The Billion Dollar Sure Thing

by Paul E. Erdman

  Stanley had, with the rest of them, tried them all on. Now he was down to gold, devaluations, tax havens. Arabs. Perhaps the shortest life cycle of all. And for what?

  And then there was the even bigger problem. Jersey, Miami, Vegas, and all that.

  Maybe the answer was so simple it might work. Just cut out. Move to Switzerland, Bermuda, even London. With maybe $30 or $35 million there could be no doubt that he would be accepted, maybe not by the people right at the top of the heap, but still accepted by most people for what he represented: money and brains. Then he would manage just a very few clients—to keep his hand in. All offshore. No more monkey business.

  Stanley Rosen had reached that ominous stage of almost forty-five years of age; the point of no return. What he wanted to find above all other things was something that had totally passed him by thus far: a period of real happiness and simple contentment. He had first really sensed that such an unbelievable goal might still be achievable not so very long ago. In August he’d spent three weeks doing absolutely nothing on the island of Sardinia, with a young girl of twenty-four from Norway. They had met at the Copenhagen airport and had taken the same taxi into town. They had dinner outside in the Tivoli. Corny, but fun. Then five days later, off into the blue together. Totally unplanned. To Sardinia. The Calle di Volpe. A hotel built for no more than sixty guests; Frenchmen, Belgians, Swiss, British, Italians, Germans. All well to do. Some even titled. Clubby. But they had accepted Stanley. They had asked his advice. They had invited him onto their yachts for a supper. And nobody had asked him for a loan. He had even accepted the invitation of a pair from Brussels to drop in on them at home afterwards. It turned out he was in the Cabinet. Yet Stanley Rosen was accepted as an old friend, a guest of honour. Sure. Rosen knew that they knew. That he had a great deal of money. But somehow, almost like sleight of hand, it was never mentioned. He knew that they knew he was an American “primitive.” But they seemed to regard this as merely curious; his Jersey accent as rather cute; his mannerisms as “natural.” Rosen was no fool. But he knew that here was a world that he must eventually pay for on the open market. He knew that the question of price would inevitably come up. But it would be worth it. Then the crude pigs from Chicago, the show girls from Las Vegas, their drunken brawls in Nassau, the nit-picking little Jews from Jersey: all this could be buried and forgotten, just as his parents had buried their memories of their ghetto in Poland. Through the simple process of emigration across the Atlantic. Thank God he had his divorce well behind him. For with her, her ghastly makeup, her shrill voice, her girlfriends, her canasta parties, the whole idea would have been absurd. But with somebody like that girl from Bergen, with a clientele in the Near East, with the credentials of a stunning success during the Great Dollar devaluation, it was possible.

  The pink telephone finally came alive again.

  “Hallo, hallo, qui est là?” came the voice.

  “This is Stanley Rosen calling from Switzerland, I would like to—”

  “Hallo, hallo. Je ne parle pas Anglais, Monsieur.”

  “Oh my God,” came Stanley Rosen’s reply. He clicked the receiver rather frantically, hoping to hell that the connection would not be broken.

  “Operator, operator,” he yelled.

  Nothing. And then more than nothing. The other end hung up. So did Stanley. “Son of a bitch,” cursed Stanley Rosen.

  Well, nothing to be done. It would take at least two or three hours to get through again. Forget about it until later.

  The phone rang again.

  “This is the operator, Mr. Rosen. Was your call to Beirut satisfactory? It was rather short.”

  “Yes, operator. Perfectly satisfactory. Thank you.”

  No sense in making an absolute ass of himself. This was certainly one thing he had to correct and quickly. A quick course in French and perhaps one in German. Mr. Stanley Rosen would soon be as European as Grace Kelly.

  Shower completed, Stanley decided to take a nap. He was satisfied, satisfied with the future now that the biggest action of his lifetime was underway.

  13

  HISTORIANS who later reconstructed these happenings during this first week of November determined that the real action started around two-fifteen on that Wednesday afternoon. The dollar was hit by the biggest wave of selling thus far experienced in the twentieth century. It dropped 3 percent in value within a matter of two hours against every major currency in Western Europe, led by the Swiss franc. Around three o’clock it looked as if a recovery might occur, but then came the news of the afternoon gold fixing. The price jumped $4.10 in one session. It meant that the gold pools in both Zurich and London were unable to cope with the sudden burst of demand for the metal. After that, the situation of the dollar worsened by the minute.

  Secretary-General Bollinger of the Bank for International Settlements was sitting alone in his office, poring over the Telex reports that had been flooding in since lunchtime. He looked slightly sick. He had instructed his secretary to put through no further calls, with two exceptions: the American secretary of the treasury and a certain Dr. Bernoulli.

  “What now?” he asked.

  The almost man-sized carving from New Guinea staring at him from across the room could hardly answer.

