Maxwell, The Outsider

by Tom Bower

  By then, Heyden, hired by Orton, had arrived from Berlin. On his first day at Neal Street on 2 January 1950, he received a familiar welcome: 'They'd forgotten what they wanted me for.' The confusion was symptomatic but transitory. Maxwell's businesses were booming and Heyden was detailed to supervise LMS's publicity, its mailing list and the printing of ten thousand copies of LMS's first catalogue, which featured 1,000 books and 1,200 different journals. His lack of any experience was overlooked.

  On that same day, the new company LMS began formal trading. Besides the five-year agreement which gave LMS exclusive rights to the worldwide sales of Springer's books and journals, Maxwell also enjoyed very favourable terms for the return of all unsold books; most importantly, Maxwell's own company, EPPAC, could sell its stock of Springer rare books and old journals to the new company on advantageous terms.

  The first LMS board meeting, which was held in January and which the Germans attended, was a notable occasion. Maxwell was representing the competing interests of EPPAC and LMS. It was a pattern of intercompany trading which would be repeated many times over the following years. At that moment, any reluctance the Germans might have felt was dissipated: they were grateful for Maxwell's services, they believed that the inter-company sales would be simple transactions, and they knew that moving the stock back to Germany was fraught with difficulties, not the least of them legal.

  Springer, however, was disquieted. The previous year, Maxwell had signed exclusive distribution agreements with his competitors Urban & Schwarzenberg, Ernst & Sohn, Verlag Chemie, Thieme and an East German publisher, Akademie-Verlag. JEIA had agreed that the same hugely advantageous exchange rates could be applied to the new contracts. Ferdinand complained to Lange that he, Springer, was bearing the cost and 'taking a great risk' to promote his competitors: 'For Maxwell, it was the means to build for himself a huge business in London and he achieved that in an astonishingly short period.' Springer was worried that it had placed so much of its future in Maxwell's hands. Yet at its early regular monthly board meetings, Maxwell successfully charmed the very precise Germans with evidence of his success, produced by the 'great intensity' of work by his staff of sixty-five. Everything, he claimed, was rapidly becoming more efficient and rationalised, and the empire was expanding. A new ten-thousand-name mailing list had been compiled, a system of Adrema name plates had been completed to speed the dispatch of circulars, and a new warehouse had been rented in the Elephant and Castle district of London. The Germans thought the innovations were 'exceptionally good' but their demeanour changed when the very reason for their special relationship with Maxwell suddenly disappeared.

  In early 1950, the new government of the Federal Republic of Germany announced that the Allies' vast network of regulations and controls would rapidly vanish and direct exports would be allowed. Anxious to earn dollars, the Bonn government urged companies like Springer to dismantle their artificial arrangements.

  Both Ferdinand and Lange realised that, despite the irksome duplication, Springer's prestige and sales had become too enmeshed with the London operation to be abruptly terminated. Moreover, the Maxwell connection placed them at an enormous advantage over their competitors since Germans were still unable to travel to most countries. Through Maxwell, they could still contact their old customers. At that moment, he was on their behalf energetically travelling around the world, opening new offices and selling Springer's books and journals in Japan, Italy, Spain and Austria and opening new offices in Basle and Paris. Both were born inauspiciously as symbols to satisfy Maxwell's dream of the self-styled international entrepreneur rather than as substantial business operations. The French company was grafted onto the remnants of Betty's father's defunct vegetable business, the grandiosely named 'Comptoir Industriel et Commercial d'lmportation et Exportation' which had been established in 1946 in the rue de Rivoli. On 25 January 1949 the Comptoir Industriel was renamed EPPAC with Louis Paul Meynard remaining as its managing director and Nassim Zacouto, a carpet dealer, named as a second director. In the same year, Meynard, under Maxwell's direction, moved the new company's headquarters to a shop with offices above at 24 rue des ficoles, which Maxwell would enthusiastically describe to Lange as 'a scientific bookshop'. For the Germans, the commercial advantages still outweighed any irritations.

