THE LAST PARTNERSHIPS Inside the Great Wall Street Money Dynasties phần 2 doc

was the most daunting of the nineteenth century. Cooke was born

August 10, 1821, in Sandusky, Ohio, to Eleutheros Cooke and Martha

Carswell. The original Cookes emigrated to America from Britain

in 1638 and settled in Massachusetts. Cooke later recalled that his

father named him Jay, after Chief Justice of the Supreme Court John

Jay, for a very specific reason. Eleutheros believed that his long first

name had cost him an election to the Ohio legislature because voters

could not fit his name on the write-in ballot. Determined that the

same fate should not befall his progeny, he gave them relatively short,

and sometimes historical, first names. Jay’s older brother was named

Pitt and his younger brother Henry. Two other offspring died early—

Eleutheros Jr. and Catherine. Originally, he proposed to call Henry

“Fox” instead, after Charles James Fox, a popular British politician at

the time. But his mother created such a fuss about a child being

named after a British statesman that Eleutheros relented and settled

on Henry, in keeping with the strong family tradition of fierce Amer￾ican independence. The family had a long record of military service in

the Revolutionary War and the War of 1812. The Carswells had a sim￾ilar history. Martha Carswell’s father was a prisoner of the British in

Canada during the War of 1812, so her fondness for the mother coun￾try was somewhat limited.7 Eleutheros Cooke went on to become a

member of the Ohio legislature and eventually the House of Repre￾sentatives. He was a member of the House when Jackson effectively

dissolved the second Bank of the United States.

Jay Cooke joined Clark and Dodge in 1839, being invited to join by

a friend working for the firm. Within a year, he had already made

his mark as a valued employee, being referred to as the “counterfeit

clerk.” Like Clark before him, he had become expert in detecting

bogus banknotes, and his keen eye made him invaluable to Clark

Dodge almost from the outset. He also took up a part-time journalism

career. The editor of the Daily Chronicle, a Philadelphia newspaper,

invited him to write a daily money market column for the paper,

which he did gladly. He wrote mainly about the condition of the bond

markets along the East Coast and on conditions in the exchange mar￾ket. Although the enterprise gave Clark Dodge good exposure in the

market, Cooke gave up the effort after a year because it was consum￾ing too much of his time. The experience did, however, mark him as

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one of the first financiers to display a journalistic flair—a trait that

many others would pursue part-time after the Civil War with greater

fanfare.

During his early retirement from Clark Dodge after Enoch Clark

died, Cooke busied himself with occasional railroad financing and

looking after his own private affairs. He kept a desk at his old firm so

that he would not be totally divorced from the banking business. The

late 1850s proved to the last period of railroad expansion, because the

Civil War would soon intervene, putting most projects on indefinite

hold. When South Carolina seceded from the Union, Cooke rapidly

decided to form his own firm and return to what he knew best—

raising bond issues for government bodies. He founded Jay Cooke &

Co. when he was only thirty-nine. Although Cooke worked for Clark

Dodge and the firm became well known on Wall Street, Cooke

remained a Philadelphia banker for his entire career.8 His flair for

financing and his strong patriotic bent made him a natural to raise

money when it was becoming more and more difficult to find. The

war scared away many of the traditional foreign investors, and Cooke

realized that the funds would have to be raised mainly from domestic

investors.

Opportunity came when Pennsylvania needed funds at the outset

of the war. The job was not easy, for Cooke or anyone else. Pennsyl￾vania had been one of a handful of states that defaulted on its debt in

the municipal bond crisis that roiled the markets when the second

Bank of the United States failed, causing the Panic of 1837. In the

interim, its reputation had not improved. One British writer sarcas￾tically wrote before the Civil War, “We all know the Americans

can fight. Nobody doubts their courage. I see now in my mind’s eye

a whole army on the plains of Pennsylvania in battle array, immense

corps of insolvent light infantry, regiments of heavy horse debtors,

battalions of repudiators, brigades of bankrupts with Vivre sans payer

ou mourir on their banners.”9 Clearly, money for the Union war effort

would not be coming from Britain. Some British newspapers even

suggested that the Confederacy had as much right to secede as the

original thirteen colonies had years before. But Jay Cooke’s genius for

raising funds won the day. It also gave a new twist to the term “Yankee

banker.”

