The development of Cowperwood as Cowperwood & Co. following his
arresting bond venture, finally brought him into relationship with one
man who was to play an important part in his life, morally,
financially, and in other ways. This was George W. Stener, the new city
treasurer-elect, who, to begin with, was a puppet in the hands of other
men, but who, also in spite of this fact, became a personage of
considerable importance, for the simple reason that he was weak. Stener
had been engaged in the real estate and insurance business in a small
way before he was made city treasurer. He was one of those men, of whom
there are so many thousands in every large community, with no breadth
of vision, no real subtlety, no craft, no great skill in anything. You
would never hear a new idea emanating from Stener. He never had one in
his life. On the other hand, he was not a bad fellow. He had a stodgy,
dusty, commonplace look to him which was more a matter of mind than of
body. His eye was of vague gray-blue; his hair a dusty light-brown and
thin. His mouth—there was nothing impressive there. He was quite tall,
nearly six feet, with moderately broad shoulders, but his figure was
anything but shapely. He seemed to stoop a little, his stomach was the
least bit protuberant, and he talked commonplaces—the small change of
newspaper and street and business gossip. People liked him in his own
neighborhood. He was thought to be honest and kindly; and he was, as
far as he knew. His wife and four children were as average and
insignificant as the wives and children of such men usually are.
Just the same, and in spite of, or perhaps, politically speaking,
because of all this, George W. Stener was brought into temporary public
notice by certain political methods which had existed in Philadelphia
practically unmodified for the previous half hundred years. First,
because he was of the same political faith as the dominant local
political party, he had become known to the local councilman and
ward-leader of his ward as a faithful soul—one useful in the matter of
drumming up votes. And next—although absolutely without value as a
speaker, for he had no ideas—you could send him from door to door,
asking the grocer and the blacksmith and the butcher how he felt about
things and he would make friends, and in the long run predict fairly
accurately the probable vote. Furthermore, you could dole him out a few
platitudes and he would repeat them. The Republican party, which was
the new-born party then, but dominant in Philadelphia, needed your
vote; it was necessary to keep the rascally Democrats out—he could
scarcely have said why. They had been for slavery. They were for free
trade. It never once occurred to him that these things had nothing to
do with the local executive and financial administration of
Philadelphia. Supposing they didn’t? What of it?
In Philadelphia at this time a certain United States Senator, one Mark
Simpson, together with Edward Malia Butler and Henry A. Mollenhauer, a
rich coal dealer and investor, were supposed to, and did, control
jointly the political destiny of the city. They had representatives,
benchmen, spies, tools—a great company. Among them was this same
Stener—a minute cog in the silent machinery of their affairs.
In scarcely any other city save this, where the inhabitants were of a
deadly average in so far as being commonplace was concerned, could such
a man as Stener have been elected city treasurer. The rank and file did
not, except in rare instances, make up their political program. An
inside ring had this matter in charge. Certain positions were allotted
to such and such men or to such and such factions of the party for such
and such services rendered—but who does not know politics?
In due course of time, therefore, George W. Stener had become persona
grata to Edward Strobik, a quondam councilman who afterward became ward
leader and still later president of council, and who, in private life
was a stone-dealer and owner of a brickyard. Strobik was a benchman of
Henry A. Mollenhauer, the hardest and coldest of all three of the
political leaders. The latter had things to get from council, and
Strobik was his tool. He had Stener elected; and because he was
faithful in voting as he was told the latter was later made an
assistant superintendent of the highways department.
Here he came under the eyes of Edward Malia Butler, and was slightly
useful to him. Then the central political committee, with Butler in
charge, decided that some nice, docile man who would at the same time
be absolutely faithful was needed for city treasurer, and Stener was
put on the ticket. He knew little of finance, but was an excellent
bookkeeper; and, anyhow, was not corporation counsel Regan, another
political tool of this great triumvirate, there to advise him at all
times? He was. It was a very simple matter. Being put on the ticket was
equivalent to being elected, and so, after a few weeks of exceedingly
trying platform experiences, in which he had stammered through
platitudinous declarations that the city needed to be honestly
administered, he was inducted into office; and there you were.
