City of Dreams
Page 19
“Economic symbiosis,” he said.
“More like the cycle of condensation to evaporation to rain. They have to stay in business with us because if we go down, their system dries up. But if we keep printing money, flooding the market in order to fight a recession or fund our pet projects or build a missile defense system to protect us from a Chinese attack that will never come, the dollar loses too much value against world currencies—”
“And the Chinese have to take a hard look at whether they want to keep buying?”
“Right. The immediate crisis comes as the Chinese make a political point by sitting out the auction tomorrow. And of course, the Supreme Court delivers their decision on the New Emission Bonds the day after tomorrow.”
“How does one affect the other?”
“Let Avid Austin tell you.”
“I guess this will be an interesting lunch, then,” said Peter.
Kathy leaned forward on her elbows. “Since you’re busy for lunch, how about having drinks with me later?”
“I’d love to, but—”
“I’m not coming on to you, Peter. Evangeline would find me and kill me.”
He laughed. “You got that right.”
“But come to the Harvard Club. Five o’clock. I’m meeting Arsenault’s accountant. Deep background.”
“On what?”
“Stay tuned.” She stood. They were done.
They shook hands. He considered giving her a hug but thought better of it. At the very least, he didn’t want Evangeline smelling someone else’s perfume on his lapel. That would mean way too much explaining.
THE SAN REMO on Central Park West: famous for the movie stars, fashion designers, and business celebrities who lived there, famous for the silhouette of two graceful towers rising ten stories above the main structure, famous as the place where the Ghostbusters fought the Stay Puft Marshmallow Man.
Austin Arsenault lived in the south tower.
“How do you want to work this?” Evangeline said as the elevator doors closed.
“By pushing the button?” said Peter.
“How do you want to work it with Arsenault? Sometimes you do the analysis and I do the emotional context. Sometimes, you pick up on the emotions while I’m the cold-eyed one.”
It was true, he thought. They really did complement each other, even in the wardrobes: he was wearing his blue blazer with a clean shirt and yellow tie. She had put on a sleeveless form-fitting yellow jersey with a matching sweater, blue slacks, pearl earrings, pearl necklace. Complementary, whether they’d planned it or not.
He said, “How about, you try to figure out what’s going on below the surface—”
“Okay. And you’ll—”
“I’ll just be as superficial as usual.”
The elevator stopped and the door popped open.
A butler greeted them in striped trousers and morning coat. He led them through an inner foyer, past a spectacular staircase that led up to the bedrooms, down a hallway to the living room.
Windows faced east across Central Park and south toward Midtown, but heavy drapes forced the eye from the view to the furnishings—the wing chairs, the antique mahogany side tables, the Oriental carpet, the paintings on the wall, including one that looked like an original Renoir.
Arsenault rose from a chair by the fireplace. “Mr. Fallon and Ms. Carrington. The man and woman of the hour.”
He seemed even sleeker in person, thought Evangeline. Silvered hair, smooth pink skin, double-breasted blue blazer, ascot. As he shook her hand, she felt the male energy, the confidence, the smooth, as she liked to call it.
Peter didn’t. He was looking at the monogram on the blazer. New York Yacht Club? And how much money did he spend for the Renoir? And why was he at home in the middle of the day, in the middle of a financial crisis?
Then another guy got up to greet them, a guy in a gray suit.
Evangeline shook his clammy hand, felt less energy, but she felt something. Doggedness? Relentlessness? The stooped posture said this one wasn’t afraid to hunch over a desk for as long as it took to get a job done. The widow’s peak showed he would comb his hair as he always had, male-pattern baldness be damned. The thin line of perspiration across his upper lip suggested he was a detail-sweater, even in the air-conditioned splendor of Arsenault’s co-op.
Who did he remind her of? Nixon. She had once shaken hands with Nixon, when he was living in New York after his exile: clammy hand, sweating, slouching a bit, and—
“This is Owen T. Magee, my attorney,” said Arsenault.
