‘I’m not the assistant manager any longer. Get out, Mr Pacey, before I throw you out.’
‘You fucking bastard,’ said the ex-manager, realizing his last card had been trumped. ‘You better keep your eyes wide open, Polack, because I’m going to cut you down to size.’ He slammed the door as he left.
By lunchtime, Pacey had been joined on the street by the headwaiter, head chef, senior housekeeper, chief desk clerk, head porter and seventeen other members of the Richmond staff who Abel felt were past redemption. In the afternoon he called a meeting of the remainder of the employees, explained to them in detail what he had done, and assured them that their jobs were not in any danger.
‘But if I find one dollar,’ said Abel, ‘I repeat, one dollar misplaced, the person involved will be fired on the spot, without references. Do I make myself clear?’
No one spoke.
Several other members of staff left during the next few weeks, once they realized that Abel Rosnovski did not intend to continue Desmond Pacey’s system on his own behalf. They were quickly replaced.
William started work as a junior director of Kane and Cabot in September 1928. He began his banking career in a small office next to Tony Simmons, the bank’s Investment Director. From the day William arrived he knew, even though nothing was said, either discreetly or indiscreetly, that Simmons was hoping to succeed Alan Lloyd as chairman of the bank.
The bank’s entire investment programme was Simmons’s responsibility. He delegated some part of his portfolio to William, in particular private investment in small businesses, land and any other outside entrepreneurial activities. Among William’s duties was the compilation of a monthly report for the board on any investments he wished to recommend. The seventeen board members met once a month in a larger oak-panelled room, dominated at both ends by portraits, one of William’s father, the other of his grandfather. William had never known his grandfather, but had always suspected he must have been one hell of a man to have married Grandmother Kane. There was ample room left on the walls for his own portrait.
William conducted himself with caution during his early months at the bank, and his fellow board members soon came to respect his judgement, and almost invariably accepted his investment recommendations. On the rare occasions when they didn’t follow his advice, they lived to regret it. On the first occasion, a Mr Mayer sought a loan from the bank to invest in ‘talking pictures’, but the board refused to believe that the concept had any merit or future. Another time, a Mr Paley came to William with an ambitious plan for a radio network. Alan Lloyd, who had about as much respect for telegraphy as for telepathy, would have nothing to do with the scheme. The board supported his view. Louis B. Mayer later founded MGM, and William Paley became Chief Executive of CBS. William backed his own judgement and supported both men with his own money, without informing either the bank or the recipients. It was a personal matter.
One of the more unpleasant aspects of William’s day-to-day duties was handling the liquidations and bankruptcies of clients who had borrowed large sums from the bank and had subsequently found themselves unable to repay their loans. William was not by nature a soft man, as Henry Osborne had learned to his cost, but insisting that old and respected clients liquidate their stocks, and even sell their homes, was always a disagreeable experience. He soon learned that these clients fell into two distinct categories - those who looked upon bankruptcy as an excuse to avoid their responsibilities, and those who were appalled by the very thought of it, and would spend the rest of their lives trying to repay every penny they had borrowed. William found it easy to be tough with the first category, but was far more lenient with the second, often with the grudging support of Tony Simmons.
The customer who had requested to see him that morning clearly fell into the second category. Max Brookes, had borrowed more than a million dollars from Kane and Cabot to invest in the Florida land boom of 1925, an investment William would never have supported had he been advising the bank at that time. Max Brookes was however celebrated in Massachusetts as one of the intrepid breed of balloonists and flyers, and a close friend of Charles Lindbergh. His tragic death, when the small plane he was piloting crashed into a tree only a hundred yards after take-off, was reported in the press across the length and breadth of America, making him a national hero.
William, acting for the bank, immediately took over the Brookes estate, which was already insolvent. He closed the account, and tried to cut the bank’s losses by selling off the land Brookes owned in Florida, except for two acres on which the family home stood. The bank’s loss still turned out to be over $300,000.
