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I Enter Politics and Politics Becomes My Business—My First Lesson in Finance
Politics had never interested me up to my thirtieth year.
I went to the polls when a President or a Governor was to be elected, and occasionally to the primaries.
But I went with about the same feeling that I paid my taxes.
As for city politics, I knew nothing about it.
It was bad business anyway.
The city seemed to be ruled by a sort of underworld that only touched me as a property owner, and occasionally aroused my disgust through the disclosures of corruption that seemed to mark the City Council.
To me a politician was a sort of wizard who had no ostensible business. He trafficked in jobs and usually kept a saloon.
It did not occur to me that a business man had any place in politics, or that he had any chance.
It was really self-interest that first led me into politics.
The city was growing rapidly and real estate values were going up.
I owned a large block of land near the center of the city, which was covered with small buildings that I did not care to replace with larger ones.
I had bought the land at a low price and was holding it for speculation.
I found its tax valuation going up so fast that it was becoming unprofitable to hold the land.
As it was, the rentals scarce met the taxes and charges against the property.
I made some inquiries about the local assessor, and prior to the next assessment went to the county auditor to see if a man whom I employed might not be appointed in that ward.
He suggested that he had a fight on his hands for re-election, and intimated that a campaign contribution might help my case.
I contributed a hundred dollars, and on his election secured the appointment of a man as assessor upon whom I could rely.
Through him I was able to keep my assessments down to a reasonable figure.
In this way I made my entrance into local politics.
About this time I concluded my property would be greatly enhanced in value if the street were paved and sewered.
In this matter I engaged the interest of the alderman from the ward, and through him came in touch with the Mayor and the Committee on Highways.
In a short time I found that the politician was a very human fellow, and not such a bad sort as I had supposed.
During these years the city had been growing with great rapidity.
It was ragged and spread over a large area, making transportation difficult.
One day the President of the bank in which I had become a director said he thought that a street railway would be a profitable venture, and suggested that I go in with him and secure a franchise.
I smiled at this idea, as I knew nothing of street railway matters, and, besides, had no money to invest in such a project, even had I been so inclined.
“Oh,” he said, “you can leave all that to me if we can only secure the franchise.
You won’t need very much capital, and we can easily secure men of experience to manage it.
You are well known among politicians and have a number of friends in the Council.
‘I will look after the financing.
At the same time, you are the owner of a large tract of land which might be reached in our routes to the outskirts of the city.”
The latter suggestion appealed to me, for I appreciated that if the land could be brought within easy access of the city, it would be greatly enhanced in value.
That of itself would be a tremendous advantage, even though the railway itself was not a success.
I interested myself in the project and consented to see what could be done.
We had a franchise prepared by our attorneys for twenty-five years.
I took the matter up with Murphy, one of the party leaders, a number of aldermen and the Mayor, and they said they thought it would be a fine thing for the city, and manifested a willingness to do anything they could for me.
But Murphy said that such things were expensive, and that it would probably cost from $5,000 to $10,000 to see the matter through the Council.
I refused to consider such a proposition.
I had never given money for anything more than campaign purposes.
But my associates were not so delicate.
They said you had to do things that way.
The Council were a bad lot.
They held up everything, good or bad, till they got their price.
Some arrangement was ultimately made by which the franchise should be
granted to our company.
We interested the daily papers in the project, induced them to urge its passage, and finally it was granted to us upon our own terms.
In reality, it was granted to a dummy, from whom we purchased the franchise for $15,000.
What was done with this money I never knew, although I fancy that most of it stopped in the pocket of Murphy, the party boss, who had managed the matter for us in the Council.
For myself, I scarcely knew what to do with the franchise, after we had gotten it.
It seemed to me we had gotten a bull by the tail.
We had not the money to build, and I could not, with any confidence, recommend it to my friends, and the local banks had no experience in such matters.
But I soon learned my first lesson in finance.
It has since stood me in good stead.
Estimates were secured as to the cost of construction, and with these in our pockets, we went to New York for the purpose of financing the proposition.
It did not occur to me that money could be borrowed upon a mere privilege in the streets, which was terminable at the end of twenty-five years.
I could think of nothing which seemed a more hazardous venture.
But we boldly proposed to issue a half million dollars of bonds, and use the proceeds for construction purposes.
I confess I was not over sanguine.
But the bankers seemed to be interested chiefly in the size of the city, its rate of growth and distribution.
How much the plant would cost did not seem to concern them greatly.
I ultimately learned that a franchise in the streets was the best sort of security, and that one could secure a loan upon it even in excess of the cost of construction.
It was better than real estate.
In a growing town, earnings are bound to increase whether times be good or bad.
They grow from ten to fifteen per cent. a year.
If the proposition is sound today, the security increases with time.
The paper franchise, bearing the signatures of the Mayor and the Clerk, which we had bought with so many questionings for $15,000, turned out to be gilt-edged collateral, and was worth a. million.
We finally secured a loan for half a million dollars on consideration of giving the bank twenty per cent of the stock, or $200,000, as a consideration for the underwriting.
We issued a million of stock, and found ourselves the possessors of a street railroad and $800,000 of stock certificates, which had cost us nothing save the influence which we had among the politicians, and an outlay of a few thousand dollars.
From the first, the road paid interest and operating expenses.
