Let's Make A Deal

The dealers are eating apples at Riverboat Joe's in Monroe, New York. Riverboat Joe Dierna left the city four years ago to set up an Upstate real-estate brokerage office. He hands out shiny Delicious and they start munching: Elliott Weiner, who is Walter Schneider's country lawyer; Ed Kourt, who is Walter Schneider's financial officer; and Walter Schneider himself, who is a very big dealer. He is, shall we say, preoccupied. He has offered half a million dollars—all cash—to Hob Schoonmaker, and Schoonmaker has turned him down. Schneider's mind is working clicketyclack. If he revs it up any more, the gears will strip.

"Walter," says Ed Kourt, patiently, "he's made up his mind. Six hundred cash and you pay Jeffrey." Jeffrey Starin is the broker on this particular transaction. Riverboat Joe is just the host. Schoonmaker is an old friend of Starin's. They pal around at the Dutch Pantry in Newburgh.

"Walter," says Elliott Weiner, patiently, "what's the difference? If the deal is good, what difference does a hundred thousand make?"

Schneider doesn't respond. The lawyer can say what's the difference because it's not his hundred grand. It's Schneider's.

Schneider clears his throat once, twice.

"All right," he says to Kourt. "Offer him six hundred. Three hundred cash and three hundred in an eight-year note, which I'll sign personally. I want him to pay the broker. And I want an option on the lumberyard for five years at two hundred thousand and another five years at three hundred thousand. And I'll give him six percent on the mortgage." He clears his throat a few more times. He has been computing the value of money: cash going out in repayment of mortgage debts (which the dealers call amortization) and interest payments; and cash coming in on money Schneider can lend out at a higher rate; computing the value of rents, the value of assets he is buying that he can sell off for immediate cash return; computing this, computing that, computing the other thing. Now there are three liberty bells showing in his eyes. He has completely altered the deal without giving up one cent more. "The other way was half full," he explains. "Now I switch to another glass and it's half empty. But it's the same amount of water." He looks pleased with himself. He gets up briskly onto long pipestem legs and starts out. He has already turned his mind elsewhere. This Schoonmaker deal—in which Schneider will buy out the largest builder in the four-county area—is only one of several Schneider has cooking in Orange (continued on page 150)Let's Make A Deal(continued from page 143) County. He believes that Orange County is going to be hot in the next decade, so he is buying it up now. He has lots in Blooming Grove, in Cornwall, in New Windsor, in Monroe. For the purchase of the Schoonmaker property, and for dealing with country brokers in general, Schneider wears what he believes is a rural outfit: new corduroy trousers, beige knit golf shirt, new desert boots and fur-lined camel's-hair sports jacket. Thus attired, he departs Riverboat Joe's munching his apple.

Schneider's name is known to few, but his business dealings affect us all. He owns the shopping centers we buy in, the apartment buildings we live in, the office towers we work in. He is the Landlord. There are not too many like him in the United States, no more than perhaps 1000, men with considerable real-estate holdings whose risk money sustains the building industry.

Schneider's business is a mystery to most of us. Reports trickle down from the dark interior of The New York Times of such and such a property sold for so many million, with this much down (down?) and that much of a second mortgage on it (is that better than a first? is there a third?) with ten years, terms, amortized. Ah, amortized!. Mystery of mysteries, a-morta, priest of no-death, of cash flow, year in, year out, life-giving cash flow.

Walter Schneider sits at his desk and writes numbers on a lined legal-size yellow pad. He is tall and very thin—a long-faced man whose posture is habitually one in which his thin shoulders appear to be wrapped protectively around his sunken chest, as if in retreat from some anticipated incursion. His walk is a shuffle. He is seated, hunched forward above his desk; his face is animated and expressive. When doing business, he puts on a competitive mien they don't see at home: He drops his eyeglasses down near the tip of his nose, and the intensity of his thought breaks up into a voracious smile as he scratches his way past mortgages, encumbrances, liens and the like to...well, to money. Walter Schneider makes money. He does it, for the most part, by organizing his deals so that he puts in a minimum of cash down, and covers the mortgage and interest payments, plus operating expenses, plus a 10 to 12 percent return, with the income generated by the property. That's it. That's all there is to it.

A former business associate of his provides a blunt but comprehensive appraisal of the man:

"He has balls. He thinks about a year or two ahead. He's busy now, but he doesn't care about now. He cares about a year or two ahead. He's a deal freak. And he's in a class by himself."

Schneider made his first million in real estate by the age of 35 (he is now 52 and more millions further along) and, as he is the first to note, the bigger he got as a real-estate investor, operator, principal—which are all names used to describe what he does—the less it had to do with real estate. Eventually, it got to be all numbers, and now he lives and works in the same part of town where cabalists and dealers hang out: where myth and reality intertwine.

The economist Thorstein Veblen noted the connection between the accumulation of private property and predatory war; between ownership of things and ownership of women; between barbaric aggression and the economic behavior that "bears the character of a struggle between men for the possession of goods." Schneider neither disagrees with this view nor finds the consciousness it represents difficult to defend.

