Paul Erdman - The Billion Dollar Sure Thing

Secretary-General Bollinger of the Bank for International Settlements was sitting alone in his office, poring over the Telex reports that had been flooding in since lunchtime. He looked slightly sick. He had instructed his secretary to put through no further calls, with two exceptions: the American secretary of the treasury and a certain Dr. Bernoulli.

“What now?” he asked.

The almost man-sized carving from New Guinea staring at him from across the room could hardly answer.

Just two more days to go, and all hell was breaking loose. And of all bloody people, the Russians. If the Americans found out the whole sordid story they would crucify him—at best. Ausgerechnet die Russen! This morning when the president of the German Bundesbank had called him, he had thought, had hoped, that it was just a coincidence. The Russians could have had a million reasons for shifting over to dollars on the pipeline purchase. Nor had the Germans been overly perturbed. They had just thought that the BIS should know. It would mean that the future demand for dollars in the Euromarket would now be higher than had generally been anticipated. That’s all. It might push the long-term rates up. Maybe by .25 percent. But the people in Frankfurt did not know what he knew. And now everything was starting to tie together. First Melekov, then the delegation from Moscow pulling out, then the pipeline switch, and now the foreign exchange and gold markets going all to hell. Before it was over it could cost the United States billions—three, five, who knows—and the whole financial world would blow sky high in spite of this cost. Money thrown right out the window. Knowing the Americans, he knew that they would defend the dollar right up to the last second, rather than lose face to the Russians.

His secretary opened the door, but she just stuck her head in. She knew when the storm warnings were flying.

“Herr Doktor Bernoulli just called from the lobby downstairs and asked if he could come right up.”

“Tell him to come ahead.”

Bollinger was close to panic. For he was a man of total integrity, completely devoted to the immense responsibility which had been entrusted to him. He was one of those few international civil servants with enough courage and foresight to go out on a limb and do what he felt was right, regardless of the possible political consequences. He had seen no better path of action than that which he had undertaken in this terrible situation, better for all the governments concerned, including the United States. Bollinger was anything but devious. His approach was analytical; his actions were based upon logic, not tactical or strategic considerations. The circumstances now defied analysis. Events had gone underground, into a world which Bollinger had never experienced, and before which he found himself helpless… and increasingly bitter.

Bernoulli entered his office.

“Please excuse me for visiting you so unexpectedly, Herr Bollinger, but I’m afraid that events are moving very swiftly. I must try to keep up with them.”

“No problem. Please be seated.”

“I think we have made excellent progress. We know now exactly the chain of action which led up to the theft. We know the two men responsible for the organization and implementation. But we still do not have the answer to the key question: Who was the final recipient of the red dossier? And what does he intend to do with it—if anything?”

“I see.”

“Now I don’t want to frighten you, but we’ve heard about the visit of that Russian delegation. The stay in Basel of your guests from Moscow coincides exactly with the period of the theft. More than that. They stayed at exactly that hotel in which the two men responsible for the physical action were seen together, more than once. The coincidence is almost overpowering, if you know what I mean. This is not the only coincidence, however. I’ll come to others later. But first, let’s deal with the Russians.”

“I frankly think you are running so far behind the events, Herr Bernoulli, that before I let you continue, I should bring you up to date on a few things. It will save you from wasting any more time on this matter.”

Bernoulli didn’t like this. His eyes drew closely together. His hands clenched. And his healthy brown was suddenly tinged with more than a trace of red.

“What’s that supposed to mean?” Bernoulli finally asked, after a long stare across Bollinger’s desk. His voice was tight. Being upstaged by an amateur at this point was not to his liking.

“I like the word ‘coincidence.’ Let me add a few more, and then I believe that you will get my point.”

“Go ahead. That’s why I came to see you, you know.”

“First, the Russian delegation. They came here to finalize arrangements for the sale of a major shipment of gold. This is by no means unusual. We have been handling the marketing of the Russians’ gold for many years now. The reason is quite simple. We ourselves are a very large owner of gold. In fact, we are the only financial institution in the world which has its total capital and reserves in the form of gold. Thus we have the capacity to immediately absorb, if necessary, complete major shipments, which otherwise would overwhelm the free market and cause dangerous price fluctuations. The Soviet Union can get a firm price from us—for every last ounce. They like that. We also like that, since it gives us another means for intervening in—tampering with, if you like—the free market for that metal. Fluctuations in the gold price in the past have led to currency speculation. We try our best to avoid the latter at almost any cost.”

“Thanks for the explanation, Herr Bollinger. But I’m afraid it does not bring us very much further.” Bernoulli was already on his second cigarette.

“Now easy does it. Back to coincidences. The Russians came here especially to finalize the arrangements for the sale of 20 million ounces. They negotiated at the usual Eastern European pace with the head of our gold department. Everything was finally agreed upon. The days after the disappearance of the dossier from my safe, the negotiations halted just this side of being signed. Nobody spoke of any cancellation of the sale. They just said that they had to get the final authorization from Moscow and would come back to us within a very short time. They left town that same day. We have not heard from them since.”

“Where’s the gold?”

“In the Zurich airport.”

“Why didn’t you tell me this before, for God’s sake?”

“Because it has happened before. It was by no means out of character. I believe that it would only have been grossly misleading if I had attached undue significance to such an event—and led you down the garden path.”

“Then why do you attach such significance to it now?”

“Because of coincidence number two. For almost a year the Russians have been negotiating with the Germans for an immense purchase of line pipe. Also here the negotiations reached the signature stage. At the very last moment, contrary to all prior indications, the Russians insisted that they would pay only in U.S. dollars.”

Bernoulli got the point.

“But now comes the clincher. Since late yesterday afternoon, Eastern Europe has been selling dollars—both spot and forward. Today it has become serious. The spot rate in Zurich has been pushed down to 3.33 from 3.40 within two hours. In the foreign exchange field this is an unprecedented change. Like the Dow Jones falling 100 points in one trading session.”

Bernoulli then asked, very quietly, “Herr Bollinger, what do you intend to do?”

“I’m waiting to see what happens in New York. The markets are now closed in Europe. The next moves will take place across the Atlantic. If the selling continues, we must start to act. The president of the Swiss National Bank and the finance minister will be consulted. I brought you fellows into this, much to my great regret. I must try to be fair with you right to the end.”