However, there was little that the selling syndicates could do to protect themselves. If they refused to be included in the next syndicate, the originating house would not offer them syndicate participation again and business would be lost. As a rule they chose to participate, but as their world became increasingly dangerous, so correspondingly did it become more vital for the investment banking houses which formed the originating syndicates to be of unimpeachable integrity. An investment banker had always lived by his reputation, but now more than ever before we found that too many errors or the merest whiff of fraud could finish a banker overnight.
In 1921 Da Costa, Van Zale and Company were principally engaged in pumping capital into Europe, but we also maintained some profitable South American business, and that spring I had a visit from Mr. Roberto Salzedo, a client I had helped twice before and was willing to help a third time if the circumstances merited it. Salzedo was one of those men who are so cosmopolitan that one never thinks of them as having any nationality at all; it came as a great surprise to me when I later discovered he was a secret but rabid nationalist of the hilly little republic where he had been born. He had been brought up in Argentina in a German section of Buenos Aires, had been educated expensively in Switzerland and had spent the past ten years living in New York in between frequent business sorties to South America. He looked vaguely Scandinavian and spoke excellent American English with an unidentifiable foreign accent. In any event he was an able man with considerable experience in international banking, and in those days when American banks were panting to jump on the bandwagon of foreign expansion, particularly in South America, men like Salzedo were highly prized by their employers.
Salzedo’s employer was the Mortgage Bank of the Andes, a huge concern which seemed to have blossomed forth from nowhere and which in 1925 was to be wound up ignominiously, a victim of the overextension in foreign markets which was the natural consequence of so much mindless expansion. However, in 1921 it was at its zenith. It had been incorporated under the laws of the state of Connecticut in August of 1916 with an authorized capital of five million dollars, and had sixteen foreign offices scattered throughout South and Central America, and one domestic branch, in New York.
Salzedo, who operated out of New York, had responsibility for the South American branches, and on the two previous occasions on which we had done business together I had helped him set up branches in Lima and Valparaiso. The flotations had sold well; the American public was a little bored with Europe, and although South American investment always seemed to have a dubious flavor there was something reassuring about investing in a bank. When Salzedo came to see me to seek a loan for further expansion I could see no reason why I should refuse him, particularly since his new branch was to be in the hilly little republic where he had spent his early years. When expanding in foreign countries it always helps to have a native’s-eye view of the terrain, and in fact if he had not received a certain telephone call as we were sitting in my office discussing the final terms I might never have discovered he had become so embroiled in local politics that he had every intention of embezzling my new loan in the cause of patriotism.
When he took the call his first words were, “Oh, it’s you!” And then to my extreme surprise he began to speak not in Spanish, which I as a North American might well have understood, but in Yiddish. Of course he had no idea I had trained in a Jewish house.
Many words have been wasted in speculating whether Salzedo was Jewish, but the question is really irrelevant. Salzedo claimed that he was not, that he and his brother had merely picked up the dialect in the German section of Buenos Aires, and personally I saw no reason to disbelieve him. I doubted if I were the only gentile in the world with a working knowledge of Yiddish. Anyway, Jewish or not, he must have considered himself a patriot who was not working for his personal gain, and I am sure there are many people in South America who still regard him as a hero and not, as the American public later judged him, a villain of the first degree.
What he said in Yiddish was innocuous. He simply criticized his brother fiercely for interrupting him at a critical point in the meeting and swore that everything was going according to plan. If he had spoken in English or in Spanish I would hardly have thought twice about the conversation, but the fact that he spoke a language he was sure I could not understand aroused my suspicions immediately. Alternatively if he had merely explained afterward that he was Jewish I would also have accepted his choice of language as natural, but Salzedo had to deny he was Jewish, and so in alarm I reopened my investigations not only into his South American banking operations but also into his private life.
Putting O’Reilly to work in the strictest secrecy I discovered that Salzedo had committed himself to financing a revolution with the loan which I was willing to grant to his bank in the form of a six-and-a-half-percent gold bond issue. O’Reilly, always miraculously adept at digging up dirt, had excelled himself. I gave him a bonus to express my admiration, doubled it to ensure he kept his mouth shut, and sat back to decide what to do next.
I had no illusions about the dangers of the course I wanted to take, and for one long moment I hesitated on the brink. It was only when I remembered Vicky that I no longer cared how great the risks were.
It was the gamble of my gambler’s life. I staked my entire career, my immense reputation and the future of my house to gamble for the ruin of Jason Da Costa.
“I’m afraid I won’t be able to manage the final details of the loan myself,” I told Salzedo. “I’m going out of town next week, but my partner Jason Da Costa will complete the arrangements with you.”
Later Jay asked me as a matter of routine about the investigation.
“Everything’s fine,” I said. “I’ll send you all the reports.”
But I did not. I kept back the secret file from O’Reilly about Salzedo’s political activities and submitted only the Mortgage Bank of the Andes’ spectacular South American balance sheets and Salzedo’s enthusiastic scheme for expansion in a hilly little republic which had had the same stable dictatorship for twenty years. Then with the fatal die cast I crossed my Rubicon and took Sylvia on a vacation to Bermuda.