Now it wouldn’t have made so much difference what George W. Stener’s
executive and financial qualifications for the position were, but at
this time the city of Philadelphia was still hobbling along under
perhaps as evil a financial system, or lack of it, as any city ever
endured—the assessor and the treasurer being allowed to collect and
hold moneys belonging to the city, outside of the city’s private
vaults, and that without any demand on the part of anybody that the
same be invested by them at interest for the city’s benefit. Rather,
all they were expected to do, apparently, was to restore the principal
and that which was with them when they entered or left office. It was
not understood or publicly demanded that the moneys so collected, or
drawn from any source, be maintained intact in the vaults of the city
treasury. They could be loaned out, deposited in banks or used to
further private interests of any one, so long as the principal was
returned, and no one was the wiser. Of course, this theory of finance
was not publicly sanctioned, but it was known politically and
journalistically, and in high finance. How were you to stop it?
Cowperwood, in approaching Edward Malia Butler, had been unconsciously
let in on this atmosphere of erratic and unsatisfactory speculation
without really knowing it. When he had left the office of Tighe & Co.,
seven years before, it was with the idea that henceforth and forever he
would have nothing to do with the stock-brokerage proposition; but now
behold him back in it again, with more vim than he had ever displayed,
for now he was working for himself, the firm of Cowperwood & Co., and
he was eager to satisfy the world of new and powerful individuals who
by degrees were drifting to him. All had a little money. All had tips,
and they wanted him to carry certain lines of stock on margin for them,
because he was known to other political men, and because he was safe.
And this was true. He was not, or at least up to this time had not
been, a speculator or a gambler on his own account. In fact he often
soothed himself with the thought that in all these years he had never
gambled for himself, but had always acted strictly for others instead.
But now here was George W. Stener with a proposition which was not
quite the same thing as stock-gambling, and yet it was.
During a long period of years preceding the Civil War, and through it,
let it here be explained and remembered, the city of Philadelphia had
been in the habit, as a corporation, when there were no available funds
in the treasury, of issuing what were known as city warrants, which
were nothing more than notes or I.O.U.’s bearing six per cent.
interest, and payable sometimes in thirty days, sometimes in three,
sometimes in six months—all depending on the amount and how soon the
city treasurer thought there would be sufficient money in the treasury
to take them up and cancel them. Small tradesmen and large contractors
were frequently paid in this way; the small tradesman who sold supplies
to the city institutions, for instance, being compelled to discount his
notes at the bank, if he needed ready money, usually for ninety cents
on the dollar, while the large contractor could afford to hold his and
wait. It can readily be seen that this might well work to the
disadvantage of the small dealer and merchant, and yet prove quite a
fine thing for a large contractor or note-broker, for the city was sure
to pay the warrants at some time, and six per cent. interest was a fat
rate, considering the absolute security. A banker or broker who
gathered up these things from small tradesmen at ninety cents on the
dollar made a fine thing of it all around if he could wait.
Originally, in all probability, there was no intention on the part of
the city treasurer to do any one an injustice, and it is likely that
there really were no funds to pay with at the time. However that may
have been, there was later no excuse for issuing the warrants, seeing
that the city might easily have been managed much more economically.
But these warrants, as can readily be imagined, had come to be a fine
source of profit for note-brokers, bankers, political financiers, and
inside political manipulators generally and so they remained a part of
the city’s fiscal policy.
There was just one drawback to all this. In order to get the full
advantage of this condition the large banker holding them must be an
“inside banker,” one close to the political forces of the city, for if
he was not and needed money and he carried his warrants to the city
treasurer, he would find that he could not get cash for them. But if he
transferred them to some banker or note-broker who was close to the
political force of the city, it was quite another matter. The treasury
would find means to pay. Or, if so desired by the note-broker or
banker—the right one—notes which were intended to be met in three
months, and should have been settled at that time, were extended to run
on years and years, drawing interest at six per cent. even when the
city had ample funds to meet them. Yet this meant, of course, an
illegal interest drain on the city, but that was all right also. “No
funds” could cover that. The general public did not know. It could not
find out. The newspapers were not at all vigilant, being pro-political.