"I know I'm aggressive," he says, clearing his throat. "Listen, it's the truth. It doesn't bother me. I make a lot of deals, which means I do a lot of negotiating, which means I play a lot of tennis matches, lobbing back and forth, all the time, and I am loving it. You know why? 'Cause it's one on one. It's me against the other guy. I can't have any help. That's where the ego factor comes in, and believe me, ego is the biggest factor in the entire business, because it's not only how I serve to the other guy. It's also how I handle his serve back to me. I gotta know what position to be in to get his return. And also be thinking, where should I try to kill it next?"

Schneider is a restless, hungering man who frequently changes his business address. He has been president of three public companies and a high executive officer in two others. At present, he has his offices in Great Neck, Long Island. In addition to the agents throughout the country who manage the properties, there is an office staff of four: a secretary, a financial officer, a man to handle the apartment building–shopping center–office building part of his portfolio, and a roadman to scout out land offerings for the part of Schneider's operations he calls the land-bank business. Schneider "manufactures" land for builders. He buys land, subdivides it for one-family homes, gets the local planning boards to approve the zoning, makes road improvements, puts in water and sewers, and then resells it to builders. The average builder, according to Schneider, does not have the funds to do this and, anyhow, is more interested in getting a finished plot to build on.

How did he settle on Orange County? To begin with, he followed the roads (a cardinal rule in real estate) and came to the realization that there were only a few places, within an hour and a half, available to all those restless New Yorkers anxious to escape the decaying inner city. He could imagine a weekend fleet of Chevies and Plymouth Furies full of cops, or junior bank executives and their families, making their way up the Palisades and onto the Thruway and then west onto Route 17 to Monroe, say, and getting off at exit 130 and seeing all that grass and sniffing the fresh air, and finding it good. New industry was coming into the area: Avon, for example, into Cornwall with 1000 new people. There were also technical factors. The Metropolitan Transportation Authority plans to run a high-speed spur into Orange County, to link up with Newburgh's Stewart Airport, whose main runway is presently 8000 feet long. The M. T. A. hopes to lengthen it to 12,000 so it can accommodate large commercial jetliners. Environmentalists are opposed, but Schneider discounts this opposition.

"They can't stop it," he insists. "It's been funded, there's the authority for it, etc., etc." When he wants to give four solid reasons but can think of only two, he will pad out, for rhetorical body, with etcs. "It won't be a big airport like Kennedy, just a supplementary airport. The key is: It's funded, you see. All the freight forwarders have bought land there to put up freight terminals. All we have left is the ecologists making motions in Federal court to stop it, and they can't stop it. It's set. The M. T. A.'11 run on an existing line. You gonna stop them running on an existing line? An hour to midtown. They can't stop it."

Information, the ability to ingest it and appraise it quickly (he reads several papers daily, the newsmagazines, the trade and industry journals, Fortune, Forbes, the lot), a ready fund of more than $1,000,000 in liquid assets and the willingness to move quickly enabled him to accumulate 600 lots in Orange County in a period of four months. This is, he estimates, the equivalent of $3,000,000 worth of sales by the end of 1974.

The very same traits, on the other hand, create a personality profile—brusque, fast-talking, assertive, opinionated and assured—that provokes a certain amount of irritation, suspicion and, yes, fear. Schneider is realist enough to know this about himself.

"If I could do it the other way, I'd be ten times as rich. I don't come across with sincerity. In other words, I'm very blunt and candid. That's a fault I have, of not being able to give the appearance of a conservative-type guy. Or, sincere would be a better word."

Schneider's inability to appear sincere is causing him trouble on the Schoonmaker deal, in which he is buying a large, active building company, together with approximately 400 lots (totaling (continued on page 173)Let's Make A Deal(continued from page 150) 200 acres) already approved by town boards, plus a business property including offices and a lumberyard, an eight-acre undeveloped commercially zoned piece, a water company in Wappingers Falls and assorted equipment. There is also a model park: 11 model homes on a model street, each model home decorated with model furniture. A fellow coming out of a city apartment gets a feeling of what things are going to be like after he buys. It gives him a foretaste of his new style of life.

The Schoonmaker company is going to be protection for the lots Schneider already owns, because he knows one thing: "People grow faster than land, but interest grows faster than people. All the wheeler-dealers say people grow faster than land—it's gotta get better, you can't lose on land. But bankers and people who put up money know that's not true. I'm also a lender—I give second mortgages. I know that interest grows faster than people. Every day, every day. Interest can eat you up."

Besides, local town boards could kill you with zoning changes, and Orange County wasn't going to be able to support all these new people wanting to come in, these firemen and public school teachers and civil servants who got robbed once too often. There weren't enough schools yet. They'd have these kids going on triple session. That meant Schneider had to get in there quick, manufacture his lots and then...build the houses himself. So he called Jeffrey Starin in Newburgh ("Jeffrey Starin the Real Estate Baron") and he said: "Listen, Jeffrey, I can't keep buying land unless I use it up. I'm not buying to speculate. I'm filing plans, I'm getting subdivisions, I'm gonna put up bonds—and I'm gonna be paying interest. I want to buy a local builder."

