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.
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