Alan Lloyd had a phone conversation with the Morgan bank and agreed that Kane and Cabot should join a group of banks who would try to shore up the national collapse in major stocks. William did not disapprove of this policy, on the ground that if there had to be a group effort, Kane and Cabot should be responsibly involved in the action. And, of course, if it worked, all the banks would be better off. Richard Whitney, the vice president of the New York Stock Exchange and the representative of the group Morgan had put together, went on the floor of the Exchange the next day and invested $30 million in blue chip stocks. The market began to hold. That day 12,894,650 shares were traded and for the next two days the market held steady. Everyone, from President Hoover to the runners in the brokerage houses, believed that the worst was behind them.
William had sold nearly all his private stocks, and his personal loss was proportionately far smaller than the bank’s, which had lost over $3 million in four days; even Tony Simmons had taken to following all of William’s suggestions. On October 29, Black Tuesday, as the day came to be known, the market fell again. Sixteen million six hundred and ten thousand and thirty shares were traded. Banks all over the country knew that the truth was that they were now insolvent. If every one of their customers demanded cash—or if they in turn tried to call in all their loans—the whole banking system would collapse around their ears.
A board meeting held on November 9 opened with one minute’s silence in memory of John J. Riordan, president of the County Trust and a director of Kane and Cabot, who had shot himself to death in his home. It was the eleventh suicide in Boston banking circles in two weeks; the dead man had been a close personal friend of Alan Lloyd’s. The chairman went on to announce that Kane and Cabot had themselves now lost nearly $4 million, the Morgan Group had failed in its effort at unification, and it was now expected that every bank should act in its own best interests. Nearly all the bank’s small investors had gone under and most of the larger ones were having impossible cash problems. Angry mobs had already gathered outside banks in New York, and the elderly guards had had to be supplemented with Pinkertons. Another week like this, said Alan, and every one of us will be wiped out. He offered his resignation, but the directors would not hear of it. His position was no different from that of any other chairman of any major American bank. Tony Simmons also offered his resignation, but his fellow directors once again would not hear of it. Tony looked as if he were no longer destined to take Alan Lloyd’s place, so William kept a magnanimous silence.
As a compromise, Simmons was sent to London to take charge of overseas investments. Out of harm’s way, thought William, who now found himself appointed Investment Director, in charge of all the bank’s investments. He immediately invited Matthew Lester to join him as his number two. This time Alan Lloyd didn’t even raise an eyebrow.
Matthew agreed to join William early in the spring, which was the soonest his father could release him. Lester’s hadn’t been without its own troubles. William, therefore, ran the investment department on his own until Matthew’s arrival. The winter of 1929 turned out to be an upsetting period for him as he watched small firms and large firms alike, run by Bostonians he had known all his life, go under. For some time he even wondered if Kane and Cabot itself could survive.
At Christmas, William spent a glorious week in Florida with Kate, helping her pack her belongings in tea chests for her return to Boston (the ones Kane and Cabot let me keep, she teased). William’s Christmas presents filled another tea chest, and Kate felt quite guilty about his generosity.
“What can a penniless widow hope to give you in return?” she mocked.
William responded by bundling her into the remaining tea chest and labeling it “William’s Present.”
He returned to Boston in high spirits, hoping his time with Kate augured the start of a better year. He settled down in Tony Simmons’s old office to read the morning mail, knowing he would have to preside over the usual two or three liquidation meetings scheduled for that week. He asked his secretary whom he was to see first.
“I’m afraid it’s another bankruptcy, Mr. Kane.”
“Oh, yes, I remember the case,” said William. The name had meant nothing to him. “I read over the file last night. A most unfortunate affair. What time is he due?”
“At ten o’clock, but the gentleman is already in the lobby waiting for you, sir.”
“Right,” said William, “please send him in. Let’s get it over with.”
William opened his file again to remind himself quickly of the salient facts. There was a line drawn through the name of the original client, a Davis Leroy. It had been replaced by that of the morning’s visitor, Abel Rosnovski.
William vividly remembered the last conversation he had had with Mr. Rosnovski and was already regretting it.
CHAPTER SIXTEEN
It took Abel about three months to appreciate the full extent of the problems facing the Richmond Continental and why the hotel was losing so much money. The simple conclusion he came to after 12 weeks of keeping his eyes wide open, while at the same time allowing the rest of the staff to believe he was half-asleep, was that the hotel’s profits were being stolen. The Richmond staff was working a collusive system on a scale that even Abel had not previously come across. The system did not, however, take into account a new assistant manager who had had to steal bread from the Russians to stay alive. Abel’s first problem now was not to let anybody know the extent of his discovery until he had had a chance to look into every department of the hotel. It didn’t take him long to figure out that each department had perfected its own system for stealing.
Deception started at the front desk, where the clerks were registering only eight out of every ten guests and pocketing the cash payments from the remaining two. The routine they were using was a simple one; anyone who had tried it at the Plaza in New York would have been found out in a few minutes and fired. The head desk clerk would choose an elderly couple who had booked in from another state for only one night. He would then discreetly make sure they had no business connections in the city and simply fail to register them. If they paid cash the following morning, the money was pocketed, and provided they had not signed the register, there was no record that the guests had ever been in the hotel. Abel had long thought that all hotels should be required to register every guest. The Plaza was already doing so.
