The Billion Dollar Sure Thing

by Paul E. Erdman

  “Roskin, are you still there?” asked Melekov.

  “Yes, I was just thinking,” replied Roskin. Then he continued. “How do you propose to present all this at the meeting?”

  Melekov answered: “The key is that the world must witness the annihilation of the dollar. Not an orderly retreat, not a negotiated adjustment, but a total route. This must be seen as the inevitable result of the policy of American dollar imperialism—the revolt of its captives all around the world. The next step must be to propose a replacement immediately, a non-imperialistic instrument of commerce. Yet one which can gain immediate international trust. My proposal is a gold-based ruble. As simple as that. Initially, we will have to control its use down to the last gold kopeck. Expand the ruble area slowly, so that we don’t run into the same kinds of problems that first the British with their sterling zone, and then the French with the franc zone, and finally the Americans with their global dollar inevitably faced. We don’t want to be the bankers for the world, Roskin. Only for a good part of it. But we cannot fail. As surely as the dollar replaced sterling in country after country in the world after World War II, the gold ruble can start displacing the dollar. There’s an old saying about a banker’s biggest capital being the trust people put in him. The United States was, until this week, the supreme banker of the world. This can now be changed.”

  Roskin listened most carefully to all this. And he again could not help but agree. He said, “Tell me, Melekov, do you propose to put these ideas on the table right at the outset of the meeting this morning?”

  Melekov replied, “Of course. When you say a, you must also say b. We must now attack. With all the economic weapons at our disposal. And for all the world to witness!”

  “Stepanov and his friends in the Central Committee might not buy it, you know.”

  “We’ll see. Roskin, I’ve got to clean up just a few things here. See you in about fifteen minutes.”

  Melekov carefully gathered his documentation in preparation for the meeting and, after packing his briefcase, leaned back to finish his cup of coffee. After telling his secretary to expect him back around noon, he descended the stairs.

  The porter at the exit indicated that a car was waiting for him. Melekov had not ordered one but stepped in anyway. It was too late to search for a taxi.

  The National Bank of the Soviet Union was housed in a much more impressive structure than its sister institution. After all, this was the home of the ruble. Marble stairways. And even an elevator. Melekov did not bother to announce himself to the inevitable crew of watchdogs at the entrance. They knew him. He took the elevator to the third floor and strode down the corridor to the very large conference room at the end. He had expected many of the executives from both of the banks to be there but found that the only man awaiting him was his friend Roskin.

  “Am I too early or something?” he immediately asked.

  “No,” replied Roskin. “It’s scheduled for nine. Maybe I should take a look where everybody’s hiding.”

  But as he entered the corridor, it was only to see a group of men heading in his direction.

  “Here they come.”

  To be more exact, three men entered the conference room. Ivan Litnovich, the man who had moved into the Central Committee only a few years ago and who had almost immediately pulled all the strings of the Soviet financial world right into his own lap. If the Soviet Union had ever had a financial czar, it was Litnovich. He was followed by Slavic, one of the oldest hacks on the committee. He had survived three leadership changes in the Kremlin and was known for his cunning and primitiveness. And finally, Melekov’s boss—Stepanov, a Soviet functionary of the standard type. All three really had only one thing in common, thought Melekov fleetingly as they entered the room: All were Georgians.

  Litnovich immediately took the chair at the head of the table and indicated to Stepanov that he should close the door. There was a peculiar absence of the usual handshakes.

  Litnovich spoke.

  “Comrades, let’s get right down to the business at hand.”

  Roskin immediately interrupted.

  “Don’t you think we should wait for the others to arrive?”

  “No,” replied the man from the Central Committee. “They have been advised to stay at their desks. For the time being, we have everybody here that is necessary.”

  Roskin glanced very briefly at Melekov.