At One Willow Street Jay signed the purchase contract with Salzedo and granted a participation on the original terms to Reischman’s. On the same day they started organizing a banking syndicate, and while this was being arranged letters were sent to numerous dealers to ask them to join a selling syndicate. Within twenty-four hours after the original syndicate had bought the bonds the one organized to sell had disposed of the issue.
Salzedo pocketed the money, abandoned the New York branch of his bank and returned in triumph to his revolutionary friends in South America to overthrow the government, but unfortunately for him people other than myself had discovered his grandiose plans. The revolution failed. The government shot Salzedo, annexed as much of his capital as it could find and denounced both the American government and the Mortgage Bank of the Andes, while far out in the American hinterland an enraged army of investors demanded a full-scale inquiry to establish why their hard-earned money had been used to finance a South American revolution.
The Mortgage Bank of the Andes, frantic with fright, claimed that since Salzedo had had virtual autonomy in the bank’s South American affairs, it had been our responsibility, not theirs, to unmask him in our necessary investigations. That put the ball squarely in our court, and Wall Street began to hum.
Returning from Bermuda, I took O’Reilly’s secret report, headed it “For Da Costa: Private and Confidential,” and mailed it to the New York Times. I reminded O’Reilly that I could circulate an untrue but plausible story about why he had left his Jesuit seminary, and advised him that it was in his own best interests not to leave my employment without a reference. When I promised him a thousand dollars every time he had to tell his story the way I wanted it told, our agreement became not only sealed but indestructible. O’Reilly may not have been the most amusing protégé I had ever had, but he was c
ertainly the most venal.
O’Reilly claimed that when I had transferred the Salzedo file he had routed his special report to Jay through the interoffice mail. He denied having shown me the report before I left for Bermuda because he claimed it had been incomplete at the time.
Naturally the report made a splash in the New York Times, and there began to be talk of fraud and collusion. In Washington the President had awakened to the fact that there might possibly be some truth in the rumor that a firm of New York investment bankers had knowingly attempted to finance a revolution in South America, and Congress, which had been trying to keep the lid on a possible scandal, now gave up the attempt and started muttering about a Senate inquiry. Questions from various sources of law enforcement mounted daily, the press was in full cry and the public was howling for retribution.
Jay denied everything, but his standing was destroyed among his fellow bankers and with the dealers his integrity had been reduced to dust. The single fact that he was suspected of collaborating with Salzedo in defiance of O’Reilly’s report was enough; an investment banker must be above suspicion, and although no one, not even the grand jury, could prove that Jay had privately gained from the loan the firm had made Salzedo, the rumor continued to reverberate through Wall Street until by 1922 it was obvious that for the good of the house, the Street and the profession he would have to resign.
But he clung to his power and his innocence. “I’ll never resign!” he said fiercely at our final partners’ meeting. “It’s not a crime to make a mistake, and I never saw that report!”
Nobody said anything. The others were too embarrassed and angry by that stage and I did not want to overplay my hand, but Jay called me out. Rounding on me in fury he shouted, “How much did you pay O’Reilly to lie?” And then pandemonium broke loose as the blood began to flow behind the exquisite façade of our place at Willow and Wall.
The other partners tried to stop us. Everyone was shouting, but Jay outshouted them all. As Charley Blair and Lewis Carson dragged him back and Steve Sullivan pinned me to my chair, Jay yelled at me, “You sonofabitch! You goddamned crazy—”
I knew what he was going to say the second before he said it. My secret was to be dragged out of the closet at last, my most private humiliation was to be aired in public, and soon there would be no one in all New York who did not know that I, Paul Cornelius Van Zale, was an—
“—epileptic!” shouted Jason Da Costa.
I was mute. There was no escape. I tried to move but was paralyzed. I could barely breathe.
“This guy’s crazy, he’s sick. He’s getting his revenge on me because he thinks I killed his daughter. He’s got no business to be walking around the streets—he should be locked up in an asylum along with all the other insane hallucinating—”
He used the word again. I felt myself flinch, but although I prayed for someone to interrupt him no one spoke, and when I forced myself to glance around the table I saw only their blank faces, frozen with shock, and the faint fatal flicker of repulsion.
“… and they wouldn’t let him out when he was a child! They kept him locked up, but later they let him out occasionally—yes, it’s true! I saw him have a fit once—we were playing tennis and he fell to the ground and thrashed about and foamed at the—”
“You shut your goddamned mouth!” But it was not I who spoke but Steve Sullivan, the most loyal of all my protégés, the younger brother I never had. I was still beyond speech, immobilized by the huge sodden weight of my shame, but Steve went for Jay like a boxer bursting from his corner, and it took not only Charley and Lewis but also Clay and Hal to tear him away.
“Get out of here!” roared Steve to Jay. “You’ve ruined yourself, but I’m damned if you’re going to drag us all down with you!”
