The Financier

T >> Theodore Dreiser >> The Financier


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.





Chapter XV


The plan Cowperwood developed after a few days' meditation will be
plain enough to any one who knows anything of commercial and financial
manipulation, but a dark secret to those who do not. In the first place,
the city treasurer was to use his (Cowperwood's) office as a bank of
deposit. He was to turn over to him, actually, or set over to his credit
on the city's books, subject to his order, certain amounts of city
loans--two hundred thousand dollars at first, since that was the amount
it was desired to raise quickly--and he would then go into the market
and see what could be done to have it brought to par. The city treasurer
was to ask leave of the stock exchange at once to have it listed as
a security. Cowperwood would then use his influence to have this
application acted upon quickly. Stener was then to dispose of all city
loan certificates through him, and him only. He was to allow him to buy
for the sinking-fund, supposedly, such amounts as he might have to buy
in order to keep the price up to par. To do this, once a considerable
number of the loan certificates had been unloaded on the public, it
might be necessary to buy back a great deal. However, these would be
sold again. The law concerning selling only at par would have to be
abrogated to this extent--i.e., that the wash sales and preliminary
sales would have to be considered no sales until par was reached.

There was a subtle advantage here, as Cowperwood pointed out to Stener.
In the first place, since the certificates were going ultimately to
reach par anyway, there was no objection to Stener or any one else
buying low at the opening price and holding for a rise. Cowperwood would
be glad to carry him on his books for any amount, and he would settle
at the end of each month. He would not be asked to buy the certificates
outright. He could be carried on the books for a certain reasonable
margin, say ten points. The money was as good as made for Stener now. In
the next place, in buying for the sinking-fund it would be possible to
buy these certificates very cheap, for, having the new and reserve issue
entirely in his hands, Cowperwood could throw such amounts as he wished
into the market at such times as he wished to buy, and consequently
depress the market. Then he could buy, and, later, up would go the
price. Having the issues totally in his hands to boost or depress
the market as he wished, there was no reason why the city should not
ultimately get par for all its issues, and at the same time considerable
money be made out of the manufactured fluctuations. He, Cowperwood,
would be glad to make most of his profit that way. The city should allow
him his normal percentage on all his actual sales of certificates for
the city at par (he would have to have that in order to keep straight
with the stock exchange); but beyond that, and for all the other
necessary manipulative sales, of which there would be many, he would
depend on his knowledge of the stock market to reimburse him. And if
Stener wanted to speculate with him--well.

Dark as this transaction may seem to the uninitiated, it will appear
quite clear to those who know. Manipulative tricks have always been
worked in connection with stocks of which one man or one set of men has
had complete control. It was no different from what subsequently was
done with Erie, Standard Oil, Copper, Sugar, Wheat, and what not.
Cowperwood was one of the first and one of the youngest to see how it
could be done. When he first talked to Stener he was twenty-eight years
of age. When he last did business with him he was thirty-four.

The houses and the bank-front of Cowperwood & Co. had been proceeding
apace. The latter was early Florentine in its decorations with windows
which grew narrower as they approached the roof, and a door of wrought
iron set between delicately carved posts, and a straight lintel of
brownstone. It was low in height and distinguished in appearance. In
the center panel had been hammered a hand, delicately wrought, thin and
artistic, holding aloft a flaming brand. Ellsworth informed him that
this had formerly been a money-changer's sign used in old Venice, the
significance of which had long been forgotten.

The interior was finished in highly-polished hardwood, stained in
imitation of the gray lichens which infest trees. Large sheets of clear,
beveled glass were used, some oval, some oblong, some square, and some
circular, following a given theory of eye movement. The fixtures for
the gas-jets were modeled after the early Roman flame-brackets, and the
office safe was made an ornament, raised on a marble platform at the
back of the office and lacquered a silver-gray, with Cowperwood & Co.
lettered on it in gold. One had a sense of reserve and taste pervading
the place, and yet it was also inestimably prosperous, solid and
assuring. Cowperwood, when he viewed it at its completion, complimented
Ellsworth cheerily. "I like this. It is really beautiful. It will be
a pleasure to work here. If those houses are going to be anything like
this, they will be perfect."

"Wait till you see them. I think you will be pleased, Mr. Cowperwood. I
am taking especial pains with yours because it is smaller. It is
really easier to treat your father's. But yours--" He went off into a
description of the entrance-hall, reception-room and parlor, which he
was arranging and decorating in such a way as to give an effect of size
and dignity not really conformable to the actual space.

And when the houses were finished, they were effective and
arresting--quite different from the conventional residences of the
street. They were separated by a space of twenty feet, laid out as
greensward. The architect had borrowed somewhat from the Tudor
school, yet not so elaborated as later became the style in many of the
residences in Philadelphia and elsewhere. The most striking features
were rather deep-recessed doorways under wide, low, slightly floriated
arches, and three projecting windows of rich form, one on the second
floor of Frank's house, two on the facade of his father's. There were
six gables showing on the front of the two houses, two on Frank's and
four on his father's. In the front of each house on the ground floor
was a recessed window unconnected with the recessed doorways, formed
by setting the inner external wall back from the outer face of the
building. This window looked out through an arched opening to the
street, and was protected by a dwarf parapet or balustrade. It was
possible to set potted vines and flowers there, which was later done,
giving a pleasant sense of greenery from the street, and to place a few
chairs there, which were reached via heavily barred French casements.

