‘They’re gunning
for us,’ said Martin.
‘They say Lee, Higginson is next on the agenda – and God knows what they’ll turn up there,’ said Steve. ‘Ivar Kreuger turned Lee, Higginson inside out, and once the Committee exposes his frauds they’ll crucify the firm.’
We all paused to consider what would happen if the Committee started exhuming the affairs of Van Zale Participations. It was very quiet. Everyone looked unhealthily pale.
‘At least you had the brains to send your brothers to Australia, Steve,’ said Clay Linden at last. ‘The Committee can hardly haul them back to Washington to testify.’
‘But what about me?’ said Steve. ‘What am I going to do when I’m hauled up before the Committee? All you guys can get away with saying that you never saw the books, but once I admit I ploughed through the entire disaster my knowledge is imputed to you and the bank goes up in smoke.’
‘Steve’s right,’ said Martin. ‘It would be fatal if he were forced to give evidence. Steve, you’d better go back to Europe and the sooner the better.’
‘Oh my God,’ I said before I could stop myself, but although my partners looked at me curiously they decided I was just exhibiting a touch of youthful hysteria. Only Steve understood. His glance, wry and cynical, met mine and flicked away.
‘I don’t want to go to London,’ he said, not looking at me. ‘My place is here in New York and I don’t want to get tied up with the London office. If I’ve got to go back to Europe let me base myself in Paris and work on a survey of European economic prospects. That would be a legitimate temporary assignment and would be useful to us in future.’
I gazed at him with a new respect, and for the first time in my life I almost liked him. Certainly it gave me new hope for his marriage.
There was no rush for Steve to leave since we had had no confirmation that Van Zale’s was to be investigated, but to avoid any accusation that he was fleeing the country he did begin his preparations for the move. Emily was excited about spending time in Europe and began to reminisce about the summer she had spent there after she had graduated from college. Her little girl Rosemary Louise was a year old by this time and almost as pretty as Vicky; Steve’s boys, according to Emily, dutifully showered their new sister with affection; and the Sullivan family’s future appeared to stretch ahead endlessly into a rosy haze.
However, the writing was on the wall for the investment bankers of Wall Street, and on the twenty-fourth of January, 1933, we were all brought one step nearer to public chastisement for our past sins. The special Sub-Committee of the Senate Banking and Currency Committee, which had now been pursuing its investigation for eight months, appointed a new counsel, and we came face to face at last with Mr Ferdinand Pecora, the Sicilian immigrant who intended to beat the mighty bankers of the Eastern Seaboard to their aristocratic knees.
David had met his Goliath. The fight was on.
[2]
Meanwhile America
was swaying on the brink of anarchy, crashing from one ghastliness to the next with twelve million now unemployed, the farmers in open revolt, banks failing daily and Roosevelt’s supporters still singing ‘Happy Days Are Here Again’. On the day before the inauguration of our new president, banks remained open in only ten states and there was not only insufficient gold left to back the currency, but insufficient cash in the Treasury to meet the government payroll.
It was rock-bottom at last. We were bankrupt.
Roosevelt came to power, closed all the banks against Lamont’s advice and took America off the gold standard. A year before we would all have shouted that this was heresy, but since we now saw that this might well be the only cure we decided the heresy had to be acceptable. Morgan of Morgan’s was even brave enough to say he welcomed it.
Roosevelt went on, flailing around like a butcher with a meat-axe, bashing everything in sight and splitting every well-worn tradition to pieces. Half the time I suspect he had no idea what he was doing, for his ignorance of economics was frightening, but he was certainly a success at demonstrating the principle that any action was better than none. In July he even started chopping up economic theory by selling gold at whatever price caught his fancy, and I believe we might all have been in hysterics at this mad behaviour if we hadn’t been so mesmerized by Pecora. Gradually as the investigation deepened Roosevelt faded into the background, America’s convulsions were no more than an apocalyptic backdrop and all we could see was Pecora sharpening his sword.
Pecora was a crusader, a progressive, a fighter for truth, honesty and fair play. He spoke for the millions who wanted to know what had really been going on during the glittering months of the Great Bull Market, and when he saw the investment bankers cowering in their tarnished palaces he began to hammer on those closed doors of privilege and power.
