He was deep in thought, as he swayed back and forth with the movement of the train. Obviously that Ford dealer in Helsinki was a complete bust. After three telegrams and two telephone calls the new gas pump had finally arrived. It did not fit. Melekov did not intend to start commuting by subway. Nor was he going to revert back to one of those automotive marvels of Soviet advanced technology. The only answer was to switch makes. An Oldsmobile 98. That should be just about right. A Mercedes would be in bad political taste. A Cadillac would be going too far. He had heard from a number of fellows in the Foreign Ministry that the General Motors service in Finland was excellent. But what about the Thunderbird? A bit racey for most of the government people. Hockey players or football stars—that’s obviously where the secondhand market lay. They had the dollars, and had learned to appreciate such things. He decided to get immediately in touch with GM that very same day. Must get the brochures and start working on the extras. This time the stereo tape recorder had better work.
Shortly after seven Melekov emerged at the Bolshoi Theatre station and a few minutes later entered the Foreign Trade Bank. The two porters just inside the seedy entrance barely looked up as he started to climb the stairs. That’s one thing he would change. One of the most important banks in the world, and it didn’t have an elevator. Even the stairs creaked.
It was going to be a full day. The contract signing formalities with the Germans had, of course, not taken place on schedule yesterday afternoon. But, as usual, it was not the Germans’ fault. Some jackass in the Ministry of Technology had apparently insisted on some last-minute change. Melekov hoped that that had been settled and that the whole deal could be put to bed before the weekend.
Melekov unlocked his desk and took out his agenda. The weekly meeting of the management was scheduled for eight-fifteen. That would give him ample time to check all the closing positions from the night before.
His secretary, dressed as usual in brown and getting fatter every day, brought in his coffee and the bundles of tear-offs from the Teletype machine.
Melekov started reading. Fantastic! The summary of the coverage in the Times was especially good.
His phone rang.
“Melekov,” he automatically answered.
“Good morning.” It was the big boss himself. “About the management meeting this morning, it’s been decided that we will move it over to the National Bank. The people there feel that a joint consultation on the situation is required between our two institutions. So nine o’clock on Radislov Street, third-floor conference room—you know, the big one. See you there.” Bang.
Aha, thought Melekov. The big play. Fine. The timing could not be better.
“Comrade Lofkin to see you. Will you receive him?” asked his secretary from just inside the door leading to her adjoining office.
“Sure. Send him right in,” Melekov answered.
The young man appeared immediately.
“Lofkin, have a seat. Care for a cigar?”
“Don’t mind if I do. Unbelievable, huh?” said the head of the bank’s foreign exchange department.
“Absolutely fantastic. Have you got our closing positions from last night with you?”
Lofkin had. He moved his chair around closer to Melekov and explained the key numbers on the sheets he had brought along.
After a minute Melekov interrupted. “Look, why don’t you just sum it up.”
“All right. If I take the total position of the bank into account, we at the present time have a net short position on the U.S. dollar of $3.16 billion. I’ve tried to really spread it around. I would guess that Paris, Frankfurt, and Amsterdam took about the same amounts. We did the bigger volume over in Zurich, London, and New York, of course. Especially New York. Boy, we really dumped there.”
“On what average basis?”
“Almost all of it is in the form of three months forward contracts. And the prices are damn good. I figure if we covered this morning, we would already be ahead a good $100 million. Not bad, is it?”
Melekov puffed away on his cigar. “May I keep these sheets for the time being?”
“Sure. What now?”
“Nothing. Just sit absolutely tight. We’re having a management meeting over at the National Bank within less than an hour. I’ll let you know right after that.”
“If you don’t mind, I’d like to get back to my office. Our fellows are absolutely buried in paperwork after yesterday. I don’t want there to be any foulups on the confirmations. Not the way we’re sitting right now.”
“Go ahead. Tell me one more thing, though. Do you think the dollar can hold through today?”
“Well, my opinion is that there’s not a chance in hell. We should know around lunchtime. If the Western Europeans decide to really dump, that will be it.”
“See you later.”
Melekov returned to the position sheets after his assistant had left. No doubt Lofkin was right. Melekov knew that there were at least $40 billion in private hands in Western Europe. When one thought just of the immense number of Eurodollar bonds which had been sold to the Europeans during the past ten years—probably $15 billion right there. The aftermarket for these bonds could not be thinner. Even in quiet times the sale of a block of a couple of million dollars of such bonds was a big deal. Dumping in that market would provide no solution. The only protection would be in the foreign exchange market. Sell dollars short against the box, as they said in New York. This could be unbelievable. Nobody would buy another dollar bond for the next ten years.
Melekov picked up the phone and called the head of the National Bank. “Roskin. Melekov here. What do you think?”
“By God, I think you’ve done it. I always knew you were a smart son of a bitch, but this is really something. You’ve heard about the meeting.”
“Right. At your place,” Melekov answered.
“Yes, but that’s not what I mean. Both Litnovich and Slavic from the Central Committee will be there. I got a call very late last night asking me to make the arrangements. My friend, we’ve shaken them right to the top. How’s our position look?”
“I just checked. We’re just a bit over $3 billion short. At the closing quotes in New York we’re already about $100 million ahead, Lofkin tells me. And we picked up 5 million ounces of gold at an average price of $78 an ounce in Zurich.”
Roskin appeared to hardly know quite what to say. Then he proceeded. “Melekov, have you given some thought as to where we go from here?”
“Well, I think we have made an excellent beginning in the markets. Now must come the massive follow-through. With all we’ve got. It must be quick and perfectly coordinated.”
Roskin, who was a good solid banker of the old school, had known for years that he had never been in the same class as his younger colleague at the Bank for Foreign Trade. But he was cunning enough to know a good ally. A man with a future. So he had decided to establish a relationship over the head of Melekov’s boss, or behind his back, depending upon the point of view. With Melekov as the brain, the chief theoretician, Roskin had no doubt that the two of them would end up jointly controlling the Soviet financial system. This coup would put the seal on it. When Melekov had approached him a couple of weeks ago with the plan, Roskin had at first been shocked. The daring of it, the risk involved—all went against his banker’s grain. Because there was no precedent.
Russia had always been ultraconservative in the area of international monetary affairs. To be sure, this stood in great contrast to the country’s aggressive use of its economic power in other ways. High Aswan dam, the Cuban sugar arrangements, the gas and oil contracts with Iran and especially Iraq, those loans to Indonesia, the support of Chile, and of Indira Gandhi in India. And most important of all, the silent war of attrition on the economic stability of the United States through the eternal prolongment of the Vietnam conflict, a project that had been successful beyond belief. But it had taken a Melekov to realize that now was the time to take advantage of the weakened position of the United States through a spectacular attack on its soft underbelly—the international position of the dollar. Roskin had seen Melekov’s point immediately, and when Melekov had demonstrated a completely atypical cocksureness on timing, he had decided to back the man. The results thus far had confirmed his confidence. But—