“Well, you can be sure they’re not going to hear about it until I go on TV to announce it. Henry, this thing has got to be kept totally and absolutely secret right up to the last minute.”
“I know. That could be a problem since it’s still going to take time to work out all the details. In fact, Mr. President, I think that while you’re at it, you should go one step further. Put gold up to $125 an ounce, yes. But also devalue the dollar by another 15 percent against other currencies. Those guys keep yapping about the dollar being overvalued, about our balance of payments always being in deficit, about having to swallow more and more dollars. Look, if we devalue by that much we’ll be able to outcompete almost every nation on earth again. Even the Japs. As long as we’re doing it, we might as well go all the way. Hell, all this should go over great with the voters. You’ll be restoring America’s leadership of the free world, protecting American jobs, putting the country back on the road to prosperity, restoring the position of the dollar to its rightful place as the currency not only of the United States but of the entire world!”
“Henry,” said the president drily, “let’s not get carried away. But you’re right. As long as we’re taking the plunge, let’s do it right. Now how much time do you think we’ll need?”
The two men discussed the matter for another two hours and finally decided that D day would be Saturday, November 8. The announcement would come on the evening of November 7, after the banks had closed.
During the next few weeks the plan was duly put to paper and five copies only were made, each bound in top-secret red. The White House pair, now complemented by the secretary of state and the chairman of the Federal Reserve Board, decided to bring a fifth man into the plan. He was the secretary-general of the Bank for International Settlements. You probably have heard relatively little about this bank. Yet, next to the IMF, it is no doubt the most important institution in the whole complex network of the international monetary system. It acts as the central bank for the world’s central bankers.
It is, for example, the Bank for International Settlements—known as the BIS in professional circles—which, when the pound sterling or the Italian lira periodically comes under pressure, massively intervenes to prevent a blowup. When everybody else is selling, the BIS is buying, and vice versa. It has almost unlimited funds available for this purpose from its owners. For its owners are the major central banks of the world, ranging from the Bank of England to the Swiss National Bank to the National Bank of Hungary. Most important from Washington’s standpoint, during every currency crisis since 1971 the BIS has provided major and consistent support to the dollar. It was a friend in enemy territory.
The cooperation of the BIS, and especially its secretary-general, would be absolutely necessary to restore international order after the first major gold price increase in over forty years. Such an event could trigger a tidal wave which would rock every financial market on earth.
It was decided that U.S. Secretary of the Treasury Henry Crosby should brief BIS Secretary-General Bollinger in a private meeting. Discreetly. If Crosby turned up in Basel, the home of the BIS, it might start speculation. It was agreed that London would be better.
A very brief transatlantic phone call and the date was fixed. Four in the afternoon of October 16, at the Savoy.
2
ON that same October 16 Dr. Walter Hofer landed in London on Swissair flight 168 from Zurich. It was shortly after seven in the evening. He hurried through the long corridors after leaving the plane, trying to beat the mob to the immigration desks. This was not all that easy for Dr. Hofer since he had unusually short legs. He would never forgive his Creator for this, perhaps deliberate, slight.
Everything else regarding Dr. Hofer was perfect. Impeccable clothes, silver grey hair, perfectly manicured hands; a face which reflected intelligence, culture, wisdom. And a bearing which obviously set him worlds apart from the thousands of others who were also striving toward English soil at this moment.
Hofer was most aware of the “otherness” of himself. His position as chairman of the board of the second largest bank in Switzerland demanded it. He regarded his post as not just a job, but rather a calling. There was little doubt in his mind that his role had been long foreordained by that Power which had seen fit to extend an especially benevolent hand over the people, and especially the currency, of his country.
The rather grubby immigration official gave him a practiced look of disdain which, however, changed into what might even have passed for a slight expression of respect when he noted the profession listed in Hofer’s passport.
“On business, sir?” This was only the second “sir” that month, a privilege reserved for quite special occasions.
“Of course,” replied Dr. Hofer. He seemed quite unaware of the honour being bestowed.
After ten impatient minutes at the baggage carousel and a wave of the hand from the customs official, Dr. Hofer was once again back in the hands of private enterprise.
“Your car is right outside, Herr Doktor.” The manager of the local branch of Hofer’s bank was blessed with a central European handshake—firm but correct—and delegated the responsibility of carrying Hofer’s overnight bag.
The two exchanged few words on the way to town. This was not unusual. Local bank managers were very seldom granted any insight into affairs which demanded the attention of the top fellows in Zurich. One of the absolute prerequisites for a managerial position in the bank was lack of curiosity, not to speak of imagination.
At the Savoy they had the usual suite ready—on the Embankment side, of course. Two messages were handed to Hofer at the reception desk. He opened them upstairs after the porter had left. Sir Robert Winthrop had sent his verification of the arrangements for the next morning. The car would be waiting for him at nine, and the meeting was scheduled to begin at nine-thirty. Fine.
The other message was obviously not so fine from the expression it created on Dr. Hofer’s aristocratic features. There was heavy fog at Orly, and she could not make it that evening.