“Mr. Magee,” Peter offered his hand.
“Owen T. Magee,” said Arsenault. “Owen says the ‘T’ that rhymes with ‘Magee’ gives his name a meter that plays like a song in people’s heads.”
Magee laughed as if he didn’t especially like Austin’s joke. “Either that or I give them my card.” He pulled one out and offered it to Peter: OWEN T. MAGEE, MAGEE & MAGEE, ESTATES, TRUSTS, AND TAXES, FLATIRON BUILDING, 175 FIFTH AVENUE, NEW YORK.
“What the card doesn’t mention,” added Arsenault, “is a reputation for probity and discretion, fanatical attention to detail, glacial calm in the presence of the IRS, and stoic refusal to cede a nickel of a client’s money without a fight.”
“I also hear that he’s suing the government on your behalf,” said Peter.
“I told you he was thorough,” Arsenault said to Magee. “Now then, we have a very nice lunch, but first”—he snapped his fingers, and the butler came in with a tray, four glasses of white wine—“Chassagne-Montrachet 2006. I always like a good wine when I show off my money collection.”
“Money collection?” said Peter.
“I thought people kept their money collections in banks,” said Evangeline.
“I’m talking about money as art, Ms. Carrington. Money as history. Money as the physical expression of our national aspiration.”
He led them down the hall to the library. The heavy drapes were drawn tight, blocking the view, darkening the room, muffling the voices. He had installed UV-filtering glass. “But I still keep the illumination low to protect the treasures.”
He flipped the switches by the door. Spotlights hit framed certificates on the walls, items in glass cases, notebooks on the shelves.
Peter and Evangeline scanned the room but said nothing.
Arsenault, however, liked to talk about himself. “I may be the world’s most prominent scripophilist, which means I collect old money—stock certificates, bonds, currency—not for their face value but for their historic and artistic importance.”
And in the next few minutes, Arsenault introduced them to a new way of seeing American history: not as a string of events or inventions or political decisions, but as a series of financial investments in the future. It was all there: a 1782 French debit note for 500,000 livres, signed by Benjamin Franklin in Paris . . . an 1893 share of General Electric, the only stock of the original Dow Thirty still trading today . . . a 9½ percent Enron bond, face value 10,000, worth a bit more than three hundred bucks to a collector.
“The march of a great nation,” said Arsenault, “mirrored in the instruments of capitalism . . . the expansions, the collapses, the dreamers, the scoundrels, the Bulls charging from one coast to the other, the hibernating Bears living off their belly fat—”
“Or someone else’s,” said Owen T. Magee.
“Always better to live off someone else’s belly fat,” said Peter.
“A lesson that brokers and lawyers learned early,” cracked Evangeline.
Arsenault gave her a look. “Watch out for her, Owen T. She’s the sarcastic one.”
Evangeline sipped her wine. “Peter can be sarcastic, too. We’re a tag team.”
“Allow me to impress the sarcasm right out of you.” Arsenault pulled down a leather-backed ring binder with the dates 1775–1783 on the spine. He laid it on a table and flipped it open to reveal archive-quality plastic sleeves containing bills, bonds, certificates, and primitive scrip.
“Some people collect swords and pistols from the Revolution, but these were the real weapons of American independence.”
He unsnapped the binder and took out one of the sleeves.
Inside was a bearer bond, issued in 1780. It did not look like much, about half the size of a modern dollar bill, rudely printed on thin paper.
“Picture a fledgling nation at war, a nation with no industry, no trade, a treasury in name only. They start printing money, but there’s nothing to back it up. No gold, no revenue, no promise of taxation. So it inflates faster than a dead horse in the hot sun. By 1780, a man needs forty dollars to buy what he bought with a buck in 1776. So Congress tries to get all that old currency off the market and replace it with a fresh issue.”
“The New Emission Bonds,” said Peter.
“We call them bonds today,” said Arsenault, “because in essence, that’s what they were. They had fixed rates of interest and dates of maturity.”