  In the cause of Springer, legend relates, Maxwell became the British airline BOAC's first passenger to clock up one million miles. His frequent dashes to Northolt aerodrome were accompanied by pleas from his devoted secretary Anne Dove to 'hold the plane for Captain Maxwell' while Oglanby raced along the Great West Road. If the loyalty of most of Maxwell's staff was won by a mixture of love and fear, Anne Dove was the exception. 'A superior lady, out of the top drawer, with excellent breeding,' is the general recollection of the Jewish refugees who observed their boss's alter ego. 'Dove was more than a secretary to Maxwell,' recalls Heyden, 'she was the most powerful influence on him.' Dove, all the refugees suspected, was the source of Maxwell's phenomenal success in British society. Others were convinced that no one could have influenced Maxwell's performance.

  Besides his wife, Maxwell relied upon two women in his life. Both were secretaries. Anne Dove was the first. During the war, she had worked as a secretary for SOE, first in Baker Street, then in Cairo and later in Italy. Since that organisation appealed to an extraordinary mixture of entrepreneurs, individualists and above all ambitious members of the Establishment who would play important roles in post-war Britain, she had collected during that decade a notable list of contacts ranging across the worlds of finance, politics and culture. In 1950, she returned to Britain and saw an advertisement in the Daily Telegraph for a secretary. She applied and after waiting for two hours outside the director's office was on the verge of leaving when she was ushered inside. On one wall of the huge book-lined, mahogany-coloured office, she remembers, there was a 'huge map of the world with all the capitals pinpointed by red lights. Behind a huge desk which didn't seem large enough for him, I saw a big man with jet black hair and large greenish eyes. But what I noticed most was the very warm and beautifully timbred voice.' During the interview, Dove recalls how Maxwell turned the map lights on and 'Whenever I would say, "Have you got an office here or there?" pointing to the various capitals, he would immediately say, "Of course." Some of the offices had not even been thought of yet, but Maxwell went on the maxim that nothing was impossible.' Dove took, the job because she was attracted to the idea of constant travel to all the 'offices' and the thought of an endless supply of bananas, her favourite fruit, from the warehouse downstairs. Her boss, she realised, was a man for whom 'there was never enough time to achieve all the things he wished for. His own life was planned in his mind several jumps ahead - ambition being the driving force - and as each ambition was achieved then the next plan was already being formulated.' Dove was quite prepared to place her impressive list of contacts at her boss's disposal. Among them was Charles Hambro, whom she knew from her service in SOE. 'Charles told me that he was pleased that I was with Maxwell looking after things,' she recalls, 'and MaxweD minded very much what Charles thought of him.'

  All those meeting Maxwell in 1950 were left breathless by what Dove describes as his 'tremendous life-force'. The size of his desk, they quipped, matched his ambitions. Visitors discovered that their attempts at conversation were constantly frustrated by their host picking up one of his four telephones and ordering calls to China, America or Russia and then switching from one language to another without a blink. Some staff insist that at least two of the telephones were not even connected but were important props for his role as the international tycoon. 'Every time I walked in,' remembers one frequent and sceptical visitor, 'he was shouting down the phone to New York and one minute later picked up another phone and was screaming at Moscow.' According to Heyden, 'You could hear Maxwell's voice booming down the length of Neal Street as he alternately harangued or charmed somebody into a profitable deal.'

  His staff were not so much sceptical as suspende
d between amusement and fright. Maxwell's senses of humour, fun and generosity were engaging qualities. At Christmas he paid for many staff to return to their families in Germany. But the moods easily changed. His appearance in the general office was usually accompanied by the question: 'And what are you doing?' If inadequately answered, there was another dismissal. Those who attempted to temper his approach met with no success. One senior executive who told Maxwell that his staff were quivering on their seats with insecurity was cut off in mid-sentence with a deep growl: 'Rubbish, while they work for me they have complete security.' 'But look at this list of all those who you've fired!' countered the bold employee. 'They're ex-employees and ex-employees have no security,' was the crushing reply.

