Jay Cooke & Company was a U.S. bank that operated from 1861 to 1873. Headquartered in Philadelphia, Pennsylvania, with branches in New York City and Washington, D.C.,[1] the bank helped underwrite the Union Civil War effort. It was the first "wire" brokerage house, pioneering the use of telegraph messages to confirm securities transactions with clients.[2] The bank became overextended in the building of the Northern Pacific Railway and failed, contributing to the Panic of 1873.
History
Early years
Jay Cooke founded the bank in 1861 with William E. C. Moorhead, the ownership split two-thirds to one-third. Later partners included Cooke's brothers, Henry and Pitt, then H. C. Fahnestock and Edward Dodge, who held the bank's seat on the New York Stock Exchange after 1870.[3]
During the Civil War, Cooke & Company sold hundreds of millions of dollars in Union government bonds. Its reputation among investors around the world enabled the bank to sell these bonds when other brokerages could not.[4] Secretary of the Treasury Salmon Chase asked Cooke to try to sell the government's new $500 million issue of 5–20 bonds. These paid six percent interest (in gold) and matured in 20 years, but were callable in five years. Cooke used numerous agents from a variety of professions—small bankers, insurance agents, and real estate professionals—to sell these bonds to support the Union war effort. Cooke & Company's innovative use of the telegraph to confirm sales allowed selling throughout the country to be coordinated in Philadelphia.[5]
External links
- Jay Cooke & Company Records at Baker Library Historical Society, Harvard Business School
References
- Clinton A. Snowden. History of Washington The Century history company, 1909^
- Charles R. Geisst. Wall Street: A History: from Its Beginnings to the Fall of Enron Oxford University Press, 2005^
- Charles R. Geisst. The Last Partnerships McGraw-Hill Professional, 2001