When Rep. Jack Kemp (R-N.Y.), who by instinct is a "gold bug," sought help last year in pushing for more stable exchange rates, he solicted and got cooperation from Sen. Bill Bradley (D-N.J.), with whom he shared an interest in tax reform.
Bradley rejects a gold standard, but believes that the global trading system demands a greater stability in exchange rates. Together, they turned to David M. Smick and Richard Medley, who had set up a consulting business in February 1985, and asked them to organize their "Congressional Summit on Exchange Rates and the Dollar" last November.
"We have no ideological fix," Smick said in a Zurich interview, "but we think there is bipartisan sentiment in the United States to do something about exchange rates after years of benign neglect."
Nonetheless, the list of invitees to the conferences they organized in Washington and Zurich reflects their bias in favor of some greater fixed relationship.
"Kemp-Bradley I" in November got wide press coverage. The timing was good -- just after Treasury Secretary James A. Baker III's success with the Group of 5 at the Plaza Hotel in New York, which produced a coordinated exchange rate intervention. Baker decided to give "Kemp-Bradley I" his official blessing with a formal appearance, and Deputy Secretary Richard Darman held an on-the-record discussion of the pros and cons of "target zones" to keep exchange rates within limits. A rough consensus favoring target zones seemed to emerge.
One feature of the November session was a reception at the Federal Reserve Building, with a cluster of governors and other Washington officials, including Baker, Bradley, Kemp and other officials, mingling with the group.
"Smick and Medley are smart operators," said an admiring PR man in New York. "Imagine getting the Fed to put on a reception for a private gathering. That -- and Baker's participation -- gave it a semi-official cachet."
More than 60 corporate and banking sponsors kicked in with contributions of several thousand dollars each for the Washington meeting, and another dozen "founders" made even larger contributions to finance costs that Smick and Medley estimate at $300,000 to $400,000.
The "founders" in November were: Citibank; Bear, Stearns and Co.; Nomura Investment Management Co. Ltd.; Fidelity Management and Research; Dai-ichi Kangyo Bank Ltd.; The Barrington Group; First Chicago Investment Advisors; Alliance Capital Management Corp.; Provident Investment Council; and RLO Inc.
"Smick and Medley made a pile of money in November," said one contributor who put up $5,000 for his company. "I estimate they made at least two to three times the cost. But that's okay, they're in business to make money. I assume they came out all right in Zurich, too."
Smick and Medley refuse to name their clients, acknowledging only that Citibank is one of about 25. They refer to their business income as "modest." Asked if it is in seven figures, Medley said: "Nowhere in that league." Their professional staff now numbers seven.
At a press conference prior to the opening session in Zurich, Smick and Medley were grilled by reporters on the source of the financing for the Zurich meeting. They responded that the money came entirely from Credit Suisse in Zurich, and Credit Suisse First Boston Ltd., U.K., but did not divulge the actual amount.
According to Smick and Medley, virtually all of the more than 200 participants and guests at Zurich, plus some 50 journalists, paid their own way -- the few exceptions being some academics and congressional staff members.