  “Comrade Melekov, the chairman of the Foreign Trade Bank of the Soviet Union has informed us in the Central Committee that you have wildly embarked on a radically new program, without his knowledge and approval. That you have exceeded your competence limits in a completely unprecedented fashion and have endangered the international financial position of the Soviet Union. I expect an explanation.”

  Melekov was shocked to the core. Roskin had assured him that his back had been covered. Perhaps it had been done at the very top. After all, in spite of his meteoric rise, Litnovich was still Number Four in the country at best.

  “I do not really understand this accusation,” said Melekov in a strong voice, perhaps a trifle too strong. The echo in this huge almost empty room was resounding. “My job is to oversee the entire foreign exchange operations of the Foreign Trade Bank of the Soviet Union. With this authority comes enormous responsibility for the welfare of our country. I have been trying to meet this responsibility to the best of my ability—and as you will see, quite successfully.”

  He reached for his briefcase and started to extract the various documentation he had so carefully prepared.

  “I disagree,” interjected Litnovich harshly. “My colleague Slavic disagrees, and your chairman, Stepanov, disagrees.”

  “Gentlemen,” said Melekov, “you cannot disagree with irrefutable facts. I have the facts here.” He waved the position sheets he had received less than an hour ago from the foreign exchange desk.

  “We are as well informed on your facts as you are, Melekov. Thanks to Chairman Stepanov. If he had not had the acute sense of responsibility which he fortunately has, and if he had not the courage to come directly to us after he had discovered your ‘facts,’ I am afraid that the leaders of this country would have not even received a hint of what has been going on in the Foreign Trade Bank of the Soviet Union during the past few days. Have you gone absolutely mad, Melekov? Are you trying to run a gambling casino? Or are you trying to totally undermine the image of the Soviet Union, an image it has taken us fifty years to build? We are today regarded as the most reliable trade partner in the world. Why do you think that we have literally unlimited credit everywhere? Why is a contract with the Soviet Union regarded as the most eminently bankable piece of paper there is? I’ll tell you why. Because we are serious financial people. Because we always keep our word, regardless of unforeseen circumstances. Because we pay exactly on time, always. Because we do not try to hedge or cheat. Because we are a socialist country and not a pack of speculative capitalistic wolves. That’s why.”

  Melekov was now angry.

  “Now just a minute. It’s very easy to throw around words like ‘speculation,’ ‘capitalistic wolves,’ and the like. But let’s see whether the glove fits or not. The truth is much different. We have based our entire foreign trade with the West on the U.S. dollar. The U.S. dollar is not safe. It is going to be devalued. It would be total insanity not to recognize this. It would be greater insanity not to protect the Soviet Union from the consequences of this. And it would be folly not to seek to take advantage of this. Even my chairman should be able to follow that simple logic.”

  “So, so. The dollar is going to be devalued. Just like that,” said Litnovich.

  “Of course,” answered Melekov. “Don’t you realize what has been happening during the past twenty-four hours? Didn’t my chairman tell you about the run out of the dollar and into gold in Europe, the start of a panic in New York, the resulting chaos in Tokyo? These are quite visible symptoms of what is going to have to happen. I am not just guessing, I—”

 
“That’s enough, Melekov,” shouted Litnovich. “Just one hour ago I received a complete intelligence report on the entire situation. I know all the facts, and perhaps more than a few that you do not know. This is a trap. You hear? A trap. All the Americans were doing was looking for an excuse to cut off those wheat shipments. Which they now have done. Do you know what that can mean for our people? And for this government? The Americans know. And that’s why they’re cutting us off. And you’ve provided them with a perfect excuse. Because you fell right into their primitive trap.”

  “But surely you must realize that they’re using this wheat thing as a bluff. Don’t you understand that it is you, not I, who is falling into a trap, stupidly missing the opportunity of a lifetime. Surely—”

  “Melekov! Shut up!” yelled Litnovich, “I’ll do the talking from now on. And the deciding. I hope this is quite clear. I want no further interruptions. None.” He pounded his fist on the conference table to emphasize the last point.

