I had a great deal of puzzling to do, and I think best when I am walking. So I walked back across the Bois de Boulogne to Paris, and walked still further, through the rough houses and ever-shrinking fields which were still a part of the far west of the city then, before resting in a café. There I sat, surrounded by laughter and smoke, as I pondered what M. Hubert had told me. Clearly, I would have to inform Barings. From what he had said, the bank might realize that this issue was going to be tricky, but would not yet know the full extent of the difficulties that were coming their way.
But I still could not make sense of it. These banks seemed to be acting in concert, but they were behaving like rank amateurs; almost as if they wanted to throw their money away. If, for a moment, you conceded they were not total fools (which is occasionally tempting with bankers, but rarely with the most senior ones), then there must be a reason. But what might it be? Barings issues a bond, half of which is taken up in England, leaving them with two and a half million sterling to place on foreign markets. Some of it would go, no doubt. So, assume that there is a shortfall of two million. A vast sum of money and it would cause difficulties, as Barings obviously could not cover that from its own resources. But such things had happened before, even if not quite on that scale. At the last resort there was the Bank of England, which would advance Barings the bullion from its reserves. Barings would have to pay through the nose, no doubt, but it would survive. Its reputation for canny manoeuvres would be dented, but its titanic strength would be demonstrated for all the world to see. The only result would be that everyone would have lost a great deal of money. What was the point of that?
Two large glasses of beer brought me no closer to an answer, so I resumed my walk. I enjoyed it; that part of Paris which has the Avenue de la Grande Armée running through it has become much drearier in the past decade or so. Then it was a very peculiar quarter, with great apartment blocks rising up out of nothing, with perhaps a field full of cows to provide the city with milk on one side and a mason’s yard or some other small workshop on the other. Tall buildings, six floors high, snuggled up to one-storey workers’ hovels which had not yet been swept away by property developers. One patch of barren land was occupied by a gypsy encampment, another by an open-air music hall, in between a fashionable, and spectacularly ugly, church, which looked forlorn and abandoned even though it was brand-new.
It was nearly six o’clock, so I had just time, if I found a cab, to get to Barings’ office near the Bourse. It was a nuisance, as I didn’t yet see the urgency, but I thought I might as well get it done with, otherwise my day tomorrow would be disrupted. Then I planned a trip to the public bath for a long soak, and an early night. I was exhausted. I should say that I was still in two minds about helping Barings at all; I had not quite forgiven them for their readiness to let me go. But old obligations are hard to get rid of; I thought of many of my colleagues with affection and, somewhat childishly, I thought it would be pleasant to demonstrate what they had lost.
I rattled my way to the Place de la Bourse, and walked up the stairs to the little office that Barings occupied. Again, you must remember that this was some years back; even the most powerful bank in the world felt no need to make a splash with gaudy offices, and had no need whatsoever for legions of employees to oversee their foreign business. Barings then employed ten people in Paris, of whom four were mere clerks, two were family members learning the trade with the remaining four doing all the work. These were, as was Barings’ tradition, overworked and underpaid. The most underpaid and overworked, alas, hated me.
I can honestly say that no thought of Roger Felstead had passed through my mind for several years. He was a man of such diligence, stolidity and utter tedium that it was possible to forget him even when you were talking to him. He believed in order. He believed in rules. He believed in procedures. He believed in loyalty, and was sure it would be rewarded. Alas, every time he felt a reward was his due, his rightful prize had been given to me. He had wanted to go to Germany, I was sent. He had greatly desired to spend some time in New York, but it was I who got on the boat, not him. He had stayed in London, methodically learning his business, doing his duty and showing total loyalty, while I rushed around accumulating unjustified rewards.
I did not like Felstead. Felstead loathed me. On such trivial things can the fate of empires depend.
“A journalist now, aren’t you?” he said, not even trying to hide the tone of superior commiseration in his voice.
“That’s right,” I said brightly. “Book reviews, interviews with actresses and society gossip. Great stuff.”
“I was sorry to hear about you leaving,” he went on, meaning the exact opposite. “There was quite a lot of talk about it.”
“I’m glad to hear it. It would have been a great pity if no one had noticed.”
“Were you really fired? That’s what I heard. That you messed up with a contract.”
“Certainly not,” I said. “No. It was because I used the bank’s money to set up as a pimp.”
He blinked, not knowing how to take that. Then the idiot decided I was joking. “Well, come to see what you’re missing? Everything seems to be running smoothly without you.”
“Good. I gather you are floating a big bond issue for the Argentinians. Water company?”
He nodded. “The most ambitious ever. And I am in charge of syndicating the French participants. It’s a big responsibility, I can tell you.”
“How’s it going?”
“Oh, pretty well. Pretty well. It’ll take time to line everybody up, of course. You know the French. No discipline. No ability to take decisions. They like their pound of flesh. Make us suffer, before they do what they’re told. Pour l’honneur du pavillon, you know.” He had an odd, irritating, honking laugh, a bit like that of a goose in flight.
