The Financier by Theodore Dreiser

This intoxicated him, for immediately he saw the opportunity of fulfilling his long-contemplated dream—that of reorganizing the company in conjunction with the North Pennsylvania line, issuing three shares where one had been before and after unloading all but a control on the general public, using the money secured to buy into other lines which were to be boomed and sold in the same way. In short, he was one of those early, daring manipulators who later were to seize upon other and ever larger phases of American natural development for their own aggrandizement.

In connection with this first consolidation, his plan was to spread rumors of the coming consolidation of the two lines, to appeal to the legislature for privileges of extension, to get up an arresting prospectus and later annual reports, and to boom the stock on the stock exchange as much as his swelling resources would permit. The trouble is that when you are trying to make a market for a stock—to unload a large issue such as his was (over five hundred thousand dollars’ worth)—while retaining five hundred thousand for yourself, it requires large capital to handle it.

The owner in these cases is compelled not only to go on the market and do much fictitious buying, thus creating a fictitious demand, but once this fictitious demand has deceived the public and he has been able to unload a considerable quantity of his wares, he is, unless he rids himself of all his stock, compelled to stand behind it. If, for instance, he sold five thousand shares, as was done in this instance, and retained five thousand, he must see that the public price of the outstanding five thousand shares did not fall below a certain point, because the value of his private shares would fall with it. And if, as is almost always the case, the private shares had been hypothecated with banks and trust companies for money wherewith to conduct other enterprises, the falling of their value in the open market merely meant that the banks would call for large margins to protect their loans or call their loans entirely.

This meant that his work was a failure, and he might readily fail.

He was already conducting one such difficult campaign in connection with this city-loan deal, the price of which varied from day to day, and which he was only too anxious to have vary, for in the main he profited by these changes.

But this second burden, interesting enough as it was, meant that he had to be doubly watchful. Once the stock was sold at a high price, the money borrowed from the city treasurer could be returned; his own holdings created out of foresight, by capitalizing the future, by writing the shrewd prospectuses and reports, would be worth their face value, or little less. He would have money to invest in other lines. He might obtain the financial direction of the whole, in which case he would be worth millions. One shrewd thing he did, which indicated the foresight and subtlety of the man, was to make a separate organization or company of any extension or addition which he made to his line. Thus, if he had two or three miles of track on a street, and he wanted to extend it two or three miles farther on the same street, instead of including this extension in the existing corporation, he would make a second corporation to control the additional two or three miles of right of way.

This corporation he would capitalize at so much, and issue stocks and bonds for its construction, equipment, and manipulation. Having done this he would then take the sub-corporation over into the parent concern, issuing more stocks and bonds of the parent company wherewith to do it, and, of course, selling these bonds to the public.

Even his brothers who worked for him did not know the various ramifications of his numerous deals, and executed his orders blindly.

Sometimes Joseph said to Edward, in a puzzled way, “Well, Frank knows what he is about, I guess.”

On the other hand, he was most careful to see that every current obligation was instantly met, and even anticipated, for he wanted to make a great show of regularity. Nothing was so precious as reputation and standing. His forethought, caution, and promptness pleased the bankers. They thought he was one of the sanest, shrewdest men they had ever met.

However, by the spring and summer of 1871, Cowperwood had actually, without being in any conceivable danger from any source, spread himself out very thin. Because of his great success he had grown more liberal—easier—in his financial ventures. By degrees, and largely because of his own confidence in himself, he had induced his father to enter upon his streetcar speculations, to use the resources of the Third National to carry a part of his loans and to furnish capital at such times as quick resources were necessary.

In the beginning the old gentleman had been a little nervous and skeptical, but as time had worn on and nothing but profit eventuated, he grew bolder and more confident.

“Frank,” he would say, looking up over his spectacles, “aren’t you afraid you’re going a little too fast in these matters? You’re carrying a lot of loans these days.”

“No more than I ever did, father, considering my resources. You can’t turn large deals without large loans. You know that as well as I do.”

“Yes, I know, but—now that Green and Coates—aren’t you going pretty strong there?”

“Not at all. I know the inside conditions there. The stock is bound to go up eventually. I’ll bull it up. I’ll combine it with my other lines, if necessary.”

Cowperwood stared at his boy. Never was there such a defiant, daring manipulator.

“You needn’t worry about me, father. If you are going to do that, call my loans. Other banks will loan on my stocks. I’d like to see your bank have the interest.”

So Cowperwood, Sr., was convinced. There was no gainsaying this argument. His bank was loaning Frank heavily, but not more so than any other. And as for the great blocks of stocks he was carrying in his son’s companies, he was to be told when to get out should that prove necessary. Frank’s brothers were being aided in the same way to make money on the side, and their interests were also now bound up indissolubly with his own.

With his growing financial opportunities, however, Cowperwood had also grown very liberal in what might be termed his standard of living. Certain young art dealers in Philadelphia, learning of his artistic inclinations and his growing wealth, had followed him up with suggestions as to furniture, tapestries, rugs, objects of art, and paintings—at first the American and later the foreign masters exclusively. His own and his father’s house had not been furnished fully in these matters, and there was that other house in North Tenth Street, which he desired to make beautiful. Aileen had always objected to the condition of her own home. Love of distinguished surroundings was a basic longing with her, though she had not the gift of interpreting her longings. But this place where they were secretly meeting must be beautiful. She was as keen for that as he was. So it became a veritable treasure-trove, more distinguished in furnishings than some of the rooms of his own home. He began to gather here some rare examples of altar cloths, rugs, and tapestries of the Middle Ages. He bought furniture after the Georgian theory—a combination of Chippendale, Sheraton, and Heppelwhite modified by the Italian Renaissance and the French Louis. He learned of handsome examples of porcelain, statuary, Greek vase forms, lovely collections of Japanese ivories and netsukes. Fletcher Gray, a partner in Cable & Gray, a local firm of importers of art objects, called on him in connection with a tapestry of the fourteenth century weaving. Gray was an enthusiast and almost instantly he conveyed some of his suppressed and yet fiery love of the beautiful to Cowperwood.

“There are fifty periods of one shade of blue porcelain alone, Mr. Cowperwood,” Gray informed him. “There are at least seven distinct schools or periods of rugs—Persian, Armenian, Arabian, Flemish, Modern Polish, Hungarian, and so on. If you ever went into that, it would be a distinguished thing to get a complete—

I mean a representative—collection of some one period, or of all these periods. They are beautiful. I have seen some of them, others I’ve read about.”

“You’ll make a convert of me yet, Fletcher,” replied Cowperwood.

“You or art will be the ruin of me. I’m inclined that way temperamentally as it is, I think, and between you and Ellsworth and Gordon Strake”—another young man intensely interested in painting—“you’ll complete my downfall. Strake has a splendid idea. He wants me to begin right now—I’m using that word ‘right’

in the sense of ‘properly,’” he commented—“and get what examples I can of just the few rare things in each school or period of art which would properly illustrate each. He tells me the great pictures are going to increase in value, and what I could get for a few hundred thousand now will be worth millions later. He doesn’t want me to bother with American art.”