Gold

by Darrell Delamaide

  “We really must do something, Mark,” Martinez said when the hubbub subsided.

  Halden hunched up in his chair, which offered a view of the Atlantic horizon. Yesterday and the day before, he had put up $2.5 billion in emergency loans to tide over the Banco do Brasil and certain other Latin American banks after the big international banks had withdrawn all their interbank lines. One of the great fictions maintained in the wake of the debt crisis that Mexico had set off in 1982 was that these interbank lines were temporary and short-term. The fact was that the funds, amounting to hundreds of millions of dollars, had to be maintained at certain levels to keep up the illusion of sovereign solvency. If the New York Fed had not been there yesterday to tide over the Banco do Brasil, the reality of bankruptcy might have overtaken the bank, and Brazil as well. Can a country go bankrupt? Even Halden wondered.

  The interbank lines were not included in the multibillion-dollar debt reschedulings agreed to by the banks and the debtor countries. Nonetheless, there was a clear understanding that they had to be maintained—clear at least until panic clouded the minds of the creditor banks.

  “What do you suggest?” Halden said. He had spent more than an hour the previous evening on the phone to bank chairmen, twisting their arms to reopen the lines to the Latin American banks. His efforts had reduced the Fed bailout from $1.5 billion on Tuesday to $1 billion by Wednesday night.

  “Would it be possible for the Fed to install an automatic safety net for situations like this?” Martinez asked. It was an idea he and Halden had discussed over many a late-night drink. Halden knew it would come to this sooner or later, anyway. Whether the bailout was automatic or ad hoc, it always came down to the Fed putting up the money. The Fed, the great, powerful, magical Fed—Halden sighed in frustration at the blind confidence placed in his imperfect institution. Even the Fed could not simply print money without paying the consequences. Angouros was listing the advantages of this new plan, parroting without knowing it the arguments Halden and Martinez had long since made.

  The gold crisis threatened to light the fuse of the debt powder keg. As Halden listened, a profound sense of futility came over him. The alarming suddenness of the gold mine sabotage threatened to topple the hodgepodge of arrangements and agreements cobbled together in the past few years to avoid the worst consequences of the overwhelming Third World debt. The shock of the sabotage shook that fragile structure with more force than it could bear.

  Halden had been a football player at Princeton, a middle linebacker. His was the duty to follow the offensive play, to back up the front line and plug the holes to keep the ball-carrier from crossing the line of scrimmage. It had been a good preparation for his Fed duties, as it turned out.

  But his feeling of impotence grew. What if the safety net were put in place? That would not remove the debt. It would remain there, like a sleeping dragon, waiting for the next financial crisis to wake it up and unleash it on a vulnerable world. The only answer would be to slay the dragon. But how?

  In the meantime, he would go along with the aid sought by the anxious politicians around the table. It was no solution, but as much of a solution as anything else for right now. Fed chairman Roberts could not say anything against it. Halden sat back, though. He would let the Latin Americans convince him for a while—his Delta flight to London didn’t leave until 4 p.m.

  FIVE

  Drew sat fidgeting in his office. The conversation with Kraml had left him confused, but he hesitated to make too many phone calls. The market was brooding, and no question was innocent.

  He jumped up and walked through the office, calling to Tom that he would return shortly. Coming out to Fleet Street, he made two rights, into a narrow lane. Without pausing, he walked one hundred yards briskly and stepped into the Cock and Bull, his regular pub.

  It was nearly 3 p.m., and most of the lunch crowd had already drifted away. Drew ordered a pint of bitter. The barman, Ralph, had a friendly smile on his face, but Drew put on a preoccupied look to discourage conversation. He was not in the mood for idle chatter.

  The journalist retreated with his pint to the corner of the padded bench lining one side of the pub.

  The Russians. What could they be up to? Kraml had sounded edgy on the subject. What connection did Marcus have with the Russians? Presumably, Marcus had connections with just about everyone who traded commodities, which made Kraml’s remark even more curious. The trader had been affirming the connection, as though he himself had just received confirmation. Something seemed to be going on in Zug.