As it happened, Starin knew of a builder named Hob Schoonmaker, who wanted out. Starin set up a meeting in his office in Newburgh and four days later, Schneider was tooling Upstate in his Mercedes 300. He couldn't bring himself to buy a Mercedes until his recent United Jewish Appeal Realtor's trip to Israel, when he saw how many of these German-made cars they have there.

The luxury car is one of the few visible signs of Schneider's vast wealth. As the only child of an immigrant family with roots in Russia, it was naturally assumed that he would work very, very hard, go to college, work his way through, get a job and then work very, very hard. Except that he is worth several million dollars, that is just what he does: He has a job (making money) and he works very, very hard. Schneider was taught habits of industry and thrift that are with him still. He has no inner reality to correspond to his wealth. His memories are of failure and of want, of intense struggle and of an all-consuming commitment to survival.

In 1933, Schneider was walking down Ashford Street in Brooklyn, a boy of 12 or 13 on his way to P.S. 158, and came upon a scene that embedded itself in his memory. Depositors were lined up outside the United States Bank. They were lined up to get their money out, but the money wasn't there. "I'll never forget it," he says. It is the most vivid picture of his childhood and early years: the failure of the United States Bank.

He has another memory: A class of '42 Queens College graduate with a bachelor's in economics, he is taking his master's at Columbia, in accounting—16 credits—at 116th Street in Manhattan. His teacher, Professor Roy Kester, has gotten him a job teaching accounting at Brooklyn College. And his home is in East New York, near Brownsville. Because of the vagaries of the New York subway system, it takes him an hour to go from any one place to any other in this triangle, so he is living at home and studying in Manhattan and teaching in Brooklyn, using up three hours a day in the subway, and playing his drums four nights a week at bar mitzvahs and Italian weddings to make a few dollars. "I worked my way through school playing the drums. My father used to meet me at the New Lots station at four a.m. to help me get the drums home."

Schneider remembers his father as a hard-working man who had very little time to give to his son and who, because of his poverty, couldn't assert the normal paternal control over his son's destiny. "He couldn't tell me to be an operator, which is what he was. An operator sewed dresses in a ladies'-wear company. He was away at work all the time, six days a week. We never talked. My mother was the dominant one in the family. She dominated me, she catered to me."

But he did learn his style of dealing from his father, who would walk into a store on Delancey Street and when the man would ask $60 for a coat, would say, "I'll give you thirty." The man would say, "I'll take fifty." His father would say, "I won't pay it," and he'd walk out the door. That was the critical skill: being able to walk out the door. The man would chase him and coax him back into the store with an offer at $40, which the elder Schneider took to mean he could make a final bid of $38 that would get him the coat. That was how he made a deal.

Schneider first got into real estate in the late Forties after a successful accounting career that had begun, inausiciously, with him in his overcoat in the dead of winter in a used car on Artie Finfer's lot doing Artie's books. Artie advised him to marry a rich girl. Instead, he married a pretty brunette named Charlotte Ecker and got rich on his own. They now have three teenaged daughters. It was obvious, Mrs. Schneider says, that he was a man of determination, who was going to get exactly what he went after. He became a C.P.A. in the S. D. Leidesdorf Company and when He had accumulated a few accounts, opened his own shop. He got into real estate entirely by accident, and on a very high level, by helping to syndicate a major Manhattan office building; that is, bringing a large number of amateur investors into the deal as limited partners with a fixed and regular return. At first, syndication was very profitable. Later, as it became harder to find suitable properties, many speculators turned reckless. Investors lost their shirts and syndication got a bad name.

"The first really big real-estate syndication was Larry Wein's syndication of the Toy Building on Fifth at Twenty-third. That was in the late Forties. At the time, I didn't even know about it. I was an accountant. I had an office, with a partner, at 570 Seventh Avenue. We were subletting rooms from a law office and during the tax season, we needed an extra room. In the office next door was a man named Reuben Horowitz, a real-estate old-timer, who gave us a room. One day Horowitz walked in and said he had bought a contract from Lou Glickman on 42 Broadway, a major office building. He wanted to know if we could raise $1,200,000. I won't make it sound difficult. It was easy. My partner and I sat down on opposite sides of a desk with two phones and, to my surprise, within two days, calling just our accounting clients, we had pledges for the entire amount. So we syndicated 42 Broadway and that was how I got into real estate. I was twenty-nine and didn't realize what I had done. We did a few more syndications with Horowitz, and I learned one very important thing from the man: Never box yourself in. Take your profit quickly or take your loss, if you have to, and go on to the next deal. There is no such thing as the last deal. Move on. And don't overconcentrate your assets."