On the ground floor of each house was placed a conservatory of flowers,
facing each other, and in the yard, which was jointly used, a pool of
white marble eight feet in diameter, with a marble Cupid upon which jets
of water played. The yard which was enclosed by a high but pierced wall
of green-gray brick, especially burnt for the purpose the same color as
the granite of the house, and surmounted by a white marble coping which
was sown to grass and had a lovely, smooth, velvety appearance. The two
houses, as originally planned, were connected by a low, green-columned
pergola which could be enclosed in glass in winter.

The rooms, which were now slowly being decorated and furnished in period
styles were very significant in that they enlarged and strengthened
Frank Cowperwood's idea of the world of art in general. It was an
enlightening and agreeable experience--one which made for artistic and
intellectual growth--to hear Ellsworth explain at length the styles and
types of architecture and furniture, the nature of woods and ornaments
employed, the qualities and peculiarities of hangings, draperies,
furniture panels, and door coverings. Ellsworth was a student of
decoration as well as of architecture, and interested in the artistic
taste of the American people, which he fancied would some day have a
splendid outcome. He was wearied to death of the prevalent Romanesque
composite combinations of country and suburban villa. The time was ripe
for something new. He scarcely knew what it would be; but this that he
had designed for Cowperwood and his father was at least different, as
he said, while at the same time being reserved, simple, and pleasing.
It was in marked contrast to the rest of the architecture of the street.
Cowperwood's dining-room, reception-room, conservatory, and butler's
pantry he had put on the first floor, together with the general
entry-hall, staircase, and coat-room under the stairs. For the second
floor he had reserved the library, general living-room, parlor, and
a small office for Cowperwood, together with a boudoir for Lillian,
connected with a dressing-room and bath.

On the third floor, neatly divided and accommodated with baths and
dressing-rooms, were the nursery, the servants' quarters, and several
guest-chambers.

Ellsworth showed Cowperwood books of designs containing furniture,
hangings, etageres, cabinets, pedestals, and some exquisite piano forms.
He discussed woods with him--rosewood, mahogany, walnut, English
oak, bird's-eye maple, and the manufactured effects such as ormolu,
marquetry, and Boule, or buhl. He explained the latter--how difficult it
was to produce, how unsuitable it was in some respects for this climate,
the brass and tortoise-shell inlay coming to swell with the heat or
damp, and so bulging or breaking. He told of the difficulties and
disadvantages of certain finishes, but finally recommended ormolu
furniture for the reception room, medallion tapestry for the parlor,
French renaissance for the dining-room and library, and bird's-eye maple
(dyed blue in one instance, and left its natural color in another) and
a rather lightly constructed and daintily carved walnut for the
other rooms. The hangings, wall-paper, and floor coverings were to
harmonize--not match--and the piano and music-cabinet for the parlor,
as well as the etagere, cabinets, and pedestals for the reception-rooms,
were to be of buhl or marquetry, if Frank cared to stand the expense.

Ellsworth advised a triangular piano--the square shapes were so
inexpressibly wearisome to the initiated. Cowperwood listened
fascinated. He foresaw a home which would be chaste, soothing, and
delightful to look upon. If he hung pictures, gilt frames were to be the
setting, large and deep; and if he wished a picture-gallery, the library
could be converted into that, and the general living-room, which lay
between the library and the parlor on the second-floor, could be turned
into a combination library and living-room. This was eventually done;
but not until his taste for pictures had considerably advanced.

It was now that he began to take a keen interest in objects of art,
pictures, bronzes, little carvings and figurines, for his cabinets,
pedestals, tables, and etageres. Philadelphia did not offer much that
was distinguished in this realm--certainly not in the open market.
There were many private houses which were enriched by travel; but his
connection with the best families was as yet small. There were then
two famous American sculptors, Powers and Hosmer, of whose work he had
examples; but Ellsworth told him that they were not the last word in
sculpture and that he should look into the merits of the ancients. He
finally secured a head of David, by Thorwaldsen, which delighted him,
and some landscapes by Hunt, Sully, and Hart, which seemed somewhat in
the spirit of his new world.

The effect of a house of this character on its owner is unmistakable.
We think we are individual, separate, above houses and material objects
generally; but there is a subtle connection which makes them reflect us
quite as much as we reflect them. They lend dignity, subtlety, force,
each to the other, and what beauty, or lack of it, there is, is shot
back and forth from one to the other as a shuttle in a loom, weaving,
weaving. Cut the thread, separate a man from that which is rightfully
his own, characteristic of him, and you have a peculiar figure, half
success, half failure, much as a spider without its web, which will
never be its whole self again until all its dignities and emoluments are
restored.

The sight of his new house going up made Cowperwood feel of more weight
in the world, and the possession of his suddenly achieved connection
with the city treasurer was as though a wide door had been thrown open
to the Elysian fields of opportunity. He rode about the city those days
behind a team of spirited bays, whose glossy hides and metaled harness
bespoke the watchful care of hostler and coachman. Ellsworth was
building an attractive stable in the little side street back of the
houses, for the joint use of both families. He told Mrs. Cowperwood that
he intended to buy her a victoria--as the low, open, four-wheeled coach
was then known--as soon as they were well settled in their new home, and
that they were to go out more. There was some talk about the value
of entertaining--that he would have to reach out socially for certain
individuals who were not now known to him. Together with Anna, his
sister, and his two brothers, Joseph and Edward, they could use the two
houses jointly. There was no reason why Anna should not make a splendid
match. Joe and Ed might marry well, since they were not destined to set
the world on fire in commerce. At least it would not hurt them to try.

"Don't you think you will like that?" he asked his wife, referring to
his plans for entertaining.

She smiled wanly. "I suppose so," she said.





Chapter XVI


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.