by Texas
'Quite simple. They've learned how to outsmart our New York bankers.'
'You lose me.'
'Don't apologize. Took me two years to unravel the intricacies.' And with that, he spread upon his desk a series of figures so improbable that they perplexed even Klinowitz, who was accustomed to the chicaneries of mankind: 'From impeccable United States government sources I find that our big banks have loaned the Latin countries to the south three hundred billion dollars. And from equally reliable sources in the recipient countries, I find that clever politicians and business magicians have diverted one hundred billion dollars into either secret Swiss accounts or business ventures here in the U.S.'
'Would you care to give me a synonym for that word diverted?'
'How about legally embezzled or cleverly sequestered or good old-fashioned stole?' He laughed: 'Whichever you elect, the result's the same. The money we loaned them is no longer in the country where we hoped it would serve a constructive purpose.'
'The original loans, will they ever be repaid?'
'I don't see how they can be, with the money vanished from the countries. I see no way that the Mexican government can recover the money your group has wasted here in Houston.'
'Have you the figures for Mexico?'
'I haven't assembled the accurate figure for the total loans, but I can prove that in 1980 they borrowed sixteen billion from us and allowed their manipulators to siphon off more than seven billion of our dollars into their private accounts.'
'As an American taxpayer,' Gabe said, 'I'd like to know what happens if the original loans go sour.'
'You guessed t. One way or another, you'll pay.'
Gabe frowned: 'If the American money had been kept in Mexico, could it have forestalled the poverty we see?'
'Now you touch a very sore point, Mr. Klinowitz. From the very beginning, Mexico was always much richer than Texas. Anything we did for our people, they could have done for theirs.'
'What went wrong?'
'I use the word diverted. It avoids moral judgment.'
So Klinowitz was not surprised when the peso, its hackup funds having been so callously diverted, began to stagger: 36 to the dollar one day, 93 the next, 147 later, then 193, with a threat of further plunging He was prepared and almost gleeful when the Mexican politicians flashed the distress signal: 'For the time being, halt all construction '
But he was a professional real estate man and was actually relieved when the Mexicans rounded up some additional capital and resumed building, for as he told Maggie Morrison: 'I have pains m my stomach when a client of mine runs into trouble.' However, he was shrewd enough to add: if 1 were you, Maggie, I'd keep my eye on those three towers of The Ramparts.'
'I'm no rental agency,' she protested. 'That's a heartache business .'
i don't mean rentals I've learned that if a building falls into trouble once, it'll do so again.'
'What could I do for the Ramparts people 7 '
'Maggie! How I wish I was thirty years old, with a small nest egg. In a fluctuating market like this, a daring trader can perform miracles'
i don't depend on miracles,' she said cautiously.
'Real money is made in a falling market Look at the unrented space in this city.'
And when she did she perceived two startling facts. The sharp decline in oil values had caused the bankruptcy of many smaller firms servicing that industry, and this meant that space which should have been rented for offices stood idle. When she toted up the appalling figures she found that 32,000,000 square feet of the finest office space in America stood vacant in Houston.
But what alarmed her more, with the rich Mexicans unable to visit the United States because of the disastrous devaluation of their peso, some twelve or thirteen major Houston hotels were suffering from lack of business. Fine establishments accustomed to seventy-and eighty-percent occupancy were getting no more than twenty or thirty, so that those which had depended on the Mexican trade were shutting down for the time being while others were going onto a five-day week to stanch the hemorrhaging.
Every intuition she had acquired in Michigan warned Maggie to retrench; every lesson she had learned from wise old Texans like Gabe Klinowitz urged her to make bold moves. In this impasse she would have liked to consult with her husband, but he was preoccupied with other ventures, so taking counsel only with herself, she monitored the chaos that seemed to have struck Houston business,
but always at the end of day she drove past The Ramparts to check on what the seven Mexican politicians were doing with their beautiful chain of buildings, and every sign she saw whispered confidentially: 'Gabe was right, these Mexicans are in deep trouble.'