Once William had liquidated everything the bank held in Max Brookes’s name, he turned his attention to Mrs Brookes, who had signed a personal guarantee for her late husband’s debts. Although William always tried to secure such a guarantee on any loans granted by the bank, he never recommended undertaking such an obligation to his friends, however confident they might feel about a venture, as failure invariably caused great distress to the guarantor and, more importantly, to his or her family.
William wrote a formal letter to Mrs Brookes, suggesting she make an appointment to discuss her position. He knew from the Brookes file that she was only twenty-two years old, and a member of an old and distinguished Boston family - daughter of Andrew Higginson and great-niece of Henry Lee Higginson, founder of the Boston Symphony. He also noted that she had substantial assets of her own. He did not relish the thought of requiring her to make them over to the bank, so he steeled himself for an unpleasant encounter.
The morning had begun badly, after a heated disagreement with Simmons about a substantial investment in copper and tin that he wished to recommend to the board. Industrial demand for the two metals was rising steadily, and William was convinced that a world shortage was certain to follow, which would guarantee the bank a handsome profit. Simmons did not agree with William’s judgement, feeling the bank should invest more heavily in the stock market, and the matter was still uppermost in William’s mind when his secretary ushered Mrs Brookes into his office.
With one tentative smile, she removed copper, tin and all other world shortages from his mind. Before she could sit down, he jumped up and walked around from the other side of his desk and settled her into a chair, simply to assure himself that she would not vanish like a mirage on closer inspection. William had never come across a woman he considered half as beautiful as Katherine Brookes. Her long fair hair fell in loose and wayward curls onto her shoulders, and little wisps escaped enchantingly from her hat and clung around her temples. The fact that she was in mourning in no way detracted from the beauty of her slim figure, and her fine bone structure ensured that she was someone whose beauty would turn to elegance over the years. Her brown eyes were enormous. They were also clearly apprehensive about what he had planned for her.
William strove for a businesslike tone of voice. ‘Mrs Brookes, may I say how sorry I was to learn of your husband’s death - a man we all admired - and how much I regret the necessity of asking you to come here today.’
Two lies in a single sentence, both of which would have been true five minutes before. He waited to hear her speak.
‘Thank you, Mr Kane. I am well aware of my obligations to your bank,’ she said, in a soft, gentle voice, ‘and I can assure you I will do everything in my power to meet them.’
William said nothing, hoping she would go on speaking. When she did not, he outlined the disposition of Max Brookes’s estate - very slowly. She listened with downcast eyes.
‘Now, Mrs Brookes, you acted as guarantor for your late husband’s loan, and that brings us to the question of your personal assets.’ He consulted his file. ‘You have eighty thousand dollars in investments - your family money, I believe - and seventeen thousand four hundred and fifty-six dollars in your checking account.’
She looked up. ‘Your knowledge of my financial position is more detailed than mine, Mr Kane. You should, however, add Buckhurst Park, our ho
me in Florida, which was in Max’s name. I also have some quite valuable jewellery of my own. If I were to realize all of my assets, that would just about cover the three hundred thousand dollars you still require, and I’ve already made arrangements to do so.’ There was only the slightest tremor in her voice.
‘Mrs Brookes, the bank has no desire to relieve you of your every last possession. With your agreement, we would like to sell your stocks and bonds. Everything else you mentioned, including the house, we feel should remain in your possession.’
She hesitated. ‘I appreciate your generosity, Mr Kane. However, I have no wish to remain under any obligation to your bank, or to leave my husband’s name under a cloud.’ The little tremor again, but quickly suppressed. ‘In any case, I’ve already decided to sell the house in Florida and return to my parents’ home as soon as possible.’
William’s pulse quickened when he realized that she would be coming back to Boston. ‘In that case, perhaps we can reach some agreement about the proceeds of the sale.’
‘Of course,’ she said flatly. ‘After all, the bank is entitled to the entire amount.’
