CIVIL WAR AND RECONSTRUCTION: THE MAKING OF MODERN AMERICA
Series One: The Papers of Jay Cooke (1821-1905) from the Historical Society of Pennsylvania
Part 4: General Correspondence, May 1870-December 1871
Editorial Introduction by Mark W Summers,
Professor of History at University of Kentucky at Lexington
No study of politics or finance in Civil War America would be complete without Jay Cooke's papers. The leading banker of his day, Cooke managed to involve himself in just about everything: from the endowment of churches and charities to the building of railroads and the sale of securities. Because of his Philadelphia banking house, the United States was able to market the bonds that paid for the Union war effort; the Northern Pacific railroad was begun, from Lake Superior to the Pacific Northwest; and Minnesota and the Dakotas were opened for white settlement. Because of his speculative schemes, the Freedman's Savings Bank was gutted and Wall Street was thrown into a panic, from which it took six years to recover. Because of his family's political involvement, the District of Columbia went on a spending spree that led to its bankruptcy and the loss of self-government.
Best of all for historian's purposes, he kept his correspondence. Because the House of Cooke had branches in New York and Washington manned by Jay's brothers Henry and Pitt, foreign emissaries, and countless informants, the Jay Cooke Papers include a wealth of material from the financial and political centers of Gilded Age America. Because U S bond prices depended on government policy and the Northern Pacific needed public aid and protection, Cooke carried on a constant interchange with well-placed public officials and lobbyists about what Congress or state officials were going to do. Thus, one might find inside reports on the Presidential impeachment trial in 1868, the prospects for a coup d'etat in 1866, the outcome of the New Hampshire state elections in 1872, and the progress of bills on the House floor in 1870. Few sources give a clearer picture of the financial policy of the Grant Administration, or the methods lobbyists used to win congressmen and influence newspaper reporters.
Whether the subject is the day-to-day construction of the Northern Pacific, its branches and rivals, the Alabama claims, the manipulation of land titles, the opening of Indian territory to white encroachment, the war effort, religious philanthropy, campaign finance, or lobbying in general, Cooke's papers provide an indispensable source. Among the correspondents are William E Chandler, Treasury official, Republican operative, and paid lobbyist for Cooke's interests; Salmon P Chase, Lincoln's Secretary of the Treasury and Chief Justice of the Supreme Court; Robert Schenck, head of the House Ways and Means Committee and - thanks to the well-documented lobbying of the Cooke's - Minister to England; Vice President Schulyer Colfax, shill for the Cooke's railroad schemes; Ignatius Donnelly, lobbyist and later crusader against the railroads; and a host of small-fry, less known to history but so well-placed in politics that their observations and political influence were invaluable.
Jay Cooke was America's great financier during the Civil War and the economic boom that followed - so influential that his failure brought on the Panic of 1873 and threw the country into a lasting depression. The collection contains 106 boxes of correspondence with influential figures from the period 1842-1880, but concentrates on the years 1860-1874, with particular strength from late 1867 to late 1873. Even during the Civil War years, there are some three or four boxes of correspondence for each year.
The correspondents include a relatively small number of highly-placed, influential figures, among them the three Cooke brothers and their financial partner H C Fahnestock. Jay Cooke controlled the banking house in Philadelphia, Henry the Washington DC branch, and his brother Pitt the New York firm. They wrote each other frankly, comprehensively and regularly - indeed in the early 1870's as often as once a day; Jay saved copies of his own letters, as well as his brothers'. Together, they form a remarkable picture of financial conditions in America, and of the rivalries with other American and British banking houses, not to mention the methods used to make public officials do right by the Cookes.
During the Civil War, the letters tell much about how the Union financed its efforts. The postwar correspondence provides revealing source material on:
- banking and bond: market business
- westward expansion
- railroad construction, especially in the Old Northwest
- political and economic trends
- public ethics in ‘the Era of Good Stealing’
- church and civic affairs
Some letters of Henry D Cooke relate to his enterprises in Western mines, lands and shipping.
There are also letterbooks of Jay Cooke, 1870-1873; newspaper clippings, 1865-1901; and family letters and papers.
Starting in 1839, Jay Cooke worked for the banking house of E W Clark & Co. Leaving it in 1857 to set up on his own, he formed a partnership, Jay Cooke & Co four years later. When the government found itself unable to sell its bond-issues to support the Union war effort, Cooke's house stepped in and made a spectacular success of it. From then on, the Cookes became indispensable for the Treasury's money-raising. Out of this partnership of bankers and public officials came a close relationship, political as well as financial, with Secretary of the Treasury Salmon P Chase and his successors Hugh McCulloch and George S Boutwell. Up to 1873, no US bond issue could take place without consulting the Cookes, and always they had a share in setting the terms and arranging the sale.
Necessarily, the relationship relied on close political connections with whatever Administration happened to be in power, and deep involvement in legislation and in partisan politics. The Cookes helped fill Republican party coffers, put prominent officeholders on their payrolls, and used their business connections to bestow favors and loans on high-placed figures who could do them service. For political as well as economic reasons, Jay Cooke & Co opened branch offices in New York and Washington, and put McCulloch in charge of their London branch when it opened in 1870. As head of the Washington branch, Henry handled much of the lobbying and applied the social skills the firm's success required. His money and political involvement helped keep Republicans in charge of the District of Columbia's city government. President Ulysses S Grant made him governor of the District.
The Cooke's shift from banking to speculation and promotion, typical of the postwar ‘boom’ atmosphere, led to their ill-fated involvement in the subsidy and construction of the Northern Pacific Railroad in the early 1870s. It was more than the house could bear, and on September 18, 1873, it closed its doors, creating a panic that brought down hundreds of other firms as well. Amid the financial wreckage, many reputations were lost - including those of politicians involved in some of the Cooke's more desperate schemes.
Jay Cooke did recover. Later he regained his estates. Fortunate investments in mines in Utah restored much of his income, but he never again wielded the political and financial influence he had in the Civil War years.