Dick and Frank make their way to the Fifth Avenue Hotel, which Frank knows by name. Dick says that he stayed outside of it once, joking that he found the rates quite reasonable. The boys joke that the queen could live there, though the narrator notes that one of actual royal palaces is a very ugly, unimpressive building that holds no comparison to the “democratic” Fifth Avenue hotel.
The two discuss Dick’s homelessness, and how it would be quite preferable for him to stop sleeping on the streets or in cheap, one-night hovels and instead rent a room of his own. Dick says winter nights are especially hard, though the narrator notes it’s difficult for Frank to grasp that his companion “had actually walked the streets in the cold.”
Though Dick admits that it gets cold in New York City during the winter, Alger carefully censors the boy’s homelessness such that the worst it seems he might endure is a few shivers. In reality, homelessness would, at times, likely be a life-or-death affair.
As Dick and Frank walk and talk, they encounter a conman whom Dick has some knowledge of. The man attempts his con on the two boys: he pretends to have just found a wallet on the ground, filled with cash. He’s sure that the wallet’s owner will want to give him a large reward, but claims he can’t stick around to return it, as he’s late for his train already. Instead, he wants the boys to take the wallet and return it, receiving the reward. All he asks in return is twenty dollars from Frank and Dick, which he assures them will be only a small portion of the reward the wallet’s owner will give them.
The remarkable amount of money that the man asks for shows just how well-off the boys must look. This moment also paints the city in a certain light. Here, and going forward, the city crawls with predators looking for any weakness whatsoever. Dick’s “street education” allows him to bypass all this, which certainly means it has value.
Dick, knowing that the wallet is stuffed with fake money, gives the conman a fake bill of his own in exchange for the wallet. The man hurries off, and Dick explains the con to Frank, who expresses shock at the whole affair. Dick, however, is quite happy, as he’s at least gained a new wallet from it.
This is one of those moments where Alger seems to have forgotten his previous plot. Had Dick been found with this fake bill earlier, in chapter three, things would have gone quite badly for him.
When the conman discovers that Dick has given him a fake bill, he returns, and threatens to call the police on Dick. Dick handles the man easily, telling the conman that he wishes he would call the police, as the police could help figure out who owned the wallet. Defeated, the man walks off, leaving Dick and Frank laughing behind him.
It's not immediately clear why Dick outconning the conman—instead of simply ignoring his game—is consistent with his strict program of moral uprightness. After all, Dick profits from his con (he gets a wallet out of the deal) in much the same way as the conman does.