In the dining room the system had been refined. Of course, the cash payments of any nonresident guests of a check for lunch or dinner were already being taken. Abel had expected this, but it took him a little longer to check through the restaurant bills and establish that the front desk was working with the dining-room staff to ensure that there were no restaurant bills for those guests whom they had already chosen not to register. Over and above this, there was a steady trail of fictitious breakages and repairs, missing equipment, disappearing food, lost bed linen and even an occasional mattress gone astray. After checking every department thoroughly, Abel concluded that more than half of the Richmond’s staff were involved in the conspiracy and that no one department had a completely clean record.
When he had first come to the Richmond, Abel had wondered why the manager, Desmond Pacey, hadn’t noticed what had been going on under his nose for a long time. He wrongly assumed the reason was that the man was lazy and could not be bothered to follow up complaints. Even Abel was slow to realize that the lazy manager was the mastermind behind the entire operation, and the reason it worked so well. Pacey had worked for the Richmond group for more than thirty years. There was not a single hotel in the group in which he had not held a senior position at one time or another, which made Abel fearful for the solvency of the entire chain. Moreover, Desmond Pacey was a personal friend of Davis Leroy. The Chicago Richmond was losing more than $30,000 a year, a situation Abel knew could be remedied overnight by firing a large portion of the staff, starting with Desmond Pacey. This posed a problem, because in thirty years Davis Leroy had rarely fired anyone. He simply tolerated t
he problems, hoping that in time they would go away. As far as Abel could determine, Richmond hotel staff went on stealing the hotel blind until they reluctantly retired.
Abel knew that the only way he could reverse the hotel’s fortunes was to have a showdown with Davis Leroy, and to that end, early in 1928, he boarded the Great Express from Illinois Central to St. Louis and on, via the Missouri Pacific, to Dallas. Under his arm was a 200-page report he had taken three months to compile in his small room in the hotel annex. When Davis Leroy had finished reading through the mass of evidence, he sat staring at Abel in dismay.
“These people are my friends” were his first words as he closed the dossier. “Some of them have been with me for thirty years. Hell—there’s always been a little fiddling around in this business, but now you tell me they’ve been robbing me behind my back?”
“Some of them, I should think, for all of those thirty years,” said Abel.
“What in hell’s name am I going to do about it?” said Leroy.
“I can stop the rot if you remove Desmond Pacey and give me carte blanche to sack anyone immediately who has been involved in the thefts.”
“Well now, Abel, I wish the problem was as simple as that.”
“The problem is just that simple,” said Abel. “And if you won’t let me deal with the culprits, you can have my resignation as of this minute, because I have no interest in being a part of the most corruptly run hotel in America.”
“Couldn’t we just demote Desmond Pacey to assistant manager? Then I could make you manager and the problem would come under your control.”
“Never,” replied Abel. “Pacey has over two years to go—he has a firm hold over the entire Richmond staff. By the time I could get him in line you’d be dead or bankrupt or both—I suspect all your other hotels are being run in the same crooked way. If you want the trend reversed in Chicago, you’ll have to make a firm decision about Pacey right now or you can go to the wall on your own. Take it or leave it.”
“Us Texans have a reputation for speaking our mind, Abel, but we’re sure not in your class. Okay, okay, I’ll give you the authority as of this minute. Congratulations. You’re the new manager of the Chicago Richmond. Congratulations. Wait till Al Capone hears you’ve arrived in Chicago; he’ll join me down here in the peace and quiet of the great Southwest. Abel, my boy,” continued Leroy, standing up and slapping his new manager on the shoulder, “don’t think I’m ungrateful. You’ve done a great job in Chicago and from now on I shall look upon you as my right-hand man. To be honest with you, Abel, I have been doing so well on the Stock Exchange I haven’t even noticed the losses, so thank God I have one honest friend. Why don’t you stay overnight and have a bite to eat.”
“I’d be delighted to join you for dinner, Mr. Leroy, but I want to spend the night at the Dallas Richmond for personal reasons.”
“You’re not going to let anyone off the hook, are you, Abel?”
“Not if I can help it.”
That evening Davis Leroy gave Abel a sumptuous meal and a little too much whiskey, which he insisted was no more than down-home hospitality. He also admitted to Abel that he was considering having someone else run the Richmond Group so that he could take life a little easier.
“Are you sure you want a dumb Polack?” slurred Abel, feeling his one-too-many drinks.
“Abel, it’s me who’s been dumb. If you hadn’t proved to be so reliable in smoking out those thieves, I might have gone under. But now that I know the truth, we’ll lick them together, and I’m going to give you the chance to put the Richmond Group back on the map.”
Abel shakily raised his glass. “I’ll drink to that—and to a long and successful partnership.”
“Go get ’em, boy.”
