Looking for an unsung hero of the US Civil War? You could do much worse than picking Jay Cooke.
Jay Cooke was what we would now call an investment banker.. He had made quite the name for himself selling all types of securities but especially state bonds---his
Cooke did things differently than most bankers at the time. Whether by necessity or plan, he marketed his securities directly to the people. Additionally he played on not only their desire for a good deal, but their patriotism.
For instance, a typical advertisement that he ran in newspapers:
“…independent of any motives of patriotism, there is considerations of self-interest which may be considers in reference to this Loan. It is a six percent loan free of any taxation”
While his pre-war career had been successful, he should be most remembered for his work during the Civil War. Starting in 1862 (after the
The details of his sales are fascinating. His place in history is guaranteed for his paving the way for future generations of “war bonds” and helping to open the world of finance to a much broader audience—a fact that during the later 1800s the railroads would use to their advantage). To help make these bonds available to the general public, he made bonds available in with par values as low as $50 and instructed his network of offices to remain open well into the evening so that the “working man” could invest after work.
It should be noted that these were not just “plain vanilla” bonds. He was selling debt that was callable and had a longer maturity (up to 20 years) than most debt of the day.
But that is not all; he also ran what some consider to be the first “wire house” whereby his firm used telegraphs to sell securities throughout the North from their office in
And even after the actual fighting ended (a time when the Union needed millions of dollars to help rebuild) he kept at his original ways (which angered the more traditional bankers) and now gets credit for initiating price stabilization (a practice whereby the investment banking syndicate enters the secondary market and helps to stabilize the price of the security they just helped to sell to the public).
There is today a middle school named after Cooke in Philadelphia.
Source: Wall Street: a History From Its Beginnings to the Fall of Enron, by Charles R. Geisst, pp. 49-58.