A list of Schneider's past and current real-estate transactions would include some of the most prestigious names in the American real-estate market (Harry Helmsley, N. K. Winston, Lou Glickman, Bill Zeckendorf) and would run several pages long. Schneider guesses that he has been involved in something like 300 to 500 deals, the figures for which linger in his memory. "Oh, yeah, the Cantor job. I bought nine hundred apartments in Queens for nine million: two hundred sixty thousand cash above mortgages. It gave me two hundred fifty thousand a year depreciation. I lost sixty thousand the first year before I rented it. Then it turned around and repaid me all my losses and gave me twelve percent on my money."

At present, he estimates that with an assortment of partners, he has about $20,000,000 in apartments, another $5,000,000 in stores and adds, with a laugh, "I own more empty downtown shopping centers than anybody I know." Schneider has the disarming habit of taking as much delight in deals that went awry as in those that rode home winners. This is doubtless because, as he admits, his batting average is very high.

Among the major properties Schneider and various partners have chased and bagged are multimillion-dollar office buildings in New York City, such as 42 Broadway, 19 Rector Street and 200 Madison Avenue, and (among his current holdings) 120 Wall Street and 580 Fifth Avenue, each worth about $10,000,000. Schneider's face brightens as he recalls the price, the down payment, the rate of interest on the mortgages and other such monetary arcana. They live on as secular relics, bones of unholy encounters.

To the uninitiated, a deal is a deal is a deal, but as Schneider makes apparent, each deal has its own shape, and the man who makes the deal molds the clay and then breathes life into it. The number details are not so important. The human drama—which Schneider calls the ego factor—is all-important. To understand how Walter Schneider makes a deal is to learn a little something about Tamerlane, the Holy Roman Empire, Howard Hughes and, for that matter, all of us to whom Schneider's business is a deep mystery.

•••

High noon in Newburgh. Schneider was in his country outfit (he had just parked his Mercedes on the street, drawing stares), but when he entered Starin's barony, he found himself upstaged by Schoonmaker, who was in three-quarter boots—a real cowboy, rugged, muscular and tanned, with a big handlebar mustache he was twirling nervously because he thought he was going to be skinned alive by this city slicker. For protection, he had brought along a hired gun named Barney Reisner, a Long Island accountant who looked, in repose, like Martin Buber. Reisner proved to be, like Schneider, a hard-nosed dealer.

From the minute he sits down, Schneider begins to evaluate the seller. He senses that Schoonmaker doesn't trust him. It isn't so much Schoonmaker's questions as the tone of voice. What else you own? You have much land? He is watching Schneider carefully, and listening carefully. For that matter, Schneider doesn't altogether trust Schoonmaker. These Upstate farmers are parochial and clannish (though Schoonmaker proved to be neither); maybe he's a bit, well, anti-Semitic? Schneider sees he has a Jewish accountant, so, of course, that only leads him to believe all the more that Schoonmaker is anti-Semitic. But he doesn't want to be reassured. He wants to feel a bit in danger; it's good for bargaining tone. Not a big point, but it does make Schneider a touch more brusque and overbearing than he might otherwise be, and this, in turn, makes Schoonmaker a jot more fearful than he might be. It keeps them...apart.

Schneider isn't doing any better with Reisner. Mainly, this is because something about the man really bothers him, and he soon finds he is unable to stop needling him. Reisner is getting irritated, as Schneider sees very well, but he can't help himself. Reisner reminds him of a former partner who had the same effect on him, a certain quality of persistence, of nagging, of fussing endlessly, worrying endlessly, some maternal controlling thing, and Schneider begins to feel like a little boy. The adrenaline starts flowing in him to attack, to reassert dominance. He battles every point with a certain hostile, scornful arrogance.

Reisner says, Let's tie the interest rate to the prime rate.

Schneider says, Screw.

Schneider could call that hard bargaining, but a moment later he does something that he can only call a serious error. They are discussing how to place a value on homes that Schoonmaker has already started building but has not yet sold to the contracted buyer, what they call "work in progress."

"You're figuring your work in progress wrong," Schneider tells Reisner. That is a bad thing to say to an accountant in front of his client. "You're figuring your work in progress based on finished selling price. You gotta base it on cost. Everybody does it that way."

Everybody doesn't do it that way, as Schneider well knows. When he sees Reisner bristle, he realizes he has gone too far. "Everybody doesn't figure it that way," Reisner says, coldly. "As long as we do it consistently, the results are the same."

Schneider knew he had turned Reisner into an enemy, unnecessarily, and he knew this would cost him dearly in time, energy and perhaps money in the bargaining, but he couldn't help himself. However, he kept the dialog alive, took notes and, after an hour or so, asked Schoonmaker how much he wanted. He had already concluded that the property was worth between $1,000,000 and $1,500,000, so he had come prepared to offer $900,000, terms. When Schoonmaker asked $1,000,000, all cash, he changed his mind. He said to himself, I'm not gonna get anywhere offering him $900,000. I'll offer him $800,000, so I have room to move up.