The precipitous fall in the peso endangered more than the Mexican politicians, because all along the border, from Brownsville to El Paso, the Rio Grande bridges that once had brought thousands of brown-skinned people into American shops, where cameras, fine clothes, stereos and perfume were sold at bargain prices unattainable in Mexico itself, were strangely empty. The devalued peso bought nothing. For three painful days the Bravo-Escandon bridge, so long the scene of Mexican inflow, had no visitors from the south, and then the activity resumed, but in an ugly way that brought shame to the United States.
American citizens streamed into Mexico to buy at bargain prices all the gasoline, baby food, vegetables and beef the Mexican markets provided, for if the peso was down, the dollar had to be up. The drain of essentials continued. The norteamericanos are stealing us into starvation!' came the justified cry from south of the border, and it was in this crisis period that feisty Simon Garza, now the mayor of Bravo as a result of the revolution in voting patterns following the disturbances in the 1960s, projected himself into prominence. By the simple, illegal device of stationing his policemen at the Bravo end of the international bridge and forbidding its citizens from going into Mexico to buy what were bargains for them but subsistence for the Mexicans, he attracted statewide approval.
'We do not profit from the despair of others,' he announced repeatedly, and he said this with such force that even those who had been depriving Mexico of its foodstuffs and means of movement applauded. Belatedly, the Mexican government placed an embargo on its dwindling supplies of food, and the situation righted itself, with the peso at the shocking black-market rate of 193 to the dollar.
But now Mayor Garza was confronted by his own problems, for with the absolute cessation of Mexican traffic into the town, the Bravo stores began to close down, as they were doing all along the Rio Grande. Seeking guidance as to what he must do to halt the strangulation of his community, he attended a meeting of the Valley mayors in Laredo, and in that city he saw real panic, because fully forty percent of the luxurious emporiums were boarded up. Their business had not declined, it had vanished; there was no escape but the immediate firing of all employees and the barring of doors.
If one had ever needed proof of the symbiotic relationship between northern Mexico and southern Texas, it was provided now, because each side of the river, deprived in its own way, staggered toward economic breakdown. Unemployment on the American side rose to twenty, then to forty, percent, and a movement was started to have the region declared a disaster area.
Among all the leaders on both sides of the river, one man stood out for the coolness with which he handled the catastrophe and the steps he took to alleviate it. Simon Garza had been reared in a rugged school, fighting the remnants of the Horace Vigil dynasty, combatting the Texas Rangers who had been determined to keep that dynasty in operation, and insisting that his fellow Hispanics go to college and learn the tricks of American life. 'Eat tortillas at home. Speak Spanish in your games. But learn who Adam Smith and Milton Friedman are.' In this drive toward educating his constituents he was assisted by his brother Efrain, the professor at A&M, who uncovered scholarships at all the Texas universities to which bright girls and boys from Bravo could apply. The revolution of the mind,' the Garza brothers cried repeatedly, 'that's what we must engineer.'
; It was Simon who persuaded President Reagan, by means of a hard, nonhysterical telegram to the White House, to come down to the Valley to see for himself the devastation wrought by the drop in the peso, and as he led the well-intentioned President past the empty bridge and the boarded-up stores he was photographed with Reagan time and again, so that when the summary meeting was held in Laredo, the Northern reporters, to whom conditions along the Rio Grande were a mystery, suddenly discovered that in Simon Garza, Texas had a Hispanic politician who made sense and who used most cleverly the perquisites of his office. Considerable attention was paid to the grateful statement of the Escandon mayor, who told the reporters in Spanish: 'Garza, he knew what to do. He closed the bridge to keep us from starving.' People would remember this.
