Bernoulli had the advantage of coming from a banking family. They had come to Switzerland as Huguenot immigrants in the seventeenth century. Their French love of money plus Calvinism had soon produced family prosperity in their new homeland, and prosperity had led to the foundation of a private bank, a family bank, in 1796. His father was the ninth Bernoulli to head the institution. Now, as then, the only sign identifying the premises was a gold plate—24-karat gold—about the size of a calling card, mounted discreetly to the left of the massive oaken door leading into the building. It was marked with nothing more than an engraved B. To be sure, the letter was capitalized.
His father had been anything but pleased when George had chosen government work, instead of staying within the family fold. But he had never openly criticized George for his choice. There had remained no doubt in his mind that the blood which flowed in his son’s veins would only endure so much humanitarianism, or whatever it was that George was trying to accomplish over in Geneva and Bern. The true calling of practicing benevolent capitalism would inevitably take hold in time.
But George knew all about this kind of benevolence. He had, after all, heard it over the dinner table year after year as a boy. That’s why George Bernoulli went into government work. And that’s also why he watched all bankers with a totally jaundiced eye, including the good Doktor Hofer. More than once he had met Hofer at his parents’ home. How anybody could be five feet five and still look down on the entire rest of the world was beyond George. But Hofer managed it. And George’s father put up with it, because Hofer was, even then, at the top of the heap in Swiss banking circles. Big profits, always bigger than everybody else’s in the business. Never a setback. Uncanny, in fact, thought Bernoulli, impossible.
For there were some things that just could not find a logical explanation. For instance, metals. The General Bank of Switzerland had always specialized in precious metals. Unlike American or British banks, Swiss banks could be all financial things to all men. They were not only commercial banks, but also underwriters, stockbrokers, commodity dealers—the list was almost endless. They were the ultimate financial supermarkets. But even the big ones had their specialities. In the case of the General Bank, it had been gold, silver, platinum, palladium.
The 1960s, especially the latter part, had been great years for precious metals. During the entire period the General Bank was bullish and invested both their clients and themselves heavily. It was said that Hofer was behind this, and Hofer was never wrong. Sure enough, by 1968 all four metals reached record highs. The General Bank continued to be bullish and continued to buy, in spite of the temporary lull that followed. But, as time proved, there was nothing temporary about it. Month after month, year after year, prices of precious metals slid down. Silver went from $2.80 an ounce to $1.50. Platinum fell from $450 to $95. Palladium collapsed completely. Only gold held. Rumour had it that in the early 1970s Hofer’s bank had been forced to sell. Their continual attempts to prop up all four markets almost singlehandedly had simply eaten up too much of their liquidity. The losses must have been monumental. But what happened to them? Not a word in the annual reports. Not a clue in the balance sheets. In fact, profits kept rising consistently, year after year, at the rate of 20 percent.
Then there were those loans to Chile, Egypt, Algeria, Pakistan, Rhodesia. Together they must have involved at least $250 million. Big publicity when they were announced. But since then, not a word. Their repayment was quite obviously impossible. Their amortization could not be avoided.
Yes, there could be no doubt that a big, big killing in the gold and foreign exchange markets would come in mighty handy for Dr. Walter Hofer.
But what about this fellow Stanley Rosen? There could be absolutely no doubt that he was managing the biggest pool of illegal money ever to be packaged in the history of the United States. He was big! But he was apparently also extremely successful. This was very well known to the American authorities. Bernoulli knew; they had sent him a dossier on Rosen that was almost 200 pages long. A summary. Rosen had been investigated at least twelve times during the past five years. Almost every federal and state agency that could possibly find an excuse had already been through his shop. But there was nothing to find. Rosen did only one thing. He served as an investment advisor, on a fee basis, to some twenty-five or thirty offshore investment companies. All quite legal and completely in line with the regulations laid down in the 1940 investment act. His partner, Harry Stahl, ran a small brokerage company, with seats on both the New York and American exchanges, and recently also on the Pacific Coast exchange. He would accept brokerage business from the general public only when they almost forced their way through the door. That sort of stuff was just a nuisance. He was strictly interested in one client only—Stanley Rosen.
The whole system stood or fell with one link in the chain: the movement of the funds out of the United States. For once they were out, that was it. They disappeared into anonymous corporations in the Caribbean or other weird little countries spotted around the world, places to which the United States authorities had no access.
In the early days of Rosen’s game, it had been simple. Anybody could walk into any commercial bank in the country, make a transfer to a foreign bank, and the money was gone forever, without a trace. Year after year, billions of dollars had been leaving the United States completely unnoticed. They finally appeared, laconically listed under “Errors and Omissions” in the balance-of-payments statistics of the Department of Commerce. The country which was the ultimate beneficiary of most of such “Errors” was, peculiarly enough, Switzerland. Uncle Sam played into the hands of people like Rosen and his friends for years before catching on. Then things changed. First, the banks had to start reporting all major transfers out of the country. Then the Internal Revenue Service required a listing of all foreign bank accounts as part of the regular income tax return. Finally, in July, 1972, anyone carrying more than $5,000 in cash with him out of the United States had to report it in detail. Suddenly the risks for international financial engineers like Stanley Rosen had become immeasurably greater. That, thought Bernoulli, may be the explanation for Rosen’s Beirut connection. He wants to get some reinsurance in the form of non-American clients. And he must prove himself over here. Make a spectacular showing. Then the clients from the Near East, from Europe, would flock to him, just as the Americans had during the past decade. But in the future, as in the past, it would no doubt be shady money. And in the future, as before, fellows like Rosen would need the secrecy cover of Swiss banks to do their thing. Here was where they were a menace to Switzerland. Their blatant abuse of the facilities offered by Swiss banks could undermine the entire system, a system upon which Swiss prosperity had been built. If it turned out that Stanley Rosen had organized the theft of the gold-dollar plan of the United States government, and if it was discovered that his criminal machinations had been carried out through numbered accounts in Zurich, the Swiss banking system would be dealt a mortal blow. For Bernoulli also knew America. They would not stand for any more of that kind of crap.