  Just two more days to go, and all hell was breaking loose. And of all bloody people, the Russians. If the Americans found out the whole sordid story they would crucify him—at best. Ausgerechnet die Russen! This morning when the president of the German Bundesbank had called him, he had thought, had hoped, that it was just a coincidence. The Russians could have had a million reasons for shifting over to dollars on the pipeline purchase. Nor had the Germans been overly perturbed. They had just thought that the BIS should know. It would mean that the future demand for dollars in the Euromarket would now be higher than had generally been anticipated. That’s all. It might push the long-term rates up. Maybe by .25 percent. But the people in Frankfurt did not know what he knew. And now everything was starting to tie together. First Melekov, then the delegation from Moscow pulling out, then the pipeline switch, and now the foreign exchange and gold markets going all to hell. Before it was over it could cost the United States billions—three, five, who knows—and the whole financial world would blow sky high in spite of this cost. Money thrown right out the window. Knowing the Americans, he knew that they would defend the dollar right up to the last second, rather than lose face to the Russians.

  His secretary opened the door, but she just stuck her head in. She knew when the storm warnings were flying.

  “Herr Doktor Bernoulli just called from the lobby downstairs and asked if he could come right up.”

  “Tell him to come ahead.”

  Bollinger was close to panic. For he was a man of total integrity, completely devoted to the immense responsibility which had been entrusted to him. He was one of those few international civil servants with enough courage and foresight to go out on a limb and do what he felt was right, regardless of the possible political consequences. He had seen no better path of action than that which he had undertaken in this terrible situation, better for all the governments concerned, including the United States. Bollinger was anything but devious. His approach was analytical; his actions were based upon logic, not tactical or strategic considerations. The circumstances now defied analysis. Events had gone underground, into a world which Bollinger had never experienced, and before which he found himself helpless . . . and increasingly bitter.

  Bernoulli entered his office.

  “Please excuse me for visiting you so unexpectedly, Herr Bollinger, but I’m afraid that events are moving very swiftly. I must try to keep up with them.”

  “No problem. Please be seated.”

  “I think we have made excellent progress. We know now exactly the chain of action which led up to the theft. We know the two men responsible for the organization and implementation. But we still do not have the answer to the key question: Who was the final recipient of the red dossier? And what does
he intend to do with it—if anything?”

  “I see.”

  “Now I don’t want to frighten you, but we’ve heard about the visit of that Russian delegation. The stay in Basel of your guests from Moscow coincides exactly with the period of the theft. More than that. They stayed at exactly that hotel in which the two men responsible for the physical action were seen together, more than once. The coincidence is almost overpowering, if you know what I mean. This is not the only coincidence, however. I’ll come to others later. But first, let’s deal with the Russians.”

  “I frankly think you are running so far behind the events, Herr Bernoulli, that before I let you continue, I should bring you up to date on a few things. It will save you from wasting any more time on this matter.”

  Bernoulli didn’t like this. His eyes drew closely together. His hands clenched. And his healthy brown was suddenly tinged with more than a trace of red.

  “What’s that supposed to mean?” Bernoulli finally asked, after a long stare across Bollinger’s desk. His voice was tight. Being upstaged by an amateur at this point was not to his liking.

  “I like the word ‘coincidence.’ Let me add a few more, and then I believe that you will get my point.”

  “Go ahead. That’s why I came to see you, you know.”

  “First, the Russian delegation. They came here to finalize arrangements for the sale of a major shipment of gold. This is by no means unusual. We have been handling the marketing of the Russians’ gold for many years now. The reason is quite simple. We ourselves are a very large owner of gold. In fact, we are the only financial institution in the world which has its total capital and reserves in the form of gold. Thus we have the capacity to immediately absorb, if necessary, complete major shipments, which otherwise would overwhelm the free market and cause dangerous price fluctuations. The Soviet Union can get a firm price from us—for every last ounce. They like that. We also like that, since it gives us another means for intervening in—tampering with, if you like—the free market for that metal. Fluctuations in the gold price in the past have led to currency speculation. We try our best to avoid the latter at almost any cost.”

  “Thanks for the explanation, Herr Bollinger. But I’m afraid it does not bring us very much further.” Bernoulli was already on his second cigarette.

  “Now easy does it. Back to coincidences. The Russians came here especially to finalize the arrangements for the sale of 20 million ounces. They negotiated at the usual Eastern European pace with the head of our gold department. Everything was finally agreed upon. The days after the disappearance of the dossier from my safe, the negotiations halted just this side of being signed. Nobody spoke of any cancellation of the sale. They just said that they had to get the final authorization from Moscow and would come back to us within a very short time. They left town that same day. We have not heard from them since.”

  “Where’s the gold?”

  “In the Zurich airport.”

  “Why didn’t you tell me this before, for God’s sake?”

  “Because it has happened before. It was by no means out of character. I believe that it would only have been grossly misleading if I had attached undue significance to such an event—and led you down the garden path.”

  “Then why do you attach such significance to it now?”

  “Because of coincidence number two. For almost a year the Russians have been negotiating with the Germans for an immense purchase of line pipe. Also here the negotiations reached the signature stage. At the very last moment, contrary to all prior indications, the Russians insisted that they would pay only in U.S. dollars.”

  Bernoulli got the point.

  “But now comes the clincher. Since late yesterday afternoon, Eastern Europe has been selling dollars—both spot and forward. Today it has become serious. The spot rate in Zurich has been pushed down to 3.33 from 3.40 within two hours. In the foreign exchange field this is an unprecedented change. Like the Dow Jones falling 100 points in one trading session.”