“But in Hamilton’s time,” said Owen T. Magee, “the term ‘bond’ referred specifically to bail and to notes put up by men handling public money.”
“Hence the term New Emission Money. But you can call them bonds.” Arsenault slipped one from its sleeve and placed it on the table. Then he swung a magnifying lamp over it and invited them to have a look.
Across the top were the words “State of New York,” the number of the bill, handwritten by the clerk who had sold it, and the words, “The Possessor of this Bill shall be paid One Hundred Spanish Milled Dollars by the Thirty-first Day of December One Thousand Seven Hundred and Eighty-five, with INTEREST in like money at the rate of five per centum per Annum, by the State of New York.” At the bottom, in handwriting as graceful as calligraphy, an ancient signature attesting to the purchase.
“Each state issued bonds as needed,” said Arsenault, “but here’s the cool part—”
With tweezers, he turned the bond over to reveal more engraving, the words “The United States” in black ink, blocked with red, and this: “The UNITED STATES ensure the payment of the within BILL and will draw Bills of Exchange for the interest annually, if demanded, according to the Resolution of CONGRESS of the 18th of March, 1780.”
“The bonds were backed,” said Owen T. Magee, “by the full faith and credit of the United States government.”
“A government operating under the Articles of Confederation. Look here”—Arsenault picked up the bond and held it above the light, to show them the watermark, the word “Confed—eration,” in two lines.
“And you’re suing the government to collect on these bonds?” said Peter.
“Under Article Six of the Constitution,” said Owen T., “which says that even the debts of the Confederation Congress will be honored by the new government.”
“If we win on all counts,” said Arsenault, “one hundred dollars from 1780 will render seven-point-four million. And I have two of these bonds.”
Peter whistled softly.
Arsenault turned to Evangeline. “He’s impressed. What about you?”
“You had me at Chassagne-Montrachet.”
Arsenault looked at her, as if deciding whether to be annoyed or amused. He chose amused. “Good answer.”
“Why are these bonds still uncashed?” asked Peter.
“Because Hamilton settled most federal obligations when he recapitalized the debts of the Revolution,” said Owen T. Magee. “But the New Emission Bonds had been issued by the states, and they issued them at different times, for different purposes and different funds, which caused confusion and not a little controversy.”
“So some states honored the bonds,” said Arsenault, “but some only honored them if you lived in the state. Some, like Rhode Island, wouldn’t honor any. That’s one of the reasons that the other states called it Rogue Island.”
The lawyer leaned close, so that the perspiration on his upper lip glistened politely in the light from the magnifying lamp. “Some states sent the bondholders to the federal government for redemption. And the feds sent them back to the states.”
“A literal case of buck-passing.” Arsenault returned the bond to its envelope. “Nevertheless, Hamilton called these bonds a debt of honor in his Report on Public Credit. But he put off the fight over them to win other points in 1790. When he brought up the subject again in 1796, Congress had other things to do. So the bonds fell between the cracks. Messy. Very messy.”
“Why hasn’t anybody fought this case before?” asked Evangeline.
“People have. But the government always stonewalls, saying that they determine who can sue them and who can’t.”
“Sovereign immunity?” said Peter.
“Correct,” said Arsenault. “But none of them ever had Owen T. Magee.”
The lawyer flashed a quick smile. Nixonian, thought Evangeline.
“We believe that these bonds have a prior claim on the credit of the United States,” said Owen T. Magee. “While we lost in the lower courts, we have an originalist Supreme Court, and my argument about Article Six struck a note with them. So, too, did our position on compound interest.”
“Yes,” said Arsenault. “While the bonds have five-year maturities, the bearers were denied the opportunity to reinvest and hence lost the use of the money for all those years. So the interest should be compounded.”
“It’s the same position that the IRS takes when they penalize you,” added Magee. “We expect that when the decision is rendered on Friday, we will win.”
