges. Smaller, "island ranges" are found in the central third of the state, for a total of 77 named ranges of the Rocky Mountains. This geographical fact is reflected in the state's name,...
.
His name was also used for Cooke Township
Cooke Township, Pennsylvania
Cooke Township is a township in Cumberland County, Pennsylvania, United States. The population was 117 at the 2000 census.-Geography:According to the United States Census Bureau, the township has a total area of , of which, of it is land and of it is water.-Demographics:As of the census of 2000,...
in Cumberland County, Pennsylvania
Cumberland County, Pennsylvania
Cumberland County is a county located in the U.S. state of Pennsylvania and is one of three counties comprising the Harrisburg–Carlisle Metropolitan Statistical Area. As of 2010, the population was 235,406.-History:...
. Jay Cooke was among the investors who in 1864 purchased the South Mountain Iron Company at Pine Grove Furnace, a charcoal-fired iron
Iron
Iron is a chemical element with the symbol Fe and atomic number 26. It is a metal in the first transition series. It is the most common element forming the planet Earth as a whole, forming much of Earth's outer and inner core. It is the fourth most common element in the Earth's crust...
operation dating to 1764. The specific reason that Cooke Township was created in 1872 out of previously existing Penn Township
Penn Township, Cumberland County, Pennsylvania
Penn Township is a township in Cumberland County, Pennsylvania, United States. The population was 2,807 at the 2000 census.-Geography:According to the United States Census Bureau, the township has a total area of 29.2 square miles , of which, 29.2 square miles of it is land and...
(established 1860) is unclear. Jay Cooke lost the company in the Panic of 1873
Panic of 1873
The Panic of 1873 triggered a severe international economic depression in both Europe and the United States that lasted until 1879, and even longer in some countries. The depression was known as the Great Depression until the 1930s, but is now known as the Long Depression...
, 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
Trout
Trout is the name for a number of species of freshwater and saltwater fish belonging to the Salmoninae subfamily of the family Salmonidae. Salmon belong to the same family as trout. Most salmon species spend almost all their lives in salt water...
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
Pine Grove Furnace State Park
Pine Grove Furnace State Park is a protected Pennsylvania area that includes Laurel and Fuller lakes in Cooke Township. The park provides various outdoor recreation activities, has the remains of the Pine Grove Iron Works, and was the site of the 1830 Laurel Forge, 1880s Pine Grove Park, and an...
.
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.
External links
- The Jay Cooke papers, including correspondence documenting the work of Jay Cooke & Company, are available for research use at the Historical Society of PennsylvaniaHistorical Society of PennsylvaniaThe Historical Society of Pennsylvania is a historical society founded in 1824 and based in Philadelphia. The Society's building, designed by Addison Hutton and listed on Philadelphia's Register of Historical Places, houses some 600,000 printed items and over 19 million manuscript and graphic items...
.