“You mean all that stuff on TV about gold and the dollar?”
“Martha, you old fox. And you always tell me that you can’t tell the difference between a mark, franc, and lira when we go on vacation.”
“Walter, things always work out, you know. They always have. You’ll find the way. Come now, let’s have a good bottle of wine together. I’ll go right down to the cellar and get one of your favourites.”
And she did. They sat talking until almost eleven. Then Martha’s sister came home. She insisted on explaining in slangy American English the entire plot of the play which she had just seen staged in German. Hofer could only take so much of that and soon excused himself.
The moment he reached his bedroom, he picked up the phone and dialed twelve digits. He was through immediately.
“Sir Robert, this is Walter Hofer in Zurich. Sorry to call you so late.”
“Not at all. In fact, I’m very happy you called. What’s going wrong?”
“We’re not quite sure, but this we do know: Two major buyers hit the gold market simultaneously at the afternoon fixing session. Both are here in Zurich. One we know: It’s a private client of ours. The other may or may not be the Russians. We don’t know. Another bank is involved and they’re not talking.”
“Did you make the deal in Johannesburg?” was Sir Robert Winthrop’s next worried question.
“The final signing will take place tomorrow here in Zurich.”
“Tomorrow?”
“Yes.”
“Well, how do you propose we cope with this situation?”
“I’ll cope. But both of us must insure that the gold price stays below $80 tomorrow. We have to meet every buy order with a matching sell order. As simple as that. We’ll just have to stop these fellows cold.”
“Yes, but could this not ultimately mean that we will have thrown good money after bad if they refuse to sign tomorrow?”
“Sir Robert, you know as well as I that there are high risks in the gold market. We knew that from the very beginning. And we made our commitments in that full knowledge. I think I need hardly remind you that when I make a commitment it is met. Just today our people told me that we have already taken the entire $35 million of your bogus Transcontinental Airlines notes off your hands. It took us less than two weeks.”
“Walter, I know that, and I will be eternally grateful. I have no intention of backing out on anything we agreed upon. I’ll be in the gold market with everything we have tomorrow.”
“Good.”
“What does David Mason think about all this?”
“He totally agrees with the strategy. He was with me in Johannesburg, you know. He’s got almost $500 million on the line in this deal. So all three of us are totally committed.”
“Well,” said Sir Robert Winthrop, “at least we’re doing great on the dollar. Our fellows pulled out all the stops today, and I figure we must be ahead a good $25 million since lunch. I assume David has been pursuing the same course.”
“Yes, but Robert, remember we’ve all agreed not to overdo it.”
“Right. We shall stick to our agreement right down the line. Anything else?”
“No. Just remember to do everything in your power to keep the lid on the gold market tomorrow.”
14
THURSDAY, November 6. Two days before the Great Dollar Devaluation. As a result of the decision of somebody, maybe Bishop Usher, that one day ends and the next day starts in the middle of the Pacific Ocean, the first metropolis to enjoy the new dawn was Tokyo. The excitement in the financial world had moved with the sun. In Japan it took on new dimensions. The Tokyo stock exchange was struck by a wave of buying unprecedented even in its confused history. The orders had been stacking up at the brokerage houses the entire preceding night, coming first from Zurich and Frankfurt, then from London, the process culminating in a massive influx of buy orders by telephone, Telex, and cable from New York, Chicago, San Francisco, and Los Angeles. It seemed as though everybody was counting on the Japanese yen as the best money haven on earth and the purchase of Japanese stocks as the easiest way to buy a currency insurance policy. Thus, during the first hour of trading, the Japanese equivalent of the Dow Jones Industrial Average rose 226 points.
This was in complete contrast to what had happened the preceding afternoon in New York. There the Dow Jones—the real one—had literally collapsed in the last hour of trading. Prices had been retreating and volume rising gradually all day long, so that by two o’clock the DJI was down just a shade over twelve points and volume was 15 million shares. Then the panic started. The session closed 42 points down, and the final volume stood at 32 million shares. The odd-lotters had the biggest day in the history of exchange. The story that afternoon was the same in every brokerage house on Wall Street. Instructions to get the hell out. Liquidate, sell—don’t worry about prices—and then get the proceeds out of the country. Put them into something solid: Swiss bank deposits, German railroad bonds, South African gold mines, British consols. Anything not denominated in dollars. Tokyo, due to its cunning location, was the first beneficiary of the flight from the dollar. The result was near chaos that morning.
But already by midday profit taking, Japanese profit taking set in. The temptation for Japanese banks and brokerage houses to unload their cats and dogs and squirrels into the laps of the great wise men of the West ultimately proved too great. Shares that had sunk into obscurity months, even years, ago were dusted off and these marvelous discoveries grudgingly passed into foreign ownership. One Oriental wit calculated that within three hours 20 percent of the ownership of Nippon Gold Corporation, an obscure little company in the dental materials business in Sapporo, had been transferred to a group of clever investors from San Diego, California, all ex-navy. All this was reported with pride by the early editions of the afternoon newspapers. For it demonstrated beyond any doubt that Japan had been accepted as being eligible for full-fledged participation in a worldwide financial panic.
Financial panics are a funny thing. They bring out the lemming in the human race as no other event does. Sure, wars, especially invasions, do a pretty good job in the panic field. The flight from Paris in 1940 or the flood of Germans who moved west before the Red Army in 1945 demonstrated this quite amply. The plague could also move people rather smartly in the Middle Ages: a few bodies in the street, and whole cities would be temporarily abandoned. Earthquakes also make good people movers. But in all such cases—wars, pestilences, natural catastrophes—panics tend to be local affairs. It takes money, or rather the fear of the loss thereof, to panic people on a worldwide scale—as on this November day.
Lots of nervous money, lots of greed, lots of fear, no government interference. Together they meant that once again the necessary components for a great financial panic were present. It just required somebody to really get it rolling. The Russians seemed predestined for this role, as the sun, having left Tokyo behind, brought a new day to Moscow.
The lot which boarded the Moscow subway on that morning was not much different than that one could meet at the crack of dawn in the Paris Métro or the London Underground. The scent of alcohol and soap joined forces, as the drunks and street cleaners crossed paths.
Comrade Melekov, though undoubtedly an eager beaver, did not exactly fit into this early morning crowd. But there he was, Bally shoes, Pucci tie, Rolex watch, Cuban cigar, and all. It was not the first time that he had smoked a Cuban cigar at this hour. But that was when he was moving in the other direction, after a hard night out. Right now he was on the way to the office.