“Steve’s right,” said Charley suddenly, and Lewis intoned, “For the good of the firm …”
Jay protested, but they silenced him. They came at last to my defense. I think it was because I said nothing. They thought I was behaving like a model Christian gentleman by turning the other cheek to my enemy, and they mistook my dumb humiliation for a dazzling display of dignity.
Afterward it was Charley Blair who said to me kindly and with great tact, “I guess none of us knew you’d ever suffered from epilepsy, Paul, but you can be sure that every one of us will hold that information in confidence. How long have you been well now?”
“Since I was fourteen.”
“So of course you think of yourself as cured?”
“Of course.”
I managed to get home and shut myself up in the library before I had my next seizure. No one saw. No one knew. Afterward I was bruised on my left ribs, and a muscle in my shoulder was torn, but I said nothing, took more medication and forced myself to accompany Sylvia to the opera. I felt very unwell and very frightened, but I did my best to behave normally and Sylvia merely thought I was tired. It was somewhere in the second act that O’Reilly tiptoed into our box to inform me that Jay had blown his brains out.
I had never thought he would kill himself. I had envisioned an obscure humiliated retreat to Florida but not that blood-spattered self-inflicted end in the heart of Manhattan. I had not understood him when he swore he would never resign.
His suicide created a sensation in the press, but soon we saw that instead of increasing the scandal it had ended it. It was as if he had after all assumed the responsibility for the Salzedo affair, so that the rest of us were exonerated from blame. We knew then that the firm would live. All my partners stood behind me because they knew their survival depended on mine, and beyond the walls of One Willow Street the profession closed its ranks to protect us from the world as we nursed ourselves painfully back to health. I remember the secret handshakes, the public expressions of confidence, the tough words in private and the honeyed smiles for the press, but at last the nightmare was receding and I knew not only that I had won my gamble with Salzedo but that I had achieved everything I had ever wanted in those far-off days when Lucius Clyde had banished me into the penury of the Lower East Side.
More days passed. I was a big man on Wall Street now. I rode in my Rolls-Royce to my palace at Willow and Wall, and I lunched with Lamont of Morgan’s, and the President himself would call me for advice from the White House. I had my mansion on Fifth Avenue and my cottage at Bar Harbor and my estate in Palm Beach; I had my showpiece wife and my loyal ex-mistress and all the women I could possibly want; and I had my wealth and my glamour and my fame.
By March I knew I could endure my world no longer, but I knew too that I would have to be careful how I escaped. It would never do if people suspected I was running away. I would have to find a cast-iron excuse for leaving New York and I would have to find it at once before my health collapsed completely and all America started to talk about my seizures. That was when I made a telephone call to the Treasury Secretary and won the prestigious role of observer at the Genoa Conference, but I was deceiving myself when I thought an escape to Europe would automatically mean an escape from the gold-barred cage in which I had imprisoned myself. I found I had taken my prison with me, gold bars and all, and I had remained in my prison until Dinah led me to freedom.
Yet now that freedom was coming to an end. Hal Beecher was the jailer sent to bring the escaped convict back to the prison yard, and from across the Atlantic the summons was raking me home.
“Jay’s boys are after your blood, Paul,” Hal said, and as soon as he spoke I knew I could not turn my back on the position I had hacked out for myself at One Willow Street. If I gave up now it would mean that my past suffering had been for nothing. It would mean I had sold my daughter and killed her husband yet still won nothing but ruin and disgrace.
I had to go on. The prison gates swung wide before me, but it was I myself who stepped inside and threw away the key.
I looked at Hal. I looked at O’Reilly, and suddenly I saw myself as the world must have seen me in recent months, a middle-aged man making a fool of himself with a girl young enou
gh to be his daughter and ignoring his work to moon around some rural waterways in a nickel-and-dime sailboat. No wonder Stewart and Greg Da Costa thought I had grown soft and vulnerable! My resolve hardened, my will toughened and all my old instincts for survival reasserted themselves.
“We leave at once for New York,” I said curtly to O’Reilly, and had the satisfaction of seeing his jaw sag before I strode from the room.
IV
In the hall the hammer-beamed ceiling soared above me. I had to stop. It was quiet in the house, and at last, unable to bear the weight of the silence, I ran upstairs to her room.
She was sitting motionless on the edge of the bed, and when I saw her shoulders hunched as if to ward off some attack I saw what I had subconsciously realized all along, that I had made the wrong decision when I decided to stay with her. If we had parted at the end of July the farewell would have been painful but endurable; I would have returned to New York, hired her a business manager and arranged that she should be thoroughly occupied with her business. Now she had nothing and it was hard to imagine her coping with a business until after the baby was born. How could I ever have believed that the affair would burn itself out and leave us free to part in peace? The affair was not extinguished but exacerbated, our emotional desire had become an addiction and the pangs of withdrawal would without doubt put us both through hell. I felt sorry for myself, I felt even sorrier for her, and all the time I was cursing myself for having mishandled the episode of Dinah Slade from its lively original beginning to its sticky, drab, appalling conventional end.
The Rich Are Different Page 15