"Eight hundred thousand," Schneider says. "A hundred sixty thousand down. The remaining six hundred forty thousand amortized over ten years, sixty-four thousand a year, plus interest on the unpaid balance, thirty-eight thousand a year declining, you'll have a cash flow equal to or more than what you've been drawing. You'll never have to sign another note again, no more fighting with planning boards, you'll just have to sit on your tochis and collect the checks. Which you're entitled to. Figure out your age. That's what a man builds for. There's no risk at all. It's the safest money."

In this litany, spoken rapidly, with little hesitation, in a cozening, seductive ritual intonation, are echoes of snake-oil dealers, men of God and lovers of women. Despite his misgivings about Schneider, Schoonmaker is getting psyched up, stroking away at his mustache now, not out of nervousness but from excitement. Definitely psyched up.

There are just two sticking points, but they are far from minor: Schneider is trying to buy the company with as little money down as possible, whereas Schoonmaker wants to get as much cash as soon as possible. Also, Schneider will not sign personally. That is another cardinal rule. In the real-estate industry, only builders sign personally. Investors like Schneider buy only "subject to the mortgage," which means they are not personally liable should they fail to make mortgage payments. A lending institution will look solely to the property itself for recoupment, so if things go wrong, the investor can walk away. At that point, the property is sold at auction and the proceeds go to the creditor. In either case, Schoonmaker holds the mortgage and the property is the collateral. But if Schneider signs personally and defaults, Schoonmaker can then sue Schneider and go after his other assets. That is what Schneider—and all other real-estate investors—refuse to do. So Schoonmaker feels unprotected. He doesn't have sufficient collateral without Schneider's personal signature.

"Let's get something straight," Reisner barks at Schneider. "Will you sign for the six hundred forty thousand?"

"Let's get something straight," Schneider barks back. "I never sign personally."

The meeting broke up on that note. Schoonmaker was hopeful of selling, the price was acceptable, but he needed more security and, for that matter, he wasn't convinced that Schneider was serious, because Schneider had made him a counteroffer without even looking at the land or the other assets.

"I always do it that way," Schneider explained. "If I go looking around I'll spend all my time going around looking." The tone of his voice indicated that he could think of nothing more preposterous than for a real-estate man to go around looking at land prior to making a firm offer. And despite his tactical error. Schneider was pleased with himself. He wasted no time at all on guilt, shame or recriminations. He had already evaluated the opening session and felt he had taken a good, strong position he could defend.

•••

Jockeying for position. "Last year I made about twenty deals," says Schneider, "and that was high for me. I'm not like these people who have to make a deal every week. I can wait. But as far as my motivation, it's the thrill of the chase. When I come out of the contract and I've demonstrated my skill, it feels as if I have accomplished something that day."

Skill in the Schoonmaker deal, Schneider realizes, is going to hinge in large measure on his ability to control his need to compete with Reisner. When Schoonmaker's accountant shows up at Schneider's offices in Great Neck four days later with the news that the price is acceptable to his client, a second and more complex phase of the negotiation commences, in which they will be, hopefully, narrowing the gap between them on the nature and precise wording of the clauses of the contract that will constitute the buy-sell agreement. In the precise wording of these clauses, protection resides.

Schneider has decided he is going to control himself. He is going to be diplomatic. He is going to be sincere.

Schneider: How are you, how you doing, how come you live out in Long Island, where do you practice, do you do many builders, how many real-estate people do you handle....

Reisner: My son's in practice with me, I'm getting older, I want to take it easy....

Schneider: I just moved out here, look at my park out the front window, I'm gonna play golf every day, I'm gonna go to lunch at the North Shore Steak House, I'm not gonna wear suits....

They get along splendidly, until it becomes necessary to get down to the details of the contract. At that point, the facade of relationship that they have erected between them collapses, like a stage-set being struck.

To begin with, Reisner knows that Schneider intends to do exactly what his client is afraid of; that is, buy the company with little cash down and with as many of the assets as possible unencumbered, so that, if he chooses, he can dispose of them, keep the cash and not make any accelerated payments on Schoonmaker's mortgage. To give one hypothetical example that has not failed to cross Schneider's mind: The lumberyard has about $200,000 worth of lumber in it. If he buys the company for $160,000 down and then sells the lumberyard's stock for $200,000, he could conceivably wind up with a surplus of $40,000 after buying the company.

Reisner broaches that possibility and Schneider says, "You're talking silly. I'm gonna form a corporation and I'm gonna give him the stock as collateral."

Reisner snorts. He turns his head to an invisible cohort, as if to say, listen to that bullshit. He tells Schneider, with scorn, "You know that's worthless."

"Oh, no," Schneider responds, innocently, "it's done that way all the time." He knows very well Reisner would never accept that, because stock as collateral doesn't give Schoonmaker any control over the assets. But he tries it, anyway. What has he got to lose?

