Paul Erdman - The Billion Dollar Sure Thing

Soon he had returned to his usual chair near the fireplace.

“Troubles?” said Martha.

Hofer did not even glance up. He was gazing into the fire.

“Walter!”

“Yes, Martha. What is it?”

“I just asked you if you have troubles. You’ve been about ten kilometres away ever since you came home this evening.”

No reply.

“Now, you know it’s always better to get things off your chest. Otherwise you just sink deeper and deeper into yourself, and soon all we will be doing is grunting at each other.”

“You’re right, Martha. It’s not so pleasant at the moment. The same old story. You do X, and the next year everybody expects you to do X plus one. And the year after, plus two. And so forth. One has to run faster and faster just to maintain the appearance of infallibility, of never making a mistake. Every year, deposits must grow 15 percent, profits 20 percent, bad loans zero percent. At this point, just one slight stumble and the word will be out that Hofer is over the hill. It’s not always so easy.”

“Why don’t you think slowly about giving it up then? There’s really nothing much more that you can hope to add to that which you’ve already done. You know that you get very little thanks for all you do anyway. Why go on and on and on, until something happens?”

“Not yet. Maybe in two or three years. But not now.”

“Why not?”

“Martha, you know that I never like to go into details about the bank. But still, I’ll try to explain very generally. Due to this craze for growth and for profits during the past ten years, we’ve been slowly building up a group of loans that we should have been writing off the books but didn’t. It wouldn’t have looked good. The competition would have laughed themselves sick. Not that they don’t have the same problem. But try to prove it. Now we are faced with three new loans that must join the crowd. It’s no real problem, when you consider our overall picture. None. But if we wiped that whole slate clean, it would also nearly wipe out our profits for a year. Maybe two. Then everything would be shipshape again for the next ten years.”

“Well, if it’s got to be done, I would not worry about those fools who have been envious of you for God knows how long. You always have the last laugh, Walter.”

“It’s not that easy. If I did it that way, the shareholders would be yelling for a younger man immediately. I know those birds. No, I’ve got to work it out during the time I’ve got left.”

“Now Walter, you’re not exactly eighty, you know.”

“Still, I want that place perfectly clean before I leave. I don’t want anybody moving into my chair who would whisper around town about the mess he inherited from old Hofer. Oh, no! But don’t worry, I have something in the works that may solve the problem right away. What bothers me is that the thing I was betting on most might be blowing up in my face.”

“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.”

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.