“It sounds a bit odd when you put it that way,” agreed the Major thoughtfully. “But it doesn’t mean that they’re tottering.”
“Of course they aren’t tottering. I just said I’d run across two instances recently of them playing the fool. One of them was a bit dirty, but may have been profitable. The other was plain loony.”
“Unless,” said Gordon, “they had reason to believe the official body would buy them out – it’s been done, you know.”
“Maybe,” said Stacey. “And if they’d been a set of mushroom jobbers I’d have believed it. But it just didn’t seem like normal behaviour for one of our biggest insurance corporations. It’s like – dash it, it’s like catching a bishop filling in football pools.”
“So what?” said the fat man. “I knew a Dean once who doubled his stipend in the year Applejack won the Oaks.”
“Charley,” said Gordon, “some of the Deans you’ve known must have been surprising characters.” Paddy found himself in a dilemma.
He knew – indeed, it did not need a great degree of perspicacity to see – that he was near the heart of the perplexity. Gathered together in that room, purely by chance, were four men. None of them had anything directly to do with the matter in hand. But all of them had a very special knowledge and experience of the world he and his friends were investigating. The dapper man called Gordon was, he gathered, an outside broker. The Major was apparently an accountant who specialized in company matters. Stacey, he knew, could be described as a financial operator. The fat man, too, belonged to the circle though he found it difficult to place him. However, he felt convinced that these four men between them could answer all the questions that were puzzling him and his friends. And the deadly part of it was that he simply dared not put a single question – in fact, he hardly dared to show that he was interested at all.
At the moment they were talking shop – and talking it freely, the result of a good many drinks, a strong community of interests and the fact that they could see no reason to be cautious. He knew well enough, however, that one unconsidered word by him would dry them up at once.
There was, moreover, a further complication. He was getting infernally drunk.
Somehow two full glasses of whisky had lined up in front of him and he had a third, half filled, in his hand.
And it was most emphatically a school in which one did not sit out a round.
“In my way of thinking,” said the fat man, “all insurance companies are swindles. It’s like the pools. You pay a lot in and they pay three-quarters of it back. It’s money for old rope.”
“They get stung sometimes,” said the Major. “Look at Rosen-berg’s claim against the UP. That must have cost them a quarter of a million to settle.”
“What’s a quarter of a million to an insurance company,” said Gordon. “They add a tenth per cent to the premium rate for that particular risk and it all balances out at the next audit.”
“Besides,” said Stacey, “it serves them right for accepting insurance on such damn silly risks.”
“There’s nothing you can’t insure against if you try,” said the fat man. “A friend of mine – he was a farmer – insured against rain on his holiday. Went to Manchester, and stayed a fortnight. Sun never stopped shining once.”
“A friend of mine,” said Stacey, “he was a farmer, too, insured against daughters.”
“Against daughters?”
“Yes – said they represented a financial loss. Be no use to him on the farm. Perfectly normal arrangement. He got a thousand pounds if the child was a girl. Fifty per cent premium. He had to pay out five hundred if it was a boy.”
“What happened?” asked the fat man.
“He had triplets,” said Stacey. “Two boys and a girl, so he finished up all square.”
“Stacey,” said the Major, “are you telling the strict truth?”
“Any man who calls me a liar,” said Mr Loveless with dignity, “stands me a drink.”
“Then you must live in a permanent state of intoxication,” said the Major.
The conversation seemed to have drifted away for the moment from purely financial topics. The fat man was embarked on a series of reminiscences involving most of the senior members of the Bench by name, and Paddy seized the opportunity of pushing one of the full whisky glasses in front of Stacey Loveless. The other he had perforce to begin drinking. It seemed to go surprisingly quickly.
“Stacey ol’ boy,” he said – and the words seemed curiously difficult to form; yet when he had formed them they seemed excruciatingly funny, so much so that he repeated them again with a giggle.
