Black Market

Red and blue intercom wires were strung up everywhere, hanging like Christmas decorations over the escalators and fire exit stairways. Open radio cha

From a row of high-vaulted windows, Carroll and Caitlin could see a black Bell army helicopter landing. Limos and official cars were discharging somber-looking men carrying briefcases.

“What's causing the worldwide panic?” Carroll wanted to know as he and Caitlin entered a cavernous marble hallway with no visible exit.

Caitlin rubbed her arms warm as she walked. The glass doors to the outside were opening constantly, and the building was as cold as a meat freezer.

“None of the usual safeguards in the systems are working Not enough fail-safe devices were ever built in for a situation like this. Academic economists have been warning the New York Stock Exchange for years. Every MBA candidate in the country knows that something like this could conceivably happen.”

Carroll pushed open heavy pine doors into a huge, frantic conference room, almost a miniature stock exchange. Brokers on complex NYNEX telephone consoles, analysts with IBM desktop computers, were talking all at once.

The room was jammed with frenetic shadowy figures many of whom were shouting into phone receivers they managed to cradle, in a practiced defiance of gravity, between jaw and shoulder. It was bedlam. It reminded Carroll of, give or take some modern accoutrements, a print he'd once seen of a Massachusetts insane asylum in the late 1800s.

Unconditional orders were being issued to sell, at the very best price possible. Jobs and business relationships were being routinely threatened over the long-distance telephones.

Jay Fairchild, tall, jowly, bald as an infant, lumbered out of a clique of gray suits to meet Caitlin and Carroll. Fairchild was the undersecretary of the Treasury, a man who'd come to rely regularly on Caitlin's judgments, her usually astute, almost unca

“Jay, what the hell has happened tonight?”

Fairchild's eyes had all the animation of glass beads. There was a standing joke that all undersecretaries were illegitimate children of past congressmen and presidents. They definitely had a rare, collective ability to look completely out of place.

“Just about every nightmare scenario you or I could ever have imagined has come true tonight,” Fairchild said. His voice held a tiny, whistling sibilance. “At the end of the day yesterday, out in Chicago, metal skyrocketed. A ton of futures, coffee, and sugar flopped badly. Bank of America and First National began calling in their loans.”

Caitlin couldn't hold back her anger at that news. “Those unbelievable shits! Morons! The commodity people out of Chicago won't listen to anybody, Arch. There have been all sorts of speculative excesses on the options market long before this. For years and years. That's one more reason we were ripe for this panic.”

“None of that is the real problem right now, though,” Jay Fairchild said. “The crash is being precipitated by the goddamn banks!… The banks are almost completely responsible. Let's wander back to the lobby. You'll see what I mean. It's worse than it looks up here.”

FBI agents and hard-nosed-looking New York City police officers were conscientiously screening the credentials of everyone trying to get into the conference room on the ground floor. Carroll knew the FBI men. They had no problem getting in.

Once inside, the thundering noise and activity were easily double what Carroll and Caitlin had witnessed and heard upstairs. It was still only 4:30 A.M., but a nightmarish fear had taken firm hold-you could see it on every face inside the overcrowded room.

The business investigators who squeezed into the conference room included some of the more sophisticated new breed of bankers. In the not-so-distant past, most banks had wanted to be viewed as impregnable places for their depositors' money, secure fortresses of capital. So bankers tended to be characterized by physical and emotional restraint, by almost compulsive neatness, by conservatism in their behavior and their thinking.

That was hardly the case with the men and women packed into this room. These were glossy, well-tailored globe-trotters, most of them as comfortable in Geneva, in Paris, or in Beirut as they were in New York. The spiritual leader of this cosmopolitan group was Walter Wriston, the now retired head of Citicorp. In Caitlin's opinion, Wriston had been little more than a glorified traveling salesman, but some thought him a genius.

“There's another factor contributing to the current disaster,” Jay Fairchild said. “The very real possibility of a worldwide crash, rather than an isolated one in the United States. This time, the whole bloody world really could go down. It's been that volatile a situation, potentially, for at least the last four years.”

Everyone they passed in the formal conference room appeared hopelessly grave and, once again, battle weary to Carroll. The scene was something like a general alarm on a warship.

Caitlin said, “Seven days of brokerage transactions are now unresolved. The bankers are competing, they're actually competing to see who can take the most clear-cut, amoral advantage of the chaos!” Her face was flushed, and there was an anger in her voice that Carroll hadn't heard before.

Carroll didn't technically understand some of what was being said, but he grasped enough. When you misappropriate people's money, a lot of small investors' money given to you on trust, he figured you were a common criminal.

Call him naive and old-fashioned, but that was how he felt.

“It sounds to me like nobody's protecting the ordinary investor right now.”

Jay Fairchild nodded. “Nobody is. The big banks are all busy maneuvering for the oil billions. They couldn't give a damn about the poor bastard out there with a hundred shares of Polaroid or A T and T.”

“Arch, Arab oil money is the name of the game. Arab money is almost always conservatively managed. Since last Friday they've been trying to move out of the U.S. Treasury bills. Into gold. Into other precious metals. The banks are all shamelessly scrambling for the huge Arab fees. They're like rats on a sinking ship, bailing out of the dollar-rushed into sterling, the yen, the Swiss franc, all the more stable currencies…Chase, Manufacturers, Bank of America, they're making small fortunes right now.” Caitlin's lips were tight as she spoke.

“Do the two of you really know what you're talking about?” Carroll finally asked in desperation.

Caitlin and Jay Fairchild looked at each other. They answered almost simultaneously:

“Right now, no.”

“Nobody knows exactly what this is about. But what we've just told you is generally true.”

The three of them stood by helplessly watching the potential stock market crash gain a frightening momentum of its own.

Reports from London, Paris, Bo

Men in white shirtsleeves and loosened neckties took turns calling out the more substantial telex quotes for the benefit of beleaguered clerks who reported them into a massive central computer.

Phibro-Salomon-bought at-121/2-down 22

General Electric-bought at-35-down 31

IBM-bought at-801/2-down 40

By eleven-thirty on the morning of December 15, most U.S. banks, including every savings and loan, had been closed. The Chicago, Philadelphia, Boston, Pacific, and mid-west exchanges had all been officially shut down. The emotional panic for investors was in full force; it was virtually unstoppable in every city, every small town, across the United States.