Jay Cooke American financier Date of Birth: 10.08.1821 Country: USA

1. Biography of Jay Cooke
2. Early Career and Financial Support for the Union
3. National Banks and the '7-30s'
4. Investment in the Northern Pacific Railway
5. Later Years

Biography of Jay Cooke

Jay Cooke, an American financier, was born on August 10, 1821, in Sandusky, Ohio. He was the son of one of the first lawyers in the state of Ohio and a member of the Whig Party.

Early Career and Financial Support for the Union

On January 1, 1861, just a few months before the Civil War began, Cooke opened his private banking firm, 'Jay Cooke & Company', in Philadelphia. During the early months of the war, Cooke worked with Secretary of the Treasury Salmon P. Chase to secure loans from leading bankers in the northern states. His firm was so successful in supporting the treasury that Chase hired him as a special agent to sell $500 million worth of long-term bonds called '5-20s', which the Treasury had been unable to circulate. Cooke received a commission of 0.5% on the first $10 million in sales and 0.375% on subsequent bond sales. He launched a nationwide campaign and recruited around 2,500 sub-agents who traveled through the northern, western, and southern states as they came under Union control. Cooke also gained the support of newspapers and placed advertisements through advertising agencies, often working directly with editors. He wrote articles on the advantages of purchasing government bonds, and all his efforts, articles, pamphlets, and advertising brochures were aimed at appealing to the patriotism of Americans. Jay emphasized that buying bonds would not only provide citizens with future profits but also help the Union win the war.

National Banks and the '7-30s'

After successfully completing this task, Cooke played a role in the creation of national banks and organized one in Washington and another in Philadelphia. When national banks faced disappointing sales of the '7-30' long-term bonds, the government once again turned to Cooke for assistance. He used a proven strategy, and his tactics of price stabilization are still used by investment bankers in carrying out IPOs today.

Investment in the Northern Pacific Railway

With the end of the war, Cooke became interested in the development of the Northwest and in 1870, he began financing the construction of the Northern Pacific Railway. He fell in love with Duluth, Minnesota, and aimed to turn it into a new Chicago. He started to realize his dream of having railroads that reached the Pacific coast pass through Duluth and lead to the Great Lakes system and European markets. However, his firm overestimated its capabilities. Ultimately, the stock market crash of 1873 forced Cooke to freeze his project, and he declared bankruptcy. George Stephen and Donald Smith acquired the company's shares at a bargain and later completed the construction of the Canadian Pacific Railway.

Later Years

When 'Jay Cooke & Company' collapsed, Cooke's relative, Charles D. Barney, led the program to reorganize the firm, which eventually became known as 'Chas. D. Barney & Co'. Cooke's son, Jay Cooke Jr., joined the new firm as a minority partner. By the 1880s, Jay Cooke had regained his fortune through successful investments in a silver mine in Utah. He passed away on February 16, 1905. His summer house, built between 1864 and 1865, still stands on a small island in the Gibraltar Harbor of Lake Erie in Put-in-Bay, Ohio. The lake served as Commodore Oliver Perry's observation point during the Battle of Lake Erie in 1813.