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.
[Illustration: HARVEY REID
[From a photograph taken in 1910]]