“Yes,” said Crosby, “but the problem will be the speculators.”
“I disagree,” replied the president. “Look, it’s now more than forty years since Roosevelt made that last big hike in the price of gold. You can be damn sure that when I announce this I’ll let the world know that I do not expect another change will be necessary before the year 2000.”
“Mr. President,” said Henry Crosby, “you’ve got it! Goddammit, you’ve really got it! And everybody thinks you’re some kind of a nitwit where economics is concerned. Brother, I would just love to see the faces of those Frenchmen when they hear about this!”
“Well, you can be sure they’re not going to hear about it until I go on TV to announce it. Henry, this thing has got to be kept totally and absolutely secret right up to the last minute.”
“I know. That could be a problem since it’s still going to take time to work out all the details. In fact, Mr. President, I think that while you’re at it, you should go one step further. Put gold up to $125 an ounce, yes. But also devalue the dollar by another 15 percent against other currencies. Those guys keep yapping about the dollar being overvalued, about our balance of payments always being in deficit, about having to swallow more and more dollars. Look, if we devalue by that much we’ll be able to outcompete almost every nation on earth again. Even the Japs. As long as we’re doing it, we might as well go all the way. Hell, all this should go over great with the voters. You’ll be restoring America’s leadership of the free world, protecting American jobs, putting the country back on the road to prosperity, restoring the position of the dollar to its rightful place as the currency not only of the United States but of the entire world!”
“Henry,” said the president drily, “let’s not get carried away. But you’re right. As long as we’re taking the plunge, let’s do it right. Now how much time do you think we’ll need?”
The two men discussed the matter for another two hours and finally decided that D day would be Saturday, November 8. The announcement would come on the evening of November 7, after the banks had closed.
During the next few weeks the plan was duly put to paper and five copies only were made, each bound in top-secret red. The White House pair, now complemented by the secretary of state and the chairman of the Federal Reserve Board, decided to bring a fifth man into the plan. He was the secretary-general of the Bank for International Settlements. You probably have heard relatively little about this bank. Yet, next to the IMF, it is no doubt the most important institution in the whole complex network of the international monetary system. It acts as the central bank for the world’s central bankers.
It is, for example, the Bank for International Settlements—known as the BIS in professional circles—which, when the pound sterling or the Italian lira periodically comes under pressure, massively intervenes to prevent a blowup. When everybody else is selling, the BIS is buying, and vice versa. It has almost unlimited funds available for this purpose from its owners. For its owners are the major central banks of the world, ranging from the Bank of England to the Swiss National Bank to the National Bank of Hungary. Most important from Washington’s standpoint, during every currency crisis since 1971 the BIS has provided major and consistent support to the dollar. It was a friend in enemy territory.
The cooperation of the BIS, and especially its secretary-general, would be absolutely necessary to restore international order after the first major gold price increase in over forty years. Such an event could trigger a tidal wave which would rock every financial market on earth.
It was decided that U.S. Secretary of the Treasury Henry Crosby should brief BIS Secretary-General Bollinger in a private meeting. Discreetly. If Crosby turned up in Basel, the home of the BIS, it might start speculation. It was agreed that London would be better.
A very brief transatlantic phone call and the date was fixed. Four in the afternoon of October 16, at the Savoy.
2
ON that same October 16 Dr. Walter Hofer landed in London on Swissair flight 168 from Zurich. It was shortly after seven in the evening. He hurried through the long corridors after leaving the plane, trying to beat the mob to the immigration desks. This was not all that easy for Dr. Hofer since he had unusually short legs. He would never forgive his Creator for this, perhaps deliberate, slight.
Everything else regarding Dr. Hofer was perfect. Impeccable clothes, silver grey hair, perfectly manicured hands; a face which reflected intelligence, culture, wisdom. And a bearing which obviously set him worlds apart from the thousands of others who were also striving toward English soil at this moment.
Hofer was most aware of the “otherness” of himself. His position as chairman of the board of the second largest bank in Switzerland demanded it. He regarded his post as not just a job, but rather a calling. There was little doubt in his mind that his role had been long foreordained by that Power which had seen fit to extend an especially benevolent hand over the people, and especially the currency, of his country.
The rather grubby immigration official gave him a practiced look of disdain which, however, changed into what might even have passed for a slight expression of respect when he noted the profession listed in Hofer’s passport.
“On business, sir?” This was only the second “sir” that month, a privilege reserved for quite special occasions.
“Of course,” replied Dr. Hofer. He seemed quite unaware of the honour being bestowed.
After ten impatient minutes at the baggage carousel and a wave of the hand from the customs official, Dr. Hofer was once again back in the hands of private enterprise.
“Your car is right outside, Herr Doktor.” The manager of the local branch of Hofer’s bank was blessed with a central European handshake—firm but correct—and delegated the responsibility of carrying Hofer’s overnight bag.
The two exchanged few words on the way to town. This was not unusual. Local bank managers were very seldom granted any insight into affairs which demanded the attention of the top fellows in Zurich. One of the absolute prerequisites for a managerial position in the bank was lack of curiosity, not to speak of imagination.
At the Savoy they had the usual suite ready—on the Embankment side, of course. Two messages were handed to Hofer at the reception desk. He opened them upstairs after the porter had left. Sir Robert Winthrop had sent his verification of the arrangements for the next morning. The car would be waiting for him at nine, and the meeting was scheduled to begin at nine-thirty. Fine.
The other message was obviously not so fine from the expression it created on Dr. Hofer’s aristocratic features. There was heavy fog at Orly, and she could not make it that evening.
“Damn it,” thought Hofer, and he actually thought it in English with quite the correct accent. He had an amazing facility for completely adapting to the language of the country he was in. During the past century the Swiss had come a long way from their cuckoo clocks.
Claudine was one of his few little pleasures in life. Four years ago he had met her at a reception given by the minister of finance in Paris. She was the niece of the minister’s deputy. Her history was not too unusual or interesting. After an early marriage and an early divorce she had established a boutique and a generous number of friendly relationships. After leaving the reception with Walter Hofer, she established the basis for a rather intimate link with the Swiss banking community. It was not just his fame and fortune which attracted her. She had a thing about short men, even though she herself was almost six feet tall. Especially short men with moustaches. For Hofer had one of the most distinguished little moustaches ever to grace the reception halls of the French Ministry of Finance. And, as he proved much later that first evening, he knew how to use it in a way which exceeded Claudine’s most optimistic expectations.