Wallingford paused in his report and a smile crossed his face. "You know, the old gold-brick dodge always worked in the sticks . . ." He caught himself and affected a cough to cover his embarrassment at this revelation.
"Anyway, the gold-in-reserve idea became rather a trademark of Trelawney's bank, and it spread to other west coast banks as well."
"Explaining how they happened to readily have a surplus of the precious metal," said Holmes. He had indicated no impatience at Wallingford's detailed recounting, and I sensed that he was much interested in the complete picture of the Trelawney-Hananish operation.
"Hananish returned to Gloucester after being mustered out, and he was more fortunate in that his father was president of the bank there and he rather inherited the position."
Holmes, his eyes on the ceiling, suddenly shot Wallingford a sharp glance, which the man interpreted. "Both Hananish's bank and the one in Shaw were publicly owned, each by a small group of stockholders."
Holmes' gaze retreated, again, to the ceiling.
"The gold reserve in both banks was annually listed as part of the assets, but most of the time it wasn't there at all."
Holmes leaned forward in his chair suddenly, and Wallingford certainly had my attention as well. Orloff, already privy to the information, was blowing smoke rings.
"Under the banking laws, there are spot checks by examiners; but Trelawney was prepared for this, Hananish as well. If there was official inquiry as to the whereabouts of the reserve gold, Trelawney had at hand a letter of credit from Hananish's bank for the amount of the gold plus the date that the metal would be returned and the agreement whereby Trelawney had made the gold temporarily available to Hananish."
Holmes rose to his feet, now restless with anticipation. "But these agreements never passed through the normal channels of either bank."
"Nor were the stockholders informed, nor was there interest charged," responded Wallingford.
I could not suppress a question at this point. "Where was the gold, then?"
Wallingford shrugged. "That I could not learn. This embraces a matter of some years, you understand. All that time what was supposed to be a reserve fund was actually in movement: being invested, acting as collateral, who knows what."
Holmes, standing by the bow window with his back to the group, suddenly whirled around. "I expressed a desire to look into previous mischief of Hananish and Trelawney—Michael as well. You recall, Watson? This information should provide a fruitful lead as well as something to throw at Hananish when we close in on him."
Orloff was snubbing out one of the small, black cigars he fancied. "Are you prepared to make your move?"
Holmes crossed to the mantelpiece, assuming a familiar position beside it. Ah hah, I thought. He's ready for the denouement.
The sleuth gave Orloff a short nod, then his eyes centered on Wallingford. "Your mention, when last we met, of the Deutsche Bank reaping rich dividends. The German banking house has call on four hundred thousand pounds' worth of gold in the vaults of the Bank of England. But the gold belongs to Hananish. From the treasure train, of course, and he's selling it twice, though this time with no consortium of banks and not with his partner Trelawney either. The Credit Lyonnais will get it from the Deutsche Bank. The Deutsche Bank gets it from the Bank of England, but the payment goes to Hananish. A major coup, but we've got him."
Wallingford grew pale and had trouble finding words. When they did come, it was not with the assured, businesslike manner that was his normal delivery.
"Mr. Holmes . . . I did not know about the three-way arrangement you outline; but it just won't work, you see."
His somewhat smug manner jarred, Holmes registered surprise. "What won't work?"
"I see what you're driving at, sir. But Hananish can stop us cold. The four hundred thousand pounds in gold was deposited in his name in the Bank of England before the robbery."
There was dead silence in the room, and I confess this startling statement actually caused me to hold my breath for a long moment. Holmes almost staggered back against the mantel, surprise a harsh and blatant thing on his expressive features. Good heavens, I thought. His whole case has been shattered by one unanticipated fact. The poor chap must be stunned.
Holmes' reaction was not what I anticipated. Instead, the palm of his right hand swept up to smite his forehead with a crack like a revolver shot.
"Dumkopf!" he shouted. When sore pressed, my friend resorted to exclamations in foreign languages.
A tinge of pink suffused the features of Wallingford, and the sleuth hastened to prevent a misunderstanding. "Not you," he said, spearing the former confidence man with an outstretched finger. His digit swung in a half circle to tap his chest forcibly. "Me!" Then his glowing eyes shifted in my direction and the shadow of a bitter smile creased his lips.
"If in future times, Watson, you choose to record this case history, you can write me down an ass."
If I had not known previously, this statement would have alerted me to how upset my friend was at himself. For he had used similar words when castigating himself for missing the mark on Colonel Walter in the matter of the Bruce-Partington plans.
Wallingford's face, a picture of consternation, was shifting from one to another of us, with a dazed expression, as though he had lost touch with reality. Orloff had a grim look of disbelief about him.
"You cannot mean that Hananish will elude our grasp," he said.
"Indeed no," replied Holmes quickly, and those two words did much to rally my morale, momentarily very low.
Holmes' long stride took him to the desk, and he gazed at it as though beset with a number of necessary actions and choosing which one to seize on first. "Now, finally, I have the right perspective regarding this case, and the errant threads that have nagged at me are unraveled."
There was a longish pause as Holmes communed with himself. Then his hawk-like face rose and his eyes enveloped us.
"Orloff, you'd best be off to the Diogenes Club and relate our findings to my brother."
Holmes passed the letter he had received the night before to the security agent. "Mycroft has developed an interest in the Deutsche Bank and could well find Wally's information of value. You might tell him that Watson and I have the matter of the stolen gold in hand."
"What can I do, sir?" asked Wallingford.
"Accompany Orloff. The Deutsche Bank has proved revealing to us. Possibly you can unearth some connection between the Germans and the financial manipulations of Trelawney and Hananish during the period the former was alive. My brother has certain connections, which you will find helpful."
A quick glance passed between Wallingford and Orloff, and the American responded dryly, "So I've learned."