Chapter 44: Banking Relationships

Chapter 44: Chapter 44: Banking Relationships

I

Constantinople, Galata — 9 October 1911

By nine in the morning, a crowd had gathered in the narrow street before the house of Morandi and Brothers, and it grew with every quarter of an hour.

The iron shutters were down, and a single printed notice had been pinned to the door by a clerk who then retreated inside. The notice said that the house had suspended payment until further advice.

Ayaan stopped at the edge of the crowd with Zeynep at his side, and he read the notice twice over the heads of the men in front.

"Italian," said Zeynep quietly. "The third of the houses that Agop Efendi named."

"They were called home by their own side, I think. The quarrel over Tripoli has made every Italian banker anxious for his own paper."

"And the anxiety has crossed the water." She watched an old man in a fez beat upon the shutters with his open hand. "Those people have deposits there, Ayaan. They are not Italians."

"No, they are porters, and widows, and small shopkeepers of Galata."

A rumour went through the crowd, and the whole crowd turned toward the next house along the street, which was the counting-house of Agop Kalfayan.

The first of them were already knocking at his door.

"Come," said Zeynep.

She had a leather satchel in her hand, which Ayaan had not noticed until that moment, and she walked toward the door of the old sarraf’s house through the press of people without hurrying.

He followed her, and he was not entirely certain what she intended.

Agop Kalfayan stood in the doorway, small and upright in a black coat, with his spectacles in one hand and a clerk on either side of him.

"I shall open at the usual hour, and I shall pay every depositor in full, in coin, on demand," he was saying, in a voice that carried to the back of the street. "The house of Kalfayan has not lent more than a third of what it holds in any year since my father founded it."

"The house of Morandi said the same, Efendi," shouted a voice.

"The house of Morandi lent to Italians who are now at war with their own bankers." Agop did not raise his voice. "I do not lend to Italians, and I shall prove it to anyone who wishes to see the ledger."

The crowd muttered, and it did not disperse.

Zeynep came up the step at his side, and she held out the satchel with both hands.

"Agop Efendi, I wish to make a deposit."

He looked at her, and he looked at the satchel, and for the first time in Ayaan’s acquaintance the old sarraf did not seem to know what to say.

"Han?m, this is not the hour—"

"It is exactly the hour." She raised her voice just enough to be heard on the step below. "The House of Hassan places four hundred liras in gold with the house of Kalfayan for three months, at six in the hundred, and I ask that the clerk write it in the ledger before the door."

There was silence in the street.

Agop took the satchel, and he gave it to the nearer clerk, and he said in a low voice, "Write it."

The clerk wrote, and an old woman near the front began to weep with relief.

By noon the queue had shortened. By evening there was no queue, and the doors were closed at the proper hour upon a counting-house that had paid out nine hundred liras and taken in a good deal more.

Agop Kalfayan came to them in the back room afterward, and he sat down very slowly.

"In forty years I have been given many gifts," he said. "I have never before been given one at my own door in front of my enemies."

"It was not a gift, Agop Efendi," said Zeynep. "It was a deposit at six in the hundred, and I expect to be paid."

"You will be paid, Han?m," said the old man, "with great pleasure."

Later, on the stair, Ayaan stopped her with a hand upon her sleeve.

"You did not tell me what you meant to do."

"I did not know until I saw the door." She drew her cloak closer. "A deposit made in a parlour is a private thing, and a deposit made upon the step is a notice to the whole street that the House of Hassan believes in this house."

"It was a risk."

"It was four hundred liras in the safest counting-house in Galata, and I knew the figures." She went down a step. "Not every risk is a gamble, Ayaan."

II

Constantinople, Emin?nü — 12 October 1911

They spread the figures of the reserve upon the back table on the Thursday, and Zeynep read them aloud in the order of the ledger.

"One third in the Ottoman Bank, as agreed in January. One third in the house of Kalfayan, which now holds four hundred more than it did on Monday. And one third in the strong room of this house, which I moved there in July at your request."

"And none of it outside the Empire."

"None of it outside, and I did not forget it." She laid a finger on the page. "I proposed that correction in the summer of last year, and I have waited a full season to see whether the House would have the means to carry it out."

"We have the means now."

"We have the means, and Monday has persuaded me that we have the necessity." She looked up. "If the strong room were sealed by a decree, or a bank were closed by a rumour, the House would have nothing that it could draw upon freely."

Ayaan considered the figures for some time.

"Agop Efendi has a correspondent in Geneva," he said. "A house named Dufour and Company, which he has known for thirty years, and which keeps accounts for merchants of eleven nations."

