September 18, 1873: Jay Cooke runs out of money

On this day in 1873 Jay Cooke ran out of money, and all of his businesses failed. This sent the entire nation into a depression known as the Panic of 1873, and no community was hit as hard as Duluth, in which Cooke had heavily invested. With no money, much of the business in the Zenith City, population 5,000+, came to a screeching halt. One Duluthian wrote that “From the giddy height of a veritable boom Duluth fell into a very slough of despondency. Real estate values went down, down, down…. City orders were relatively about as valuable as Confederate bonds. The engineer of the steam fire-engine resigned his position because, as he said, “the city’s credit is not good enough to purchase oil for the engine.” The Clark House Hotel, the leading hostelry of Northern Minnesota, boarded up its west-end corridors, and carried on a lifeless business in the center and eastern portions. The crowd of speculators who had thronged its steps disappeared, as by magic, and discouragement and hopelessness seized upon the spirits of the people. Then followed for several years, a period of business stagnation and general depression which seemed to grow only more severe as time passed. Banks failed, goods of all kinds were sold at sheriff’s sale, and vacant houses and business blocks added to the general air of desolation. Those who could do so moved away, and the city’s population was reduced to 1,300 souls. By 1877 Duluth had lost its city charter and it took ten years to get it back. Read more about Duluth’s early development here and about Jay Cooke here.

This sketch of a mob attacking a bank during the onset of the Panic of 1873 appeared in the October 4, 1873, edition of Frank Leslie’s Illustrated Newspaper. (Image: Public Domain)