“So if I said that I had heard through my contacts that Credit International has decided not to have anything to do with the loan, that in fact no bank in France is going to touch anymore Barings paper, that Russian and Belgian banks are also beginning to wobble, then you will tell me that this is silly market speculation and that everything is really running smoothly?”
He blanched, and I could see from his reaction that he knew none of this. None of the banks had officially refused to participate as yet; they were saving it up as a big surprise. I wondered when that surprise was going to come.
“I certainly would,” he said, although the certainty in his voice was noticeable by its absence. “Who told you this?”
“Contacts,” I said. “It’s what comes of spending time in society. You should try it. You think it’s nonsense?”
“Absolutely. It is completely absurd. When has a Barings issue ever been snubbed? Occasionally you might get one bank scaling back on its participation. That’s normal. You know that. But large numbers? They know our reputation. When has Lord Revelstoke ever put a foot wrong? Why, the man is a genius! You know all of this, and yet you give credence to a bunch of jealous gossipmongers? It’s clear you were not cut out for banking, my boy, if you’re given to this sort of panic.”
I felt like replying that it was clear that neither was he, if he was given to that sort of imbecility. He reminded me of what I disliked about Barings, in fact: the smugness, and conviction of invincibility. Barings were the rulers of the fin de siècle. But then the Rothschilds had ruled at the beginning of the century, and were now a conservative shadow of their former selves. Did Barings think they would dominate the world forever?
“I’m glad to hear it,” I replied. “So you think that I should ignore all these stories. I was thinking of writing something for The Times…”
“Oh, you mustn’t do that!” he said swiftly. “That would be the grossest disloyalty. If people hear there are problems, then they will…”
“So there are problems?”
“I said, it’s going slowly. But it’s a complicated issue. A lot of money. There are bound to be difficulties.”
“Has Credit I
nternational refused?”
“Certainly not.”
“Has it accepted?”
“Not yet. They say they are having administrative difficulties. But they assured me I was not to worry. They will give a definite answer next Thursday morning.”
Next Thursday. In six days’ time. That would give two uninterrupted trading days for panic to sweep across the markets, if things worked out as I thought they might.
“Listen,” I said. “I am not joking. I think a storm is brewing. You must send a telegram to London, so they can prepare.”
He stared, with a particularly unappealing smile of incredulity on his face. “Warn them? Of what? Of a story heard by a journalist? You expect Lord Revelstoke to give up his weekend because of something you heard at some dowager’s party?”
“It’s somewhat more than that.”
“It doesn’t matter. No one can touch Barings. You should know that. And as for sending a telegram, I’ve never heard anything so absurd in my life. You stick to your actresses, Cort. Leave the serious stuff to people who know what they’re about.”
I shrugged. “Very well. I will do as you say. I heard this and I reported it to you. You can do as you wish with it. You are no doubt correct in your assessment. As you say, you are more experienced than I am.”
“Precisely,” he said with satisfaction. “And don’t think that I am ungrateful for your concern. It was good of you to come in. And if you hear any other titbits in future, don’t feel afraid to come and tell me, however ridiculous they are. And you must let me buy you a drink sometime, in payment for your efforts.”
At that moment, the delightful image of Barings sinking with all hands and Felstead being the first to drown swam before my eyes. I wished the French well.
“Excellent idea,” I said. “But not today. At the moment you would do me a greater service by letting me have a look at the Stock Exchange notices. I am trying to get something together on France’s attitude to dual convertibility. So I need some basic information. The Times publishes it, but it would help to have it all in one place…”
Now he had established his superiority, Felstead was all grace. Fortunately, he did not clap me on the back as he led me to a desk before getting out the bank bulletins. Had he done so I might have spoiled it all by hitting him.
The Stock Exchange daily bulletins are the dreariest of all newspapers; the prices for dozens of government stocks, the prices of innumerable foreign stocks and utilities. The discount rates and interest rates applicable to hundreds of different instruments, in dozens of countries. News of new issues and dividend payments. By carefully considering all of these, a man of sense can make his fortune. So it is said; it was my great weakness as a banker that I never had the slightest interest in any of it. I had forced myself to understand it, but it never brought me the pleasure or satisfaction that it gave to many of my colleagues.
I tortured myself reading columns of numbers and prices and rates, hoping to find some hint of how the second stage of this adventure was going to play out. For there must be a second stage. M. Hubert was right: why do something which could scarcely hurt Barings, and could cost you a lot of money? But if banks across the Continent were indeed coordinating a response, something serious was taking place and it could be assumed that it was being organised by people of intelligence.
It took the better part of two hours, but then I had it. And even I was shocked. I had assumed I would find some sort of evidence of a secondary assault on Barings, but in fact it was much more serious than that. So much so that I didn’t even look at the relevant figures until late; it never occurred to me it would be important.
Barings wasn’t the target. They were aiming at the Bank of England itself.
