August 10: Jay Cooke, Financier of the Civil War

His early work career involved one failure after another, yet he persevered and became known as the financier of the American Civil War – and later the collapse of his company would cause the Panic of 1873.

Jay Cooke was born on August 10, 1821, in the then-frontier town of Sandusky, located in North-Central Ohio on the coast of Lake Erie. Eleutheros Cooke, his father, was a pioneer Ohio lawyer as well as a representing Ohio in Congress from 1831-1833 as a member of the Whig Party. He also was one of the early railroad investors, and was a real estate speculator. The new child was named after John Jay, the first Chief Justice of the Supreme Court.

It seemed as though Cooke was predestined for the world of business and finance. His early school experience was at the local schools in Sandusky, and at the age of fourteen he became a clerk in a local store. A year later he moved to take a position in a wholesale business in St. Louis, Missouri. The following year he lost his job due to the Panic of 1837 and would return to Ohio – settling in

At the age of fourteen, Cooke became a clerk in a local store. When he was fifteen, he moved to St. Louis, Missouri, and took a position in a wholesale business. He lost his job the following year due to the Panic of 1837 when he was sixteen, and returned to Ohio, where he settled in Bloomingville, just outside of Sandusky.

Cooke decided that his future lay in the East, and he moved to Philadelphia Pennsylvania in 1838. He began working with a packet company, becoming involved with shipping and receiving goods on steamboats. The company failed with the year, and Cook became a bookkeeper in a local hotel. In 1839, the E.W. Clark & Company – which was a brokerage and banking company (and one of the largest private banking firms in the nation) – hired Cooke. He found his niche, quickly advancing through the ranks of the company and becoming a partner by 1842. The company was a successful one, providing financing for the newest boom in transportation – the railroads – as well as arranging to loan the federal government money to finance the Mexican War. By the time Cooke was thirty he was also a partner in Calrk & Company’s New York and St. Louis branches.

The Panic of 1857 would cause Clark & Company to suffer, but Cook – through a finely developed business acumen and wise management of his investments - emerged from that Panic a wealthy man. He retired from the firm in 1858, and would spend his time reorganizing abandoned railways and canals in Pennsylvania, putting them back in operation.

The Civil War was beginning to brew when the private banking house of Jay Cooke & Company opened in Philadelphia on January 1, 1861. It quickly established itself as an economic force to be reckoned with when it quickly floated a war loan of three million dollars for the state of Pennsylvania. The nations leaders, facing what they knew would become a costly civil war, quickly approached Cooke. Union Secretary of State Salmon P. Chase met with Cook in the early months of the war to discuss loans. Cooke quickly arranged loans from the leading bankers in the Northern states, and his own firm was extremely successful in distributing Union Treasury notes. Cooke was rewarded for his efforts by being engaged as a special agent for the sale of $500,000,000 of “five-twenty” government bonds that were authorized for sale in February 1862.

Cooke was so successful at arranging the sale of these bonds – which had not done well before Cooke came on the scene – that he actually sold eleven million dollars more than he was authorized. The Congress quickly sanctioned the sales. Thanks to Cooke’s efforts on this and other loan drives, Union soldiers were supplied and paid regularly.

As the Civil War moved toward its conclusion, Cooke became interested in the development of the American Northwest. In 1870 Cooke & Company financed the construction of the Northern Pacific Railway, hoping to create a transportation route that would bring the raw materials and produce from the West to Duluth, Minnesota – then shipped through the Great Lakes to markets in Europe. Unfortunately, the project was not as successful as Cooke had hoped. Competition with the Union Pacific drove shipping rates down so far that the railroads lost money. Since many investors – including Cooke - speculated on railroad stocks, the market lost faith in railroads. When Cook & Company closed its doors on September 18, 1873, it started the Panic of 1873.

The man who had financed the Union in the Civil War soon found his company foundering. The company did collapse, but thanks to investments in a silver mine in Utah, Cooke was able to pay off all of his creditors and regain his wealth by 1880.

Cooke died at the age of 83 on February 8, 1905, and is buried in the St. Paul's Episcopal Church Cemetery, Montgomery County, Pennsylvania.

Cooke was noted for his piety and as an Episcopalian regularly gave a tenth of his income for religious and charitable purposes. He overcame difficulties throughout his life, including bankruptcy, in order to become one of the noted financiers of the day.

LOCAL LIBRARY RESOURCES:

Our local library has no biography on Jay Cooke

WEB RESOURCES:

1911 Encyclopedia
Biography from Answers
Find A Grave
Ohio History Central
Ohio State University
Wikipedia

PHOTO SOURCES:

01. Portrait, Tax History Museum
02. Portrait as a young man, Ohio State University, Cooke Collection
03. Portrait of Jay Cooke, Ohio State University, Cooke Collection
04. Cooke tomb, Find A Grave by Thomas Fisher
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