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Who was Nicholas Deak? (1964 Time Magazine Profile)

Alex Constantine - September 16, 2010

Money: The World of Deaknick

Time | Jun. 12, 1964

nicholas deak coin1 250x250 - Who was Nicholas Deak? (1964 Time Magazine Profile)He lives in a Scarsdale mansion in stead of a London flat, and never ever packs a shoulder-bolstered Walther PPK automatic. But there is more than a soupçon of the fictional counterspy in trim, urbane Nicholas Deak, who is the James Bond of the world of money.

Born in Hungary 58 years ago, Deak holds a doctorate in economics, can talk money in five languages, used to work for the League of Nations. A naturalized American, he spent World War II as an OSS agent parachuting into Burmese jungles to search for Japanese prisoners. On a postwar assignment, he sneaked Hungarian boxcars past the Russian occupiers to help rebuild West Germany's railways. Deak still keeps in OSS trim with a vegetarian diet, daily sprints around his own suburban running track, and ski trips with his Viennese wife. From a paneled office (cable address: Deaknick) overlooking lower Manhattan harbor, he supervises more than 100 agents working for Deak & Co., one of the world's biggest dealers in foreign currencies.

Gamble on Change. Last week lines of tourists bought up pounds, francs and yen from Deak's Perera Co., busiest currency exchange in the U.S. and only one of Deak's skein of 20 currency "stores." The tourist trade is a small part of Deak's business; his plumpest profits come from the active shufflings of currencies in crisis. "Whenever countries are not stable," says Deak, "their currencies are heavily traded." Currency speculators and companies operating in inflation-ridden countries such as Brazil or Italy try to conserve the value of their cash by buying or selling "forward contracts" for funds, similar to commodity futures; a speculator who sold Brazilian cruzeiros short a year ago could have doubled his money. Deak trades in the contracts, gambling that fiscal and political changes will work his way.

He also collects rents for owners of foreign properties, buys up blocked accounts at bargain prices, or, on occasion, the inheritance of an heir who has trouble getting his money out of a foreign country. In such cases, Deak is in effect betting that he can get the money unfrozen later or turn a profit by using the funds inside the country. He has the right connections for it. Occasionally, governments buy and sell their own currencies through Deak, creating an artificial demand that boosts the exchange rate and balms national pride.

Constantly operating on the fringe of politics, Deak often gets subtle warnings of impending events. In 1962 millions of dollars worth of Indian rupees that Deak held were suddenly scooped up in Hong Kong, Beirut and Kuwait. They were purchased by agents of the Red Chinese, who used the rupees for folding money when they invaded India soon after.

Holding the Bags. Privately owned Deak & Co. issues no earnings reports. But Nick Deak happily admits that he has more than made good his boast to a wartime OSS comrade that he would open a small foreign-currency exchange, steadily expand and become a millionaire. His route to riches was, and is, tricky. Dealing in all currencies except four that are proscribed by the U.S. Government (Cuban pesos, Red Chinese yuan, North Korean won and North Vietnamese dongh), Deak always risks being caught with funny money. But he rarely loses.

Deak once sat atop a bundle of old Israeli pounds that had been called in by Israel and were thought to be worthless. He managed to dispose of them in —of all places—Arab Lebanon. What happened to the money after it reached Beirut? In Deak's business, one does not ask such questions.


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