In his modest offices in Fort Worth, Ransom Rusk was facing such an assault from all sides that he groaned: 'God must be mad at Texas!' And while he was trying to sort things out, he received a preemptive call from his bank in Midland: 'Better come down here and give us help.' So in his private plane he flew to the Midland-Odessa airport, linchpin in the Texas oil complex, where he was met by the three managers of his service companies, who reported unanimous ruination for anything connected with oil. 'Mr. Rusk, Activated Mud can find no customers at all. I think
we'll have to fire everybody.' Electronic Logging was little better, for it showed a ninety-two-percent decline. But it was when he drove to the vast parking area between the two oil towns that he found visual proof of what had happened to the bonanza region, for there, stacked neatly in rows like dinosaurs whose time had passed, stood rusting in the bright sunlight nineteen of the twenty-three giant drilling rigs that would normally have been standing proudly erect in fields scattered across the landscape from the Gulf to New Mexico. Now their towers lay prostrate, their drilling engines silent and gathering dust.
'What did we pay for that last batch?' Rusk asked, and when his drilling manager said: 'Special electronics, special everything, thirteen million each.' Instantly calculating thirteen times nineteen, Rusk said quietly: 'That's two hundred forty-seven million dollars down the drain.' He had multiplied thirteen by twenty and subtracted thirteen.
'Not completely lost,' the manager assured him. 'If oil comes back, which it will have to . . .'
'What could you get for this, right now?' Rusk asked, kicking one of the rigs.
'Maybe a hundred and fifty thousand ... if we could find a buyer.'
'That's one percent of its value. I call that loss.'
And in that sickening moment by the fallen rigs, there among the dinosaurs whose days of rampaging were gone, Rusk had to make his decision. A powerfully organized man just entering his sixties, he should have been free to enjoy his favorable position in the world, his power and his billion dollars; instead, he found himself attacked on all sides, with foundations crumbling. But he did not propose to go down whimpering. He would fight back with all the energy he had been acquiring through past decades. He would ride out this storm, husband his resources, and prepare to fight back when conditions were more favorable.
'Close down Activated Mud. Just close it down. We'll find something for the top people to do till oil recovers. Electronic Logging, it's got to be of permanent value. What do you suggest?'
It was agreed that logging services would always be required, so long as one man wildcatted anywhere in Texas: 'Mr. Rusk, I think we should retain a core of the real experts, no matter
'I think so, too. Cut to the bone and hunker down. And these?' Almost lovingly he touched with the toe of his cowboy boot the nearest prostrate rig. 'What in the world do we do with these?'
The question was almost academic, for it had no sensible solution. There lay the mighty rigs, their towering superstructures
humbled, and unless prospecting for oil resumed, they would not rise again. They would be valueless.
When none of his advisers offered a sensible solution, Rusk cut the Gordian knot: 'Fan out across Texas. Find young men who are willing to take a risk. Sell off these nineteen idle rigs for whatever they'll bring. But get rid of them. We'll keep the four that arc working. For when things start up again.'
'You mean, sell them regardless of what we can get?'
'Exactly what I mean. The gamble for oil passes into younger hands.'
'Mr. Rusk, I want your firm order on this. You're willing to sell this thirteen-million-dollar rig for a hundred and fifty thousand dollars?'
'For a hundred thousand, if that's what it brings.'
With that harsh decision behind him he drove into Midland, where the managers of the bank in which he was heavily invested were in quiet panic. 'Ransom, the bottom is dropping out. It's all quicksand.'
'Just how bad?' And they explained what he had already suspected: if you drove in from the airport, you saw the service fields lying idle, your own among them. Did you notice the string of motels? Two years ago they had to limit guests to three nights in a row. Everybody wanted to come to Odessa to get in on the action.'
'I noticed the few cars parked outside.'
'Paul here owns three of them. Eight-percent occupancy. Foreclosures everywhere.'
Rusk looked at Paul Mesmer, the distressed motel owner, and swore that under no circumstances would he, Rusk, allow himself to look like that. Firmly he asked: 'What's the worst aspect of our situation?' and he listened in a shock he did not betray as these good men, who had expected oil to go to sixty dollars a barrel, explained what they faced when it dropped to twenty-seven
'Bluntly
'That's the way I want it, bluntly.'