William played for another meeting. ‘Don’t make too hasty a decision, Mrs Brookes. I think I should consult my colleagues, and discuss their response with you at a later date.’
She shrugged slightly. ‘As you wish, Mr Kane. I don’t really care about the money either way, and I wouldn’t want to put you to any inconvenience.’
William blinked. ‘Mrs Brookes, I must confess to being surprised by your equanimity under such difficult circumstances. At least allow me the pleasure of taking you to lunch.’
She smiled, revealing an unexpected dimple in her right cheek. William gazed at it in fascination, and did his utmost to provoke its reappearance over a long lunch at the Ritz-Carlton Hotel at his father’s old table. By the time he returned to his desk, it was well past three o’clock.
‘Long lunch, William,’ commented Simmons.
‘Yes. The Brookes business turned out to be far trickier than I had anticipated.’
‘It looked fairly straightforward to me when I glanced through the papers,’ said Simmons. ‘She isn’t complaining about our offer, is she? I thought we were being rather generous, all things considered.’
‘Yes, she thought so, too. I had to talk her out of divesting herself of her last dollar to swell our reserves.’
Simmons stared. ‘That doesn’t sound like the William Kane we know. Still, there’s never been a better time for the bank to be magnanimous.’
William grimaced. Since the day of his arrival, he and Simmons had been in disagreement about where the stock market was heading. The Dow Jones had been moving steadily upward since Herbert Hoover’s election to the White House in November 1928. In fact, ten days later, the New York Stock Exchange posted a record volume of sales, over six million shares were traded in one day. But William was convinced that the upward trend, fuelled by a large influx of borrowed money could only result in inflation to the point of instability. Simmons, on the other hand, was confident that the boom would continue, and when William urged caution at board meetings he was invariably overruled. However, that did not prevent him from selling some of his own stock and reinvesting it in land, gold, commodities and even in some carefully selected paintings - Manet, Monet and Matisse, although he still wasn’t sure about the latest fad, Picasso.
When the Federal Reserve Bank of New York put out an edict declaring that it would not cover loans to banks that released money to their customers for the sole purpose of speculation, William considered that the first nail had been driven into the speculators’ coffin. He immediately reviewed the bank’s lending programme, and estimated that Kane and Cabot had more than $26 million outstanding on such commitments. At the next board meeting he advised the board to call in these loans as quickly as possible, certain that, with such a government regulation in place, stock prices must inevitably fall in the long term.
‘William, you’re far too cautious for your own good,’ said Simmons. ‘Don’t you see that we can’t afford to jump off this bandwagon and let every bank other than Kane and Cabot make a profit?’
‘And don’t you see that the market is fuelled by loans that at some time will have to be repaid, and that’s when the wheels come off the bandwagon, it will come crashing to a halt and we’ll end up taking heavy losses.’
‘No, I can’t—’ began Simmons, his voice rising.
‘Gentlemen, gentlemen,’ interrupted Alan Lloyd. ‘This is a boardroom, not a boxing ring. I suggest that we take a vote. Those in favour …’
William lost the vote by 12 to 2.
26
BY THE END of the year, Abel had invited four employees from the Plaza to join him in Chicago. They had three things in common: they were young, ambitious and honest. Within six months, only 37 of the original 110 employees were still working at the Richmond.
At the end of the financial year, Abel cracked open a large bottle of champagne with Davis Leroy to celebrate the annual figures for the Chicago Richmond. They had declared a profit of $3,468; small, but the first profit the hotel had ever shown in its thirty years’ existence. Abel was projecting a profit of more than $25,000 in 1929.
Davis Leroy raised his glass. ‘Once you’ve got this place in shape, Abel, perhaps you should turn your attention to the rest of the group.’
‘I’m not moving until I’ve found the right man to take my place.’
‘Whatever you say,’ said Davis as Abel refilled his glass.
