The Redacted Sherlock Holmes - Volume 4 Read online

  This was the first time I could recall Holmes asking me a question of a type which suggested he hoped that I might know something that he did not know already. “Well, of course,” I said, “the King of Bohemia used that name when he came to consult with us about Irene Adler. When I came to write down the story that became A Scandal in Bohemia, I originally spelt the name with a C, but I found out that Germans generally spell it with a K rather than with a C and that was why I used the spelling K-R-A-M-M in the published version of my story. That was also why I went to the Ks when Cramm first introduced himself and he was kind enough to correct me. I don’t imagine you keep false names in your archives.”

  I could see from the look on Holmes’s face that I had only made what was troubling him more troubling still.

  Soon it was Friday 1 September. That morning we heard that the Germans had attacked Poland and that night a blackout was imposed for the first time. In the warm late summer evening, Holmes and I sat in our back garden.

  We had done this many times before, since my arrival two years previously, but we had always had the light from the house to prevent complete darkness. Now we had only light from the stars as even the smoking of cigarettes and cigars outside was banned. The only thing that told me that Holmes was still there was the smell of his pipe, as outdoor smoking of these was still allowed as long as the bowl was hooded.

  “I suppose, Watson,” said Holmes, “that I owe you an explanation of my behaviour over the last few weeks.”

  “If I may say so, Holmes,” I replied, “you were often absent in body or in spirit in our halcyon years in Baker Street and your behaviour now has reminded me of our time then.”

  “You will recall the case of Irene Adler - the woman. You were not sharing quarters with me at the time of the case in 1888 and so you were not there to observe what happened next. After the flight of Miss Adler and her new husband, she wrote to me and I joined her for a brief spell during her honeymoon when her new husband, the barrister Godfrey Norton, had to return to England to seek advice on the medical complaint that subsequently killed him. I must disclose to you that Cramm and his wife are not the only people to have had an irregular assignation on their honeymoon.”

  As Holmes’ pipe was hooded, I could not see whether the tobacco in the bowl had gone red, but the waves of tobacco smoke which wafted over me told me that my friend was in the grip of a powerful emotion.

  “So,” I replied, thinking that I might learn more if I did not show any great surprise at the revelation of his relationship with Miss Adler, “you had an irregular dalliance with the adventuress Miss Adler on her honeymoon. What has that to do with the Cramms?”

  “Only that Cramm or von Cramm spelt with a C at the beginning is a highly unusual name in Germany. I can find no family records relating to a von Cramm beyond the birth certificate of Frau von Cramm, a copy of which I had sent over to me with what I suspect will be the last post that will be received in this country from Germany for a very long time. No parent at all is named on it, but the date of birth is nine months after my visit to Miss Adler. And it was at that time I sent Miss Adler your first draft of the story you call A Scandal in Bohemia, which contained the name von Kramm, although in the draft I sent, the name was spelt with a C.”

  “And was Miss Adler personally wealthy? Being an amateur tennis player and travelling round the world requires significant personal wealth as Gottfried von Cramm himself stated.”

  “She was an adventuress who mingled with royalty and could afford to live at Bryony Lodge - a bijou villa in a fashionable part of London. The swift death of the wealthy barrister, Godfrey Norton, will have further augmented her wealth. There cannot be many wealthy independent women in Germany who could afford to let their son play tennis full time.”

  “So what will you do now?”

  I could hear Holmes shift uneasily in his seat and there was a long silence.

  “I am not sure that there is much I can do. Even if I wanted to go to Germany and introduce myself to Frau von Cramm as her father and to Gottfried von Cramm as his grandfather, I am not going to be able to do so for the foreseeable future. I must, I suppose, comfort myself with the thoughts of the beauty of Frau von Cramm, the conspicuously honourable behaviour of her son, and the thought that I may survive the gathering storm and see him again on the tennis court when it eventually abates.”

  On Consistent Luck

  After my second marriage and return to medical practice in 1907, I continued to assist Holmes in his work although with reduced frequency. This was not because of any diminution of interest on my part in my friend’s work but rather because my energies were fully engaged in building up my new practice in Queen Square. Holmes, too, became used to handling cases without me, and I find no more than three or four cases in my notes for 1911. Holmes particularly valued my assistance in the resolution of issues relating to some of life’s more worldly matters as his own lifestyle, with its unique mingling of bohemianism and asceticism, deprived him of some of the insights afforded to me by my more orthodox modus vivendi. My interest was accordingly piqued when I received a note from him in late 1911 carrying the message: “Have been asked by the Chancellor of the Exchequer, Mr Lawler, for an appointment on a matter which he has not disclosed, but which he describes as mundane in the extreme. Could you spare some time?”