'We may have to close our doors.'
'How much 7 '
'A billion and a quarter dollars.'
'That's a manly sum. Depositors protected?'
'In part.'
'Us investors?'
'A complete wipe-out.'
Rusk heard this doleful news without wincing. He had $16,-000,000 in bank shares, and to lose it on top of his heavy losses in the oil business would be inconvenient but not disabling. Still,
he hated to admit that his business judgment had been faulty, so he asked: 'Any way we can prevent the Feds from moving in?'
'If we all chipped in more of our own money . . .'
'How much you want from me?'
'If you could see your way clear . . . five million.'
'Done.'
'Before you sign anything, Ransom, you realize that whatever you give will be in jeopardy?'
He did not answer the question. Instead, he looked at the embattled directors, these sturdy men of the plains who had gambled fantastically, making it big when things went their way, now willing to put up small fortunes when things turned sour. They were Texas gamblers and they did not whimper.
'I like the way you're handling things,' and he flew back to Fort Worth.
But on the way east he had a vision, you could term it nothing else: The action has got to swing to Dallas. With Houston in trouble on its real estate, and Midland in shock over oil, and the Rio Grande with up to forty-five percent unemployed, leadership passes to Dallas. That's where the big fight for the soul of Texas is going to be conducted. That's where I want to be.
So he directed his pilot to land not at Meacham Field, the city airport for Fort Worth, but at Love Field in Dallas. Radioing ahead for his driver to meet him at the new destination, he sped, immediately upon landing, toward that imposing complex of new construction in North Dallas, some fourteen miles out from the traditional center of the city, and in one of the many rental offices peddling space in the bright new buildings, he rented what would become a major center of Dallas power: Ransom Rusk Enterprises.
He had been in position only a few weeks when the wisdom of this move was proved, because as a major stockholder in TexTek, he was summoned to their board room when that huge conglomerate stumbled into trouble. Pierre Soult, founding genius of the electronics end of the business, had died, throwing his pioneering but fragile company into such temporary disarray that the new managemen
t had to inform Rusk: 'Due to increased competition from Japan and an unforeseen collapse in electronic games and home computers, we've experienced a loss in the first quarter of a hundred million dollars and can expect a repeat or worse next quarter.'
'When do we inform the public?' Rusk asked as he calculated the effect on his huge holdings.
'Tomorrow.'
So Rusk was on hand when the devastating losses were announced to Wall Street, and he sat grim-lipped as the ticker
reported the sensational drop in TexTek. Within one trading day in New York, the paper value of TexTek stock dropped by one billion dollars.
He was also on the scene, as a major investor, when Braniff Airlines, once the pride of Dallas, stumbled and fumbled, striving vainly to stay alive but missing every tenuous opportunity. In the panic meetings, he gave Braniff management counsel he had given his oil-field managers in Odessa: 'Cut back. Decide ruthlessly what must be done. And do it now.'
He supervised the cutting away of the once-profitable South American routes. He tried to halt the tremendous losses on the new routes the company had unwisely pioneered in recent months, and he did his best to find new funds, but in the end he had to admit: 'We gave it a good try. It's bankrupt.' And Texas travelers through the massive new Dallas-Fort Worth Airport looked shamefacedly at the varicolored Braniff planes stowed aimlessly on 'the parking lots and tried to calculate the loss in money and pride which their clipped wings represented.
One New York banking expert, dispatched to Dallas to investigate the mood in Texas, reported confidentially to his superiors:
People outside Texas, especially those in less-favored states like Michigan, Ohio and Pennsylvania, had begun to look upon Dallas and Houston as places where the figures could only go up. Now they are learning with the rest of us that they can also come down. Houston, Midland, Abilene, El Paso, Laredo and the so-called Golden Triangle are disaster areas, and in certain hard-struck industries unemployment reaches past fifty percent.