  “Now you listen to me. They started this thing, quietly, subtly. With the help of their friends, of course. And you jumped on this fake bandwagon just like a greedy wild-eyed greasy speculator right out of the textbook. I know how smart you young fellows are. I know all the fancy tricks you learn in London and Zurich. Well, we don’t want any part of such stuff. As a result of your megalomania, the world now thinks that we started this; that we are trying foolishly to hit the Americans right where their greatest strength lies—smack in the middle of their dollar. And when it doesn’t come off? Who stands as the idiot in the eyes of the world? We will. We, the Soviet Union. And the Soviet people, who will have to stand in bread lines for the first time in twenty-five years. All because of you, you stupid son of a bitch. Can’t you remember a small incident not that many years ago on a little island in the Caribbean called Cuba? It set us back God knows how many years. Just because another maniac thought he could outbluff the Americans with his rockets. And now you, of all people, little unknown jerk Melekov, have decided to confront the world with your super-weapon, the ruble. Absolute total insanity!”

  At this point Melekov made up his mind. Fine. O.K. Your funeral.

  Litnovich continued, but now in a very soft voice, barely audible to Melekov who was sitting no more than five metres away. “You, Melekov, are suspended from your position at the Foreign Trade Bank of the Soviet Union. As of right now. You may leave. A car is waiting for you downstairs. You will return to your apartment, and you will remain there.”

  Without a word, without a glance at his “friend” Roskin, but on unsteady legs, Melekov rose and started to repack his papers.

  “The papers and briefcase remain here, Melekov.”

  Melekov left the room.

  “Now, Comrade Roskin. What has your role been in this whole scandal?” Roskin had had time to think a bit ahead. His reply was deliberate, measured—correctly measured, he hoped.

  “Comrade Litnovich, I would be the last to deny that Melekov has talked to me about this matter. I can also not deny that his logic concerning the growing inherent risks which we are running in the dollar was quite convincing. Therefore I decided to take certain defensive measures. I suspended a major sale of gold last week. I agreed that it made sense to put the German pipe purchase onto a dollar basis, in the hope that we could pay for the deliveries in devalued dollars. That’s it.”

  “But didn’t you realize that Melekov was selling dollars like a maniac on the foreign exchange markets in every major Western city during the past forty hours? Didn’t you know that he has built up a short position in dollars exceeding—imagine!—$3 billion? Don’t you know he just bought 5 million ounces of gold for over $300 million?”

  “Of course not. This is quite outside of the range of our normal discussions. We confer with each other on matters of principle, not those of operation.”

  Litnovich fixed Roskin in a deliberate stare. Roskin returned it quite calmly and without the twitch of an eyelash. To survive as the head of the National Bank for so long had required strong nerves more than once.

  Finally Litnovich resumed. “We’ll have further talks on this subject, Comrade Roskin. Right now, we have more important things to accomplish. But get this—and get it quite clearly. We want this thing stopped absolutely dead and right now. We want these stories of the Soviet Union trying to destroy the dollar in an open fight to be squelched, completely and immediately. And I want this nonsense with gold to stop—right now. By you, personally.”

  Five minutes later the meeting had ended. It was only nine-thirty Moscow time.

  The chairman of the National Bank was the first to be back at his desk. He only had to walk a few steps down the corridors from the conference room to get there. He picked up the phone, and placed an emergency call to Basel, Switzerland, for eleven-thirty. That should catch the gold people of the BIS right after they got to work. That done, he made a very careful set of notes based upon his recall of the conference which had just ended. He sought total recall. Every word would be important at some later date. Especially the exact words which Melekov had spoken.

  Ten minutes later Chairman Stepanov of the Foreign Trade Bank of the Soviet Union had also returned to his office. The first thing he did was also pick up the phone.

  “Get me the head of that German delegation on the pipeline deal.”

  His secretary replied, “Yes, sir. What’s the name, and where is he?”

  “Dammit, how should I know? Just get him, and now.”