  Whether Zug was the missing link or not, there was simply too much gold in the market. Kraml had been uncharacteristically evasive about gold selling. Drew needed to see the Austrian in person, to have a talk more private than international phone lines permitted.

  Even if the Russians had been stockpiling gold, which ran counter to all analyses of the gold market, could they be selling enough to compensate for the sudden loss of the South African production?

  Drew mulled over these questions. Could South Africa, or some South African firm like Anglo American, be unloading stockpiles of gold? But Preston would have told him if Anglo was thought to have that amount of gold.

  The panic had sharply increased demand for gold, and the price had shot up correspondingly. Now the price was stable. Was there a limit, after all, to gold demand, panic or no panic? Or was there a large supply source that was meeting demand at this higher price level?

  The amount of trading going on, in fact, was only slightly short of the normal volume in bullion. It was almost as if, aside from the higher price, the mine sabotage had not taken place.

  But it had taken place. Drew drained his glass. It had taken place the day before yesterday, and the news had shut down world financial markets in unprecedented fashion.

  Drew stared at the blurs through the glazed windows of the pub. The mine sabotage had taken place. Van der Merwe had managed to get a telex out about it. The South African government had announced it.

  Still, it gnawed at him. He had never seen the telex. MacLean, who might have seen it, had disappeared. Drew could not reach Van der Merwe. The Russians, or somebody, had a lot of gold to sell. His old friend Kraml, as cool under pressure as anyone, was not so cool today.

  When he got back to the office, Drew found a short item from the French Press Association on his desk. He looked through the window to Tom, who just nodded solemnly at him.

  Drew studied the story.

  Apparent Murder Victim Found in

  Haute-Savoie

  Annecy Nov. 17 (fpa)—Departmental police found an unidentified male corpse hidden in an abandoned automobile near here today. The man had apparently been murdered, police said.

  The body was stripped of all clothing or identification, but appeared to be that of a balding, middle-aged man. Severe battering of the face and head delayed positive identification.

  The automobile, an Opel Kadett, had no plates and the engine number was filed off. Police said these details suggested a professional assassination. There are indications that the crime may have taken place in Switzerland. Swiss police and Interpol are cooperating in the investigation.

  Drew looked again at Tom. The slotman arched an eyebrow and shrugged his shoulders. Drew read the story again. He called MacLean’s number. No answer. His phone buzzed.

  “Hello, hero. We still on for five o’clock?” It took Drew a few seconds to realize it was Katy Trevera on the phone, not Sangrat, or Preston, or Corrello, or God knows who from the South African embassy. Katy was advertising director for Money Manager, and the two of them had a comfortable understanding. Free and easy; no plans, no disappointments. Just a couple of friends who enjoyed each other’s company.

  “Everything’s set for five; Chel will be there,” Katy said. Drew flipped open his agenda and saw that he had indeed penciled in a date with Katy. For weeks she had been after him to come see the exhibit of Chel Hang, a Chinese painter friend of hers. Although he wasn’t a great student of
art, Drew had realized, after years of traipsing through Europe’s best museums and long conversations with artists he had known, that his appreciation of art was as refined as that of most other people. He even bought a piece now and again. He especially liked a situation like this one, where he met the artist through friends. It made painting more personal, somehow.

  “Katy, I hate to stand you two up, but you know what’s going on in the market. I’m not sure when I’ll get away.”

  “That’s OK. Everybody keeps telling me what a hero you are for breaking the sabotage story. I’ll let you off the hook this time.” There was a subtle change in her voice. “How about a late supper?”

  Drew knew that tone, the implied suggestion. Why not? He thought suddenly, with a feeling of relief. After all, the world didn’t come to an end just because of a financial crisis.

  “That sounds like a good idea,” he said.

  “Why don’t you just come to my place when you’re finished. I’ll fix a salad.”

