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.