  Obviously the place needed a bit more discipline. He’d given that man Melekov far too much authority and freedom in the place. With the best of intentions, all the good will in the world. And look what happened. He, Stepanov, would now have to pick up the pieces. That goddamned liar over at the National Bank, Roskin, had better be bloody careful, too. His position was hanging on a thread. Just one more incident and—bang! Litnovich would see to that!

  The phone rang.

  “I have Herr Klausen of Rhein-Ruhr Stahl,” said his secretary. “Hold on, I’ll connect you immediately.”

  The phone clicked a few times as phones always do in the Soviet Union.

  “Klausen,” suddenly came roaring out of the receiver.

  “My dear Herr Klausen, this is Chairman Stepanov of the Foreign Trade Bank.”

  “Who?”

  “Stepanov. Foreign Trade Bank of the Soviet Union.”

  “I’m afraid I have never met you. I’ve always dealt with Melekov.”

  “That’s right, Herr Klausen. Unfortunately Mr. Melekov is out today, and therefore I have taken over some of his tasks. I’m his chairman.”

  “Fine, but Mr. Stepanov, let me tell you something. I am not at all sure that there is any task left to talk about. I had been assured that the signing of our agreement was firmly scheduled for five yesterday afternoon. At four-thirty I get a most peculiar telephone call from the Ministry of Technology that it had to be postponed. Technical difficulties was the explanation. I know damn well that we mutually agreed on every single technical detail weeks ago. Now, I suppose there are also new financial difficulties?”

  “But Herr Klausen—”

  “Excuse me, but I would like to finish. I have been sitting here in Moscow for almost two weeks waiting to sign an agreement, the contents of which we had all agreed upon a long time ago. I was told that the last change was the switch from German marks to dollars as the unit of account. Fine. We agreed to the change in less than twenty-four hours, even though it was not at all easy. Now comes something new. Mr. Stepanov, I intend to fly back to Düsseldorf this weekend, with or without a signed contract. Now, you were saying?”

  Stepanov was not exactly accustomed to being addressed in this fashion, but as one victim of that crazy Melekov to another, he could certainly sympathize with the German in his anger.

  “That’s just it, Herr Klausen. I’m afraid that there has been a terrible misunderstanding in our bank. All our fault, and none of yours, of course. I fully sympathize with your feelings at
this moment. Perhaps we could meet any time it might be convenient for you, perhaps at your hotel?”

  “Not necessary. I’m sure we can come to the heart of the matter right here and now on the telephone. Just two questions. Who is finally authorized to approve this contract, or not approve it as the case may be? When will I get a straight answer, yes or no, from him?”

  Klausen had been through the Eastern European game of musical chairs at the conference table more than once before. The other side always started with the third or fourth team and slowly worked their way up the ranks until the big boss himself finally appeared. But this was ridiculous.

  “I can answer both questions. I have been authorized by Comrade Litnovich, who as you know is a member of our Central Committee, to inform you that he will personally appear for the final signing at five this afternoon. He has, however, requested that I seek your approval to just one change.”

  “That is?”

  “That we go back to the original financial arrangements, as foreseen before my colleague Melekov asked you to change them.”

  “You mean, you want to put the whole thing back on a German mark basis, with exactly the original terms and conditions?” asked Klausen incredulously.

  “Precisely.”

  “Done.”

  “Fine. If you agree I will personally pick you up at your hotel at four, shall we say, and then we can proceed directly to the Ministry of Finance in the Kremlin for the formal proceedings.”

  “Agreed.”

  “Until then, my dear Herr Klausen.”

  After he had hung up, Stepanov immediately buzzed for his secretary.

  “Get Lofkin to my office. Right now.”

  There was another case: Lofkin. He knew all along what Melekov had been up to. As head of the foreign exchange desk, he had to execute every single sell order. But not even a peep to the man who was chairman of the bank.

  “You asked for me, Comrade Stepanov?”