‘‘Hullo,” said Mr Loveless, “you still here?”
“Stacey ol’ boy,” said Paddy, “I’m absolutely broke – cleaned out. I think it’s time I stood another round. I’m a round behind – two rounds behind. Can you lend me some money?”
“Never mind about that,” said Mr Loveless. “I brought you here. Have the next one on me.”
It was definitely the next one – a liqueur brandy – that did the trick. Paddy ceased to have any noticeable grip on reality. The faces of the four men elongated and widened and distorted in the frowsy atmosphere. The fat man shone like an enormous jovial sun; the dapper man grew so thin and tenuous that he hardly seemed to exist at all. The Major, on the other hand, became curiously more and more like Paddy’s Commanding Officer in the Hyde Parks.
He confided the coincidence to the Major who laughed, whereupon Paddy laughed too, and suddenly everybody seemed to be laughing.
Fragments of conversation still came to him. At one point in the proceedings plates of bread and cheese appeared on the table – they were drinking stout at the time – and in one of the spasmodic moments of mental clarity brought about by the introduction of this solid matter he clearly heard the dapper man say, “Were you serious about the Stalagmite, Stacey?” to which Mr Loveless answered. “Of course not, Gordon. I’m never serious.”
“You don’t think it’s going to be another You and Me smash–” The mists of alcohol rolled back before Paddy could get the answer to this.
At some indefinite period later he found himself involved in an acrimonious argument with the fat man, from which Stacey rescued him, seizing him by the arm and propelling him across the floor.
“Musn’t slang your host, ol’ boy,” he said. “I think it’s time we took the road.”
“Watchermeanmyhost, didn’t I stand ’m a drink,” said Paddy indignantly.
“It’s all right ol’ boy, he owns the place,” said Stacey.
Further time passed and Paddy found himself in the Bank Underground Station.
He was violently sick at the foot of the emergency stairs – but fortunately no one appeared to notice. Slightly sobered he climbed on to a Central Line train and fell asleep, waking again momentarily at Ealing Broadway. He recognized himself to be off course but decided to sit tight. Sure enough, next time he opened his eyes he was back at the Bank again. How long he would have continued to shuttle backwards and forwards on the Central Line is problematical, but fortunately at this point Nap, who was coming home early from the office, happened to find him. Taking in the situation with a practised eye he steered Paddy home and put him to bed.
11
The Financial Angle
“Mac,” said Paddy next morning, “I need your help, and I need it badly.”
“What you look as if you need is a large alka-seltzer and a packet of aspirin,” said McAndrews in an unprejudiced sort of way. “What happened to you yesterday?”
“I got tight, Mac. Beautifully, uproariously tight. All in the line of duty.”
“Nae doot,” said McAndrews. “You rang me up at five o’clock last night and urged me to buy cotton. You said, so far as I could very well understand you, that you had inside information that the Government was planning to blow up the Liverpool Cotton Exchange.”
“Did I?” said Paddy guiltily – “That must have been after I got home. But never mind all that
now. What I want you to do, Mac, is to answer some questions and not ask me why I’m asking them – if you see what I mean?”
“Oh, ay,” said McAndrews.
“First of all then,” said Paddy, “have you heard of Bairsted Enterprises?”
“If you were thinking of putting money into them it’s too late,” said McAndrews. “They’re sunk.”
“I know. But do you know who sunk them?”
“So far as I know,” said McAndrews cautiously, “they sunk themselves, by a process of under-production and over-expenditure.”
“That’s what you were meant to think,” said Paddy. “But it isn’t true. They were scuppered – by the Stalagmite Insurance Corporation.”
“And why would the Stalagmite Insurance Corporation want to do that?” asked Mac. He sounded more interested than surprised.