The Yankee Banking Houses: Clark Dodge and Jay Cooke

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Pennsylvania commissioned him to raise a bond of $3 million, not

an easy task for a state already in debt by more than $40 million.

Pennsylvania needed the money to defend its southern border against

attack. It named Drexel & Co., a well-established Philadelphia bank￾ing house, and Cooke as agents for the issue. (Drexel was to become

a familiar name in investment banking over the next century and a

quarter, especially when the young J. P. Morgan took an interest in

the firm after the Civil War.) Being joint agents raised eyebrows in

some quarters, because Cooke was new to the banking scene as an

independent although his reputation at Clark Dodge preceded him.

He organized a massive selling effort. The bond was oversubscribed

and rated a great success. No stranger to advertising and a bit of self￾promotion, Cooke then turned and sent the list of subscribers to all

the major newspapers in the country. He even sent a list by post to

Jefferson Davis in Richmond to show that the population of the North

was fully behind the effort. Individuals and banks on the subscribers’

list included all of the major banks in Pennsylvania, Drexel and Jay

Cooke & Co. themselves, as well as F. A. Muhlenberg Jr., the son of

the first Speaker of the House of Representatives. Cooke found that

patriotism sold well in Pennsylvania. A precedent had been estab￾lished for the next round of fund-raising for Washington.

Salmon Chase was Secretary of the Treasury in the Lincoln admin￾istration, charged with raising money for the war effort. Cooke trav￾eled to Washington, hoping to become involved in the financing

effort. His brother Henry, previously the editor of the Ohio State

Journal in Columbus, offered to introduce him to Chase. Cooke

seized the opportunity to meet the secretary. In 1861, he participated

in a small part of a Treasury issue that was not going well and suc￾ceeded in selling it. The way was now paved for further participation,

but it was certainly not automatic. Cooke took it upon himself to

gather subscriptions for Treasury bonds and then hand them to

Salmon Chase, who could not but take notice of the Philadelphia

banker’s dexterity in raising subscriptions so easily. But Cooke was

sure to tell Chase at every opportunity that he was doing it at no com￾mission for himself.

The same was not true of the rest of the Treasury bond offerings

that Cooke helped sell to the public. Chase was duly impressed with

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Cooke’s ability to sell public debt and enlisted him to participate in

future offerings, which grew larger and larger as the war dragged on.

Chase offered Cooke a job in the Treasury as an undersecretary, but

he refused it after some serious thought. Cooke clearly thought that

the best way to serve his country was by selling as many bonds as

possible, not by becoming a bureaucrat tied to Washington. He con￾tinued to gather subscriptions nevertheless. The Treasury’s tenuous

position and Cooke’s rising importance were evident in the aftermath

of the Battle of Bull Run. Sounds of the battle could easily be heard

in Washington itself, but the city was stunned by the unexpected news

that the Union army had been routed and was in disarray. Fearing

that Confederates would overrun the city in the near future, Cooke

became even more intent on raising as much money as the govern￾ment needed to defeat the rebels. He opened an office in Washington

and, upon hearing of the rout, began to make the rounds of the banks

in Washington to line up even more potential subscriptions. His forti￾tude and determination began to show in what he considered his

patriotic duty to defend the Union. Naturally, there was also a finan￾cial side. Some of this fund-raising would have to repay the tireless

efforts of the fund-raisers themselves.

Cooke’s role in the Civil War financings became a model for

bankers of the future, who would use it to become even more suc￾cessful in their own right. One was J. Pierpont Morgan, who would

note the adulation that Cooke received because of his closeness with

Salmon Chase and the indefatigable effort he put into selling bonds

nationwide. In fact, Morgan would eventually try to capture the mar￾ket for Treasury bonds from Cooke’s houses after 1865.10 But the

road to Chase’s heart—and the Treasury’s pockets—was not easily

traveled. Chase was a conservative, hard-money man who accepted

change only when forced to do so. The Battle of Bull Run became

the lightning rod for change in the Lincoln administration and for

Cooke’s own personal fortune. Chase packed off for New York to

raise a new bond issue of $50 million, dubbed “the 5-20s” (an early

callable bond issue). He asked Cooke to accompany him, to fortify

him, when he asked the New York banks for such a large sum. Cooke

did accompany him, and the money was raised after some initial

arm-twisting. Among the participants were Clark Dodge; Fisk &

The Yankee Banking Houses: Clark Dodge and Jay Cooke

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