With the immense strain upon the government’s resources, the catastrophe of suspension would no doubt have occurred sooner or later; but financial historians believe that had Secretary Chase been more willing to accept the bankers’ propositions, had he coöperated with them more fully, the financing of the Civil War might have wrought less damage in the business world than it did.
AGENCIES
During the sale of the $150,000,000 bond issue Secretary Chase appointed a large number of agents in every part of the United States to secure the popular subscriptions. Most of these were presidents of local banks. The agents were allowed a commission of one-fifth of one per cent on the first $100,000, and one-eighth on later amounts. One hundred and fifty dollars was allowed for advertising purposes. A traveling agent went through the West, arranging for local agencies and assisting in advertising. It was proposed to allow the country bankers a larger commission with a view to stimulating wide sales, but this proposal the Secretary of the Treasury declined to adopt.
The western agents were not very successful in promoting this loan. Jay Cooke, of Philadelphia, sold more than one-fourth of all the bonds issued to the agents; but, in order to do so, spent more than the amount of his commission in advertising.
Secretary Chase became much interested in the measures adopted by this Philadelphia banker. As more and more pressure was put upon him for funds, he often consulted with Cooke, and frequently permitted the latter to buy United States securities to buoy up a falling market. On October 23, 1862 Chase appointed Jay Cooke sole agent for the conversion of legal tender treasury notes into the $500,000,000
six per cent five-twenty bonds authorized by Act of Congress February 25, 1862. By advertising on a larger scale than had hitherto been known, and by employment of 2,500 sub-agents, mostly bank presidents, in every part of the North, Jay Cooke accomplished his enormous task, the loan being finally over-subscribed by $11,000,000. His commission was three-eighths of one per cent on the first $100,000,000, of which one-eighth went to the sub-agent, and one-eighth to advertising and to placating the public press. The loan was sold in small denominations to every class of the population. Cooke patriotically resisted all proposals to sell large blocks of the bonds to European holders. He believed a bond issue held by the people was the safest means of financing and of prosecuting the war. He made the loan a great democratic institution. It is not too much to say that his success in selling this $500,000,000 bond issue “dispirited the South, gave Europe … useful evidence of the determined courage and material wealth of the northern people, and was a factor of vast importance in deciding the fate of the Union.”
[2] This article was originally prepared as a memorandum for the information of the Wisconsin State Council of Defense, in response to the request of Charles McCarthy, secretary of the Council.
HARVEY REID
[From a photograph taken in 1910]