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easily have been managed much more economically. But these warrants, as can readily be
imagined, had come to be a fine source of profit for note-brokers, bankers, political financiers,
and inside political manipulators generally and so they remained a part of the city's fiscal policy.
There was just one drawback to all this. In order to get the full advantage of this condition the
large banker holding them must be an "inside banker," one close to the political forces of the
city, for if he was not and needed money and he carried his warrants to the city treasurer, he
would find that he could not get cash for them. But if he transferred them to some banker or
note-broker who was close to the political force of the city, it was quite another matter. The
treasury would find means to pay. Or, if so desired by the note-broker or banker--the right
one--notes which were intended to be met in three months, and should have been settled at that
time, were extended to run on years and years, drawing interest at six per cent. even when the
city had ample funds to meet them. Yet this meant, of course, an illegal interest drain on the
city, but that was all right also. "No funds" could cover that. The general public did not know. It
could not find out. The newspapers were not at all vigilant, being pro-political. There were no
persistent, enthusiastic reformers who obtained any political credence. During the war, warrants
outstanding in this manner arose in amount to much over two million dollars, all drawing six per
cent. interest, but then, of course, it began to get a little scandalous. Besides, at least some of
the investors began to want their money back.
In order, therefore, to clear up this outstanding indebtedness and make everything shipshape
again, it was decided that the city must issue a loan, say for two million dollars--no need to be
exact about the amount. And this loan must take the shape of interest-bearing certificates of a
par value of one hundred dollars, redeemable in six, twelve, or eighteen months, as the case
may be. These certificates of loan were then ostensibly to be sold in the open market, a sinking-
fund set aside for their redemption, and the money so obtained used to take up the long-
outstanding warrants which were now such a subject of public comment.
It is obvious that this was merely a case of robbing Peter to pay Paul. There was no real
clearing up of the outstanding debt. It was the intention of the schemers to make it possible for
the financial politicians on the inside to reap the same old harvest by allowing the certificates to
be sold to the right parties for ninety or less, setting up the claim that there was no market for
them, the credit of the city being bad. To a certain extent this was true. The war was just over.
Money was high. Investors could get more than six per cent. elsewhere unless the loan was
sold at ninety. But there were a few watchful politicians not in the administration, and some
newspapers and non-political financiers who, because of the high strain of patriotism existing at
the time, insisted that the loan should be sold at par. Therefore a clause to that effect had to be
inserted in the enabling ordinance.
This, as one might readily see, destroyed the politicians' little scheme to get this loan at ninety.
Nevertheless since they desired that the money tied up in the old warrants and now not
redeemable because of lack of funds should be paid them, the only way this could be done
would be to have some broker who knew the subtleties of the stock market handle this new city
loan on 'change in such a way that it would be made to seem worth one hundred and to be sold
to outsiders at that figure. Afterward, if, as it was certain to do, it fell below that, the politicians
could buy as much of it as they pleased, and eventually have the city redeem it at par.
George W. Stener, entering as city treasurer at this time, and bringing no special financial
intelligence to the proposition, was really troubled. Henry A. Mollenhauer, one of the men who
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