  “See you tonight, then.” Drew felt better already. His eyes came back to the FPA news item. He called Corrello.

  “Rich, something just came over the FPA wire.” He read the dispatch to a silent Atlanta executive.

  “You think it might be MacLean?” No beating around the bush.

  “I have a bad feeling about it,” Drew answered. Those finely honed instincts.

  “Don’t jump to any conclusions. Just hold tight till I’ve talked to Madison. I’ll call you tomorrow.”

  Drew sat with a tight feeling in his stomach. Preston had said Fürglin’s crowd was rough. But what could MacLean have done to deserve death? Was his cut too big?

  With a conscious effort, Drew put the matter out of his mind and went out to the slot to spell Tom.

  ~

  Drew watched Katy through half-opened eyes. She slipped out of bed and tiptoed to the dresser, took a cigarette out of the pack, and lit it. The drawn curtains kept the room dim, but the brief flame highlighted her face. She turned and walked quickly down the hallway to the bathroom. Her hair came down to the middle of her back. There were two dimples at the base of her back; her bottom was round, her hips narrow, her legs long and shapely.

  She disappeared into the bathroom. Drew turned over on his back, feeling that pleasant ache from lovemaking. The tension of the past week had made him more passionate than usual with Katy. He realized how much pressure he had been under from the release sex had provided.

  Katy came back down the hall. She knew about Drew’s addiction to his morning coffee and always kept real coffee on hand to brew for him when he spent the night.

  “Coffee’s on,” Katy said. “It’s after nine,” she called back, on her way down the hall. Drew reached for the phone on the bedside table. It had been nearly midnight when he left work the night before.

  He dialed the office. “Ah, Drew, tried to call you a little while ago but got no answer,” Richard, his night editor, said.

  “I went out early for a run in the park,” Drew lied. He detested jogging, but his flat was near Hyde Park, so the excuse was plausible. “What’s up?”

  “The Old Lady called,” Richard said.

  Drew had been half expecting a call from the Bank of England, the Old Lady of Threadneedle Street. “Let me guess. They want me to drop around for a cup of tea.”

  “I don’t know what they’re serving, but they said it was urgent and they want you there at eleven. Charley himself wants to see you.”

  “Eleven it is. Call and confirm for me, will you?” Charley was Charles McQuade Guinness, deputy governor of the bank. Of course, they had to know where that news came from. Had they tumbled to MacLean’s scam?

  He turned around, and Katy put a mug of freshly brewed coffee in his hands.

  “Charley Guinness wants to see me,” he explained. The deputy governor was probably the most respected man in the City. Effectively the chief executive of the central bank, his role had grown in importance with a succession of weak political appointments to the governorship.

  Katy looked at him ambiguously. “You better run,” she said.

  Drew ignored her tease. “Yeah, I’d better,” he said. Cab to Knightsbridge and home, quick shower and shave, cab to the City. He would just make it.

  She was still undressed as he pulled on his topcoat. “Give me a call,” she said lightly.

  Drew kissed her quickly and was out the door. He felt better than he had in a week.

  ~

  Drew still felt good as he mounted the short staircase into the Bank of England’s reception hall.

  He hardly noticed the porters in their top hats and mauve tailcoats, although the historic costume had startled him on his first visit a decade ago. The Bank was a financial version of Buckingham Palace, complete with its own colorful guards.

  The Bank of England was in many ways the premier central bank in the world. London’s key role in international finance during capitalism’s golden age made England’s bank of issue the model for most other central banks. Although some dramatic banking failures had tarnished the Old Lady’s image in recent years, it still functioned as the moral backbone of the major central banks.

  Drew went to the desk and announced himself. It was just after eleven. He had put on his blue pinstripe for the Bank audience.

  A porter, more soberly dressed than those at the entry, led him through the hallway around the court and up what appeared to be the back stairs. They came to a reception area where another porter relieved him of his coat.

