“This is the big drop,” the other went on, with a wine-laden man’s pride in the fact of possessing valuable secrets. “They’re going to make a million-dollar bond issue.”
“What for?” inquired Bobby.
“They need the money,” chuckled Mr. Smythe. “Those city bonds, you know.”
“What bonds?” demanded Bobby eagerly, but trying to speak nonchalantly.
Mr. Smythe suddenly realized the solemn gravity of his folly. Once more he was talking too much. Once more! It was a thing to weep over. “I’m a fool,” he confessed in awe-stricken tones; “a rotten fool, Burnit. I’m ashamed to look anybody in the face. I’m ashamed——”
“It’s highly commendable of you, I’m sure,” Bobby agreed, and took his hasty leave before Clarence should begin to sob.
Immediately he called up Chalmers at his home.
“Chalmers,” he demanded, “why must the Consolidated Illuminating and Power Company purchase city bonds?”
Chalmers laughed.
“Originally so Sam Stone could lend money to the Consumers’ Electric. It is a part of their franchise, which is renewable at their option in ten-year periods, and which became a part of the Consolidated’s property when the combine was effected. To insure ‘faithful performance of contract,’ for which clause every crooked municipality has a particular affection, they were to purchase a million dollars’ worth of city bonds. Each year one hundred thousand dollars’ worth were retired. In the tenth year, in renewing their franchise for the next ten years, they were compelled to renew also their million dollars of city bonds. These bonds they then used as collateral. Stone carried all that he could, at enormous usury, I understand, and let some of his banker friends in on the rest; and I suppose the banks paid him a rake-off. The ten-year period is up this fall, and their bonds are naturally retired; but, of course, they will renew.”