My colleague Gene and I have a system for greeting each new city: We sit over a beer and watch the people. This is not easy to do in Socialist cities, however, where there is no entertainment for local money, only for the real money spent by foreigners. Socialist money is not real money, you see. Real money is a medium of exchange that can be used to buy things, whereas the Soviet ruble -- the epitome of Socialist currency -- has been accurately described as a license to forage for goods.

Consequently, citizens of Socialist countries -- including newly ex-Socialist countries -- want nothing to do with their own money. What they want is the kind foreigners have in their pockets. They will do what they can to change theirs for yours, I have found, so it's wise to beware those friendly overtures.

We are in Prague, Gene and I, a city that has no shortage of friendly wine bars, beer bars and small restaurants. In this, Prague is not a Socialist city, but more like the West. The Czech crown -- as the newly named Czech and Slovak Republic breaks free of Socialism -- hasn't quite become real money, but beer is available. The only problem is finding a place to sit.

As we stand in the door of the third consecutive watering hole, wondering how we might find a table, a friendly chap holds out a hand to Gene. "Intercontinental Hotel, yes?" He is short, plump and well-dressed. Middle age has left bags under his eyes, but his smile is positively radiant.

Gene stumbles. "Did we meet last night at the reception?" The worst sin of any business traveler is to forget someone you've met.

The man waves a hand. "Intercontinental Hotel. Check-in." His English is better than our Czech, but not much.

"I think he checked us in at the hotel," I say. "Intercontinental Hotel -- you work there?" The man nods happily. He shakes my hand for good measure. "What you want?" he asks. "Eat?"

"We were just trying to get a beer," Gene tells him.

"Beer? You want beer? You come with me. Good place."

Why not? We're here to meet the people.

Around the corner is a hotel with a large clean dining room, empty except for a Czech family with children. "Sit," our guide says. He knows the waiter, and orders beer for us, wine for himself. "Good beer," he says. "I pay. You my friends." We sit. He has captured us in a net of friendship.

We chat with our guide in a mixture of poor English and poorer German. His name is Josef. He has two children, a son and a daughter. The talk turns serious. He leans across the table confidentially. "How much it costs, you think, to live in Germany 10 days? How many marks?" We puzzle this one over. Neither of us really knows.

"My son," he says, "he goes to Germany. PhD. Goes to seminar, 10 days. Costs paid but not food. How much marks he needs?" We try to figure it out: 10 days ... a hundred marks, minimum, if you live really cheap? Say twice that. A hundred dollars, one-fifty?

Josef sips his wine, then suggests, "Maybe you change money with me."

There it is, the request for real money; it changes everything.

"We don't have marks," I pointout. "We're Americans, not German." He shrugs. "Marks, dollars ... no problem."

We're sympathetic, but we don't want to change money. We don't know whether it's legal (although in post-revolution Czechoslovakia we're not worried about arrest). Mainly, we don't want the crowns. We're in Prague only for a day, and spending a hundred dollars worth of Czech crowns won't be easy. (With local currency bought at street rates, Czechoslovakia, like all of Eastern Europe, is dirt cheap; even at official rates, dinner for four, with wine, in a fine restaurant that caters to foreigners comes to $50.) Crowns, unlike dollars, aren't money outside Czechoslovakia, and when we leave we won't be able to change crowns into dollars unless we can show a receipt from an official exchange bank.

"No, I don't think we can do it."

Josef's sad Slavic eyes are like a spaniel's. "My son ... he need currency." We waver. It's not, after all, much money. Josef is encouraged. "You pay me," he suggests, "I pay hotel for you."

"Will the hotel take crowns?" If it will, it's the first hotel I've seen in Eastern Europe that will take Socialist money from a foreigner. Hotels, whether run by foreigners or the state, want real money.

"Sure, maybe. I fix it for you."

If they will, it's okay by us. "What hours do you work?"

"Ten o'clock at night, to 6 morning."

"Okay. I'll come tonight, and if the hotel will take crowns, we'll do it."

He frowns. "Not so easy. You give me money, I fix it. Tomorrow morning, you go, everything okay."

Suspicion creeps up slowly; but it comes. "I'll come in the morning, Josef," I say. "Before you leave work. We'll do it then."

"My son, he goes to Germany tomorrow early -- 6:30. I have to give him money tonight."

"I'll see you at the hotel tonight, then."

"I won't be at hotel. I work tonight: 10 to 6."

"I thought you worked at the hotel?"

He pauses, doesn't answer.

The waiter comes with our bill. Josef offers to pay, but doesn't fight for it. I pay. Twenty crowns -- about 60 cents in real money. As we part outside, Josef pleads, "Maybe you give me 10 dollars?"

We don't.