There were no persistent, enthusiastic reformers who obtained any
political credence. During the war, warrants outstanding in this manner
arose in amount to much over two million dollars, all drawing six per
cent. interest, but then, of course, it began to get a little
scandalous. Besides, at least some of the investors began to want their
money back.
In order, therefore, to clear up this outstanding indebtedness and make
everything shipshape again, it was decided that the city must issue a
loan, say for two million dollars—no need to be exact about the amount.
And this loan must take the shape of interest-bearing certificates of a
par value of one hundred dollars, redeemable in six, twelve, or
eighteen months, as the case may be. These certificates of loan were
then ostensibly to be sold in the open market, a sinking-fund set aside
for their redemption, and the money so obtained used to take up the
long-outstanding warrants which were now such a subject of public
comment.
It is obvious that this was merely a case of robbing Peter to pay Paul.
There was no real clearing up of the outstanding debt. It was the
intention of the schemers to make it possible for the financial
politicians on the inside to reap the same old harvest by allowing the
certificates to be sold to the right parties for ninety or less,
setting up the claim that there was no market for them, the credit of
the city being bad. To a certain extent this was true. The war was just
over. Money was high. Investors could get more than six per cent.
elsewhere unless the loan was sold at ninety. But there were a few
watchful politicians not in the administration, and some newspapers and
non-political financiers who, because of the high strain of patriotism
existing at the time, insisted that the loan should be sold at par.
Therefore a clause to that effect had to be inserted in the enabling
ordinance.
This, as one might readily see, destroyed the politicians’ little
scheme to get this loan at ninety. Nevertheless since they desired that
the money tied up in the old warrants and now not redeemable because of
lack of funds should be paid them, the only way this could be done
would be to have some broker who knew the subtleties of the stock
market handle this new city loan on ’change in such a way that it would
be made to seem worth one hundred and to be sold to outsiders at that
figure. Afterward, if, as it was certain to do, it fell below that, the
politicians could buy as much of it as they pleased, and eventually
have the city redeem it at par.
George W. Stener, entering as city treasurer at this time, and bringing
no special financial intelligence to the proposition, was really
troubled. Henry A. Mollenhauer, one of the men who had gathered up a
large amount of the old city warrants, and who now wanted his money, in
order to invest it in bonanza offers in the West, called on Stener, and
also on the mayor. He with Simpson and Butler made up the Big Three.
“I think something ought to be done about these warrants that are
outstanding,” he explained. “I am carrying a large amount of them, and
there are others. We have helped the city a long time by saying
nothing; but now I think that something ought to be done. Mr. Butler
and Mr. Simpson feel the same way. Couldn’t these new loan certificates
be listed on the stock exchange and the money raised that way? Some
clever broker could bring them to par.”
Stener was greatly flattered by the visit from Mollenhauer. Rarely did
he trouble to put in a personal appearance, and then only for the
weight and effect his presence would have. He called on the mayor and
the president of council, much as he called on Stener, with a lofty,
distant, inscrutable air. They were as office-boys to him.
In order to understand exactly the motive for Mollenhauer’s interest in
Stener, and the significance of this visit and Stener’s subsequent
action in regard to it, it will be necessary to scan the political
horizon for some little distance back. Although George W. Stener was in
a way a political henchman and appointee of Mollenhauer’s, the latter
was only vaguely acquainted with him. He had seen him before; knew of
him; had agreed that his name should be put on the local slate largely
because he had been assured by those who were closest to him and who
did his bidding that Stener was “all right,” that he would do as he was
told, that he would cause no one any trouble, etc. In fact, during
several previous administrations, Mollenhauer had maintained a
subsurface connection with the treasury, but never so close a one as
could easily be traced. He was too conspicuous a man politically and
financially for that. But he was not above a plan, in which Simpson if
not Butler shared, of using political and commercial stool-pigeons to
bleed the city treasury as much as possible without creating a scandal.
In fact, for some years previous to this, various agents had already
been employed—Edward Strobik, president of council, Asa Conklin, the
then incumbent of the mayor’s chair, Thomas Wycroft, alderman, Jacob
Harmon, alderman, and others—to organize dummy companies under various
names, whose business it was to deal in those things which the city
needed—lumber, stone, steel, iron, cement—a long list—and of course,
always at a fat profit to those ultimately behind the dummy companies,
so organized. It saved the city the trouble of looking far and wide for
honest and reasonable dealers.