  Mr Lawler had petitioned Holmes on three previous occasions before rising to the lofty position of Chancellor, and his commissions had related to the tobacco industry, climate change, and corporate tax avoidance. All three consultations had delivered the result which the slight and inscrutable Mr Lawler had sought for his political party while also delivering to him significant personal gain. It was at the end of the matter from 1907, which I have related under the allusive title “A Dutch Sandwich,” that Mr Lawler had ascended to his current elevated position, although achieving this elevation had not appeared to be the objective of his original commission. The interest to which I have referred above was accordingly mixed with a certain wariness as to where Mr Lawler’s petition might lead us.

  I arrived at Baker Street to find Holmes surrounded by all his normal accoutrements. A Bunsen burner blazed away on the table, heating some unidentifiable material in a test tube; from the test tube, there issued a particularly odoriferous gas, which in turn mixed with the smell of strong tobacco; the violin case lay open at the side of the armchair; and propped up against the leg of an occasional table were books on semiotics, apiculture, and taxidermy.

  Holmes welcomed me warmly and said: “Requests for an interview from Mr Lawler have never proved less than stimulating. He has been Chancellor for some years now. If he is truly as ambitious as I think him to be, he must be looking for a way to become Prime Minister.”

  A few minutes later, Mr Lawler - the smoke from a small cigar trailing after him and his customary opera hat on his head - appeared at the door. He was accompanied by two other men. The first was introduced to us as Alfred Marshall, a wispy-haired professor of economics at King’s College Cambridge; and the other, a much younger man with a moustache, as John Maynard Keynes. The latter carried a large, flat, wooden case for which I could not immediately fathom a use.

  Mr Lawler opened proceedings in his customarily cordial fashion.

  “It is good to see you again, Mr Holmes, and you too, Dr Watson. Professor Marshall and Mr Keynes are two of the foremost economic thinkers in the country. They, and we in the government, are much concerned by a series of advertisements that has been appearing in the national press.”

  “And what are these advertisements for?”

  “They are advertisements for the sale of household insurance.”

  I could see a look of bafflement and disappointment spreading across Holmes’s face. After a long pause, he finally said, “During all the many years of my association with Dr Watson, I have been concerned about the degeneration of my pract
ice into an agency for recovering lost lead pencils and giving advice to young ladies from boarding schools. I think, however, Mr Lawler, that the matter that you are bringing to my attention has touched bottom at last. What do you feel, Sir, that I can contribute to a discussion on a topic such as household insurance?”

  “I will leave the exposition of our concerns to my two learned colleagues,” said Lawler, completely ignoring Holmes’s plaint. “Professor Marshall is used to presenting complex information in a way that facilitates comprehension by his students. and he will be ably assisted by young Mr Keynes.”

  The latter leant down and opened his case to reveal a portable easel which he proceeded to assemble before us. Rather than mounting a canvas, he spread a large piece of paper onto the easel which he secured with two portly bulldog clips. He then positioned several bottles of ink below the paper, into each of which he placed a quill. When his preparations were complete, he stood expectantly to attention.

  Professor Marshall rose, tipped back his head, and proceeded to address us as though he were addressing a lecture hall of students.

  “I am the foremost economist in the country,” he boomed, “and I have produced many of the world’s great treatises on economics - The Economics of Industry is the best-known example and is a landmark work of its kind. Mr Keynes is my protégé, and although only twenty-eight, he is editor of The Economic Journal. As part of my work, I have propounded numerous theories about monopolistic supply, perfect competition, marginal revenue and marginal cost. I am particularly known for my graphical presentation of revenue and cost behaviour.”

  I think Marshall was about to continue to enumerate his qualifications, but at this point Keynes whisked a quill out of one of the inkpots, turned to the board and started to draw the axes of a graph on the paper. Against the vertical axis of the graph he wrote the words “Price/cost.” and against the horizontal axis he wrote “Supply.”

  “In a market governed by the normal laws of supply and demand,” Marshall proclaimed in a declamatory tone, “each additional supply of a product delivers a declining marginal revenue compared to the previous supply. That is to say, that if the first unit of output is sold at £10, then the second will be sold at £9 and so on.”

  With a dramatic flourish of his arm, Keynes drew a sweeping curve in black ink moving downwards from left to right on the graph. He put the quill back into its pot and waited expectantly for Marshall to continue.

  We might as well have been at the back of a lecture hall, so loudly did Marshall continue to address us. “Meanwhile the marginal cost of each additional supply increases. That is to say, that if the first unit costs £1 to produce, then the second will cost £2.”

  Keynes pulled a quill from a different inkpot and drew another extravagant curve, this time in dark blue. This moved upwards from left to right so that it crossed the first curve at a point about halfway along the horizontal axis.

  “Transactions will continue,” expatiated Marshall, “until the marginal cost of the last unit of output supplied is greater than the marginal revenue that it generates.”

  Keynes stooped to pick out yet another quill from the row he had assembled on the easel and, with infinite precision, drew a small cross in red ink at the point where the black curved line and the dark-blue curved line passed over each other, to lend emphasis to what Marshall was saying. Marshall added for additional emphasis as he concluded the first part of his exposition: “To the right of the point on the horizontal access which Mr Keynes has been kind enough to mark in red, marginal cost per unit exceeds marginal revenue per unit. Thus, in respect of transactions to the right of the intersection point, further supply destroys value for the supplier and makes no economic sense.”