  Bernoulli then asked, very quietly, “Herr Bollinger, what do you intend to do?”

  “I’m waiting to see what happens in New York. The markets are now closed in Europe. The next moves will take place across the Atlantic. If the selling continues, we must start to act. The president of the Swiss National Bank and the finance minister will be consulted. I brought you fellows into this, much to my great regret. I must try to be fair with you right to the end.”

  “And what about the Americans?”

  “I’ll have to deal with them in my own way.”

  “This could get pretty bad before the weekend, I imagine.”

  “Yes. So if you’ll please excuse me, Herr Bernoulli, I really must get back on the job.”

  “Just one more question. Do you really think the Russians would pull such a brazen, naked attempt to disgrace the United States?”

  “A few years ago I would have said no. But the young Turks are starting to take over in the Soviet Union. They’re anything but Stalinists. But they are also not of the Khrushchev school. They calculate. They recognize that the best weapon at the disposal of the Soviet Union is not the Red Army of Stalin, or their rockets, but the immense economic potential of their country. And contrary to Western countries, they have absolute central control of their economy. They can direct its energy like a general his army. But the weak point has always been the ruble. Or to put it another way, the dominating role of the dollar. Downgrade the latter, and you automatically upgrade the former in many areas of the world. Destruction of faith in the dollar system cannot help but be a major policy objective of anyone at odds with the United States. De Gaulle recognized all this years ago and took the initiative. He did not succeed. The Russians are in a quite different class, of course.”

  “But the risk.”

  “What risk? The United States has absolutely no means of retaliation. And on the dollar issue, it also has very few allies. On gold, none. The power of the dollar is a greater source of resentment throughout the Western world than any other element of American foreign policy, even right here in Switzerland.”

  Bernoulli rose and shook hands with Bollinger.

  But as he was leaving, he got in one parting shot. “To my simple mind, this all seems just a little too pat. In any case, if anything new develops, we’ll probably see each other again.”

  As Bernoulli left, Bollinger picked up his phone and called the foreign exchange desk of the bank.

  “What’s happening in New York?”

  “It’s continuing, sir. The bid price on spot francs has now dropped to just a shade under 3.31 cents. As you know, under the term of the 1973 monetary agreement, the Swiss National Bank must intervene at this level. They will have to start buying dollars. What do you want us to do?”

  “Nothing at the moment. But nobody goes home this evening until I say so. We might have to stay on right through Tokyo tonight.”

  He hung up and redialed. “Joan, get me the President of the National Bank in Zurich, please. Right away.”

  The call was through in less then thirty seconds. “This is Bollinger. How do things look to you?”

  “We don’t like it a bit. Where’s all this selling coming from?”

  Bollinger thought carefully before he replied. “Seems to have started in Eastern Europe. Then Zurich, Frankfurt, Paris, it would seem.”

  “What are you fellows going to do?”

  “I’m not sure. Maybe it will start to correct itself in New York.”

  The National Bank president did not seem to buy that one.

  “I’m not so sure. Funny damned thing. It came out of absolutely nowhere. We’ve more or less got used to these currency speculators crawling out of the woodwork every fall, but normally you can see them coming. This thing has all built up within twenty-four hours.”

  “You’ve heard about New York, I suppose. The dollar has dropped below the 3.31 level. Will you start to intervene?”

  “We’re having a meeting in about fifte
en minutes on that subject. My guess is that we’ll try to hold it here for the rest of the day. A slight turnaround in Europe tomorrow could produce a surge of covering of short positions. Then we would be out of the woods. That’s my thinking at the moment.”

  “Thanks. That’s very important for us. We will probably also be in the market in New York within a short time, trying to stop this thing. I’ll keep in touch.”

  “What are the people in Washington saying?”

  “I don’t know. I expect to hear from them any moment now,” replied Bollinger.

  “Right. Thanks for the call.”

  Although already five o’clock in Switzerland, it was only eleven in the morning in Washington. The secretary of the treasury was just entering the White House grounds in his limousine. As he stepped out of the car another government vehicle rolled up right behind him. It was the secretary of state. Both cleared the security people together, and were immediately met by one of the president’s assistants who took them directly to the Cabinet room.

  The chairman of the Federal Reserve Board was already there. Less than a minute later the president arrived and asked them all to be seated.

  He turned first to Secretary of the Treasury Henry Crosby.

  “Henry, what’s going on? I got word from the Intelligence people less than an hour ago. They report that massive selling of the dollar has set in in Europe, and that the gold price has gone sky high. What’s more, they claim that the Russians started it all. How is that possible, for God’s sake?”

  “I don’t know. I just know that it’s a fact.”

  “When did it start exactly?”

  “Yesterday. During the afternoon in New York, and then at the tail end of the banking day in San Francisco. Nothing startling, but steady selling was there. Then during the European business day today that’s just ending, it really started to pick up steam. The last hours have seen nothing short of a mass movement out of dollars and into the Swiss franc, the German mark, the guilder—you name it. The speculators seem to have joined in with full force only today.”