The remainder of the meeting consists of this same sort of parry and thrust as they fence for protection. Who will get the accounts receivable? Will there be a mortgage on the model park? On the water plant in Wappingers Falls? On the commercial piece? Will Schneider be buying stock in Schoonmaker's company or will he be buying the assets after Schoonmaker dissolves his corporation? If he buys the assets, he won't be assuming any liabilities. If he buys the stock, he steps into Schoonmaker's shoes and takes on problems and liabilities Schoonmaker may have incurred and not even known about. The implications in each of these questions had to do with the amount of protection the parties would have, but the manner in which the issues were discussed had only to do with the power struggle between Reisner and Schneider.

Schneider does not think of himself as having a giant ego of industry-leading proportions, and he tells a story that proves his case. During the mid-Fifties, his accounting practice was flourishing and he found himself doing the books for such real-estate-syndicating giants as Lou Glickman, Marvin Kratter and Jerry Tenney. "I do not have a phone in my John," says Schneider. "Glickman and Kratter and Tenney do. One investor, during the early Sixties, hit upon a telephone in the John as a status symbol. He would continuously make calls from his John, transacting business, and in case there was any doubt where he was, he would flush the toilet. Within a short time, the phone company was swamped with orders from real-estate investors for John telephones. After a while, the telephones were replaced by fancier models with hold buttons. The next step was logical, but it never developed: Having secretaries answer the John phones."

In dealing, everything counts. Those who do not actually install John phones aren't daydreaming. Reisner and Schneider each worked hard to install a psychic john phone from which to call the other, but each found that the other party wasn't answering. They were deadlocked. (continued on page 180)Let's Make a Deal(continued from page 176)

During the next few weeks, there were several more meetings, without progress. Then, unexpectedly, Schneider created extraordinary protection for himself. He made a move that in chess parlance would be called a brilliancy.

What he did was hire Ed Kourt as his accountant and financial officer. Kourt had himself been an unsuccessful bidder on the Schoonmaker property and, before that, comptroller of the company. This meant that Schneider, who had previously needed contractual security against all sorts of hidden dangers, could now rely on Kourt's word. After all, he knew the company's financial data better than anybody else, including Schoonmaker.

Periodically, Kourt would run into Schoonmaker at the Dutch Pantry and they would chat about the deal. Kourt carried up Schneider's all-cash offer for $500,000. Schoonmaker wanted $600,000. No deal. At the same time, the impasse between Schneider and Reisner continued. Schneider came up with an ingenious lot-substitution plan, whereby he would exchange with Schoonmaker one of his own lots each time he used up one of Schoonmaker's lots, thereby maintaining a constant level of collateral. It proved so complex that Schoonmaker's lawyer pronounced it impossible to work out. Finally, that afternoon at Riverboat Joe Dierna's office in Monroe, Schneider figured out a new deal, for $300,000 cash and $300,000 terms, plus other tidbits. Kourt went off and talked to Schoonmaker, and Schoonmaker thought they had shaken hands on a $600,000 all-cash deal. Kourt insists no such deal was offered. In any case, Schoonmaker flew off on vacation thinking he had sold his company. When he found out otherwise, he was angry, disappointed, let down, betrayed. There had been further disagreements between Reisner and Schneider. The villain, Schoonmaker reasoned, was Schneider, a man who could not be taken seriously, who kept changing his offer, who wouldn't settle down and make a contract. Schoonmaker let it be known that the deal was off.

Schneider assumed this was simply a bargaining position. For one thing, a second and a third contract began to circulate. He and Reisner were still disputing the terms of the contract. But when Starin called Schoonmaker to invite him to have lunch with Schneider at the Dutch Pantry, Schoonmaker refused.

Starin said, This isn't exactly a business lunch, Hob.

No? Then why are we having it?

Walter has a friend, a journalist. He wants to know about real estate and deals, and so forth.

Well, says Schoonmaker, all right. Call me in the morning and remind me. Schoonmaker no longer wanted to see Schneider, because Reisner had convinced him that Schneider was not serious, was merely toying with him, but he wouldn't mind talking to a journalist about the real-estate business in general, that would be a pleasure; and, on the other hand, Schneider would be there. It would actually be...impossible...for them not to reopen negotiations in some form or another. So the meeting was ideal for Schoonmaker. He could refuse to deal with Schneider but still go to lunch and hear Schneider's latest offer. Perfect.

•••

Inside the Dutch Pantry. When Schneider arrived, Schoonmaker was already there. The Dutch Pantry is red, white and blue, plastic, with hex signs on its walls. Actually, it disposes itself as a sort of ethnic homolog of Howard Johnson's, its competitor across the street.

"We better get down to business," Schneider said after a few moments of desultory chitchat, and Schoonmaker flushed. He didn't want to be pushed. "What business you have in mind?" he asked. He looked around the table, feeling himself outnumbered: Schneider, Kourt, Starin, a journalist taking notes. So he let fly a roundhouse right.