  No waiting, Drew marveled, as the oak door at the end of the reception area opened. If only it was this easy all the time! He thought of the accumulated hours he had spent waiting in antechambers like this one.

  Guinness himself came out to meet him. They knew each other from press briefings, and Drew had interviewed him once some time ago.

  “Good of you to come at such short notice,” Guinness said, guiding the journalist back to his office.

  Drew was surprised to see other people when he came into the room. He recognized Mark Halden immediately, although he had hardly expected to see him in this setting. Halden’s companion was even more remarkable. Drew could not remember ever having seen a woman inside the Bank of England, let alone one as beautiful as this tall brunette.

  “Hello, Drew,” Halden said, extending his hand. “Been a while since we’ve met. Paris, wasn’t it?”

  Now it clicked. The meeting was with Halden; Guinness was there for protocol.

  “Years ago,” Drew responded. “We both had different jobs then.” He smiled.

  “This is Carol Connors, one of our top economists.” Carol shook his hand firmly, with a friendly, open smile. Despite his confusion at the sudden turn of events, Drew was momentarily distracted by the encounter. Carol’s brown eyes were alight with intelligence, but perhaps something more—that slight expansion of the pupils that marks a kindling of interest.

  Guinness ordered tea as Drew took his place and concentrated on the two men. He imagined how many bank chief executives had sat in his place, waiting for the tea to be served in Guinness’s office, wondering what had prompted the Bank’s summons.

  Once the tea was poured and Halden had reminisced with Drew about Paris, the Fed president said, “I’m sure you’ve figured out why we called you.”

  “South Africa,” answered the journalist.

  “I’ve spoken to Tom Madison and another fellow—”

  “Richard Corrello,” Carol prompted. Drew nodded. Protocol again, clearing the conversation with his two superiors at SBC.

  “That was it. They said it was your call. The news came from your stringer, they said. But that’s all they knew.”

  Drew picked up on cue. He recognized the need for the responsible authorities to explore the circumstances leading up to such a market crisis, so he sketched the chronology of Tuesday afternoon, starting with Van der Merwe’s phone call. He did not mention the telex or MacLean.

  The two central bankers listened
attentively. Guinness was a tall man, whose big ears stuck out prominently. Carol took notes, looking up only occasionally to meet Drew’s eyes.

  “My traders tell me there was considerable movement in the market just before your flash,” Halden said when Drew had finished.

  Drew paused. He took a deep breath and told the three of them about MacLean. He narrated just the facts: Van der Merwe asking about his telex, MacLean’s hasty departure for the dentist and subsequent disappearance. They were suggestive enough. Then he added what he had heard about the gold trading from Preston Morgan and David Sangrat, without giving the names of these two sources.

  “Looks like we need to find this MacLean,” Halden said to Guinness.

  “Have you talked to the police?” Guinness asked Drew, who shook his head. “It’ll be easier for me to get the machinery moving. Somebody from the Yard will call you.”

  “There is one other thing I should mention,” Drew said, and told them about the unidentified murder victim in Annecy. The information was greeted with silence, except for the scratching of a pencil as Guinness made a note.

  Carol resumed the conversation. “You’ve had no contact with Van der Merwe since then?” she asked Drew.

  “Our contact with him was always spotty anyway, and communications seem completely shut down since the sabotage.”

  Halden was thoughtful. “Amazing, how thin the thread is,” he remarked. He looked at Drew. “The markets are up and running again. But you know as well as I do just how delicate things are.” He paused. “Off the record, I had an emergency meeting yesterday with the Latin American finance ministers. The Fed’s putting up a ten-billion-dollar safety net for their interbank deposits.”

  Drew kept quiet but whistled in his mind. What a tip, straight from the horse’s mouth. Too bad it was off the record.

  “Can you do me a favor, Drew?” Halden leaned forward. “Let me know first if you hear anything else from Van der Merwe.” Drew shifted in his seat. “I know it’s unusual,” Halden went on, “but I asked Madison, and he had no objection. It’s up to you.”