Since the action of at least three of these dummies will have something
to do with the development of Cowperwood’s story, they may be briefly
described. Edward Strobik, the chief of them, and the one most useful
to Mollenhauer, in a minor way, was a very spry person of about
thirty-five at this time—lean and somewhat forceful, with black hair,
black eyes, and an inordinately large black mustache. He was dapper,
inclined to noticeable clothing—a pair of striped trousers, a white
vest, a black cutaway coat and a high silk hat. His markedly ornamental
shoes were always polished to perfection, and his immaculate appearance
gave him the nickname of “The Dude” among some. Nevertheless he was
quite able on a small scale, and was well liked by many.
His two closest associates, Messrs. Thomas Wycroft and Jacob Harmon,
were rather less attractive and less brilliant. Jacob Harmon was a
thick wit socially, but no fool financially. He was big and rather
doleful to look upon, with sandy brown hair and brown eyes, but fairly
intelligent, and absolutely willing to approve anything which was not
too broad in its crookedness and which would afford him sufficient
protection to keep him out of the clutches of the law. He was really
not so cunning as dull and anxious to get along.
Thomas Wycroft, the last of this useful but minor triumvirate, was a
tall, lean man, candle-waxy, hollow-eyed, gaunt of face, pathetic to
look at physically, but shrewd. He was an iron-molder by trade and had
gotten into politics much as Stener had—because he was useful; and he
had managed to make some money—via this triumvirate of which Strobik
was the ringleader, and which was engaged in various peculiar
businesses which will now be indicated.
The companies which these several henchmen had organized under previous
administrations, and for Mollenhauer, dealt in meat, building material,
lamp-posts, highway supplies, anything you will, which the city
departments or its institutions needed. A city contract once awarded
was irrevocable, but certain councilmen had to be fixed in advance and
it took money to do that. The company so organized need not actually
slaughter any cattle or mold lamp-posts. All it had to do was to
organize to do that, obtain a charter, secure a contract for supplying
such material to the city from the city council (which Strobik, Harmon,
and Wycroft would attend to), and then sublet this to some actual
beef-slaughterer or iron-founder, who would supply the material and
allow them to pocket their profit which in turn was divided or paid for
to Mollenhauer and Simpson in the form of political donations to clubs
or organizations. It was so easy and in a way so legitimate. The
particular beef-slaughterer or iron-founder thus favored could not hope
of his own ability thus to obtain a contract. Stener, or whoever was in
charge of the city treasury at the time, for his services in loaning
money at a low rate of interest to be used as surety for the proper
performance of contract, and to aid in some instances the beef-killer
or iron-founder to carry out his end, was to be allowed not only the
one or two per cent. which he might pocket (other treasurers had), but
a fair proportion of the profits. A complacent, confidential chief
clerk who was all right would be recommended to him. It did not concern
Stener that Strobik, Harmon, and Wycroft, acting for Mollenhauer, were
incidentally planning to use a little of the money loaned for purposes
quite outside those indicated. It was his business to loan it.
However, to be going on. Some time before he was even nominated, Stener
had learned from Strobik, who, by the way, was one of his sureties as
treasurer (which suretyship was against the law, as were those of
Councilmen Wycroft and Harmon, the law of Pennsylvania stipulating that
one political servant might not become surety for another), that those
who had brought about this nomination and election would by no means
ask him to do anything which was not perfectly legal, but that he must
be complacent and not stand in the way of big municipal perquisites nor
bite the hands that fed him. It was also made perfectly plain to him,
that once he was well in office a little money for himself was to be
made. As has been indicated, he had always been a poor man. He had seen
all those who had dabbled in politics to any extent about him
heretofore do very well financially indeed, while he pegged along as an
insurance and real-estate agent. He had worked hard as a small
political henchman. Other politicians were building themselves nice
homes in newer portions of the city. They were going off to New York or
Harrisburg or Washington on jaunting parties. They were seen in happy
converse at road-houses or country hotels in season with their wives or
their women favorites, and he was not, as yet, of this happy throng.