"I had a deal," he said to Starin, "but if Walter came up with the same deal we shook hands on, I wouldn't give it to him today, I'll tell you that." Schneider was impassive, but his eyelids betrayed his shock. "Walter," Schoonmaker said, "you may be ten times smarter than I am, but I'm ten times more stubborn than you are."

Schneider cleared his throat several times and leaped into the breach. "I think there's been a complete lack of communications in terms of what we have done in terms of protection. I presume you still want to sell it?"

"Yeah."

"OK, then." Schneider then launched on his complex and exhaustive description of his theory of lot substitution, which, he kept assuring Schoonmaker, gave him great collateral. Schneider was like a parent reassuring a child that there are no such things as ghosts, only shadows. Schoonmaker, who has been around long enough to know about shadows and ghosts, was having none of it.

Schoonmaker said, "I told Barney Reisner, 'Listen, you're the professional. I'm not that bright. You figure it out. Sell the property and keep me protected.' The big problem," he confided to the journalist, "is that Walter's not dealing directly with me but with my agent. He'd like to get to me because I might not see the trees for the forest."

President Nixon had arrived earlier that day in Peking. "I imagine what Mao and Nixon do is not dissimilar from what you and Walter do," the journalist suggested.

"Yeah, we both lie like hell," Schoonmaker said. "Both got a knife under the chair, but we're not sure just when to twist it. Walter, I can see, is getting a little nervous, and he's about ready to twist it."

As far as Schneider was concerned, the tenor of Schoonmaker's remarks made it apparent that the deal was dead. Schoonmaker had misconstrued the look on his face. Schneider had, for the moment, allowed himself to feel some sorrow. He had wanted the deal and was really sorry he couldn't have it. His face had flattened out and the color had drained out of it. He wore a denied, flattened look. When Schneider is doing well, his features bunch up at the nose and mouth and he has a demonic, compacted look. When he is doing poorly, his features relax and lengthen to their natural proportions, and one can see that he is actually quite a handsome man. Then he can be seen as one whom sorrow would ennoble, if only he were willing to chance it. But for that, one must go unprotected.

For the next hour or so, the conversation was aimless, though not without interest. The deal was not even alluded to. During the dessert, the journalist, who did not precisely understand the central issue, asked Schoonmaker, in the interest of the post-mortem, what his main problem was with the deal. This struck an unexpected spark in Schoonmaker. It gave him an opportunity to chastise Schneider for his cruel and heartless ways. This reckless man, with his bulging bank balances and his hot-eyed promises of warm unending cash flow, had evoked in Schoonmaker a discarded maiden's anger toward the seducer, an anger he had been unwilling to verbalize. Now he did, and having done so, he was once again able to entertain lustful thoughts toward Schneider's money. Some instinct for what remained of the deal prompted him to direct his anger at Ed Kourt, his erstwhile comptroller, which was tactically correct. Anger toward Schneider would have placed between them an insurmountable barrier.

Kourt made no attempt to defend his honor, thereby justifying Schneider's estimate of his worth. He merely replied, in the mildest possible tones, "There were several possibilities, Hob."

Schneider understood that Schoonmaker's angry outburst constituted an opening that he could exploit. He pressed forward with protestations of care and devotion: "Can I tell you something? Would I send a lawyer with seven typewritten pages if I've changed my mind?" He leaned back and extended both his arms, a seated version of going onto bended knee. "Would I come up here on Washington's Birthday?"

Schoonmaker was beginning to thaw. Following his outburst, color flooded his face. When he left the table to answer a phone call, Schneider was able to observe that the time was then half past two, which meant that Schoonmaker was willing to be late for a two-o'clock bank appointment that he had earlier announced. That, too, was a good sign. When Schoonmaker returned, Schneider plighted his troth: "Listen, Hob, we'll meet in New York this week to close the deal. With a certified check for a hundred and sixty thousand. We'll bridge all the bullshit." A certified check. Cash on the line. An end to the apparently endless negotiations. And the price back up to $800,000. Schoonmaker brightened. "That's the kind of business I like to do, Ed knows that," Schoonmaker said.

He was not prepared, however, to capitulate on Schneider's guarantee. He still wanted Schneider to sign personally on the mortgage. Once again, Schneider demurred.

"I never signed before."

"Well, you'll have to get in the habit at least that much."

"To me that's a traumatic experience."

"Well, I'd like for you to really have a real tremor."

"I have a tremor. I never signed."

Schoonmaker grinned. "I'd like to have you go all the way. I don't want to half drown you. I either want to drown you or you live."

"You're not going to drown me," Schneider said. "I'll bury myself, but I won't let you drown me. There's a difference."

That proved to be a more amiable and playful interchange than it appeared at the time, because when Schoonmaker and Schneider parted, the deal was provisionally on again. Schoonmaker said he would talk to Reisner about the luncheon and then would decide if there were any real point to making a trip down to New York to close the deal in the office of his big-city lawyer, a man named Aaron Danzig.