"Switzerland is a country that has been neutral since before our grandfathers were born." Zeynep’s voice was dry. "It is not likely to take a side in any quarrel of ours."

"How much should the House keep within reach at all times?"

"Six months of wages and rent, and the next two payments to the mill, and nothing less." Zeynep did not need to consult the page. "I have kept to that rule since the first quarter, and I do not intend to depart from it."

"Then we shall write."

"I have written." She slid a letter from beneath the ledger. "I composed it on Tuesday night, and I have only to ask whether you wish to alter it."

He read it.

It asked, in the plainest French, whether Dufour and Company would open an account for a Constantinople stationery house, upon what minimum, at what rate, and with what conditions for withdrawal, and it was signed by both of them.

"I do not wish to alter a word."

"Then Elias Efendi will carry it to the post, and Agop Efendi will send his own letter by the same mail." She folded it with a firm hand. "It is a small thing, Ayaan, to put a few hundred liras in a vault that is a thousand leagues away."

"It is a small thing now."

"Yes," said Zeynep, "and that is the reason to do it now."

III

Constantinople, Galata, the Ottoman Bank — 19 October 1911

The director’s room smelled as it had in January, of lamp oil and leather, and Barrault received them with a stiffness that Ayaan recognised as a form of respect.

"I trust that the House weathered the week in Galata without inconvenience," he said.

"We were fortunate, Monsieur Barrault," said Zeynep. "We held little paper upon the Italian houses, because we take a second name upon every bill above thirty liras."

"A prudent practice. I wish that more of my clients followed it." The director drew a sheet toward him. "I have asked you here to propose a further relationship, and I should like you to hear it before you decide."

"We are listening."

"The Bank has a difficulty. It has branches at Smyrna, Salonica, Beirut, and a few other ports, and it has no presence in the interior." Barrault folded his hands. "Your wholesale branch now has seventy and more customers in the provincial towns, and each of them must send his payments to Constantinople, by post or by carrier, at a cost that you bear and he bears."

"That is so."

"If the Bank were to name the House as its correspondent, each of your stationers could pay his account at the nearest agent of the Bank, who would credit your account here by telegraph." The director’s tone was careful. "It would save the carriage of coin, and the risk of its loss, and the delay of a week."

Ayaan saw at once what lay behind the proposal.

He wants the House’s volume, and he wants to be seen with the House, now that the Palace has bought its paper.

It is also an excellent idea, and I should have thought of it myself in another month.

"What would the Bank ask in return?" he said.

"Only that the House use the Bank for this service, and no other."

"Exclusively?"

"For this service, Efendi, and this service alone."

"We shall decline the exclusivity, Monsieur Barrault," said Zeynep, before he could answer. "We shall accept the service, and the fee for it shall be written in a schedule that is shown to every stationer who uses it."

"The Bank does not usually publish its fees."

"The House publishes everything, Monsieur, and its customers will think the better of the Bank for being named in a schedule that they can read." She smiled slightly. "I believe that is the reason that you came to us."

The director looked at her for a long moment, and then he gave a short, dry laugh.

"Madame, I begin to suspect that I have been negotiating against the ledger of the House since January, and that I have never once won."

"You won the loan, Monsieur, and you will be repaid in full."

"That is not the kind of winning that I meant." He picked up his pen. "Let it be as you say. The fee will be written, and the schedule shall be printed, and I shall tell the Council in Paris that the arrangement is of your devising."

"It is of the whole House’s devising," said Zeynep. "I only put it in writing."

IV

Constantinople, Bab-? ?li — 2 November 1911

The commission upon school supplies met for its quarterly session in the long room, with the winter rain beating upon the windows and the stove ticking in the corner.

Server Bey rose to present the Treasury’s figures, and he did so as he did everything, without enthusiasm and without error.

"The commission directed that suppliers be paid within sixty days of the receipt," he said. "In the last quarter the Treasury has paid in an average of a hundred and forty."

A murmur went round the table.

"I mention it because I have examined the effect of this delay upon prices." He turned a page. "A supplier who expects to be paid in four months adds the cost of four months to his price. I find that the average addition is fifteen in the hundred, which the Treasury pays whether it wishes to or not."

"Fifteen in the hundred is a very large sum," said Re?id Bey.

"It is more than the Ministry of Public Instruction spends on inspectors, and the Treasury has paid it without noticing." Server Bey’s tone did not change. "I should be glad to learn whether any member has a remedy, since I have found none."

Ayaan hesitated, because it was not his place to speak first, and then he saw that the old accountant was looking at him.

"Server Bey, may I ask why the Treasury pays late?"

