Free Spirit stopped to pick up an old woman who should have been meeting her son at St. Louis by now are you a stranded passenger too, four boys they have and still trying for a girl he should cut it off and pickle it if you ask me you did say you’re a stranded passenger? Webb tried to nod in the right places.
The car stopped outside the Plantation Hotel and the clerk, a balding man of about sixty, gave the woman a ground floor room and took Webb up to the first floor. The man hovered. Webb told him he had no dollars. The man said he took the other stuff too. Webb said he didn’t have any of that either and the clerk left shaking his head. Webb locked the door, had a warm shower and collapsed into bed.
He lay in the semi-dark and listened to the night sounds of New York and the elevator disgorging the late-night arrivals.
He worried because something didn’t fit. He was still worrying when he drifted into a confused, restless, dream-filled sleep.
While Webb slept, the quiet little run on gold continued, a trickle slowly gaining strength. More ominously, the dollar began to drift down against other currencies.
The meridian drifted at a thousand miles an hour across the Pacific, the vast, empty, watery hemisphere of the planet. Twelve thousand miles across the ocean, dawn touched the Sea of Okhotsk and the northernmost islands of Japan. An hour later the sun pierced the morning fog over Tokyo; an hour later again and Singapore awoke; and once again clever people, this time in glass-fronted towers overlooking Kowloon and Clearwater Bay, began to worry. They made precautionary moves.
The dollar’s drift became a slide.
Just before 1030 GMT, in London, three taxis drew up in New Court, a small courtyard in a narrow street close to the Bank of England. Three men emerged from the taxis and, as they entered the offices of N.M. Rothschild, were joined by a fourth man arriving on foot from the direction of the Bank tube station. As happened every morning at this hour, they were ushered into a small, quiet, wood-panelled office. The walls were lined with portraits of past monarchs, like hunting trophies: a reminder that, historically, even kings had needed the moneylenders. Each man had a desk on which was a telephone and a small Union Jack. The chairman of Rothschild’s was already seated, and he welcomed the arrivals with a nod; it was a routine repeated twice daily, at 10:30 a.m. and 3 p.m.
The five constituted an inner circle of the London Bullion Market Association. They traded gold between themselves without ever physically exchanging the yellow metal. On their word, the twice-daily “fixing” of the price of gold, the value of gold was decided, and so the wealth of the world’s central banks, holding vast gold reserves, was determined.
The chairman of Rothschild’s (N.M. Rothschild, founded in 1804) opened the proceedings. He spoke in a soft, colourless voice, almost a monotone: here, gold and money, the most emotionally charged subjects known to man, were traded in an atmosphere from which all passion was ruthlessly expunged. “Gentlemen, we are faced with an extraordinary situation. My office informs me that there has been a sharp upwards movement in bullion within the last few hours.”
The man from the Standard Chartered Bank (a subsidiary of Mocatta and Goldsmid, founded 1684) nodded. “It’s small, but quite distinct. However, my office can find no reason for it.”
There were murmurs of assent. The man from Montagu Precious Metals (Samuel Montagu, a relative newcomer, having been founded in 1853) tapped a folder in front of him. “It is very mysterious. My buying orders from our Middle East offices alone amount to nearly a billion dollars at last night’s Comex rate.”
The man from Deutsche Bank Sharps Pixley (Sharps, founded 1750 and merged with Pixley in 1852) raised an eyebrow. “But what about security? Can you physically export so much gold from London to Saudi?”
Rothschild’s gave Sharps Pixley a disapproving look: the tone of surprise had been a tad too strong, too colourful, for this office.
The man from the Republic National Bank of New York spoke in a measured, cultured American accent. “My office feels that this is being driven by a small number of individuals who, for whatever reason, are trying to capture as much of the private gold market as they can. The market has spotted this and is responding irrationally.”
“We must not have panic,” Deutsche Bank Sharps Pixley said, looking worried.
Rothschild’s almost smiled. “Panic can be profitable. As one of my predecessors said, the time to buy is when blood is running in the streets.”
And with what passed for social chit-chat over, the five began the serious business of fixing the price of gold, of resolving the age-old tension between buyer and seller. Each man had a portfolio before him, and referred constantly to his office through the telephone. As the prices began to converge, each dealer lowered his little flag to indicate agreement with the fixing price. The man from New York was the last to agree. The flight from the dollar would be catastrophic, but the force of the market was overwhelming. As soon as he had lowered his flag, a messenger was summoned and the price of gold was published worldwide. Overnight, it had almost doubled.
Immediately after the Rothschild’s morning session, encrypted information began to flow along the Highway from Midland Global Markets to the offices of the Hongkong and Shanghai Banking Corporation, whose assets under management were four hundred billion dollars. Midland Global owned the Corporation and four hundred billion dollars was a lot of responsibility. The Corporation began to offload its derivatives market, quietly tried to go short on the Nikkei.
For South Africa, the world’s largest gold producer, the news was good. Barclays de Zoete Wedd contacted their owners, Barclays Bank, for instructions, but the message was already on its way from London: somebody knows something, thinks the future is bad news. Some unspecified calamity may be on the way; maybe the greenhouse is beginning to run, or the Arctic ice cap is about to break off. Whatever. So reduce exposure to the future; get out of leveraged currency swaps. And do it quietly, always quietly. No panic selling.
The Nikkei 225 Index faltered. By the close of day it had begun to plunge. On the Square Mile, the Bank of England raised interest rates, and raised them again, but the slide was becoming uncontrollable, the strain on currencies intolerable.
As the sun moved round, rumours began to sweep the markets. Whatever the calamity, somebody knew it was going to hit the States; maybe the big one was about to hit San Francisco and Silicon Valley. Whatever.
Panic. The slide on shares and currencies, now out of control, accelerated towards a precipice. Gold, the one certainty in an uncertain world, went stratospheric.
All this without knowledge of the nature of the impending disaster. But in the early hours of the morning, Eastern Standard Time, while Webb tossed and turned in a stifling hotel room, that information reached the offices of the New York Times.
The Situation Room, T-49 Hours
The Admiral was a six o’clock riser. At six fifteen, as on most mornings excepting Thanksgiving, birthdays and the like, hot water was spraying on his head and down over his scrawny, suntanned neck. He turned and shut his eyes, letting the stream hit his face and run down over his chest and his trim stomach. He groped for the shower switch, turned it off and was just turning to the shower door when his wife opened it.
“Robert. Were you expecting a car this morning?”
The Admiral showed surprise. “No I was not. What’s going on?” Hastily, he dried himself off. Only once, in his ten years at Washington, had he been summoned from his home, and that had been at the outbreak of the Second Korean War.