“Because they had put up the money for a rival show – Factory Fitments. You remember, some time ago, you asked me to look into them, and I found out that they had been bought up at issue – well the Stalagmite did that. Then they set out to wreck Bairsteds. They lent them money on mortgage and called in the mortgage at a time when they knew that Bairsteds couldn’t pay up. Then they did something or other with insurance policies – I didn’t quite follow that bit – and destroyed their credit in the City so that no one else would take up the mortgages.”
“That first bit’s true enough,” said McAndrews thoughtfully. “They cancelled their policies. The big companies have a ‘get out’ clause, ye ken, in some of their commaircial policies. They retain the option to cancel the policy at short notice. It costs them money of course.”
“It cost them a thousand pounds,” said Paddy.
“Very likely. Where did you pick up all this?”
“Some of it from Stacey Loveless – some from a little man called Gordon–”
“Ay – that’ll be Gordon Epps – you’ve been moving in high society. So the Stalagmite are behind Factory Fitments – that’s verra interesting. What else did you pick up?”
“Look here,” said Paddy. “You’re not meant to be asking me questions. I’m meant to be picking your brains. And I’m telling you this in confidence.”
“It shall go no fairther than these walls,” said McAndrews with a solemn grin. “Ask your questions.”
“Well then, who is Bairsted?”
“Henry Bairsted. He used to work for Impeys, the Deptford steel people. He’s been with them since the year dot. Then he started out on his own, manufacturing factory equipment – about three years ago. You know as much about the rest as I do.”
“I see. Next question. Who is Pip?”
“He might be different people in different places. In what precise context did you happen to hear him mentioned?”
“Someone said that the Stalagmite was behind a firm which made vegetable fat – synthetic stuff. I didn’t quite catch the name – something like syncol.”
McAndrews gave a long whistle. “Syn-ol,” he said. “That’s a verra surprising idea. Verra surprising indeed. You’re sure you’re not mistaken.”
“No. Syn-ol. That was it.”
“The only Pip likely to know a thing like that,” said McAndrews slowly, “would be Philip Van Bright.”
“Philip Van Bright,” repeated Paddy. “Moody and Van Bright.” It seemed to him that the information was significant, but for the life of him he couldn’t quite see how. His head was not in the best condition for thinking.
“They seem to feature quite prominently in this affair,” went on McAndrews. “You’ll recollect that they acted in the flotation of Factory Fitments, Ltd.”
“Yes,” said Paddy. “And as far as I can recollect Stacey said that both his bits of information about the Stalagmite came from Pip – that’s from Philip Van Bright. Both the bit about Factory Fitments and the bit about Syn-ol–”
“If you’re not sure, why don’t you ask him?”
“Because he wouldn’t tell me,” said Paddy. “He only mentioned it yesterday because he was tight – well, not tight exactly – but anyway I’m sure that if I said anything about it to him this morning he’d dry up like a tap–”
“I expect you’re right,” agreed McAndrews. “Was there anything else?”
“No – there was a bit about Gold – the MP – talking at Liverpool – but I think that was a joke. And then – oh yes. What was the ‘You and Me smash’–?”
A curious change came over McAndrews. For a moment all movement ceased; then, when he turned to face Paddy, he had the look of a man who has seen a ghost.
“The You and Me smash–” he whispered. “You’re certain – yes, of course.”
“Why, Mac, what is it? What’s it all about?”
“The You and Me smash,” said McAndrews slowly, “was the biggest private financial disaster that I can ever remember. The ‘You and Me’ Mutual Insurance Company – you’ll be too young to remember the name, but it was a big name, a name to juggle with, in the early years of this century. They were one of the most important half-dozen firms specializing in life insurance. Then, just after the war – the First World War I mean – they crashed.”
“Why?” asked Paddy.
“Do you understand how an insurance company works,” asked McAndrews.
“Yes. No – not really. It’s just one of those things you rather take for granted. How does it work, Mac?”
