Friday, January 25, 2019

BOOK REVIEW: Jay Cooke's Gamble. The Northern Pacific Railroad, The Sioux, and the Panic of 1873 by M. John Lubetkin

Jay Cooke’s Gamble. The Northern Pacific Railroad, The Sioux, and the Panic of 1873 by M. John Lubetkin is a fascinating account of the bold, visionary (or impractical, depending on perspective) endeavor to build a second transcontinental railroad in the 1870s.

I’m interested in learning about the Panic of 1873, but quickly discovered that U.S. economic history is far too convoluted and complex to grasp without investing a lot of time – and I’m not that interested in it. When I came across this book, I thought it might be a way to approach the topic obliquely. I expected something detail-rich and narrow in focus, but dry. But this book is anything but dry.

Lubetkin has researched the topic thoroughly and presents it in a well-organized, tension-filled fashion. The major players are fleshed-out, three-dimensional people whose talents and strong points are balanced with their foibles. While the author was reasonably non-biased, I nevertheless found myself rooting for some and peeved with others.

Jay Cooke is the focal point. The most prominent banker of the time, Cooke was particularly skilled at selling bonds – a talent that gained him the reputation as financier of the Civil War in the North. After the war, he needed a new calling and found it in the Northern Pacific Railroad. Convinced it was God’s will that he help open up the Pacific Northwest to Christian settlement, Cooke took on ownership of the foundering project.

His own reputation was sterling, but he partnered with J. Gregory Smith and Thomas H. Canfield, two greedy, dishonest men who began bilking the company pretty much as soon as it was formed.

Aside from the financial shenanigans, construction of the railroad was hampered by the lack of a defined route. The bulk of the narrative concerns the surveying expeditions sent out to determine the best path. Although led by dedicated, hardworking men, the surveys were troubled by poor maps, horrible weather, and fear of Native Americans. The route along the Yellowstone River took them through the territory of Sitting Bull and the Sioux, who were well aware that a railroad through their hunting grounds would be devastating. The survey teams received military escorts, but these were of inconsistent efficacy, especially as a couple of the top commanders were alcoholics whose leadership was unreliable.

The final survey, just before the collapse, received the largest military escort. The calvary was commanded by George Armstrong Custer. The author does a wonderful job of portraying Custer fairly, showing both his strengths and weaknesses, a harbinger of things to come.

In the end, the combined financial strains, environmental forces, and fear of Indian attack were too much for skittish investors. Cooke had more and more difficulty raising the necessary funds to keep the company solvent. His own bank was too heavily invested in the railroad. When one of his junior executives bailed out and betrayed him, Cooke was blind-sided and hadn’t time to gather resources to save his bank and smaller connected banks. While many other factors also played into the Panic of 1873, Cooke’s bankruptcy was a major precipitant.

The summary does not do justice to how well this book presents the material. Using letters, diaries, newspaper accounts, and a host of other material, Lubetkin transports the reader into the midst of the events. I’m surprised by how riveting I found the read.

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