Discussing the conversation later, it seemed clear enough that Josef didn't work at the Intercontinental Hotel. He just followed our suggestions and built a story around them, until he forgot his lines. How did he know we were staying there in the first place? Either he saw us there, or guessed -- we weren't far from it when he spotted us, and there aren't many other hotels in Prague for Western businessmen.

But why didn't he just ask us if we wanted to change money?

Probably because we'd have refused a direct approach. Kids on the street had been asking us all afternoon. We'd refused them all; we didn't need the crowns. Although it didn't work with us, I'd guess that, over a number of transactions, sympathy gets Josef further than the direct approach would.

The Czech crown isn't fully real money, yet -- the official exchange rate is about 30 crowns to the dollar, but the lads on the street are offering 40. The difference may be thought of as a tax -- or, by the more cynical, as government theft. The Czech tax/theft rate, at 33 percent, is moderate compared to some. In the U.S.S.R., the government banks will give you six rubles for a dollar; but the offered rate on the street is 15, and a careful shopper can get 20 or 25 -- which means the government bank is keeping up to three-fourths of the real value of your dollar. The people's eagerness to do an illegal money swap is understandable.

The rate spread in Czechoslovakia isn't high enough to be tempting. The U.S.S.R. is a different matter, but keep in mind that money-changing, or even paying in any foreign currency, is a crime in the Soviet Union. Few Westerners have been arrested for playing in foreign money; but some reportedly have been, and recently.

The search for real money colors all contacts in Eastern Europe, the land of "controlled currency," and especially in the U.S.S.R. Cab drivers, waiters, all the people a traveler meets want real money.

Approaches come in all kinds. The usual one in Moscow is for a young man on the street to ask you what time it is. This gives him a chance to check your wristwatch, to see if he wants to buy it. If it's digital, he doesn't. Old-fashioned watches are the thing in Moscow. Whether or not he buys your watch, the next question is, "You want to change money?"

Moscow on a winter's evening. I'm walking alone along the Moscow River, from the Mezhdunarodnaya Hotel, where I've just had dinner -- a roast chicken in the German Bierstube -- to the hotel where I'm staying. (Yes, of course I'd rather stay at the Mezh, but on short notice you can't get in there.) Light snow is falling. The only person in sight is a man on the other side of the street, coming toward me. He crosses over ahead of me. He's well dressed, in a fur-collared cloth coat and a hat that could be all mink. As we pass, he looks me over. I hear him turn behind me and walk in my direction. Nervous, I shift closer to the embankment rail. He's not a policeman. KGB? He comes up beside me. "Do you want to change money?"

I start to say no, but change my mind, curious. "How much?


"I can get that at the bank," I say. How could he not know that? Or does he think I'm fresh off the plane and don't know what the ruble is worth?

He shrugs. "Okay, 12."

"Most people offer 15."

"15 okay."

"No, I'm not really interested."


"No thank you."

"I go Turkey on bizniz," he says. "I need dollars. One hundred dollars, 3,000 rubles."

"No thank you."

"Okay." He turns and walks back the way he was going.

But you get the same question from your cab driver, and the maid in the hotel who takes your laundry, and the waiter, and the kid selling Gorby dolls on the street. And whether or not you want to change money, they want to be paid for their services and goods in real money.

What to do?

You can pay in Socialist money, of course, but you may not get much for it. Getting a cab for rubles in Moscow, for example, is a slow process. How long can you afford to wait?

Some people take the global view: To pay in dollars is to strike a blow for the free market. It's economic reform at the lowest level. The sooner the dollar economy arrives, the better, and the cab drivers are getting there as fast as they can.

The global view may be correct; but it's still illegal.

Then there's the alternative of paying in goods. This, apparently, is not illegal. But it raises the fundamental problem of any barter transaction: Not everyone wants the same goods. Your hotel maid would give her soul for cosmetics; your cab driver won't cross the street for them.

There is, fortunately, an answer: a product light enough to carry, inexpensive enough to suit small transactions, and fungible, so that the recipient will always take it, if only to trade for something he or she likes better. The answer is Western cigarettes.

I have not compared brand preferences throughout Eastern Europe, but Marlboros are the Soviet standard, where they've become an alternative medium of exchange. I suspect that this is less a matter of taste than of the convenience offered by standardization. Just as your money-changer will take marks or yen but quotes in dollars, cab drivers quote their prices in Marlboros but will take other brands.

The current cigarette-to-dollar exchange rate in Moscow, incidentally, is two packs to $5. Two packs will get you a cab ride across downtown Moscow; five will take you anywhere in the city. Carry a couple of packs in your coat pocket and a carton in your briefcase: You'll never be friendless.

I suspect Josef would have swapped Czech crowns for cigarettes too; but we didn't need the crowns.

William E. Holland is a lawyer with the firm of Chadbourne & Parke in New York.