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Where the Civil War was Financed

Jay Cooke (August 10, 1821 – February 16, 1905) was an American financier. Cooke and his firm Jay Cooke & Company were most notable for their role in financing the Union's war effort during the American Civil War. In his later career, Cooke was noted for his role in the financing of railroads in the northwestern United States.

On January 1, 1861, just months before the start of the American Civil War, Cooke opened the private banking house of Jay Cooke & Company in Philadelphia. Soon after the war began, the new firm floated a war loan of $3,000,000 for the state of Pennsylvania.

In the early months of the American Civil War, Cooke collaborated with the secretary of the treasury Salmon P. Chase in securing loans from the leading bankers in the Northern cities; his own firm was so successful in distributing treasury notes that Chase engaged him as special agent for the sale of the $500,000,000 of so-called "five-twenty" bonds—which were callable in 5 years and matured in 20 years—authorized by Congress on February 25, 1862. The treasury department had previously failed in selling these bonds. (Cooke and his brother a newspaper editor had helped Chase get his job by lobbying for him, even though all were former Democrats.)

Cooke was granted a commission of one half of 1 percent of the revenue generated from the first $10 million worth of bonds, and three-eighths percent of all subsequent bond sales. With these funds, Cooke financed a nationwide bond-marketing campaign. Cooke appointed approximately 2,500 sub-agents who traveled through every northern and western state and territory, as well as the Southern states as they came under control of the Union Army. In addition to his far-reaching band of agents, Cooke secured the support of most Northern newspapers. He not only purchased ads through advertising agencies, but often worked directly with editors who were willing to feature lengthy articles extolling the virtues of buying government bonds. In his effort to drum up a popular market for the bonds, Cooke heralded a particular type of patriotism based on classical liberalist notions of self-interest. His editorials, articles, handbills, circulars, and signs most often appealed to Americans' desire to turn a profit, while simultaneously aiding the war effort.

Cooke quickly sold $11,000,000 more in bonds than had been authorized. Congress immediately sanctioned the excess. At the same time, Cooke influenced the establishment of national banks, and organized a national bank at Washington and another at Philadelphia almost as quickly as Congress could authorize the institutions.

Source: "Jay Cooke,"

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Record Details

Title: Where the Civil War was Financed


Drawn by Frank H. Taylor

Caption with print: Jay Cooke was a young banker from Ohio connected, in 1861, with a prominent banking house in Philadelphia. When the national government required vast sums to put and keep the Union forces in the field, he was among the first to respond. He located in the building Third Street, adjoining the Girard Bank, and organized the greatest advertising campaign ever known. Thoughout the war his agents scoured the entire north. He was able to supply the Federal cause, through those historic years, with money to the total of $1,500,000,000, at the rate of four and one-half per cent interest. For this service his firm was paid about one-sixteenth of one per cent.

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