Cooke's Crash

JAY COOKE--Henrietta M. Larson-- Harvard University Press ($5).

In the early days of the Civil War, when Jay Cooke was a pious, 40-year-old, moderately successful Philadelphia banker, he wrote a frantic appeal to his brother in Columbus, Ohio: "I see Chase is in the Treasy, & now what is to be done--can't you . . . open a Banking house in Washn & be something respectable--or at least can't you inaugurate something whereby we can all safely make some Cash?" Unaware at that point were the Cooke brothers that they were about to become the greatest bankers in the country, to finance the greatest industrial enterprise in U. S. history up to that time (Northern Pacific), to fail with the greatest crash then on record. A blue-eyed, energetic Episcopalian whose only frivolity was playing his flute, Jay Cooke was born in Sandusky, Ohio in 1821, grew up in a hot Abolitionist country, served his apprenticeship in St. Louis, got into Philadelphia banking at the age of 18. Since his marriage in 1844 was happy, his prudent investments in railroads and Western lands profitable, his early career was so unexciting that it appears in his biography as little more than a record of the jobs he held.

By the middle of 1861 the Treasury was having difficulty in selling Government securities. Cooke blandly sent a letter to Secretary of the Treasury Salmon Portland Chase, suggesting that he be made special agent to handle them, although he had only a small organization. With healthy caution, Cooke did not write letters directly to Washington officials. He sent them to his brother, who personally read them to the official concerned. For a number of reasons--including the failure of banks to handle the loans, bad set-backs to the Northern cause, the danger of war with England, as well as Cooke's previous small success in selling securities directly to the public--Chase abruptly gave Cooke the commission. Thereupon the banker was galvanized into activity that was as undignified as it was successful. With 2,500 agents in the field, heavy advertising appropriations (bankers had previously received $150 each for advertising Government issues) Cooke sold notes to small investors, filled the papers with patriotic appeals, plastered the country with flamboyant posters, inaugurating modern methods of high-pressure salesmanship. He kept the agencies open at night, serving coffee and doughnuts free to the customers.

Making no dramatic capital of violent ups and downs of Jay Cooke's career, Dr. Henrietta Larson writes matter-of-factly about his dubious banking policies, learnedly about the condition of U. S. banking in his time, describing his major financial maneuvers in detail that will probably seem tiresomely academic to all save academicians. Readers who have been following the recent crash disclosures of the corruption in Grant's Administration will find further confirmation in Jay Cooke, with its accounts of the ceaseless "attending to" of prominent officials, James G. Elaine's request that Cooke bribe him for something, Ben Butler's loud outcry that he had been overlooked in the distribution of hush money. But all Cooke's salting of Congressmen did not help him when the Northern Pacific got into difficulties, dragged his house down in the panic of 1873. He tried to repeat his tactics with Government bonds in selling Northern Pacific securities, overpublicized the road so greatly that his advertisements of Northwest riches became a National joke.

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