‘That dreadful little man Pecora!’ said Lewis, looking down his nose. ‘I thought gangsters were the only items Sicily exported to this country?’
We all tittered but, like Lewis himself, we were all scared to death. Wall Street trembled, and in the exclusive clubs uptown, in the hallowed corridors of the Metropolitan, the University and the Knickerbocker, there was many an old Porcellian who could not bring himself to voice the upstart’s name.
It soon became obvious to us that it wasn’t enough just to ensure all three Sullivan brothers were out of the country. Pecora demolished the investment banking firm of Halsey, Stuart, laid waste the National City Company and even slit open the affairs of the House of Morgan from end to end. Nothing was sacrosanct, no one was spared. Finally, when we heard that he had extorted both the articles of partnership as well as the banking records from Morgan’s, we knew it was vital to head him away from Van Zale’s. It wouldn’t have taken Pecora long to make a connection between my broker’s
acquisition of the Van Zale Participations shares and my enhanced power in the revised articles of partnership, and once the trust’s books were exposed Pecora would scalp us all.
‘But how can we possibly head him off?’ said Martin in despair. ‘He’s absolutely incorruptible and he’s bound to want to investigate us.’
Lewis could only mutter something about buying up the senators on the sub-committee. He had been in a state of gibbering terror ever since Pecora had exposed the income tax evasions of Charles Mitchell, the President of the National City Bank.
I suddenly saw my chance. If I could save us from Pecora my power in the firm would not merely have doubled but quadrupled.
‘Supposing,’ I said vaguely, ‘that Pecora receives a diversion he can’t ignore? His time is limited. He knows that Congress and the public are going to lose interest in the investigation eventually, so he wants every victim he picks to provide a first-class scandal. We’ve covered up the trust mess pretty well. He can’t know for sure that we could provide him with banner headlines. If he hears another front-rank Yankee house offers better publicity value, don’t you think it’s possible that he might pass us by?’
Everyone spoke at once, demanding to know which house I had in mind.
‘Dillon, Read,’ I said. ‘We all know what was going on there.’
‘For Christ’s sake! You mean we could tip Pecora off?’ I’d even succeeded in shocking Clay Linden.
‘But Cornelius,’ said Lewis appalled, ‘it’s a tradition of the Street that all the Yankee banking houses hang together. We must be loyal to Dillon, Read, just as they would be loyal to us.’
‘Screw tradition,’ I said. ‘It’s their neck or ours.’
It was theirs. Pecora passed us by, and when we realized we were safe I had Lewis almost crying on my shoulder with gratitude.
‘Thank God Pecora never got the chance to interrogate me about my taxes!’ he kept saying. ‘What an unbelievably lucky escape!’
‘Tell me, Lewis,’ I said idly, ‘what exactly did you do on your tax returns?’
He told me. He was garrulous in the enormity of his relief. His deviousness related to a source of income other than the income from the partnership, and as I had suspected was a variation on the scheme which had led Mitchell to his indictment for tax evasion. A fictitious sale of assets had been negotiated to establish a ‘loss’ for income tax purposes. Whether this apparent fraud was tax evasion or merely tax avoidance was something only a court of law could decide, but even if Mitchell won an acquittal there was no doubt his career would still be in ruins.
‘… so for God’s sake don’t tell anyone,’ added Lewis as an afterthought, still perspiring at his narrow escape. ‘Of course not!’ I said soothingly.
Later Sam said: ‘Christ, Lewis was a fool!’
‘To lie to the I.R.S.?’
‘No, to tell the truth to you! What are you going to do?’
‘Well, nothing right
now,’ I said vaguely, ‘but it’s nice to know, isn’t it, that we’ve got Lewis exactly where we want him?’
‘Very nice,’ said Sam.
[1]
After Pecora and the Senate Sub-Committee went into recess for the remainder of the summer, Alicia and I retreated to the cottage I had bought the previous year at Bar Harbor and soon the children joined us. Vivienne had finally condescended to let Vicky spend each August with me, and as my lawyers had battered a similar concession from Ralph Foxworth, Sebastian and Andrew also arrived with their nurse.