"Because the revenue comes in unevenly. The tithes are collected in autumn and the customs in spring, and in the months between, the Treasury has nothing to pay with." The accountant frowned. "It is not mismanagement. It is the calendar."

"Then the delay is not a fault, but a fact, and a fact can be planned for."

"Explain."

"Suppose that the Treasury published, a year in advance, the months in which it would pay suppliers of each Ministry, and kept to them." Ayaan spoke slowly, and he saw Server Bey’s pencil begin to move. "A supplier who knew that he would be paid in March would not charge for fear of June. He would charge for the interval that he knew, and he would charge much less."

"The Treasury cannot promise payment in a month that it may not be able to keep."

"It need not promise the month in which it is richest, Server Bey. It need promise only the month in which it is certain, even if that is later than the Treasury would like." Ayaan met his eyes. "A late payment that is certain is cheaper than an early payment that is doubtful."

The accountant was silent, and the pencil moved on.

"I should like to see figures," he said at last.

"Zeynep Han?m has made a statement of the House’s costs under each delay, and I shall bring it tomorrow."

"I shall verify it." Server Bey looked up. "If it is correct, I shall write to the Ministry of Finance, and I shall say that it is the recommendation of the commission."

"Efendi, it will be the commission’s."

"It will be the commission’s, and I shall be quite ready to add that it was a merchant who thought of it." The faintest line appeared at the corner of his mouth. "A fact, Hassan Efendi. It is the only part of the argument that I did not have to verify."

V

Constantinople, üsküdar — 9 November 1911

The retired pasha had died on the sixth, in his sleep, and Cevdet received Ayaan in the library with the windows shuttered and a single candle burning on the long desk.

He wore black, and he looked older, and he did not begin with any compliment.

"I told you in August that I would answer in the autumn." He indicated the shelves. "It is autumn."

"Efendi, I did not come to press you."

"You came because you are a courteous man, and because you wished to know." The scarred man sat down. "The heirs will take the library to Paris in January. I have been told to catalogue it for the dealer, which is a bitter task, and I shall do it faithfully, because I owe it to the dead."

"And afterward?"

"Afterward I should like to accept your offer." He said it flatly. "I shall keep the books of the school, and I shall teach the boys to look after them, and I shall draw an engineer’s wage that I have not earned."

"You will earn it, Efendi."

"I should add a condition, and you may refuse it." Cevdet’s eyes were direct. "I shall continue to read what I read, and to know what I know, and I shall not give up the habit because I hold an honest post."

"I should not ask you to."

"You will not mind that I report upon what I see?"

"If what you see is the House, Efendi, you will find that it is exactly what it appears to be." Ayaan smiled. "I have nothing in the school that I should be ashamed to have you read."

"No. I begin to believe that." The scarred man was silent for a moment. "There is something else, and it is for your ear alone."

Ayaan waited.

"Three weeks ago, an inquiry came to the Ottoman Bank from a firm in Berlin, upon a letter-paper that I recognise. It asked, very politely, for a general opinion upon the standing of the House of Hassan, its reserves, and the names of its correspondents."

"Barrault did not mention it."

"Barrault did not answer it. He sent a short refusal, and he did not mention it because he is a banker, and a banker who mentions such letters is no longer one." Cevdet’s voice was approving. "I learned of it by another road, and I tell you so that you will know that your relationship with the Bank has already been tested, and that it held."

"I shall thank him when I see him."

"You will do nothing of the kind. You will say nothing, and he will understand that you know." The scarred man rose and went to the window, and he opened the shutter a little upon the grey light. "That is the whole of banking, Hassan Efendi. It is a trade of things that are not said."

VI

Constantinople, Emin?nü — 20 November 1911

The letter from Geneva came on a Monday, in a thin envelope with a blue stamp, and Zeynep opened it at the back table with a paper knife.

She read it through once in silence, and then she handed it across.

It was in the same plain French that she had written, in a firm, upright hand, and it said that the house of Dufour and Company would be honoured to open an account for the House of Hassan of Constantinople, upon the recommendation of its old friend Monsieur Kalfayan.

The minimum was one hundred liras. The rate was three in the hundred, which was modest, and the conditions for withdrawal were set down in four short lines that anyone could understand.

"Three in the hundred," said Ayaan.

"It is the price of being safe." She took the letter back. "I should rather earn three in a vault that I can reach in any storm than seven in one that may be closed by a rumour."

"How much shall we send?"

"Four hundred liras, in a draft upon the Ottoman Bank at Paris, which Monsieur Barrault will arrange." She had already written the sum upon a slip. "It is a tenth of the reserve, and I shall add to it each quarter until it is a third."