“An insurance company,” said McAndrews – he seemed to have recovered his equanimity, “like all truly great institutions, is a meeracle of simplicity. A great deal of money goes in at one end – that’s the premium, ye ken – and a good deal, though not quite so much – comes out at the other – that’s the payments to the insured. The only difficulty they experience is what to do with the money in the interim. When you realize that they may be receiving something like a hundred thousand pounds in a day–”
“Good God,” said Paddy, “what’s difficult about that? If anyone gave me a hundred thousand pounds I’d be happy enough. Can’t they invest it?”
“That’s precisely the trouble,” said McAndrews. “You can’t go down to the Stock Exchange with that sort of money in your pocket and get rid of it as easily as putting five pounds into the Post Office Savings Bank. It needs the most judeecious handling.”
“All right,” said Paddy. “I see that.”
“It’s the General Manager who controls the investments. That’s why he has to be such a sound man. Well, the General Manager of this particular Company was not a good man. He was an out and out bad one.”
“A crook?”
“Yes. Or criminally foolish. The distinction so far as he was consairned was purely theoretical. He was jailed. The company, it was found, had succeeded, under his guidance, in turning a million and a half of profit into a two million loss. Some of the money was gone for ever – in foreign stock, which was hardly worth the paper it was printed on. Some had been directly embezzled – by this man and his associate.”
“So he was put into clink – and serve him right,” said Paddy.
“He was, as I say, jailed. But that was not the most interesting point. After the criminal proceedings were over, the Attorney-General, on behalf of the shareholders, instituted two actions – one against the directors and one against the firm of chartered accountants who had been auditing the accounts. Both actions failed.”
“I see,” said Paddy. He was in fact beginning to see dimly what McAndrews was driving at. “That was before the old Company Act.”
“Yes. I’d almost say that certain sections of the Company Act were aimed at that decision. The directors were just the ordinary crowd – not guinea pigs, by any means. But not financial experts either. They attended board meetings and signed the cheques – and left the investment to Cummins – that was the name of the general manager.”
“But the man in the street didn’t like the directors getting off scot-free?”
“There was a lot of public feeling about it,” agreed McAndrews. “And then th
e Company Act was passed – and now this new one. I haven’t just studied it closely, but I fancy it doesn’t make a director’s responsibility any lighter.”
“I see,” said Paddy. “So you think that if there was a new ‘You and Me’ smash it might be the directors who got it in the neck?”
“The general manager wouldn’t escape, of course,” said McAndrews. “But I think that if the liabilities were on the scale you are contemplating – well, the general manager might be at the Old Bailey, but the directors would be in Carey Street.”
“H’m. But the Stalagmite directors – they’re not fools, are they? They must know all this.”
“They’re sairtainly not fools,” agreed McAndrews. “Stallybrowe and Sir Hubert Fosdick are a bit long in the tooth. And Sir George Burroughs has got so many irons in the fire that he wouldn’t have time to pay very close attention to the routine details of what was going on. But Charles Atkinson and Andrew B Chattell are a different proposition. They’re both trained accountants and they’ve been in insurance all their working lives – yes, what is it?”
“Dammit,” said Paddy, “every time you mention those two names together, it rings a bell. I’ve heard them before, I know. Not precisely in this connection, either. When Hazlerigg was talking about them the other day I had exactly the same impression–”
“And who may Hazlerigg be?”
“Never mind that,” said Paddy hastily, “go on with what you were saying.”
“Well then – there’s Hewson-Collet, too. He’s primarily a lawyer, but that doesn’t mean he’s a fool about finance.”
“Quite,” said Paddy. “Then what it amounts to is this. Any managing director nowadays who hoped to do what that other chap – Cummins – did for his Insurance Company would have to be pretty circumspect. He’s in a position of authority so far as the rest of the corporation are concerned. They are his subordinates. So the ordinary checks won’t catch them. They’re designed to prevent the office boy stealing the stamps or the junior ledger clerk making a commission on the side by undercharging their friends. But they’re no use where the fellow at the top’s concerned.”
The Doors Open Page 16