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Jay Cooke
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Jay Cooke (August 10, 1821-February 8, 1905), American financier, was born at Sandusky, Ohio, the son of Eleutheros Cooke (1787-1864), a pioneer Ohio lawyer and Whig member of Congress from that state in 1831-1833 and member of the Ohio General Assembly.
Jay Cooke received a preliminary training in a trading house in St. Louis, Missouri, and in the booking office of a transportation company in Philadelphia. At the age of eighteen, he entered the Philadelphia house of E.W.
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Jay Cooke (August 10, 1821-February 8, 1905), American financier, was born at Sandusky, Ohio, the son of Eleutheros Cooke (1787-1864), a pioneer Ohio lawyer and Whig member of Congress from that state in 1831-1833 and member of the Ohio General Assembly.
Jay Cooke received a preliminary training in a trading house in St. Louis, Missouri, and in the booking office of a transportation company in Philadelphia. At the age of eighteen, he entered the Philadelphia house of E.W. Clark & Company, one of the largest private banks in the country. Three years later, he was admitted to membership in the firm and, before the age of 30, was also a partner in the New York City and St. Louis branches of the Clarks.
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 Railroads
In 1858, he retired from the firm, and, for the next three years, he devoted himself to reorganizing abandoned Pennsylvania railways and canals and placing them again in operation. On January 1, 1861, he opened the private banking house of Jay Cooke & Company in Philadelphia and quickly floated a war loan of $3,000,000 for the state of Pennsylvania.
Financier of the Civil War
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 secured the influence of the American press, appointed 2,500 sub-agents, and 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)
Radical Republicans
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.
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 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. 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 (Baron Mount Stephen) and Douglas Smith (Lord Strathcona) who then finished building the Canadian Pacific Railway.
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 Ogontz, Pennsylvania, on February 8, 1905.
Philanthropy
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.
Honor
Cooke's legacy is honored in the name of Jay Cooke State Park, a large state park located near Duluth in the state of 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.
Further reading
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