Page 20 - John Anderson

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Jay Cooke founded the bank in 1861 with William E.C. Moorhead,
split two-thirds to one-third. During the American 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.
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 telegraphs to confirm sales
allowed selling throughout the country to be coordinated in
Philadelphia.
At the close of the Civil War, Cooke & Company continued to fund its
investments through the sale of US treasuries. After the “Black
Friday” scare, however, it became apparent that Cooke & Company
would have to find other sources of capital. The firm turned to
investing in railroads. In 1870, the Northern Pacific Railroad made
Cooke & Company its exclusive bond agent. But Cooke had difficulty
marketing the bonds to investors; wound up owning 75 percent of the

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