Business History - Donald Alexander Smith and Jay Cooke - Essay Example

of Teacher Business History Brief Introduction of Donald Alexander Smith and Jay Cooke Nothing is really impossible if you just put your heart to it. A fine example of that is the story of two prominent industrialists that left indelible footprints in the sands of time in business history. Born in Forres, Scotland on August 6, 1820, Donald Alexander Smith is the 1st Baron of Strathcona and Mount Royal, Hudson Bay's Company (HBC) officer, business man, politician, diplomat and philanthropist. He was also a fervent supporter of the Canadian Pacific Railway (CPR). Jay Cooke was a renowned banker and a "financier of the Civil War". He was born in Sandusky, Ohio on August 10, 1821. Donald Alexander Smith vs. Jay Cooke Donald Alexander Smith and Jay Cooke both worked as clerks before earning their millions. A man of many achievements with a strong personality, a scheming mind and a generous heart, Donald Alexander Smith, 1st Baron of Strathcona, knows what he wants and will stop at nothing to get it. Smith's strong will coupled with his hard working attitude made him a successful man. His Canadian Office was in fact nicknamed as "The Light House" because the windows are frequently illuminated long after the remainder of the street was in darkness. On the other hand, Cooke's efficiency, friendliness and competence have impressed many businessmen which enabled him to climb in the corporate ladder of success. "He developed his skills rapidly, writing to his older brother at one point, 'I am getting to be a good judge of bank notes, can tell counterfeits at sight, and know all nearly the broken banks in the United States of America...' By the age of twenty-one Cooke was a full partner in the banking house..." (Frey 58). Smith had made his way to his fortune with the use of his persuasive skills and political connections. "He used his influence as an HBC officer and bribes to attempt a peaceful settlement..." (Redford 940). It was also said that, "Smith profited from his position in the HBC to survey business opportunities both for the company and for himself" (Redford 941). Smiths numerous personal business endeavours put a stress in his career at HBC (Hudson's Bay Company). "Undoubtedly, Smith's business ventures distracted him from his management of the HBC's affairs. He received periodic rebukes From Governor Sir Stafford Henry Northcote who complained that he had to report on land sales based on information gleaned from newspapers" (Redford 942). Smith was also said to have neglected the fur trade. William Joseph Christie, inspecting chief factor of the HBC reported to the London committee on the slack management of the company's affairs. Christie resigned his job when no action was taken on his information. Conversely, Jay Cooke first gained the attention of the banking industry when he marketed $3 million of Pennsylvania's bond issue. The state was in dire straits, it is indebted by $40 million. Cooke created a marketing strategy that made the bonds oversubscribe in less than a month. He sent agents all over the state and drafted circulars, pamphlets and posters emphasizing the patriotic need for the subscription of the issue. The proceeds of the bond issue were to be used as a necessary capital to win the war. Mr Cooke capitalized patriotism in selling the bonds. It can also be observed that Smith was politically active. It is but understandable why it seems this way, after all any political/high organizational position entails power that may be used to prosper or obliterate a business. Through these connections he was able to meet new business partners, engage in another business venture and gain more money. "Smith began a political career representing Winnepig-St John in the Manitoba legislature 1870-1874 and Selkirk in the House of Commons 1871-78" (Farr). Whereas, Cooke served the government as Ohio's financial adviser and he also helped develop sound fiscal policies during the American Civil War. In spite of Smith's hard work and achievements, a shadowy figure of him lurks in the background. Lord Strathcona may have schemes of his own which adds to his triumph over his business dealings. He was suspected by Charles John Brydges in ruining HBC's reputation so that he could later buy HBC shares of stock at a much lower price. Indeed, a few years later he was the major stockholder of the company. Although this was never proven it won't our escape our attention that a business-minded person like Smith will stop at nothing to have a high rate of return in his investments. Donald Alexander Smith was also a very materialistic man, his house was full of treasures of great value and he makes it known to the public how much each of it was worth. His bequests were often published to the public letting everyone know how rich he is and how safe it is to invest in his businesses. He was hitting three birds with one stone. First, his popularity rate will grow. Second, he aids other people in their needs giving him a good image for him and his company. Third, it served as a free publicity for his company. While Smith was into bribery and was accused of corruption, Cooke does not tolerate dishonesty. "As rumours of corruption in the construction of the NP reached him, he acted quickly." But since no businessman is a saint, Cooke had had his share of ill will when he successfully ridded J. Gregory Smith. He had been irritated with Mr Smith because he remained in Vermont managing NP through people whom Cooke considered to be inept. Jay Cooke wanted to have the best efforts put into the company he is in. He concentrates on whatever undertaking he is involved with. Donald Alexander Smith made donations in great proportions to several universities, and smaller ones to churches, snowshoe clubs, boys' brigades, and monasteries. This might be viewed as an act of charity meant to help other people but when you deeply study the situation he gains more than what he has given. In most of his well publicized donations his popularity grows, his ability to wield power strengthens. It was noted that Smith's greatest benefaction was reserved for McGill University and 1896 he served as Chancellor of McGill University where he founded Royal Victoria College for women. Like Lord Strathcona, Cooke was also a benefactor of various organizations although his donations doesn't quite compare to those of the baron. "Among his other benevolent schemes was the retreat for the indigent, sick or overworked clergymen of the Episcopal Church which he established on Lake Erie" (Jay Cooke, Financier 2). Both Smith and Cooke may have been successful in their own ways but they also had their share of failures. Lord Strathcona was a successful business tycoon. However, politics appeared to be his waterloo. In 1880 he was unseated when two dedicated Conservatives, David Young and Archibald Wright, protested the election on the grounds of corrupt practices. The attempt to oust him was at first unsuccessful but an appeal to the Supreme Court of Canada defeated Smith. In the succeeding by-election Lord Strathcona, was defeated and then he decided to withdraw from politics. Relatively, Cooke and Company was unable to meet its obligations and closed its doors on September 18, 1873. The closing was a tremendous shock to the public which made the American people apprehensive in the banking system and attempted to withdraw their investments. Conclusion Born worlds apart, Smith and Cooke are two different individuals, undertaking different business techniques which made them both extremely successful. Cunningly smart and a slave of power, Smith is a fine example of the Canadian rags-to-riches story. In contrast, Cooke who was perceived by other people as an honourable businessman was indifferent to power; instead his interest lies in helping those that are in need. Works Cited "Jay Cooke." July 1, 2005. Ohio History Central. 12 Apr. 2009. http://www.ohiohistorycentral.org/entry.phprec=81> "Jay Cooke, Financier of Civil War, is dead." New York Times 17 Feb. 1905:2. "Lord Strathcona is dead; The end came peacefully" The Globe 21 Jan. 1914:1. Farr, D.M.L. Smith, Donald Alexander, 1st Baron Strathcona and Mount Royal. 2009. The Canadian Encyclopedia. 12 Apr. 2009. Frey, Robert. "Jay Cooke." Business History and Biography. 57-63. Redford, Alexander. "Smith, Donald Alexander." Dictionary of National Biography. Ed. Ramsay Cook and Jean Hamelin. Toronto: University of Toronto Press, 1998. 939-947. Read More