The Moneychangers

At the end of nine holes, on the course, Big George resumed his fifth hole argument with Byron Stonebridge.

"The U.S. goverurnent and other governments," Big George declared, "are being run by those who don't, or won't, understand economic principles. It's a reason the only reason we have runaway inflation. It's why the world's money system is breaking down. It's why everything moneywise can only get worse."

"I'll go part way with you on that," Stonebridge told him. "The way Congress is spending money, you'd think the supply is inexhaustible. We've supposedly sane people in the House and Senate who believe that for every dollar coming in you can safely put out four or five."

Big George said impatiently, "Every businessman knows that. Known it for a generation. The question is not if, but when, will the American economy collapse?" "I'm not convinced it has to. We could still avert it."

"Could, but won't. Socialism which is spending money you don't have and never will is too deep-rooted. So there comes a point when government runs out of credit. Fools think it can't happen. But it will."

The Vice-President sighed. "In public I'd deny the truth of that. Here, among us privately, I can't."

"The sequence which is coming," Big George said, "is easy to predict. It'll be much the way things went in Chile. A good many think that Chile was different and remote. It wasn't. It was a small-scale model of the U.S.A. and Canada and Britain."

The Honorable Harold ventured thoughtfully, "I agree with your point about sequence. First a democracy solid, world-acknowledged, and effective. Then socialism, mild at first but soon increasing. Money spent wildly until nothing's left. After that, financial ruin, anarchy, dictatorship."

"No matter how much in a hole we get," Byron Stonebridge said, "I'll not believe we'd go that far."

"We wouldn't need to," Big George told him. "Not if some of us with intelligence and power think ahead, and plan. When financial collapse comes, in the U.S. we've two strong arms to stop us short of anarchy. One is big business. By that I mean a cartel of multi-national companics like mine, and big banks like yours and others, which could run the country financially, exerting fiscal discipline. We would be solvent because of worldwide operation; we'd have put our own resources where inflation didn't swallow them. The other strong arm is the military and police. In partnership with big business, they'd keep order."

The Vice-President said drily, "In other words, a police state. You might encounter opposition."

Big George shrugged. "Some maybe; not much. People will accept the inevitable. Especially when democracy, so-called, has split apart, the money system shattered, individual purchasing power nil. Besides that, Americans don't believe in democratic institutions any more. You politicians undermined them."

Roscoe Heyward had kept silent, listening. Now he said, "What you foresee, George, is an extension of the present military-industrial complex into an elitist government."

"Exactly! And industrial-military I prefer it that way is becoming stronger as American economics wealcen. And we've organization It's loose, but tightening fast."

"Eisenhower was first to recognize the military-industrial structure," Heyward said. "And warn against it," Byron Stonebridge added.

"Hell, yes!" Big George agreed. "And more fool him! Ike, of all people, should have seen the possibilities for strength. Don't you?"

The Vice-President sipped his Planter's Punch. "This is off the record. But yes, I do."

"I’ll say this," Big George assured him, "you're one who should be joining us."

The Honorable Harold asked, "How much time, George, do you believe we have?"

"My own experts tell me eight to nine years. By then, collapse of the money system is inevitable."

"What appeals to me as a banker," Roscoe Heyward said, "is the idea of discipline at last in money and government."

G. G. Quartermain signed the bar chit and stood up. "And you'll see it. That I promise you." They drove to the tenth tee.

Big George called over to the Vice-President, "By, you've been playing way over your head and it's your honor. Tee it up and let's see some disciplined and economic golf. You're only one-up and there are nine tough holes to go."

Big George and Roscoe Heyward waited on the cart path while Harold Austin looked over his lie on the fourteenth hole; after general searching, a Secret-Service man had located his ball beneath a hibiscus bush. Big George had relaxed since he and Heyward had taken two holes and were now one-up. As they sat in the cart, the subject which Heyward had been hoping for was raised. It happened with surprising casualness. "So your bank would like some Supranational business."

"The thought had occurred to us." Heyward tried to match the other's casualness.

"I'm extending Supranational's foreign communications holdings by buying control of small, key telephone and broadcast companies. Some owned by governments, others private. We do it quietly, paying off local politicians where we have to; that way we avoid nationalistic fuss. Supranational provides advanced technology, efficient service, which small countries can't afford, and standardization for global linkage. There's good profitability for ourselves. In three more years we'll control through subsidiaries, forty-five percent of communications linkages, worldwide. No one else comes close. It's important to America; it'll be vital in the kind of industrial-military liaison we were talking about."

"Yes," Heyward agreed, "I can see the significance of that."

"From your bank I'd want a credit line of fifty million dollars. Of course, at prime."

"Naturally, whatever we arranged would be at prime." Heyward had known that any loan to Supranational would be at the bank's best interest rate. In banking it was axiomatic that the richest customers paid least for borrowed money; highest interest rates were for the poor. "What we would have to review," he pointed out, "is our bank's legal limitation under Federal law."

"Legal limit, hell There are ways around that, methods used every day. You know it as well as I do." "Yes, I'm aware that there are ways and means."

What both men were speaking of, and fully understood, was a U.S. banking regulation forbidding any bank to loan more than ten percent of its capital and paid-in surplus to a single debtor. The purpose was to guard against bank failure and protect depositors from loss. Inthe case of First Mercantile American, a fifty-million dollar loan to Supranational would substantially exceed that limit.

'The way to beat the regulation," Big George said, "is for you to split the loan among our subsidiary companies. Then we'll reallocate it as and where we need."

Roscoe Heyward mused, "It could be done that way." He was aware that the proposal violated the spirit of the law while remaining technically within it. But he also knew that what Big George had said was true: Such methods were in everyday use by the biggest, most prestigious banks.

Yet even with that problem handled, the size of the proposed commitment staggered him. He had envisaged twenty or twenty-five million as a starting point, with the sum increasing perhaps as relationships between Supranational and the bank developed.

As if reading his mind, Big George said flatly, "I never deal in small amounts. If fifty million is bigger than you people can handle, let's forget the whole thing. I'll give it to Chase."

The elusive, important business which Heyward had come here hoping to capture seemed suddenly to be slipping away. He said emphatically, "No, no. It's not too large."

Mentally he reviewed other FMA commitments. No one knew them better. Yes, fifty million to SuNatCo could be managed. It would necessitate turning off taps within the bank cutting back drastically on smaller loans and mortgages, but this could be handled. A large single loan to a client like Supranational would be immensely more profitable than a host of small loans, costly to process and collect.

"I intend to recommend the line of credit strongly to our board," Heyward said decisively, "and I'm certain they'll agree." His golfing partner acknowledged curtly, "Good."

"Of course, it would strengthen my position if I could inform our directors that we would have some bank represensation on the Supranational boards"

Big George drove the golf cart up to his ball, which he studied before replying. "That might be arranged. If it was, I'd expect your trust department to invest heavily in our stock. It's time some fresh buying pushed the price up."