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
