The Financier

remained was the finances of peace, and the greatest things in American financial enterprise were those related to the construction of transcontinental railway lines. The Union Pacific, authorized in 1860, was already building; the Northern Pacific and the Southern Pacific were already dreams in various pioneer minds. The great thing was to connect the Atlantic and the Pacific by steel, to bind up the territorially perfected and newly solidified Union, or to enter upon some vast project of mining, of which gold and silver were the most important. Actually railway-building was the most significant of all, and railroad stocks were far and away the most valuable and important on every exchange in America. Here in Philadelphia, New York Central, Rock Island, Wabash, Central Pacific, St. Paul, Hannibal & St. Joseph, Union Pacific, and Ohio & Mississippi were freely traded in. There were men who were getting rich and famous out of handling these things; and such towering figures as Cornelius Vanderbilt, Jay Gould, Daniel Drew, James Fish, and others in the East, and Fair, Crocker, W. R. Hearst, and Collis P. Huntington, in the West, were already raising their heads like vast mountains in connection with these enterprises. Among those who dreamed most ardently on this score was Jay Cooke, who without the wolfish cunning of a Gould or the practical knowledge of a Vanderbilt, was ambitious to thread the northern reaches of America with a band of steel which should be a permanent memorial to his name.

The project which fascinated him most was one that related to the development of the territory then lying almost unexplored between the extreme western shore of Lake Superior, where Duluth now stands, and that portion of the Pacific Ocean into which the Columbia River empties⁠—the extreme northern one-third of the United States. Here, if a railroad were built, would spring up great cities and prosperous towns. There were, it was suspected, mines of various metals in the region of the Rockies which this railroad would traverse, and untold wealth to be reaped from the fertile corn and wheat lands. Products brought only so far east as Duluth could then be shipped to the Atlantic, via the Great Lakes and the Erie Canal, at a greatly reduced cost. It was a vision of empire, not unlike the Panama Canal project of the same period, and one that bade fair apparently to be as useful to humanity. It had aroused the interest and enthusiasm of Cooke. Because of the fact that the government had made a grant of vast areas of land on either side of the proposed track to the corporation that should seriously undertake it and complete it within a reasonable number of years, and because of the opportunity it gave him of remaining a distinguished public figure, he had eventually shouldered the project. It was open to many objections and criticisms; but the genius which had been sufficient to finance the Civil War was considered sufficient to finance the Northern Pacific Railroad. Cooke undertook it with the idea of being able to put the merits of the proposition before the people direct⁠—not through the agency of any great financial corporation⁠—and of selling to the butcher, the baker, and the candlestick-maker the stock or shares that he wished to dispose of.

It was a brilliant chance. His genius had worked out the sale of great government loans during the Civil War to the people direct in this fashion. Why not Northern Pacific certificates? For several years he conducted a pyrotechnic campaign, surveying the territory in question, organizing great railway-construction corps, building hundreds of miles of track under most trying conditions, and selling great blocks of his stock, on which interest of a certain percentage was guaranteed. If it had not been that he knew little of railroad-building, personally, and that the project was so vast that it could not well be encompassed by one man, even so great a man it might have proved successful, as under subsequent management it did. However, hard times, the war between France and Germany, which tied up European capital for the time being and made it indifferent to American projects, envy, calumny, a certain percentage of mismanagement, all conspired to wreck it. On September 18, 1873, at twelve-fifteen noon, Jay Cooke & Co. failed for approximately eight million dollars and the Northern Pacific for all that had been invested in it⁠—some fifty million dollars more.

One can imagine what the result was⁠—the most important financier and the most distinguished railway enterprise collapsing at one and the same time. “A financial thunderclap in a clear sky,” said the Philadelphia Press. “No one could have been more surprised,” said the Philadelphia Inquirer, “if snow had fallen amid the sunshine of a summer noon.” The public, which by Cooke’s previous tremendous success had been lulled into believing him invincible, could not understand it. It was beyond belief. Jay Cooke fail? Impossible, or anything connected with him. Nevertheless, he had failed; and the New York Stock Exchange, after witnessing a number of crashes immediately afterward, closed for eight days. The Lake Shore Railroad failed to pay a call-loan of one million seven hundred and fifty thousand dollars; and the Union Trust Company, allied to the Vanderbilt interests, closed its doors after withstanding a prolonged run. The National Trust Company of New York had eight hundred thousand dollars of government securities in its vaults, but not a dollar could be borrowed upon them; and it suspended. Suspicion was universal, rumor affected everyone.

In Philadelphia, when the news reached the stock exchange, it came first in the form of a brief despatch addressed to the stock board from the New York Stock Exchange⁠—“Rumor on street of failure of Jay Cooke & Co. Answer.” It was not believed, and so not replied to. Nothing was thought of it. The world of brokers paid scarcely any attention to it. Cowperwood, who had followed the fortunes of Jay Cooke & Co. with considerable suspicion of its president’s brilliant theory of vending his