“Damn it,” thought Hofer, and he actually thought it in English with quite the correct accent. He had an amazing facility for completely adapting to the language of the country he was in. During the past century the Swiss had come a long way from their cuckoo clocks.
Claudine was one of his few little pleasures in life. Four years ago he had met her at a reception given by the minister of finance in Paris. She was the niece of the minister’s deputy. Her history was not too unusual or interesting. After an early marriage and an early divorce she had established a boutique and a generous number of friendly relationships. After leaving the reception with Walter Hofer, she established the basis for a rather intimate link with the Swiss banking community. It was not just his fame and fortune which attracted her. She had a thing about short men, even though she herself was almost six feet tall. Especially short men with moustaches. For Hofer had one of the most distinguished little moustaches ever to grace the reception halls of the French Ministry of Finance. And, as he proved much later that first evening, he knew how to use it in a way which exceeded Claudine’s most optimistic expectations.
Hofer, for his part, just loved tall women, especially big-breasted ones. Since Claudine had come into his life, Paris no longer meant complicated foreign exchange controls, an eternally wobbly franc, and hordes of uncouth Americans. No, the City of Light had become a haven, a place of respite, where he could snuggle his rather Roman nose, and moustache, between those mounds of ever-refreshing pleasure.
Claudine had appeared at the end of a most unfortunate incident in Dr. Hofer’s personal life. His secretary, Heidi, had been endowed with both the height and bust measurement so prized by the five-foot-five Alpine magnate. Also she had been willing to provide comfort to her boss even during banking hours. This should not appear as perverse as you might imagine, since banking hours in Switzerland are unusually long. It was also not as imprudent as you might suppose. For in the General Bank of Switzerla
nd, all top executive offices were equipped with a signal system very common in that country. Right next to the door leading into such offices is mounted a quite unobtrusive light. When switched on, it serves to every law-abiding Swiss as a sacred barrier never to be violated, regardless of the emergency, no matter how urgent.
But bulbs will burn out.
Dr. Hofer now had a male secretary and a greatly increased sympathy for astronauts, Grand Prix pilots, and the like whose lives were constantly exposed to the vagaries of modern technology. After a certain period of introspection, long office hours had to some degree given way to an increased regularity of overnight trips within Europe.
And now because of that damned fog in Paris he was going to face a complete waste of the better part of the twenty-four hours in London which, as so often in the past, he had planned with meticulous care.
He picked up the phone. “Give me Paris, Trocadero 7534, please. This is suite 717–20.”
“I’ll call back, sir.”
At least they could sympathize with each other by phone. He unzipped his bag and sorted out his toilet articles, eleven in all. It was just a short trip. He decided to take a shower and then eat downstairs. After five minutes the phone rang.
“I’m afraid that Trocadero 7534 does not answer, sir.”
“Well, try it again.”
“I’ve dialed three times already to be sure. No one answers.”
“Then cancel the call. One moment, though. Could you now connect me with Zurich, 51–35–94.” He hung up. This time he had the connection immediately. “Martha, this is Walter. I’m at the Savoy and everything is fine,” said Hofer.
“Oh, I’m so glad,” replied his wife. “You know how I always worry about you when you fly. Especially in the fall, when there is so much fog.”
Oh God, thought Hofer. Fog again.
His wife continued: “Walter, are you sure you will come home tomorrow night as planned? You know, you promised. But it seems that every time, something comes up, and then . . .”
Hofer didn’t really listen any longer. After five minutes or so he finally interjected, “Martha, I’m expecting a call from New York about this time, so I think we had better hang up. I hate to leave you alone so much as a result of these trips, but you know they are simply unavoidable. I’ll try, I promise, to make it home tomorrow.”
“I know, Walter,” replied his wife. “Just don’t work too hard.”
Twenty minutes later he entered the Grill Room. It was very crowded, but the headwaiter, recognizing Hofer though not quite placing him, found a quiet table by the windows in the far corner.
This was probably the third time in ten years that Hofer had dined alone in a public restaurant. But he made the best of it and enjoyed his steak Diane, which, he found, was almost as well prepared as at the Carlton in Brussels. Over coffee, which was certainly not up to Swiss standards, he pored through the Economist. Glancing up, he suddenly noticed two men in an intensive discussion well across the rather large room—men whom he knew quite well.
Damn peculiar! Crosby and Bollinger, alone together in London? He had just seen Bollinger the other day in Basel, and no mention had been made of any special meeting this week. To be sure, as secretary-general of the Bank for International Settlements, Bollinger had to be rather close-lipped. But still. It was also rather funny that he had heard nothing about the American secretary of the treasury being in London right now. Crosby was a type who relished publicity. Evidently this was not a chance meeting. Both were, at times, referring to a document which Crosby had obviously brought with him. Bound in glaring red. Only the Americans would do that.
By now all lingering thoughts about the phone call that had remained unanswered in Paris completely disappeared. Dr. Walter Hofer was trying intensely to calculate the possible significance of the scene he was witnessing across the room. He deliberately tarried over his coffee, even ordering a second cup, something which was by no means in keeping with his usual dining habits.
