The Gnome of Wall Street

By Marshall Loeb

Executive View

When he was in his early 40s, a mere stripling, Nicholas Deak parachuted into the Burmese jungles and the Balkans on many spooky missions as an agent of the Office of Strategic Services in World War II. Now, in his early 70s, Deak has slowed down only a bit. He runs--not jogs, runs--three to five miles every morning on his own track at his estate in suburban New York. Then he is chauffeured to the global headquarters of Deak & Co., in the Deak-Perera Building near Wall Street, where he directs the largest foreign exchange business in the Western Hemisphere.

"In gold we trust," is Deak's philosophy, and he has made many fortunes by dealing in gilt and anxiety. Clients crowd his Hong Kong branch offices to buy newly minted "Deak Dollars," small gold coins that command premium prices because they are stamped with Deak's aquiline features. Other customers stand in line at his 42nd Street outlet in Manhattan to buy gold coins and Swiss franc traveler's checks, which they stash away as investments. At this rate, Nick Deak will be giving Karl Maiden some competition. Still other investors--widows, orphans and the simply frightened--seek Deak for investment advice or put their money into gold, silver or Swiss franc deposits in his banks in Switzerland and Austria. In a dull year he may earn about $1 million for himself. And this has been anything but a dull year.

An eminent goldbug, a professional pessimist, Deak understands the psychology of people who have lost faith in mere money and paper shares. Critics, including many stockbrokers, say that Deak has a great 17th century mind, that his views would make Marie Antoinette look like Bella. Abzug. But his opinions are important, since so many nervous people share them.

"World inflation has reached crisis proportions, only we do not realize it," says Deak, his Bela Lugosi accent echoing his native Transylvania. The demands for federal spending on welfare and defense are so intense that "various measures taken by Government can affect inflation and the dollar, but only very little. I'm afraid that inflation will increase, and eventually our monetary system will collapse and our social structure will change. I went through all this before--in Hungary, Austria and Germany hi the 1920s--and the trend is inevitable."

Deak castigates federal policies--but what would he do if he were Treasury Secretary? He laughs: "The first thing I would do is resign. Bill Simon, a very good man, had that job. He told me that it took him a year to find his way around and about another year to become convinced that he couldn't do anything because of the bureaucracy and the Congress."

If inflation brings gross social change, not everybody will be hurt. Deak calculates that people who possess resources will do well. Farmers will flourish--unless Government steps in to regulate their income. His vested interests move Deak to believe that gold holders will prosper, because he expects the barbarous metal to rise and rise. The Arabs, he notes, are pushing up the price by putting so much of their new wealth in gold. He is less enthusiastic about big gold coins than small ones, which are easier to barter in a pinch. He thinks that silver has even more potential for gain because it has not yet risen as much as gold, and within two years there will be a shortage of silver for industrial use. He dislikes stocks in gold-mining companies because they are taxed; he shuns real estate for the same reason.

"But the best protection of all," says Deak, "is to stay deeply engaged in the system, to ride with the rough waves and hope to stay on the crest." That is a remarkable conclusion for a bear, but Deak explains that people will do all right if they have goods or services or skills to market, for those will always be in demand. The people who stand to suffer are the untrained and the unlettered, which is a most important reason that inflation must be crushed and severe crisis avoided.

Skeptics and optimists may dismiss these views as the ursine musings of just another gold fanatic. But it should be remembered that Nick Deak is a survivor--of wars, inflation and collapses on two continents over half a century--and in difficult times, perhaps the survivors can offer us a lesson.

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