________________________________________________
_ It was not long after the arrangement between Treasurer Stener
and Cowperwood had been made that the machinery for the carrying
out of that political-financial relationship was put in motion.
The sum of two hundred and ten thousand dollars in six per cent.
interest-bearing certificates, payable in ten years, was set over
to the credit of Cowperwood & Co. on the books of the city, subject
to his order. Then, with proper listing, he began to offer it in
small amounts at more than ninety, at the same time creating the
impression that it was going to be a prosperous investment. The
certificates gradually rose and were unloaded in rising amounts
until one hundred was reached, when all the two hundred thousand
dollars' worth--two thousand certificates in all--was fed out in
small lots. Stener was satisfied. Two hundred shares had been
carried for him and sold at one hundred, which netted him two
thousand dollars. It was illegitimate gain, unethical; but his
conscience was not very much troubled by that. He had none, truly.
He saw visions of a halcyon future.
It is difficult to make perfectly clear what a subtle and significant
power this suddenly placed in the hands of Cowperwood. Consider
that he was only twenty-eight--nearing twenty-nine. Imagine yourself
by nature versed in the arts of finance, capable of playing with
sums of money in the forms of stocks, certificates, bonds, and cash,
as the ordinary man plays with checkers or chess. Or, better yet,
imagine yourself one of those subtle masters of the mysteries of
the higher forms of chess--the type of mind so well illustrated by
the famous and historic chess-players, who could sit with their
backs to a group of rivals playing fourteen men at once, calling
out all the moves in turn, remembering all the positions of all
the men on all the boards, and winning. This, of course, would be
an overstatement of the subtlety of Cowperwood at this time, and
yet it would not be wholly out of bounds. He knew instinctively
what could be done with a given sum of money--how as cash it could
be deposited in one place, and yet as credit and the basis of moving
checks, used in not one but many other places at the same time.
When properly watched and followed this manipulation gave him the
constructive and purchasing power of ten and a dozen times as much
as his original sum might have represented. He knew instinctively
the principles of "pyramiding" and "kiting." He could see exactly
not only how he could raise and lower the value of these certificates
of loan, day after day and year after year--if he were so fortunate
as to retain his hold on the city treasurer--but also how this would
give him a credit with the banks hitherto beyond his wildest dreams.
His father's bank was one of the first to profit by this and to
extend him loans. The various local politicians and bosses--
Mollenhauer, Butler, Simpson, and others--seeing the success of his
efforts in this direction, speculated in city loan. He became known
to Mollenhauer and Simpson, by reputation, if not personally, as
the man who was carrying this city loan proposition to a successful
issue. Stener was supposed to have done a clever thing in finding
him. The stock exchange stipulated that all trades were to be
compared the same day and settled before the close of the next;
but this working arrangement with the new city treasurer gave
Cowperwood much more latitude, and now he had always until the first
of the month, or practically thirty days at times, in which to
render an accounting for all deals connected with the loan issue.
And, moreover, this was really not an accounting in the sense of
removing anything from his hands. Since the issue was to be so
large, the sum at his disposal would always be large, and
so-called transfers and balancing at the end of the month would
be a mere matter of bookkeeping. He could use these city loan
certificates deposited with him for manipulative purposes,
deposit them at any bank as collateral for a loan, quite as if
they were his own, thus raising seventy per cent. of their actual
value in cash, and he did not hesitate to do so. He could take
this cash, which need not be accounted for until the end of the
month, and cover other stock transactions, on which he could
borrow again. There was no limit to the resources of which he
now found himself possessed, except the resources of his own energy,
ingenuity, and the limits of time in which he had to work. The
politicians did not realize what a bonanza he was making of it
all for himself, because they were as yet unaware of the subtlety
of his mind. When Stener told him, after talking the matter over
with the mayor, Strobik, and others that he would formally, during
the course of the year, set over on the city's books all of the
two millions in city loan, Cowperwood was silent--but with delight.
Two millions! His to play with! He had been called in as a
financial adviser, and he had given his advice and it had been
taken! Well. He was not a man who inherently was troubled with
conscientious scruples. At the same time he still believed himself
financially honest. He was no sharper or shrewder than any other
financier--certainly no sharper than any other would be if he
could.
It should be noted here that this proposition of Stener's in regard
to city money had no connection with the attitude of the principal
leaders in local politics in regard to street-railway control, which
was a new and intriguing phase of the city's financial life. Many
of the leading financiers and financier-politicians were interested
in that. For instance, Messrs. Mollenhauer, Butler, and Simpson
were interested in street-railways separately on their own account.
There was no understanding between them on this score. If they had
thought at all on the matter they would have decided that they did
not want any outsider to interfere. As a matter of fact the
street-railway business in Philadelphia was not sufficiently developed
at this time to suggest to any one the grand scheme of union which
came later. Yet in connection with this new arrangement between
Stener and Cowperwood, it was Strobik who now came forward to
Stener with an idea of his own. All were certain to make money
through Cowperwood--he and Stener, especially. What was amiss,
therefore, with himself and Stener and with Cowperwood as their--
or rather Stener's secret representative, since Strobik did not
dare to appear in the matter--buying now sufficient street-railway
shares in some one line to control it, and then, if he, Strobik,
could, by efforts of his own, get the city council to set aside
certain streets for its extension, why, there you were--they would
own it. Only, later, he proposed to shake Stener out if he could.
