ARTHUR.T Stories ----A Study in Finance ----VI---Page 31

Meantime the stock, which had been listed at 2-1/4, began to go rapidly
up. Word went around the trust company that it was a great purchase
anywhere below 10, and John, as well as the other boys employed in the
company, got together what money he could and began to buy it. It
continued to go up--they had unconsciously assisted it in its
ascent--and they bought more. John purchased seventy-five shares--all
the way up to 8 and 9. One of his friends took eight hundred. Then it
dropped out of sight. They hadn't time to get out, and John, in prison,
has his yet. But he still had faith in Prescott, for he liked him and
believed in his business capacity.

The stock "operation" over, Prescott began to prospect for something

new, and suggested to John that they form a brokerage house under the
latter's name. John was to be president at "a fixed salary." It sounded
very grand. His duties at the trust company began to seem picayune.
Moreover, his loss in copper had depressed him and he wanted to recoup,
if he could. But how to get the two thousand five hundred dollars
necessary to start in business? Prescott pleaded poverty, yet talked
constantly of the ease with which a fortune might be made if they could
only once "get in right." It was a period of increased dividends, of
stock-jobbing operations of enormous magnitude, of "fifty-point
movements," when the lucky purchaser of only a hundred shares of some
inconspicuous railroad sometimes found that he could sell out next week
with five thousand dollars' profit. The air seemed full of money. It
appeared to rain banknotes and stock certificates.

In the "loan cage" at the trust company John handled daily millions in

securities, a great part of which were negotiable. When almost everybody was so rich he wondered why any one remained poor. Two or three men of his own age gave up their jobs in other concerns and became traders,
while another opened an office of his own. John was told that they had
acted on "good information," had bought a few hundred shares of Union Pacific, and were now comfortably fixed. He would have been glad to
buy, but copper had left him without anything to buy with.

One day Prescott took him out to lunch and confided to him that one of the big speculators had tipped him off to buy cotton, since there was going to be a failure in the crop. It was practically a sure thing. Two thousand dollars' margin would buy enough cotton to start them in
business, even if the rise was only a very small one.

"Why don't you borrow a couple of bonds?" asked Prescott. "Borrow from whom?" inquired John.

"Why, from some customer of the trust company."
"No one would lend them to me," answered John.

"Well, borrow them, anyhow. They would never know about it, and you
could put them back as soon as we closed the account," suggested
Prescott.

John was shocked, and said so.

"You are easy," said his comrade. "Don't you know that the trust

companies do it themselves all the time? The presidents of the railroads
use the holdings of their companies as collateral. Even the banks use
their deposits for trading. Didn't old ---- dump a lot of rotten stuff
on you? Why don't you get even? Let me tell you something. Fully
one-half of the men who are now successful financiers got their start by
putting up as margin securities deposited with them. No one ever knew
the difference, and now they are on their feet. If you took two bonds
overnight you might put them back in the morning. Every one does it.
It's part of the game."

"But suppose we lost?" asked John.

"You can't," said Prescott. "Cotton is sure to go up. It's throwing away the chance of your life."

John said he couldn't do such a thing, but when he returned to the

office the cashier told him that a merger had been planned between their company and another--a larger one. John knew what that meant well
enough--half the clerks would lose their positions. He was getting
thirty-five dollars a week, had married a young wife, and, as he had
told the magnate, he "needed it all." That night as he put the
securities from the "loan cage" back in the vault the bonds burned his
fingers. They were lying around loose, no good to anybody, and only two of them, overnight maybe, would make him independent of salaries and mergers--a free man and his own master.

The vault was in the basement just below the loan cage. It was some

twenty feet long and ten wide. There were three tiers of boxes with

double combination doors. In the extreme left-hand corner was the "loan
box." Near it were two other boxes in which the securities of certain
customers on deposit were kept. John had individual access to the loan
box and the two others--one of which contained the collateral which
secured loans that were practically permanent. He thus had within his
control negotiable bonds of over a million dollars in value. The
securities were in piles, strapped with rubber bands, and bore slips on
which were written the names of the owners. Every morning John carried
up all these piles to the loan cage--except the securities on deposit.
At the end of the day he carried all back himself and tossed them into
the boxes. When the interest coupons on the deposited bonds had to be
cut he carried these, also, upstairs. At night the vault was secured by