The figures were clear, once I had noticed them. For the past two months, bullion had been draining out of the Bank. Money was withdrawn, new deposits were not made, or were delayed. The Bank of France, citing the need for gold to pay for a tax shortfall due to a poor harvest, had postponed depositing ten million sterling; the Bank of Russia had withdrawn fifteen million. Commercial banks which ordinarily would keep smaller but substantial quantities of gold on deposit in London had been pulling it out: £100,000 here, £200,000 there. In all—I settled down with pencil and paper and added it up going back six weeks—another seven million had been withdrawn in this way. According to my calculations, the Bank had probably less than four million in bullion in its vaults.
And next week, the most powerful bank in the world was going to get a shock which would send it reeling, causing panic throughout the London markets. When people panic, they want their money back. They want gold. And Barings would be wanting to borrow the same gold, to cover the holes in its positions. It had promised the Argentinian Water Company five million. It had to pay, and it wasn’t going to have enough money. Every stock listed on the Exchange would plummet in value. Banks and their customers would panic. A queue of bankers would form at the Bank of England and it wouldn’t have enough gold to satisfy demand. It would have to suspend convertibility, say it would no longer give gold for paper, and the reputation of the entire City of London would be in ruins, with Barings the first to fold. “I promise to pay the bearer on demand the sum of one pound.” On demand. In gold. Except that it would be revealed as a lie. Not worth the paper it was printed on, so that paper would rapidly become worthless.
It was breathtakingly audacious. And simple. And it was going to work. “A determined enemy would not waste his time and gold striking at the navy or invading the colonies. He would aim to destroy belief in the word of a handful of bankers in London.” That was what Netscher had said, and he was right. It was going to happen. And that idiot Felstead wouldn’t believe me.
The beauty of the scheme was that even telling someone would merely start the panic earlier, rather than calm it down. There was not enough gold in London, and nothing could change that.
I came to the conclusion that, even though it might already be too late, I must, at least, alert Mr. Wilkinson, and for that I needed the assistance of John Stone. The Times could not help me, as we ordinarily sent our stories by the public telegraph, going down to the local post office and sending them off, word by word. This was not very private, and it was well known that the operators of the machines received a small stipend from the police to report anything of interest. Felstead would not help, but Stone certainly would, I thought. And I knew that his companies maintained their own private telegraph links, which might, perhaps, be intercepted but which were more likely to pass undetected.
Finding Stone, however, was not so simple. I knew that he had offices close to the Palais Royal, but these were closed—it was already so late that I went there just to be thorough, rather than with any real hope of success. I knew, also, that he stayed usually at the Hôtel du Louvre, but again he was out. It took a hefty inducement before I was allowed to go up and talk to his manservant.
“I’m afraid I do not know where Mr. Stone is, sir,” said this character, his face immobile as he looked me straight in the eye.
“Yes, you do,” I replied tartly. “And however commendable your lying may be under normal circumstances, it is not now. I have to see him, and as swiftly as possible. It is a matter of the highest urgency, and he will not thank you if you do not tell me where to find him.”
The servant hesitated for a few seconds, then said, with the greatest reluctance, “I believe he had an appointment for tea with the Countess von Futak. But I do not know where that might be…”
I grinned broadly at him. “But I do. Excellent man, thank you. I will make sure he is aware of your impeccable judgement.”
I didn’t quite run down the stairs, but I hurried, and I certainly pushed aside an old gentleman waiting to be handed into a cab outside the main door. He scowled, I made an apologetic gesture as I leaped in and gave directions.
It took fifteen minutes to get to Elizabeth’s house, and I battered on the door until I was let in and demanded to see both her
and Stone. It then occurred to me that I might well be placing both of them in a position of considerable embarrassment. Elizabeth had told me that she was open to visitors only on certain days and at certain hours. For the rest she had her business to attend to. This was not an evening when she received anyone other than her shareholders. Did that mean that Stone had acquired a stake? Oddly, as I waited, I hoped very much not. But I did not have time to wonder why it mattered to me.
There was no embarrassment, fortunately. I was shown into the little salon, the one she kept for herself, rather than visitors, a charming room furnished to her tastes, not to the requirements of show. And there they were, sitting in two little chairs, side by side, just like a couple spending a few intimate moments together, talking about their day and enjoying each other’s company. The difference in her struck me immediately; she was relaxed, unguarded, and completely at ease. I didn’t think I had ever seen her quite like that before. Certainly she was never so when with me. Always I sensed a tension, as though she expected to have to defend herself. I felt jealous, although it did not hit me at the time.
But the moment I entered that watchfulness came back, and Stone rose to greet me and break up all impression of intimacy.
“Forgive me, both,” I said. “I would not be here uninvited if it was not a matter of importance. Mr. Stone, may I have a word in private, please.”
Elizabeth rose. “Stay here; I have matters to attend to upstairs. I will not disturb you.”
She left the room swiftly, and Stone eyed me with a mixture of curiosity and, I could tell, no small amount of annoyance.