But this preliminary work had to be done by some one, and it might
as well be Stener. At the same time, as he saw, this work had to
be done very carefully, because naturally his superiors were
watchful, and if they found him dabbling in affairs of this kind
to his own advantage, they might make it impossible for him to
continue politically in a position where he could help himself
just the same. Any outside organization such as a street-railway
company already in existence had a right to appeal to the city
council for privileges which would naturally further its and the
city's growth, and, other things being equal, these could not be
refused. It would not do for him to appear, however, both as a
shareholder and president of the council. But with Cowperwood
acting privately for Stener it would be another thing.
The interesting thing about this proposition as finally presented
by Stener for Strobik to Cowperwood, was that it raised, without
appearing to do so, the whole question of Cowperwood's attitude
toward the city administration. Although he was dealing privately
for Edward Butler as an agent, and with this same plan in mind,
and although he had never met either Mollenhauer or Simpson, he
nevertheless felt that in so far as the manipulation of the city
loan was concerned he was acting for them. On the other hand, in
this matter of the private street-railway purchase which Stener
now brought to him, he realized from the very beginning, by Stener's
attitude, that there was something untoward in it, that Stener felt
he was doing something which he ought not to do.
"Cowperwood," he said to him the first morning he ever broached
this matter--it was in Stener's office, at the old city hall at
Sixth and Chestnut, and Stener, in view of his oncoming prosperity,
was feeling very good indeed--"isn't there some street-railway
property around town here that a man could buy in on and get control
of if he had sufficient money?"
Cowperwood knew that there were such properties. His very alert
mind had long since sensed the general opportunities here. The
omnibuses were slowly disappearing. The best routes were already
preempted. Still, there were other streets, and the city was
growing. The incoming population would make great business in
the future. One could afford to pay almost any price for the
short lines already built if one could wait and extend the lines
into larger and better areas later. And already he had conceived
in his own mind the theory of the "endless chain," or "argeeable
formula," as it was later termed, of buying a certain property on
a long-time payment and issuing stocks or bonds sufficient not only
to pay your seller, but to reimburse you for your trouble, to say
nothing of giving you a margin wherewith to invest in other things--
allied properties, for instance, against which more bonds could be
issued, and so on, ad infinitum. It became an old story later,
but it was new at that time, and he kept the thought closely to
himself. None the less he was glad to have Stener speak of this,
since street-railways were his hobby, and he was convinced that
he would be a great master of them if he ever had an opportunity
to control them.
"Why, yes, George," he said, noncommittally, there are two or
three that offer a good chance if a man had money enough. I notice
blocks of stock being offered on 'change now and then by one person
and another. It would be good policy to pick these things up as
they're offered, and then to see later if some of the other
stockholders won't want to sell out. Green and Coates, now, looks
like a good proposition to me. If I had three or four hundred
thousand dollars that I thought I could put into that by degrees
I would follow it up. It only takes about thirty per cent. of the
stock of any railroad to control it. Most of the shares are
scattered around so far and wide that they never vote, and I think
two or three hundred thousand dollars would control that road."
He mentioned one other line that might be secured in the same way
in the course of time.
Stener meditated. "That's a good deal of money," he said,
thoughtfully. "I'll talk to you about that some more later."
And he was off to see Strobik none the less.
Cowperwood knew that Stener did not have any two or three hundred
thousand dollars to invest in anything. There was only one way
that he could get it--and that was to borrow it out of the city
treasury and forego the interest. But he would not do that on his
own initiative. Some one else must be behind him and who else
other than Mollenhauer, or Simpson, or possibly even Butler, though
he doubted that, unless the triumvirate were secretly working
together. But what of it? The larger politicians were always
using the treasury, and he was thinking now, only, of his own
attitude in regard to the use of this money. No harm could come
to him, if Stener's ventures were successful; and there was no
reason why they should not be. Even if they were not he would be
merely acting as an agent. In addition, he saw how in the
manipulation of this money for Stener he could probably eventually
control certain lines for himself.
There was one line being laid out to within a few blocks of his
new home--the Seventeenth and Nineteenth Street line it was called--
which interested him greatly. He rode on it occasionally when he
was delayed or did not wish to trouble about a vehicle. It ran
through two thriving streets of red-brick houses, and was destined
to have a great future once the city grew large enough. As yet it
was really not long enough. If he could get that, for instance,
and combine it with Butler's lines, once they were secured--or
Mollenhauer's, or Simpson's, the legislature could be induced to
give them additional franchises. He even dreamed of a combination
between Butler, Mollenhauer, Simpson, and himself. Between them,
politically, they could get anything. But Butler was not a
philanthropist. He would have to be approached with a very sizable
bird in hand. The combination must be obviously advisable.
Besides, he was dealing for Butler in street-railway stocks, and
if this particular line were such a good thing Butler might wonder
why it had not been brought to him in the first place. It would
be better, Frank thought, to wait until he actually had it as his
own, in which case it would be a different matter. Then he could
talk as a capitalist. He began to dream of a city-wide
street-railway system controlled by a few men, or preferably himself
alone. _
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