Davis began to visit Chicago more regularly, and he and Abel often went to baseball games and the races together. On one occasion, when Davis had lost $700 on the first six races, he threw his arms round Abel and said, Why do I bother with horses? You’re the only good bet I’ve ever made.’
Whenever Melanie Leroy dined at the hotel with her father Abel couldn’t take his eyes off her, although she never gave him a second look. And on the rare occasions when they spoke, she didn’t suggest that he might substitute ‘Melanie’ for ‘Miss Leroy’. That was, until she discovered he was the holder of an economics degree from Columbia, and had read Kafka as well as Fitzgerald. She softened a little more when he became manager of the Chicago Richmond, and from time to time dined with him in the hotel, when she would discuss the work she was doing for her liberal arts degree at the University of Chicago. Emboldened, he invited her to a concert, and then a fortnight later to the theatre. He even began to feel a proprietorial jealousy whenever she brought other men to dine at the hotel, though she never came with the same escort twice.
So greatly had the cuisine improved under Abel’s new regime that people who had lived in Chicago for thirty years and scarcely realized the hotel existed were now making regular dinner reservations every Saturday evening.
During his second year Abel had the whole hotel redecorated - for the first time in twenty years - and dressed the staff in smart new green-and-gold uniforms. One guest who had stayed at the Richmond for a week every year for the past decade actually turned around and went back out of the front door, thinking he had walked into the wrong establishment. When Al Capone booked a dinner party for sixteen in a private room to celebrate his thirtieth birthday, Abel knew he had arrived.
Abel’s personal wealth also multiplied during this period, as the stock market flourished. He had left the Plaza with $8,000 eighteen months before, and his brokerage account now stood at over $30,000. He felt confident that the market would continue to rise, so he always reinvested his profits. His personal requirements were still modest. He had acquired three new suits and two pairs of brown patent leather shoes. His accommodation and food were provided by the hotel, and he had few out-of-pocket expenses.
The Continental Trust Bank had handled the Richmond account for more than thirty years, so Abel had transferred his own account to them when he first arrived in Chicago. Every morning he would go to the bank and deposit the hotel’s previous day’s takings. One morning, after he’d complete
d this task, the teller asked if he could spare a moment to see the manager. Abel didn’t hide his surprise. He knew his personal account was never overdrawn, so he assumed the meeting must have something to do with the Richmond. But the bank could hardly complain that the hotel’s account was in the black for the first time in years. The teller guided Abel through a tangle of corridors until they reached a closed wooden door. A gentle knock, and he was ushered in.
‘Good morning, Mr Rosnovski. My name is Curtis Fenton,’ said the manager. He shook hands with Abel before motioning him to a green leather button chair on the other side of the desk. The manager was a short, rotund man who wore half-moon spectacles and an impeccable white collar and black tie to go with his three-piece banker’s suit.
‘Thank you,’ said Abel nervously. He retained, from his days in Russia, a natural fear of the unknown.
‘I would have invited you to lunch, Mr Rosnovski …’
Abel’s heartbeat steadied a little. He was reasonably confident that bank managers did not dispense free meals when they had unpleasant messages to deliver.
‘… but something has arisen that requires my immediate attention, so I hope you won’t mind if I discuss the problem with you without delay.’ Abel said nothing, something else the Russians had taught him. Fenton went on, ‘I’ll come straight to the point, Mr Rosnovski. One of my most respected customers, an elderly lady, Miss Amy Leroy’ - the name made Abel sit up instantly - ‘is in possession of twenty-five per cent of the Richmond Group stock. She has offered this holding to her brother, Mr Davis Leroy, several times in the past, but he has always reluctantly turned her down. I can understand Mr Leroy’s reasoning. He already owns seventy-five per cent of the company and I daresay he feels he has no need to worry about the other twenty-five per cent, which, incidentally, was a legacy from their late father. However, Miss Leroy still wishes to dispose of her stock, as it has never paid a dividend.’
Kane and Abel Page 24