“Which brings us,” said Austin Arsenault, “to the subject of yourself . . . or yourselves. We want you to help us find as many of these bonds as possible.”
And luncheon was served.
SO THEY SAT in the dining room, in shafts of sunlight that reflected off the mirrored walls. They ate Dover sole flown in from Arsenault’s English supplier and washed it down with more Chassagne-Montrachet ’06.
Peter thought the mirrors were appropriate, considering what Kathy Flynn had said about Arsenault. But there was something genuine about his enthusiasm. Owning two bonds worth seven and half million dollars each would make anyone enthusiastic.
Evangeline tasted the fish and said it was as good as the wine.
Arsenault accepted the compliment as if he had caught and cooked it himself.
Peter let the small talk fade, then he dove back in. “So, you want me to find as many bonds as possible? Aren’t there a lot of other people looking for them, too?”
“Most of the bonds are held by institutions like your Massachusetts Historical Society,” said Owen T. Magee. “They’ve kept them for their historical value. Until our suit, these bonds retailed as historical paper for fifteen hundred to three thousand apiece. But everything that’s on the market has been snapped up.”
“Then why are we here?” asked Evangeline.
“Or more directly,” asked Peter, “why didn’t you contact me earlier?”
“For starters”—Arsenault took a taste of fish—“New Yorkers usually don’t turn to Boston for help. We have a lot of good rare document people right here in the city.”
“But I’m the best at it,” said Peter.
“We were working with Oscar Delancey,” said Owen T. Magee. “How could we not, with a great old New York name like that?”
“Oscar Delancey is Jewish,” said Peter. “His ancestors came from Poland three generations ago. They just thought it was a good name if you wanted to get by in the big town. Have either of you seen him recently, by the way?”
Arsenault and Magee exchanged glances.
Peter and Evangeline did, too.
“Wherever he is or whatever he’s up to,” said Arsenault, “he’s not giving us much help at the moment, which means he’s doing America a disservice”—Arsenault set down his knife and fork—“because we aren’t in this for the money.”
“Not in it for the money?” said Evangeline, with the I-don’t-believe-a-word-you’re-saying deadpan that Peter loved.
“Then why are you in it?” asked Peter.
“How,” said Evangeline, still deadpanning, “are you going to do that?”
Arsenault laughed, though it did not sound genuine. It was more like one of the repertoire of sounds that a man of stature makes to express an opinion without words. This one sounded—what—amused? Condescending? Condescendingly amused? “By spreading the alarm about the deficit, of course. What do you think the Paul Revere Foundation has been doing?”
“Hamilton spoke of a national debt being a national asset, if properly managed,” said Owen T. Magee. “We stopped managing our debt in the Reagan years.”
“I thought all you rich Wall Street types were Republicans,” said Evangeline, “and you’re criticizing the rightie Jesus?”
“History will be kind to Reagan,” said Owen T. Magee. “He pulled us out of a recession and raised the standard of living for a generation. The supply-siders told him he could cut taxes and increase military spending and with a few bumps along the way, we’d still have thirty years of prosperity.”
“He only got twenty-eight,” said Peter.
“In American politics, twenty-eight years is like an ice age, a temperate period, and a century of global warming, too. By the 2008 meltdown, it was somebody else’s problem. Now our grandchildren are up to their eyeballs in debt before they’re born. You heard me say all this on CNBC yesterday. And I’m told that you heard Kathy Flynn’s condensation-to-evaporation-to-rain speech this morning.”
What Peter heard was the sound of Evangeline’s fork hitting the plate. Though the Dover sole was nicely filleted, he suddenly felt as if he had a bone in his throat.
He saw the eyes of Arsenault and Magee shifting to Evangeline, then to her fork.
So he made only the briefest eye contact with her. A clanging fork, a tightening of her features . . . but she was not the sort to show anything to outsiders. She simply put her fork back to work on the fish and acted as though it had just slipped from her hand.
After another mouthful, she recovered and said, “Most people aren’t paying attention to stuff like this.”