Elleck turned his mind to the people who would be the hardest hit: the small investors, the private punters, heavily exposed on their margins. Coffee had closed on Friday night at £1,004; it had begun trading on Monday morning at £400, a drop of £604, before rising slightly and levelling out at just over £500. People who had bought on margin at around about the thousand mark — where coffee had been for some time — would have about £100 invested for every ton. With a drop of £500 in the price, it meant that when the time came for them to pay the balance of the £1,000 purchase price, they would have paid out £1,000 for coffee that they could sell for only £500 — and they would therefore have lost £500 for each ton. In common with other commodity broking firms, Elleck could not let Globalex be on the hook for this difference; so when a commodity dropped substantially in price, the investors in that commodity were required to increase their margin to cover the position. It was known as a ‘margin call.’
The first job Elleck had done this morning was to check the margin positions of all Globalex’s clients. He had noticed, to his surprise, that Alex Rocq held over 1,000 tons on margin. Even at ten per cent of the price, that was a lot of money he had invested — over £100,000. Elleck did not like his employees playing the markets, and particularly not through their own firm; if they wanted to invest, they were supposed to go elsewhere, although that rule was not strictly enforced. One hundred thousand pounds was a lot of money for a fellow of Rocq’s age to have invested, and £1 million was an incredible amount to be on the hook for in just one commodity. Elleck had a feeling, just from looking at the figures, that Rocq was playing with fire.
Thirty seconds on the intercom to the accounts departments told Elleck the name and branch of Rocq’s personal bank. Two minutes later, he was talking on the telephone to one of the directors of the bank, in his office in Cannon Street. Eight minutes later the director called him back: Rocq was hocked to the eyeballs for £102,000. Elleck thanked him, assured him he’d be the first person to receive the next hot tip he came across, and hung up. Rocq now owned only £500,000 worth of coffee, but he was contracted to buying £1,042,000 worth. Rocq would shortly be receiving a margin demand for another £400,000, and that was if coffee didn’t drop any more.
Elleck pinched his nostrils together and blew hard; his ears always popped in aeroplanes. They bumped through a series of air pockets and he heard the engines change pitch a couple of times, as Hopkins lined them up for the landing approach. He’d looked at Rocq’s position at midday; by the close of play, coffee had dropped to £420 a ton; that meant Rocq’s margin call by the end of the day would have stood at about £480,000. For a man hocked to the eyeballs, that was a lot of long green ones to stump up in a hurry; it was a lot of long green ones to stump up at all. Elleck smiled to himself.
The first thing that had happened this morning was that all the smart boys in coffee had tried to go short. It was the rush to sell short that had contributed to coffee’s rapid decline to its £420 figure. But Elleck knew from experience that the situation would change. During the next few days the World Health Organization would clarify their views, doctors for and against would be on every news show, talk show and documentary for the next fortnight, and the newspapers would be stuffed full of arguments. Slowly, a general opinion would emerge: as bad as was feared, not so bad, or worse. Whichever way it shifted, coffee, which had overnight become the most volatile substance in the world, would shift too — in leaps and bounds. Fortunes had been lost on coffee; but Elleck knew full well that during the weeks to come, equally great, if not greater, fortunes would be made on the stuff by those that had the money to stay in the game.
As soon as Elleck had got his information on Rocq, he had summoned the Honourable James Rice up to his office.
‘I presume Alex Rocq has spoken to you about his coffee position?’ Rice hesitated, wondering whether his boss might be trying to trap him into something. ‘What do you mean, Sir Monty?’
‘Don’t be ridiculous, James, you must know what I mean. Rocq bought £1 million worth of coffee through you last Monday. Surely it hasn’t failed to escape your attention that there have been one or two adverse articles about this particular substance in the newspapers during the past twenty-four hours?’
Rice felt faintly silly; he was friendly with Rocq, but not so friendly that he was prepared to draw the wrath of his boss to defend him. ‘Well, he’s concerned, Sir Monty — very concerned, I’d say.’
‘What’s he doing about it?’
‘Trying to go short.’
‘Along with the rest of the world?’
Rice shook his head. ‘No. Most people seem to be giving up and sitting tight; there are no buyers for the stuff at any price — haven’t been any since about eleven o’clock. Hasn’t been a short market at all today — those that did get out either went into cash or other commodities. A lot of people did go short very early, but they pushed the price down so rapidly that even the wide-boys got nervous.’
‘Did Rocq go short?’
‘No — he hasn’t yet — I think he’ll wait a day or two — that’s what I’ve advised him. You know what these medical scares can be like — doctors seem to change their minds on things every few months. Cholesterol used to be bad for you; then they discovered not enough cholesterol is worse than too much. I’m not saying it’ll be the same here, but who knows.’
Elleck nodded in agreement. ‘I trust Rocq will get his margin call today — along with everyone else?’
‘It’s on the computer — along with everyone else’s,’ nodded Rice.
‘Has he said anything about it?’
‘Well — he won’t receive it for probably another hour, Sir Monty.’
‘No, I know he won’t have received it yet — but he must know he’s going to. He hasn’t said anything at all?’
‘Well,’ again Rice hesitated, ‘he wants me to have lunch with him — tomorrow.’
‘And if he brings up the business of the margin then?’
‘Rules are rules — I can’t do anything about them, can I, Sir Monty?’
‘I’m pleased with your work for this company, James. You have a good future here, a very good future indeed.’
‘Thank you, Sir Monty.’
‘I would offer you a cup of — er coffee — but I imagine you probably have more than you need right now anyway.’
Rice grinned and Elleck stood up. ‘Thank you for coming up to see me, James — and — er, by the way — if young Alex does mention this margin business to you — I’d — er, I’d be very grateful if you would let me know.’
‘Do you think he will, sir?’
‘Four hundred and eighty thousand pounds is a lot of money,’ said Elleck.’
‘I’ll let you know, Sir Monty.’
‘Thank you, James.’
The wheels of the Mitsubishi bumped down onto the grass, lifted up, and then settled down; the plane roared as the pilot reversed the engines. Elleck smiled to himself. He had Rocq by the balls, and he had a feeling that to have a person of Rocq’s calibre, and in Rocq’s position, by the balls was, right now, not at all a bad thing.
The Citroen Pallas swept out of Bordeaux airport and onto the Libourne road. Although it was a clear summer’s evening and in spite of the falling dusk it was still quite light, the chauffeur was having great difficulty in seeing, because of the incessant clouds of Upman corona smoke which blew over his head from the back seat, and cascaded down in front of his eyes.