  I could see that Holmes, as had been the case in each of the three previous matters brought to our attention by Mr Lawler, was struggling to see the point of these initial discussions. Nevertheless, he held his counsel, and, after a pause, Marshall continued:

  “Insurance is a sector of business which should accord well with this economic model. Some risks for insurance are lower than others and so present a low potential cost to the insurer,” - Keynes drew a barely visible column outlined in green in the bottom left-hand corner of the graph - “while others present a high risk and hence a higher cost.” Keynes draw a much larger column also outlined in green immediately beneath the red cross. “Insurance is a business where the consumer buys the product out of a sense of prudence and duty. He has no product packaging to which to feel attached or any sense of loyalty to an individual insurer. He is merely buying a commodity annually, the benefit of which he is unlikely ever to see in any one year if at all. Indeed, the average householder makes no more than one claim in his entire lifetime.”

  “Pray continue,” said Holmes, who, to my surprise, was now sitting bolt upright and seemed to be showing the keenest interest in Marshall’s scholarly presentation.

  “For the last several months, there have been daily advertisements in the newspapers placed by an organisation called The Price Comparer. These show the prices charged for home insurance by the major providers. Although there are, on the face of it, many providers of insurance, they all represent the public face of the three companies that dominate the insurance business. According to the theory I have outlined above and which no one has ever queried, the publication of consumer prices from the major insurers should result in the elimination of profitability in the industry as home owners switch to the cheapest provider, which should in turn lead to a progressive reduction on prices.”

  Keynes pulled out yet another quill and drew a new marginal revenue curve in a bright mustard yellow on the chart. This new marginal revenue curve started at a much lower point on the vertical axis but its curve had the same downward gradient as the marginal revenue he had drawn with such alacrity in black. Its lower starting point on the graph meant that it crossed the marginal cost line at a much earlier point on its course, representing a much lower number of transactions where marginal revenue would exceed marginal cost.

  Marshall continued to address us as though he were in a lecture theatre.

  “As there is no loyalty by the consumer to any one provider of insurance, all business should migrate to the cheapest provider, and this provider should barely be able to cover his costs.”

  “And how have the insurance companies reacted to this?” asked Holmes.

  “One would have thought that they would regard such clarity on price as a threat to their business, but they do not appear to do so. They have not sought to silence The Price Comparer, and indeed their chief executive officers have all publicly welcomed the extra transparency that The Price Comparer has brought to the pricing of household insurance.”

  “And what has happened to the profitability of the three companies?” asked Holmes.

  “The annual accounts of the three insurance companies show no sign of a diminution in performance. Indeed, all three companies have just announced record annual profits and this has contributed to the surge in share prices which has led the stock market to rise to its current peak level.”

  “And who pays the costs of The Price Comparer?” asked Holmes, turning to Mr Lawler. “It will necessarily incur costs of its own to gather the information and to publish advertisements in the national press.”

  “The Price Comparer,” replied the Chancellor, “is a division of International Publications, a so-called media organisation which publishes books and magazines as well organising publication of information in organs which do not belong to it. The Treasury has conducted its own enquiry into how The Price Comparer is funded. This enquiry has established that The Price Comparer’s costs are met by contributions from the insurers. These are calculated on the basis of how many requests for information about insurance are received at the insurers’ offices from people who come bringing one of The Price Comparer’s advertisements.”


  “And is The Price Comparer profitable?” asked Holmes.

  “It is not possible to see the accounts of The Price Comparer as an individual entity as its operations are not separately reported amid the plethora of financial data about itself that International Publications releases. Nevertheless, it is clear that it is prepared to invest significantly in its success. It advertises extensively in all the newspapers, it is located at International Publications’ prestigious premises in Regent Street, and it has a marketing budget of sufficient size that it can give away soft toys to people who avail itself of its services. The latest of these is a toy cat, which is given to anyone who buys two years of insurance in one transaction, based on the advertisements it places.”

  “I am surprised that the provision of a mere cat in the form of a toy could be sufficient motivation to alter consumer behaviour,” murmured Holmes half to himself. “Presumably,” he continued, addressing Marshall and Keynes, “the insurers offer lower prices to people who come to them direct rather than consulting first with the advertisements from The Price Comparer, as a quote from The Price Comparer necessarily entails a higher cost to the insurer.”

  “No,” said Marshall, “on the contrary, the lowest price offers are made to those who bring The Price Comparer’s advertisements with them to the insurance companies’ offices.”

  “So that means that the insurer is offering its best price in circumstances which result in it incurring its highest costs?”

  “What you say, Mr Holmes, is of course true. The insurers say that they get such a large volume of their business through The Price Comparer that they are compelled to operate in this way. They would lose significant market share if their offerings were not visible in the advertising by The Price Comparer.”