I had never been more grateful for the opportunity to lead a quiet family life. We took the children for picnics and walks, and for many happy hours I played with the model train set Alicia had bought for Sebastian. F.A.O. Schwartz must have found us good customers that year. I had ransacked their store for presents for Vicky, and although Alicia warned me not to spoil her I took no notice. Vicky was two and a half and could talk to me. We used to have long conversations after I had read her the required bedtime story, and I was continually marvelling how advanced she was for her age. Naturally I had enough tact to praise Alicia’s boys as well, but the truth was Sebastian was backward and Andrew was plain and neither of them bore any resemblance to their mother. For the first time in my life I understood the difficulties my own stepfather must have encountered, and as I saw again the pattern of history repeating itself I seemed to feel those mythical mills of God grinding out a belated retribution for my past insensitivity.
In September the children went away, and without them the house seemed such a morgue that we closed it at once and returned to New York.
It seemed empty too in the mansion on Fifth Avenue, and upstairs in the east wing the nursery still stood deserted, the furniture swathed in dustsheets, the blinds drawn on every window.
The mills of God were working overtime that year.
‘Take what you want in life,’ says the old Spanish proverb, ‘and pay for it.’ My credit finally ran out on Thursday, the seventh of September, 1933.
The weather was very hot with the temperature soaring freakishly towards ninety, and the city shimmered in a humid haze. It was a gross distorted repulsive day. I thought it would never end.
Ironically I had been looking forward to it for some time because Sam was due to return that morning from Europe where I had sent him to check up on Steve. After Pecora had concluded his summer investigations
Steve had decided to stay on in Europe until December in order to avoid the suspicion which a prompt return would have aroused, but I had at once started to worry in case Dinah Slade was beckoning him again. I still had no desire to go to Europe, but Sam had willingly volunteered to go in my place. It had seemed the ideal opportunity to combine a private mission with a business reconnaissance; I had decided that one of us should acquire at least a rudimentary knowledge of European banking and Sam, being European-born and bilingual, was obviously better suited than I was to reconnoitre the territory.
He departed enthusiastically for Cherbourg at the end of July, and after spending two weeks in Paris with Emily and Steve he headed east across the German border into his native land.
I had one postcard from him. It was a picture of Cologne Cathedral and on the back he had scrawled one word, ‘Wunderschön!’, before signing his real name, Hans-Dieter.
‘Sam must be enjoying himself,’ I said vaguely to Alicia, and I was relieved for Sam’s feelings for Germany had always been so convoluted that I had feared he might hate the German section of his trip. Jake had given him an introduction to the Reischman office in Hamburg, and it was from Hamburg that he eventually sailed back to the States.
I went down to West Twenty-First Street to meet his ship the
Manhattan
, and as soon as he emerged from the customs hall I sensed he had changed. It was strange that I should have sensed this for the change was within him, but I knew him so well and no doubt there were half a dozen hints which my mind subconsciously recorded as significant. He wore a foreign suit and looked much neater than usual. His hair was shorter and styled differently so that the bones of his face had an altered emphasis. His shoes gleamed, his cuffs were crisp and his skin glowed as if he had been scrubbing it every day with iced water.
‘Hi!’ he said in his familiar Maine accent. ‘Good to see you again! How are you doing?’
It took me a moment to realize I had expected him to speak in a foreign language. ‘Just fine!’ I said with a smile. We shook hands. ‘How are you? Good trip? You look as if you’ve just come back from a vacation in the Promised Land!’
‘That’s exactly the way I feel,’ he said, and when I looked at him closely I saw he was serious.
My heart sank. I knew what happened to Americans who fell in love with Europe. They became restless and dissatisfied, torn between two worlds, confused, dislocated and rootless. The pleasures of Europe were like the pleasures of alcohol, acceptable in moderation and ruinous when taken to excess. In despair I tried to discover the extent of his new addiction.
‘So you fell in love with Europe,’ I said politely. ‘That’s nice.’
‘Not Europe,’ he said. ‘Germany.’
‘Oh.’ I did not know much about Germany except that I had heard they had finally found someone to put their affairs in order. ‘Tell me about it,’ I
said helplessly as my chauffeur drove us to Park Avenue, and my invitation opened the flood-gates to a seemingly endless torrent of information.