Naturally now that he was promised something, he was interested and
compliant. What might he not get?
When it came to this visit from Mollenhauer, with its suggestion in
regard to bringing city loan to par, although it bore no obvious
relation to Mollenhauer’s subsurface connection with Stener, through
Strobik and the others, Stener did definitely recognize his own
political subservience—his master’s stentorian voice—and immediately
thereafter hurried to Strobik for information.
“Just what would you do about this?” he asked of Strobik, who knew of
Mollenhauer’s visit before Stener told him, and was waiting for Stener
to speak to him. “Mr. Mollenhauer talks about having this new loan
listed on ’change and brought to par so that it will sell for one
hundred.”
Neither Strobik, Harmon, nor Wycroft knew how the certificates of city
loan, which were worth only ninety on the open market, were to be made
to sell for one hundred on ’change, but Mollenhauer’s secretary, one
Abner Sengstack, had suggested to Strobik that, since Butler was
dealing with young Cowperwood and Mollenhauer did not care particularly
for his private broker in this instance, it might be as well to try
Cowperwood.
So it was that Cowperwood was called to Stener’s office. And once
there, and not as yet recognizing either the hand of Mollenhauer or
Simpson in this, merely looked at the peculiarly shambling,
heavy-cheeked, middle-class man before him without either interest or
sympathy, realizing at once that he had a financial baby to deal with.
If he could act as adviser to this man—be his sole counsel for four
years!
“How do you do, Mr. Stener?” he said in his soft, ingratiating voice,
as the latter held out his hand. “I am glad to meet you. I have heard
of you before, of course.”
Stener was long in explaining to Cowperwood just what his difficulty
was. He went at it in a clumsy fashion, stumbling through the
difficulties of the situation he was suffered to meet.
“The main thing, as I see it, is to make these certificates sell at
par. I can issue them in any sized lots you like, and as often as you
like. I want to get enough now to clear away two hundred thousand
dollars’ worth of the outstanding warrants, and as much more as I can
get later.”
Cowperwood felt like a physician feeling a patient’s pulse—a patient
who is really not sick at all but the reassurance of whom means a fat
fee. The abstrusities of the stock exchange were as his A B C’s to him.
He knew if he could have this loan put in his hands—all of it, if he
could have the fact kept dark that he was acting for the city, and that
if Stener would allow him to buy as a “bull” for the sinking-fund while
selling judiciously for a rise, he could do wonders even with a big
issue. He had to have all of it, though, in order that he might have
agents under him. Looming up in his mind was a scheme whereby he could
make a lot of the unwary speculators about ’change go short of this
stock or loan under the impression, of course, that it was scattered
freely in various persons’ hands, and that they could buy as much of it
as they wanted. Then they would wake to find that they could not get
it; that he had it all. Only he would not risk his secret that far. Not
he, oh, no. But he would drive the city loan to par and then sell. And
what a fat thing for himself among others in so doing. Wisely enough he
sensed that there was politics in all this—shrewder and bigger men
above and behind Stener. But what of that? And how slyly and shrewdly
they were sending Stener to him. It might be that his name was becoming
very potent in their political world here. And what might that not
mean!
“I tell you what I’d like to do, Mr. Stener,” he said, after he had
listened to his explanation and asked how much of the city loan he
would like to sell during the coming year. “I’ll be glad to undertake
it. But I’d like to have a day or two in which to think it over.”
“Why, certainly, certainly, Mr. Cowperwood,” replied Stener, genially.
“That’s all right. Take your time. If you know how it can be done, just
show me when you’re ready. By the way, what do you charge?”
“Well, the stock exchange has a regular scale of charges which we
brokers are compelled to observe. It’s one-fourth of one per cent. on
the par value of bonds and loans. Of course, I may hav to add a lot of
fictitious selling—I’ll explain that to you later—but I won’t charge
you anything for that so long as it is a secret between us. I’ll give
you the best service I can, Mr. Stener. You can depend on that. Let me
have a day or two to think it over, though.”
He shook hands with Stener, and they parted. Cowperwood was satisfied
that he was on the verge of a significant combination, and Stener that
he had found someone on whom he could lean.