"Is that not slow?"

"It is the speed at which a prudent house should do such things. A man who moves his whole fortune to a foreign vault in a week is a man who has been frightened, and a man who has been frightened is easily robbed."

He nodded, because there was nothing to add.

Elias came to the door with the post, and he stopped when he saw the open letter.

"Efendi, Han?m, is it from Geneva?"

"It is, Elias."

"I have never seen a letter from so far away." He looked at the blue stamp with a clerk’s reverence. "May I keep the envelope for the collection?"

"You may keep the stamp," said Zeynep, and she smiled. "The House has nothing to hide in Geneva."

When he had gone, she laid the letter in the cedar box, beside the receipts, the contract of the mill, and the first schedule of prices of the school fund.

"Three banks, three countries of the law," she said. "I have wished for that since the day that I proposed it."

"You did not tell me that you wished it so much."

"I did not wish to be thanked for a thing that I had not yet done." She shut the lid. "Now you may thank me."

"I thank you."

"Good. Now tell me what you are afraid of, since you have been looking at the harbour for a week."

He had not known that she had seen it.

"I am afraid that the quarrel with Italy will not be resolved by words," he said at last, "and that a war upon the sea will make every payment that crosses the water uncertain."

"Then it is as well that we have a vault that does not cross the water," said Zeynep.

VII

Constantinople, Galata — 15 December 1911

On the fifteenth of December, Agop Kalfayan sent a note to the House, asking in his small, precise hand that both of them should dine at his table at seven.

The house stood at the top of a steep lane behind the Galata Tower, plain, narrow, and spotlessly clean, and it was kept by an old Armenian woman who had been in his service for thirty years.

The dinner was simple, with lentil soup, roast chicken, and a plate of dried apricots, and the old sarraf ate little and spoke less until the plates were cleared.

Then he folded his napkin, and he laid his hands upon the table.

"I am seventy-one years of age," he said. "My son is a physician in Vienna, and he does not wish to return, and I have no one to whom to leave the house of Kalfayan."

Zeynep put down her glass.

"Agop Efendi—"

"Do not speak, Han?m, I am not about to die." The old man’s eyes held a trace of humour. "I am about to make a proposal, and I should like you to hear all of it first."

"We shall hear it," said Ayaan.

"For some years I have lent small sums to stationers, booksellers, and printers of this city, upon the security of a second name, and I have never lost a kuru?." Agop drew a folded sheet from his coat. "I have lent to perhaps forty such men. They are the most honest borrowers that I have known, because they know that if their paper is bad, no one will give them another loan."

"That is so," said Zeynep slowly. "Hac? Arif Efendi said the same."

"I have been thinking that these men should not depend upon a single old man. They should have a society of their own, with a fund, and a rule, and a committee, and a book that anyone may read." Agop unfolded the sheet. "A Mutual Credit Society of the Stationers and Printers, lending to its members at a fair rate upon the second-name rule."

"And the capital?" asked Ayaan.

"I shall give five hundred liras, which is about the half of what I have lent in the last ten years. I should ask the House to give the same, and I should ask the guild of Sirkeci to give what it can, and each member to give a little each year."

"And the management?"

"The management would be by a committee of five, of whom the House would hold one seat, and I would hold one, and the guild three." The old man looked from one to the other. "I would not wish the House to hold the majority, Efendi. A society that is governed by its richest member is only a bank with a pleasanter name."

Ayaan found that he could not at first reply.

In the first life, I should have called this a cooperative credit society, and I should have thought that it belonged to the century that I came from.

An old sarraf of Galata has proposed it over lentil soup, out of his own experience, and without having read a single page of the future.

"It is the second principle," he said at last. "An institution that is built to outlive its builder."

"I do not know your principles, Efendi, but I recognise the sound of them." Agop smiled. "Will you consider it?"

"We shall do more than consider it," said Zeynep. She had drawn the sheet toward her, and she was already reading the first line. "We shall write the rules, and Hac? Arif Efendi shall read them, and by the new year you will have a draft."

"By the new year? It is only sixteen days away."

"Then I must begin tonight." She looked up, and her eyes were bright. "Agop Efendi, you do not know what you have done."

"I know exactly what I have done, Han?m," said the old man, and he picked up the last apricot. "I have given the work to the person who will do it best."

Outside, the wind came up from the Golden Horn, and the bell of the Galata Tower struck eight, and none of the three at the table counted the strokes.

That night Ayaan opened the notebook, and beneath the date he wrote a single line.

A bank is the trust of many people placed in the keeping of a few. Let every institution that the House builds be watched by the many whom it serves.