  Springer employees were less intimidated by the extravagant style. After a period of relative calm, they were once again sending their complaints to London, especially about the failure to send money which was owed. By November 1950 the outstanding bills amounted to £115,000 (£27,585 in October alone) and the debt was growing. Although Maxwell was not solely to blame - customers were invariably reluctant to pay their accounts, and compliance with the Bank of England's rigid currency controls presented endless difficulties - Springer's suspicious staff constantly scrutinised every detail of London's operations.

  Triumphantly, in November they found some evidence to justify their unease. By chance, Springer staff had seen a document, inadvertently sent from London to Berlin, which showed that Maxwell's distribution deals with their competitors Ernst & Sohn and Urban & Schwarzenberg were signed, not as they believed with LMS, but with Maxwell's own company, EPPAC. Both Lange and Ferdinand were shocked since in their view this was a clear contravention of their agreement with Maxwell which forbade EPPAC to compete with LMS for ten years. They were due to travel to London in mid-November and a showdown seemed inevitable. To avert the crisis, at twelve noon on 1 November Maxwell went to Bishopsgate and successfully obtained a further £25,000 loan from Sir Charles Hambro. But it was not enough to prevent the Germans demanding concessions.

  At a meeting on 14 November, Maxwell agreed that Springer could begin exporting books directly from Germany and that he would repay DM 1.1 million in five monthly instalments. The following afternoon, Lange, Ferdinand and Maxwell went to Hambros to confirm the recapitalisation of their company. It was a useful opportunity for Maxwell to demonstrate the support he enjoyed in the City. Relations improved and Maxwell once again addressed a letter to Tonjes as 'My dear Onkel'. Springer, he knew, still depended upon him.

  One problem in early 1951 which needed his help was to find a route out of their original agreement. The demand for Springer's books was growing but the supply was hindered by an unpleasant truth that their exports were based on a fundamental deception. Springer had never disclosed to German Customs the true value of the books and journals in the boxes: the value of their exports which were declared on the ECDs (Exchange Control Documents) did not match the true value. Whereas the current certificate was worth DM 30,000, the shipments awaiting dispatch were worth DM 600,000. Lange and Hovel confided to Maxwell that their deception was in danger of exposure.

  At first it was argued that the Customs officers would never check the real value of the books, but he was persuaded to the contrary. Then both sides formulated a ruse which they believed to be legal. One hundred boxes awaiting shipment in Berlin and Würzburg would be repacked, relabelled and sold in three parts: Springer would sell to LMS and EPPAC, while Lange & Springer (a separate German company) would sell to LMS. It was the provision of that kind of help which earned Maxwell their gratitude. But the respite was again short-lived.

  On 28 November 1950, Maxwell arrived in Berlin reporting that business was booming. He disclosed that he had secured a massive £150,000 order for books from Guozi Shudian, the Communist Chinese book-dealer, and that he had been paid in advance. Ferdinand was less pleased. He claimed that Maxwell had overcharged Springer's old customer and warned that the Chinese would eventually discover the truth. Six weeks later, the crisis deepened.

  On 3 November, three weeks before Maxwell's confident report to Ferdinand, the directors of LMS in Paris had met and began proceedings to declare the company bankrupt. It was a surprising decision since only five months earlier they had voted to quintuple the company's capital. Now, however, Meynard and the other directors blamed Springer who they erroneously claimed had halved discounts on the sales as the cause of their demise. In contrast, Maxwell's letters to Lange blamed French tariffs, currency restrictions and the state of the French economy.

  In quick succession, Maxwell's difficulties were compounded; the LMS operation in Basle also collapsed because the Swiss insisted on buying direct from Berlin and adamantly refused to place their orders in London; and Maxwell's much vaunted deal with Sansoni of Florence, which featured as a considerable profit in that year's accounts, was proving to be disastrous. Shipping books from Germany to Italy via London was costly, and Springer was faced with Sansoni's complaint that excessive stock had been delivered which he insisted Springer should repurchase. For the conservative Springer team, each case was a major crisis. Together, they seemed to presage the Gotterdammerung.

