On a hot morning in the summer of 1934, as Florence was stumbling through Magnitogorsk and the American economy was still stumbling through the Depression, President Roosevelt sat upright to take breakfast in his mahogany bed and to light the first of the day’s forty Camel cigarettes in their ivory holder. It was a fact widely known among FDR’s advisers that the best time to seek the president’s audience was in the early morning, between the time the maid delivered his hash and eggs and the arrival of the valet, at ten o’clock sharp, to dress the president and strap him into his braces. A lesser-known fact was that the first person to enter Roosevelt’s private chambers each morning was not Mrs. Roosevelt but the stiffer and more morose figure of Henry Morgenthau, his secretary of the treasury. Were a casual viewer to catch a glimpse inside the presidential bedroom, he might take the balding man in the clerically high collar to be a priest administering last rites, for there was an unmistakable air of solemnity to Roosevelt’s meetings with Morgenthau. The president, having recently failed to raise food prices with his agrarian reforms, and facing another farmers’ revolt, had of late undertaken a more radical strategy: raising prices by rapidly devaluing the dollar. The ritual Morgenthau was performing that morning, and every morning that summer, was the more profane rite of setting the day’s bid price for gold.
It was an elementary game of supply and demand: having snipped the dollar’s link to gold, the government was employing its enormous new powers to buy up gold on the world market, in order to drive down the value of the dollar and raise the price of everything else. There was but one wrench in this elegant mechanism. For some time now, inexplicable surpluses of gold were swelling the markets in London, Paris, and New York. And not corrupted gold, but ingots so pure that biting into one was like sinking your teeth into hardened fudge. The ingots were stampless, anonymous. Only their smoothness distinguished them—a gravy softness identical to that of imperial tsarist coins. Gold, in other words, that could come only from the prison mines of the Russian Arctic.
“What do these Russians think they’re playing at, street dice?” inquired the president. “Are they stupid enough to kill their own market by dumping so much gold?”
“I’m inclined to believe so, sir,” replied Morgenthau dyspeptically. “Their understanding of the commodities markets is quite primitive.”
“Nonsense, Henry! These Bolshies are ready to saw off their snouts to spite their faces. It’s pure sabotage!”
“Or it may simply be that…”
“What?”
“That they need the cash, and fast.”
“Well, then, someone ought to tell them that, if they want to spend their easy cash on our American machines and in our American factories, they’d best put an end to these shenanigans.”
“Received and understood, sir.”
Departing the president’s quarters, Morgenthau began to pen a letter in his head. He had no authority to stop American firms from doing business with Russia, and neither did the president. Even at the top, power consisted not of a single giant switch but of a myriad of delicate levers that needed to be pulled discreetly.
—
THE LETTERS THAT BEGAN arriving at the Foreign Currency Department of the Soviet State Bank in Moscow were confounding in their tone of obscure threat and even vaguer appeal. A sentence teetering on the edge of solicitude might turn abruptly to blackmail, or vice versa. The task of reading this cavalcade of memos from the U.S. Treasury, Russia’s various creditors, and foreign export firms fell on the shoulders of one Grigory Grigorievich Timofeyev, director of the Foreign Currency Desk. Responding to so much hostile correspondence required, in Timofeyev’s view as a former diplomat, a certain aggressive delicacy, and much more time than he had to spare. But one clear and chilly afternoon in September, his answer walked in the door. The pretty, serious-looking woman who entered his office made a clumsy effort to smile as she adjusted her ruffled blouse. But it wasn’t her overdressed appearance that gave her away as a foreigner so much as her walk, an athletic stride that even her flouncy clothes couldn’t hide. Her complexion was still burnished pink from the summer’s sun. But her eyes, blue and downsloping, announced her industriousness and eagerness to please. She’d been sent by the Office of American Trade, formerly Amtorg.
Timofeyev motioned for her to sit.
“You worked at the Soviet Trade Mission in New York?” He was reading a letter from the Mission signed by one Scoop Epstein.
“Yes. My specialization was in trade contracts,” the young woman replied in stiff but serviceable Russian, “steel, industrial machinery, special equipment….”
“You don’t need to summarize. What is your intention in coming to the Soviet Union?”
Florence had been asked this question many times over in Magnitogorsk and found that, whatever her answer, it did not satisfy the Russians. Since her motives would always be suspect, she settled at last on flattery. “I’m very impressed with everything that’s been accomplished in the Soviet Union in such a short time. I want to contribute my labor to a society that’s moving forward, not stagnating like—”
Timofeyev cut her off. “There are many people who come to the U.S.S.R. with no intention of living and working here other than to denounce us to the bourgeois press as soon as they leave. As you know, there have already been plenty of such slanderous so-called eyewitnesses.”
“Respectfully, Comrade Timofeyev, most of these people are deceived by their unrealistic expectations. My decision to come to Russia was not a light decision. I have no illusions.”