Abel spent the night at the Dallas Richmond, giving a false name and pointedly telling the desk clerk that he would be staying only one night. In the morning when he watched as the hotel’s only copy of the receipt for his cash payment disappeared into the wastepaper basket, Abel’s suspicions were confirmed. The problem was not Chicago’s alone. He decided he would have to get Chicago straightened out first; the rest of the group’s finaglings would have to wait until later. He made one call to Davis Leroy, to tell him that he had proved that the disease had spread to more than one member of the group.
Abel traveled back the way he had come. The Mississippi Valley lay sullen outside the train windows, devastated by the floods of the previous year. Abel thought about the devastation he was going to cause when he returned to the Chicago Richmond.
When he arrived, there was no night porter on duty and only one clerk could be found. Abel decided to let them all have a good night’s rest before he bid them farewell. A young bellboy opened the front door for him as he made his way back to the annex.
“Have a good trip, Mr. Rosnovski?” he asked.
“Yes, thank you. How have things been here?”
“Oh, very quiet.”
You may find it even quieter this time tomorrow, thought Abel, when you’re the only member of the staff left.
Abel unpacked and called room service to order a light meal; it arrived in something more than an hour. When he had finished his coffee, Abel undressed and stood in a cold shower, going over his plan for the following day. He had picked a good time of year for his massacre. It was early February and the hotel had only about a 25 percent occupancy, and Abel was confident that he could run the Richmond with about half its present staff. He climbed into bed, threw the pillow on the floor and slept, like his unsuspecting staff, soundly.
Desmond Pacey, known to everyone at the Richmond as Lazy Pacey, was sixty-three years old. He was considerably overweight and rather slow of movement on his short legs. Desmond Pacey had seen seven assistant managers come and go in the Richmond. Some had been greedy and had wanted more of the “take”; some couldn’t seem to understand how the system worked. The Polack, he decided, wasn’t turning out to be any brighter than the others. Pacey hummed to himself as he walked slowly toward Abel’s office for their daily ten o’clock meeting. It was seventeen minutes past ten.
“Sorry to have kept you waiting,” said the manager, not sounding sorry at all.
Abel made no comment.
“I was held up with something at the front desk—you know how it is.”
Abel knew exactly how it was at the front desk. He slowly opened the drawer of the desk in front of him and laid out forty crumpled hotel bills, some of them in four or five pieces, bills he had recovered from wastepaper baskets and ashtrays, bills for those guests who had paid cash and who had never been registered. He watched the fat little manager trying to work out what they were, upside down.
Desmond Pacey couldn’t quite fathom it. Not that he cared that much. There was nothing for him to worry about. If the stupid Polack had caught on to the system, he could either take his cut or leave. Pacey was wondering what percentage he would have to give him. Perhaps a nice room in the hotel would keep him quiet for the time being.
“You’re fired, Mr. Pacey, and I want you off the premises within the hour.”
Desmond Pacey didn’t actually take in the words, because he couldn’t believe them.
“What was that you said? I don’t think I heard you right.”
“You did,” said Abel. “You’re fired.”
“You can’t fire me. I’m the manager and I’ve been with the Richmond Group for over thirty years. If there’s any firing to be done, I’ll do it. Who in God’s name do you think you are?”
“I am the new manager.”
“You’re what?”
“The new manager,” Abel repeated. “Mr. Leroy appointed me yesterday and I have just fired you, Mr. Pacey.”
“What for?”
“For larceny on a grand scale.” Abel turned the bills around so that the bespectacled man could see them all properly. “Every one of these guests paid their bill, but not one penny of the money reached the Richmond account. And they all have one thing in common—you
r signature is on them.”
“You couldn’t prove anything in a hundred years.”
“I know,” said Abel. “You’ve been running a good system. Well, you can go and run that system somewhere else, because your luck’s run out here. There is an old Polish saying, Mr. Pacey: The pitcher carries water only until the handle breaks. The handle has just broken and you’re fired.”
“You don’t have the authority to fire me,” said Pacey. Sweat peppered out on his forehead. “Davis Leroy is a close personal friend of mine. He’s the only man who can fire me. You only came out from New York three months ago. He wouldn’t even listen to you if I had spoken to him. I could get you thrown out of this hotel with one phone call.”
“Go ahead,” said Abel. He picked up the telephone and asked the operator to get Davis Leroy in Dallas. The two men waited, staring at each other. The sweat had now trickled down to the tip of Pacey’s nose. For a second, Abel wondered if his employer would remain firm.
“Good morning, Mr. Leroy, it’s Abel Rosnovski calling from Chicago. I’ve just fired Desmond Pacey and he wants a word with you.”
Shakily, Pacey took the telephone. He listened for only a few moments.
“But Davis, I … What could I do … ? I swear to you it isn’t true … . There must be some mistake.”
Abel heard the line click.
“One hour, Mr. Pacey,” said Abel, “or I’ll hand over these bills to the Chicago Police Department.”
“Now wait a moment,” Pacey said. “Don’t act so hasty.” His tone and attitude had changed abruptly. “We could bring you in on the whole operation, you could make a very steady little income if we ran this hotel together, and no one would be any the wiser. The money would be far more than you’re making as assistant manager and we all know Davis can afford the losses——”
Kane and Abel/Sons of Fortune Page 25