  Ferdinand, galled that he should have surrendered so much control over his company's reputation and future, reflected his staffs irritation about the London operation. In early 1951, he sent Maxwell a long reprimand criticising his failure to appreciate the invaluable mailing list. But more revealing were the guidelines which Springer listed as important for a publisher's behaviour: adhere to the prices quoted in the catalogues; do not quote a rare-book price for standard books; and treat a customer in such a way that he will return for a further sale. The more memorable cautionary rules have in retrospect a piquancy. A publisher, Maxwell was told, should not promise more than he can fulfil; it is more important to serve a customer than exploit him; one shouldn't buy more than one can pay for; and one shouldn't offer more than one can deliver. 'You are making the mistake that you are expecting good results based on faulty methods,' concluded Ferdinand. Their personal relationship, he said, was terminated.

  The first consequence of the break was a letter from Springer's accountants to Maxwell disclosing that they wanted to scrutinise LMS's accounts. The initial summary sent from London for the year 1949/50 showed a loss of £225. In June 1951 R.A. Meilicke, Springer's lawyer, and Fritz Fuhrmann, an accountant, arrived in London to check the books, especially the sales of EPPAC's stock to LMS. There were good grounds for their suspicions. Maxwell's own accountants had also discovered irregularities.

  Over the past year, Frank Beckwith, a qualified chartered secretary and LMS's accounts manager, had been grappling with dozens of untidy files containing invoices and receipts, in an effort to end the chaotic system he had inherited on his recruitment. Reconciling the inter-company trading between EPPAC, LMS and Low-Bell was complicated by the never-ending flow of foreign currencies in and out of their bank accounts and through smaller companies privately owned by Maxwell. Together with Tom Clark, an accountant who would stay with Maxwell for over twenty-five years, Beckwith discovered that their predecessor had been obtaining Maxwell's signature for cheques against false invoices which were in fact payments to himself. Defrauding Maxwell, the two new accountants decided, had not been difficult. 'Maxwell's style of business', recalls Beckwith, 'was like a golfer who liked to hit the big drive down the green but was uninterested in the small strokes at the end.' Others suspected that Maxwell had not shown sufficient care to prevent the chaos developing. Among those was Ferdinand Springer.

  Fuhrmann's first impression on landing at Northolt aerodrome was favourable. Oglanby graciously chauffeured the German in the Cadillac to the Shaftesbury Hotel. Compared to Berlin, London was a sanctuary with plenty of food and not totally devastated by bombing. Fuhrmann's attitude changed a few hours later when he heard from Meilicke that LMS's accountants, Moodie & Epstein, had reported that LMS's accumulated losses were £22,618, considerably worse than expected.
Fuhrmann suspected the accountants of 'manipulation'.

  Fuhrmann met Maxwell at 2 p.m. the following day when Maxwell explained that the proper accounts were not yet ready. Instead of staying in London, Maxwell suggested that the German should fly immediately to Basle. Fuhrmann refused and prepared his own assessment which confirmed that, although the official accounts would show a £22,000 loss, the real loss was only £4,486. The accounts were nevertheless unsatisfactory and the two Germans secretly appointed a solicitor, considered initiating a private investigation, and finally returned home dissatisfied.

  The relationship between Maxwell and Ferdinand now exploded. In May 1951, Butterworths decided that their joint venture with Springer was grossly unprofitable although Rosbaud had established three highly respected journals - Spectrochimica Acta, Journal of Atmospheric and Terrestrial Physics and Geo-chimica et Cosmochimica Acta - and published two standard textbooks. Maxwell bought their shares but it is not clear how much he paid nor whether Springer knew in advance that he had bought the interest. However, on 10 October 1951 he wrote to Springer requesting £7,500 for the Butterworth-Springer shares he had just bought. Ferdinand's reply was stinging and shows that he felt misled. Maxwell's proposals, he wrote, were an 'embarrassing shock' because they broke all the previous agreements. It was 'disreputable for a gentleman and businessman to make those type of demands which were contrary to his previous promises'. Future relations, he wrote, 'were very doubtful', and he ended, 'I deeply regret having to write this letter.' Within an hour of its receipt, Maxwell telephoned Springer in Heidelberg but the secretary was under orders not to transfer any calls: 'Dr Springer doesn't want to speak to you, Captain Maxwell,' she told the evidently hurt caller from London.