Finally the pair got up to leave. It was Bollinger, not the American, who now was carrying the red-covered papers. Both appeared extremely solemn.
Fifteen minutes later Hofer was in bed. But the peculiar happening in the Grill Room kept him awake for at least an hour. Something was up.
3
THE next morning at nine on the dot Dr. Walter Hofer stepped into the waiting Rolls. Fifteen minutes later he was in the City. Sir Robert Winthrop was there to greet him at the door of the bank. Bad sign. First a meeting scheduled for nine-thirty, the crack of dawn by City standards, and now the personal touch.
“Walter! So good to see you again. It was extremely kind of you to come over at such short notice.”
“You know it is always a pleasure for me to come to London, Sir Robert,” replied Hofer. “Is David here?”
“Yes. I think we might as well go right up to my office and join him.”
They took the oak-panelled elevator to the fourth floor. Hofer was always infected with more than a touch of envy when he visited this old merchant bank. Everything at Winthrop’s was in such good taste—unplanned taste. In a way it was a pity that such tradition was being wasted on these increasingly incompetent bankers. But at least the people here at Winthrop’s were the best of the lot in London.
A tall gentleman rose to greet Hofer as he entered Sir Robert’s office. It was David Mason, president of the third largest bank in New York. Mason was more than a banker. He was Establishment. A staunch Republican, he had served his government in various posts, most recently on the Cabinet level. Mason had the easy manners of eminently successful men. But when the three men took their chairs at the coffee table, these easy manners immediately gave way to extreme alertness and wariness. The American knew that there was more than a shade of cunning in the apparent superciliousness of Sir Robert. He also knew that the practiced straightforwardness of Dr. Hofer was often a perfect cover for the most deliberate deceit.
Both Europeans shared quite the same opinion regarding their American friend. As experience had so often shown, the glad handshake could be followed by almost naked brutality within minutes. The ever-present American humour was rarely amusing, all the more so since it so often contained deliberate barbs, designed to serve as ill-disguised warnings, or even insults.
In other words, the attitudes in his room were quite typical of those present at so many meetings which bring businessmen from both sides of the Atlantic together. The difference, perhaps, was that these three men had been arm’s-length cronies for almost twenty years. This was not by any means the first time they had met in the rather peculiar office of Sir Robert Winthrop.
Sir Robert did not particularly like formality and liked to think of his office in the bank as a, well, place of refuge. The furnishings reflected this. The pièce de résistance was the huge model of his family yacht, built in 1936. The more one’s gaze wandered around the room, the more apparent the marine touch became. Here a painting of somebody or other in an admiral’s uniform; there an extremely old telescope, on a massive circular mount. A look inside the bar would have revealed an unusually high ratio of rum to whisky.
The explanation was quite simple. The Winthrop family had always had really two responsibilities: the navy and the coin of the realm. Sir Robert, as a result of the wisdom of his father who had recognized quite early the rather limited intellectual capacity of his second son, had been delegated as the family guardian of the seas. The elder brother, James, had been selected for the bank. Robert had been happy in the hearty company of his peers, until tragedy had struck in the form of the very early demise of his brother. Overnight Robert became a banker. But, though he bumbled his way through, he had never really got into the spirit of the whole thing. He had never felt the need to spend sleepless nights over falling profits or to gloat over the humiliation of a competitor. He was steadfast in his faith that Winthrop’s, come what may, would always find its way through, He was willing to serve his time at the helm out of duty, not pleasure.
This particular morning was proving a bit awkward to get underway. It was too early to offer something to drink, and in view of the solemnity of the occasion, it would definitely be out of place to get too involved in small talk. Sir Robert decided the situation called for a no-nonsense, to-the-point sort of approach. So he plunged right in.
“Gentlemen, since I have the privilege of being the host at this meeting, I would like to confirm that we have just two matters on the agenda, namely, Transcontinental Airlines and Canadian and Western Oil. I propose that we get right to them.”
Both Walter Hofer and David Mason nodded their agreement, so Sir Robert went on.
“The Transcontinental situation, which our American colleague brought to us some time ago, has created a very serious problem for my bank. I’ll summarize the background for your benefit, Walter. The company, like so many airlines, developed a very serious cash flow problem as a result of its massive equipment purchases and almost stagnant passenger growth. Bills to pay, and insufficient current income to meet them. Transcontinental has always had the Republican Bank in New York as its prime bank, and thus David, here, is on their board. He arranged for the company to get the maximum line from his bank, namely $80 million, and also helped them establish quite substantial lines with other banks in the West over the years. Under the unusual circumstances, the company still ran short of cash, so our American colleague assisted the company in raising an additional $50 million in Europe. We at Winthrop’s agreed to serve as the managing underwriter in London to place the two-year promissory notes selected as the vehicle for obtaining these funds.”
Sir Robert now focused his attention on David Mason.
“We have put our name very firmly on this issue, but it still proved difficult for us to put together a syndicate. In the end, after much arm-twisting, we were able to place most of it; 75 percent to be exact. The rest, of course, we are still stuck with.”
The Billion Dollar Sure Thing Page 2