Cooke’s Duluth Investments
After Stuntz convinced Cooke to make Duluth the terminus of his railroad (and after St. Louis County came up with more cash than Wisconsin’s Douglas County), Duluth was revived, as Walter Van Brunt described it so poetically: “A glorious resurrection took place; the lifeless corpse [of Duluth], touched by the wand of Jay Cooke, sprang full-armed from the tomb.” That wand was more like a wad of cash, and most of the money Cooke’s spread around Duluth would be spent by his representatives.
In May, 1869, George Sargent moved to Duluth, bringing with him “funds furnished by E. W. Clark and Company, bankers in Philadelphia, and by Jay Cooke and Company, to build the Clark House, the Bay View House, and the Episcopal Church.” Van Brunt, who called Sargent “the Napoleon of the Northwest,” wrote that the former Civil War general “marched up Minnesota Point on an Indian trail to where the Hayes Block now stands, took another trail, leading westerly, on the exact line of what is now Superior Street, and the next day purchased $30,000 worth of real estate from William Nettleton.”
Sargent used more of Cooke’s and Clark’s money to establish the first bank in Duluth. “Jay Cooke’s Bank” as it was often referred to, was run by George C. Stone, another of Cooke’s “Philadelphia Men.” Cooke also invested heavily in the Union Improvement and Elevator Co., which built Duluth’s first grain elevator at the terminus of his Lake Superior & Mississippi Railroad at the base of Third Avenue West. He then installed one of his Philadelphia agents, George C. Thomas, as the company’s president.
Cooke also played a heavy role in shaping the future of journalism in Duluth by luring Robert Mitchell of the Superior Tribune across the bay to supplant Dr. Thomas Foster’s Minnesotian. According to Mitchell, “the leading citizens of Duluth, who…had helped Dr. Thomas Foster to establish his paper, the Minnesotian, here, had become very tired of him, as he had become too arrogant and dictatorial and entirely too obstreperous to suit the people of the then-booming city, and they concluded that they must and would have another paper.”
One of those men, Colonel J. B. Culver, asked Cooke to send someone from the east to establish a newspaper in Duluth. Cooke knew of no one to recommend, but he had been reading Mitchell’s work in the Tribune in his offices in Philadelphia. Cooke had noticed that Mitchell “had been giving the people of [Superior] some pretty good advice, and that he seemed to understand the situation at the head of the lakes pretty well, and suggested that if that editor was all right, as a man, it might be a good stroke to import him to run their proposed newspaper.”
And so they did. Mitchell moved across the bay in April, 1870, and wrote later that “his decision incensed the people of Superior, owing to the intensely bitter feeling then existing there towards Duluth; in those days the man from Superior who would cast his lot with Duluth was regarded as a traitor to Superior.” Foster wasn’t too pleased himself, and after Mitchell’s relocation referred to Culver and other Duluth civic leaders as “The Ring” and the Duluth Tribune its “organ” and “pet.”
Cooke invested in many other ventures in Duluth, and his Lake Superior & Mississippi Railroad even helped finance the digging of Duluth’s Ship Canal. But not all of Cooke’s Duluth investments were in business ventures or infrastructure improvements. As a devout Episcopalian, Cooke regularly gave a “tithe” or ten percent of his income to religious or charitable concerns. As mentioned, he gave the fund to establish and build Duluth’s St. Paul’s Episcopal Church—named for the church Cooke attended in Pennsylvania—which would become known as “Jay Cooke’s Church.” In 1871, when Pilgrim Congregational Church was established in Duluth, “Jay Cooke and other friends” in Philadelphia contributed $1,000 toward the $2,800 building.
In 1872, things were looking pretty good for Duluth. The ship canal had been dug and, thanks to Cooke’s investments, the population had grown to well over 3,000 people. Two years earlier the township had become a city and incorporated several of the surrounding townships, increasing its size. But a set back that would eventually cost Cooke his fortune and Duluth its city charter was looming around the bend.
The Panic of ’73
In 1872, while Duluth’s future looked secured, there was trouble brewing for Jay Cooke and his associates. Cooke was having trouble financing the construction of the Northern Pacific railroad. An 1869 trip to England to sell bonds failed, but an associate had better luck in Germany, convincing a delegation of German bankers to travel to Duluth to see it for themselves. Reportedly, “They returned to their own land well impressed by the possibilities of the Great Northwest” and ready to take on $50 million worth of Northern Pacific bonds.
But their investment never materialized. Napoleon had stepped into the Franco-Prussian War, which would lead to his demise. It would also keep the German bankers’ money in Germany. Cooke had to look to America’s rich for capital; he managed to raise $30 million, but by late 1872 he had run out of potential investors. Further, Cooke had personally taken on the responsibility of paying the bond’s interest—and eventually he could no longer fulfill those responsibilities. His pockets had been turned inside out. Jay Cooke was broke.
So was the rest of the country. But the pain of the financial depression was most acute in the Zenith City. One writer described the fallout in Duluth as downright gloomy:
From the giddy height of a veritable boom, Duluth fell into a very slough of despondency. Real estate values went down, down, down, until offers at a discount of fifty per cent under former prices found no takers. City orders were relatively about as valuable as Confederate bonds. It was as though the very heavens had fallen.
It was as if Duluthians did not want to face reality. Historian Dwight Woodbridge would later write that, “so great was the prestige of Jay Cooke’s name that a mere doubt of his ability to carry through the enterprise to a successful completion would have been looked upon as almost high treason. Hence when the crash of 1873 came it came with a stunning shock to Duluth. For awhile its citizens could not credit the news; after they had accepted it they were strongly confident that Mr. Cooke would rearrange his affairs shortly and resume his interrupted work. But Mr. Cooke never did.”
Duluth would have to pick itself up from its own bootstraps—and did so. It took some time, and it even lost its city charter in 1877. But when wheat from the Red River Valley finally arrived on the railroad Cooke began building in the 1860s, the ship canal he had financed had made Duluth an ideal inland port. Soon the grain and shipping industries lifted Duluth, and in the 1880s it once again boomed, regaining its city status in 1877.
Cooke himself was back on his feet faster than Duluth. In the mid-1860s his daughter Laura had married Charles Barney a fledgling financier that Cooke invited into the family business. After Jay Cooke & Co. went bankrupt, Barney reorganized the firm as Charles. D. Barney & Co. Cooke’s son, Jay Cooke, Jr., joined the company at this time as well. They made many shrewd investments, the most lucrative an interest in a Utah silver mine. Charles Barney’s firm would later become known as Smith-Barney.
By 1880 Cooke had paid off all of his debts and was again a wealthy man, but his interests in Duluth were gone, long ago purchased by others or simply allowed to fail. Still, it was said of Cooke that “he never regained his national place of confidence as a financier.”