has happened to the last few South American issues we've handled,' he said, and he handed round copies of a table.
Micky studied the table while Hugh continued. 'The interest rate offered has gone up from six percent three years ago to seven and a half percent last year. Despite that increase, the number of bonds remaining unsold has been higher each time.'
Micky knew enough about finance to understand what that meant: investors were finding South American bonds less and less attractive. Hugh's calm exposition and relentless logic made Micky fume.
Hugh went on: 'Also, in each of the last three issues, the bank has been obliged to buy bonds in the open market to keep the price up artificially.' Which meant, Micky realized, that the figures in the table understated the problem.
'The consequence of our persistence in this saturated market is that we now hold almost a million pounds' worth of Cordova bonds. Our bank is gravely overexposed to that one sector.'
It was a powerful argument. Trying to stay cool, Micky reflected that if he were a partner he would now vote against the issue. But it would not be decided purely by the financial reasoning. There was more at stake here than money.
For a few seconds no one spoke. Edward looked angry, but he was restraining himself, knowing it would appear better if one of the other partners contradicted Hugh.
At last Sir Harry said: 'Point taken, Hugh, but I think you may be overstating the case a little.'
George Hartshorn concurred. 'We're all agreed that the plan itself is sound. The risk is small and the profits are considerable. I think we should accept.'
Micky had known in advance that those two would support Edward. He was waiting for Young William's verdict.
But it was Samuel who spoke next. 'I understand that you're all reluctant to veto the first major proposal brought in by a new Senior Partner,' he said. His tone suggested that they were not enemies divided into opposing camps, but reasonable men who could not help but agree given a little goodwill. 'Perhaps you're not inclined to place much reliance on the views of two partners who have already announced their resignations. But I've been in the business twice as long as anyone else in this room, and Hugh is probably the most successful young banker in the world, and we both feel this project is more dangerous than it looks. Don't let personal considerations lead you to dismiss that advice out of hand.'
Samuel was eloquent, Micky thought, but his position had been known in advance. Everyone now looked at Young William.
At last he spoke. 'South American bonds have always seemed more risky,' he began. 'If we had allowed ourselves to be frightened of them we would have missed out on a great deal of profitable business during the last few years.' This sounded good, Micky thought. William went on: 'I don't think there's going to be a financial collapse. Cordova has gone from strength to strength under President Garcia. I believe we can anticipate increasing profits from our business there in future. We should be looking for more such business, not less.'
Micky let his breath out in a long, silent sigh of relief. He had won.
Edward said: 'Four partners in favor, then, and two against.'
'Just a minute,' said Hugh.
God forbid that Hugh should have something up his sleeve, Micky thought. He clenched his jaw. He wanted to cry out a protest but he had to suppress his feelings.
Edward looked crossly at Hugh. 'What is it? You're outvoted.'
'A vote has always been a last resort in this room,' Hugh said. 'When there is disagreement between the partners we try to reach a compromise that everyone can assent to.'
Micky could see that Edward was ready to squash this idea, but William said: 'What have you got in mind, Hugh?'
'Let me ask Edward something,' Hugh said. 'Are you confident that we can sell all or most of this issue?'
'Yes, if we price it right,' Edward said. It was clear from his expression that he did not know where this was heading. Micky had a dreadful premonition that he was about to be outmaneuvered.
Hugh went on: 'Then why don't we sell the bonds on a commission basis, rather than underwriting the issue.'
Micky muffled a curse. That was not what he wanted. Normally, when the bank launched, say, a million pounds' worth of bonds, it agreed to buy any unsold bonds itself, thereby guaranteeing that the borrower would receive the full million. In return for that guarantee, the bank took a fat percentage. The alternative method was to offer the bonds for sale with no guarantee. The bank took no risk and received a much lower percentage, but if only ten thousand of the million bonds were sold, the borrrower would get only ten thousand pounds. The risk remained with the borrower--and at this stage Micky did not want any risks.
William grunted. 'Hmm. That's an idea.'
Hugh had been cunning, Micky thought despondently. If he had continued to oppose the scheme outright, he would have been overruled. But he had suggested a way of reducing the risk. Bankers, being a conservative breed, loved to reduce their risks.
Sir Harry said: 'If we do sell them all, we still make about sixty thousand pounds, even at the reduced commission. And if we don't sell them all we shall have avoided a considerable loss.'
Say something, Edward! thought Micky. Edward was losing control of the meeting. But he seemed not to know how to get it back.
Samuel said: 'And we can record a unanimous decision of the partners--always a pleasant outcome.'
There was a general murmur of assent.
In desperation, Micky said: 'I can't promise that my principals will agree to that. In the past the bank has always underwritten Cordovan bonds. If you decide to change your policy ...' He hesitated. 'I may have to go to another bank.' It was an empty threat, but would they know that?
William was offended. 'That's your privilege. Another bank may take a different view of the risks.'
Micky saw that his threat had only served to consolidate the opposition. Hastily he added: 'The leaders of my country value their relationship with Pilasters Bank and would not wish to jeopardize that.'
Edward said: 'And we reciprocate their feelings.'
'Thank you.' Micky realized there was no more to be said.
He began to roll up the map of the harbor. He had been defeated, but he was not ready to give up yet. That two million pounds was the key to the presidency of his country. He had to have it.
He would think of something.
Edward and Micky had arranged to have lunch together in the dining room of the Cowes Club. It was planned as a celebration of their triumph, but now they had nothing to celebrate.
By the time Edward arrived, Micky had worked out what he had to do. His only chance
