"Go on, sir."
"We will suppose at the start that we organize the Central Sonora Railroad Company and capitalize it for—well, just as an example, let's say ten millions of dollars. Before deciding on this we will have made surveys and estimates that have convinced us beyond question that the road may be built and placed in operation for four millions of dollars."
"Then why should it not be capitalized for four millions?"
"Because that is not business—safe, conservative business. Because that would make it impossible to raise the money needed without ourselves taking chances of great loss. Let me proceed. Having organized in a legal manner, and having issued certificates of stock to the extent of ten millions of dollars, we can next proceed to raise the money required to begin active building operations."
"By placing the stock on the market?"
"Not yet. Every man here, with the possible exception of yourself, Mr. Merriwell, is known to every great banking institution in the country, and his credit is unlimited. At the outset we will take four million dollars' worth of our stock to some institution and secure from it on that stock the full sum required to build the railroad. Thus, you can see, we will not have to put up a dollar of our own money; but we will build the railroad with the money of the general public, which has been deposited at the bank from which we secure it."
"I see," nodded Frank, his eyes shining queerly. "It's a fine little scheme you have, Mr. Jerome!"
"I am letting you into the secret methods of capitalists who build railroads and organize great business projects without using a dollar of their own money," said Jerome. "Having secured our money, we will proceed to put our railroad through."
"We'll build it, and the general public will pay the bills?"
"Exactly. Having it constructed, by successful manipulation—the easiest thing in the world for those who know the trick—we'll unload four million dollars' worth of stock on the public and square ourselves with the bank. At this stage of the game the public will have paid for the railroad, which was built with the public's own money; but we shall still hold six million dollars' worth of stock in that road, or the controlling interest."