So gratifying was the result and so rapidly was the city growing, that we projected it into other streets.
Within a few years’ time we had increased our capitalization to $5,000,000, and secured such extensions and franchises from the Council as were necessary to complete the system.
In large part we did this without resorting to corrupt methods.
There was such a demand for service that we organized the citizens or real estate speculators of a neighborhood, who fought our battles for us.
We used to send delegations to the City Hall, clamorous for an extension, so that it appeared to the people that the company was conferring a favor upon them by building new lines.
In five years’ time our earnings had doubled, and within that period I had made in the neighborhood of $1,000,000 in a business which a few years before I knew nothing of, and in which I had not invested a dollar, and into which I had put very little time or energy.
I had gained much experience by this time.
I knew the value of such properties, and was now in touch with banking institutions in other cities.
I looked up the matter of artificial gas and found it to be even more profitable than railways.
I got in touch with a gas contractor, who was willing to erect such a plant and take his pay in bonds.
I then moved on the Council, and succeeded in getting a franchise from the city through the aid of the newspapers, one of which I now had an interest in, as well as the local boss, whom I had taken into partnership on several deals which had proven advantageous.
I was slowly becoming identified with politics, and through the agency of the bosses of both parties I was able to line up both the Republican and Democratic Councilmen.
In this instance we paid nothing for the franchise, although considerable stock was distributed among the local newspapers, and some of it was advantageously placed in the hands of political leaders for the purpose of protection.
At that time it was not necessary to use money as it was later.
Everyone was interested in the development of the town, and was proud of my enterprise and daring in venturing to construct a gas plant.
As a matter of fact, at this time I was looked upon as a public-spirited citizen.
I was building up the city.
As I said before, the gas proposition was easily financed, for the contractor accepted his pay in bonds, which he readily negotiated, leaving me in possession of almost all of the capital stock.
From the start the gas plant paid handsomely.
As time went on we extended our mains into all parts of the city, and found it even more profitable than the street railway.
Our earnings increased by leaps and bounds.
In time we introduced economies and disposed of the by-product so advantageously that we were able to place gas in the mains at but trifling cost to ourselves.
The earnings from the sale of gas were velvet.
I was becoming more closely bound to politics every day.
We had contracts with the city for lighting the streets, as well as the public buildings.
It was necessary to protect ourselves from “striking” legislation.
I made it a point to become acquainted with the Councilmen.
I knew them by name, and kept myself acquainted with their families and business.
The same thing was even more true of the street railways.
We were always wanting small extensions and privileges for the erection of poles and street work.
From the first, I was a large contributor to campaign funds.
As a matter of fact, we made our contributions to both parties.
I had chosen as manager of the street railway a leader in the Democratic party who was thoroughly familiar with ward politics.
He knew all the boys.
He cemented his friendship by giving employment on the line to their friends and relatives.
He was constantly about the City Hall, and was known as a good fellow, so that he could secure almost anything he wanted from the Councilmen of either party.
In time he practically dictated aldermanic nominations in the lower wards.
I used to accuse him of taking children out of the cradle and training them for the Council.
He maintained his control of the members of the Council in many ways.
He would get a man under business or personal obligations to him, and then secure his nomination for the Council.
He would provide him with funds and get the organization back of him, and in this way we had little difficulty with Democratic aldermen.
Others were reached in other ways.
We permitted one to handle our scrap iron.
Another shod our horses; another had all of our insurance.
There was always a lawyer or two whom we gave some sort of business to.
For among us we controlled or were able to influence many lines of business.
Our manager was invaluable in many other ways.
He organized the Council through his intimate acquaintance with the members.
He would get the fellows together for a caucus.
At the meeting one of his friends would be chosen for President and another as Clerk.
Through the President, the Committees on Street Railways, Streets, Lighting and the like would be made up, and as the Council was mostly composed of men from the lower walks of life, who devoted little time and attention to their duties, he was able in this way to control such legislation as we needed.
In much the same way I became identified with the Republican organization.
The city and county were Republican by a safe majority, and my large contributions to the campaigns gave me a position of standing in the party councils.
I was made Treasurer of the Executive Committee.
In time I came to dominate the organization.
This was a comparatively simple matter, as it was held together largely by spoils, and was dependent upon the source of supply.
At the same time the interest of the general public was sporadic.
Just as I had previously found it necessary to protect my real estate through the ward assessors, I now found it necessary to protect our gas and railway properties from excessive taxation.
They were worth millions in the market, but they could be reproduced for a very much smaller sum.
It became a matter of moment to us to have them assessed at their structural value.
And the first favor which I asked of the organization was the naming of the County Auditor.
I appreciated that by one stroke of his pen he could increase our taxes hundreds of thousands of dollars, by merely estimating our franchises as taxable property.
This we were able to prevent through our control of the organization and the selection of a man known to us to be safe.
For the same reason, I was interested in the appointment of the Director of Streets.
We were constantly tearing up the highways for the gas mains and for street railway purposes, and a hostile director had it in his power to cause us a great deal of trouble.
In this almost unconscious way I ultimately became the leader of the Republican party in the city and county.
I did not achieve this position as an ambition, but drifted into it naturally from the necessity of the situation.
And, as afterwards transpired, it was fortunate that this was true.
This series of posts will insure that these free thinkers' works live on in living memory.
If only a few.
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