At the same time, Schneider rethought the deal through and concluded that he would have to make one more major concession. He would have to scrap his lot-substitution plan and, instead, pay Schoonmaker for each lot as he used it. Apparently, that was all the incentive Schoonmaker needed. Less than a week later, he showed up at Danzig's office in the Empire State Building with stock certificates in his pocket. Schneider showed up with two blank checks.

• • •

Closing. From the 48th floor of the Empire State Building, the city seemed domed and lit by fluorescent pollution. A brilliant pall hung overhead. But none of that affected the participants, all of whom seemed sprightly. Schneider arrived with a springy walk, a shaped gray double-knit suit, new fly-boy goggles and, protruding from the center of his mouth, a very long, very thin cigar. It had just been lit.

In Danzig's office, the participants sat in maroon-, green- and beige-leather armchairs in a semicircle around Danzig's glass-topped desk. In the window well behind the attorney was a prism. It refracted the morning light and a rainbow, blue over green over orange, manifested itself upon the shocking-pink shirt of Barney Reisner. As the day wore on, the rainbow traveled around the room from Reisner to Schoonmaker to Starin to Harry Balterman—Schneider's big-city lawyer—to Schneider and, finally, to Kourt.

What soon became apparent was that there were going to be not one but a number of negotiations taking place, as the ego mix thickened. It was nothing less than a tournament of dealers.

Danzig set the tone with his opening remarks, imparted with a delivery at once fibrous and world-weary. A proto-British gentleman with a black-plastic comb sticking out his back pocket, Danzig suggested that (a) the deal was so complicated that it would be impossible to close, (b) he wanted the closing done his way or it couldn't be done successfully and (c) if they only marshaled their patience and stamina, the closing would certainly be accomplished; however, (d) Schoonmaker had another buyer at a better price, with better guarantees, and he, Danzig, much preferred that offer to Schneider's.

This statement constituted a very complex bargaining position. Vis-à-vis Danzig's opposite number, Balterman, it established precedence, status and an intangible, unstated superiority: "Be a good boy, Harry," Danzig smiled, the lines around his eyes crinkling. "Do it my way first." Vis-à-vis Schneider, it established a certain subtly scornful insouciance that Danzig skillfully parodied a moment later, in the midst of reading a key clause of the contract, by gesturing toward Schneider and saying, "This obligation is to be assumed by, uh, this gentleman here...I forget his name...."

Crude, but effective. As he spoke, Danzig lovingly stroked his tie up near the knot, four, five, six, a dozen times. He was, indeed, jerking them off. Schneider refused to respond, though pique had set his eyelids fluttering. He had more important game to stalk. Balterman, however, grew hot. "I'm not listening to a word you're saying," he shouted. "This is a bunch of crap, this is no closing, how can we close? We wrote you a seven-page memo. What the hell are you talking about? We have to go over the points point by point."

Danzig smiled at Balterman's outburst. It certainly didn't offend him at all. "All right, Harry," he said soothingly. "Now we'll do it your way."

Whether this meeting was a closing or whether it was merely to nail down the contract that would lead to the closing was immaterial. At this stage in the negotiations, presumably, both the buyer and the seller were primed for the deal. Any further concessions would be based not so much on tangible or verifiable points of business procedure but on intangibles such as desire, weariness and the like. Consequently, Danzig had done his job with skill. He had set an atmosphere in which Reisner's ability to bargain with Schneider would be enhanced, with the buyer a little off balance, a little insecure (did they really have another buyer with a better offer?) and a little bit disarrayed. Danzig retired to the window well, where he sat with a wary, watchful look on his face, alert for unexpected (or expected) pitfalls.

As it happened, Schneider was able to handle Danzig's gambit with little difficulty. "That's the last time I want to hear about the other buyer," he said, without malice, but firmly, then he turned to Reisner and proceeded to recapitulate every point in the contract they had previously disputed, plus several they had previously agreed upon. It was different from previous encounters in only one respect: Schoonmaker, sitting beside Reisner, began to spot points of protection without which he would lose very little, if anything. These were basically items of protection in principle, and on these points, he began to support Schneider. "I'm a businessman like Walter," he would say. "And I think like he does. I'd be willing to take the money out of my pocket for that."

When this had happened a second and a third time, it became apparent that Schoonmaker had accepted Schneider's view that he was being overprotected by Reisner. It also became apparent that his presence provided the lubrication without which the works would not otherwise have moved. The atmosphere began to lighten considerably. Schneider stood up and entered into a minor-key negotiation: "Hey, Aaron, you wanna get some coffee for us?" Danzig, in the new spirit of cooperation, ordered Danish as well. Everybody was in a good mood.

As the discussion continued through Balterman's seven points (and the rainbow settled on his chest), a certain weariness overtook the principals and their lieutenants. The rhythm, which appeared to be archetypal, was of extended reasonable discussion, followed by a brief excited flurry, followed by the resolution of a point, a certain relaxation and, once again, a build-up of tension. Very like a series of orgasms.

Danzig turns a page in the contract and says. "Now we come to the lot substitutions. All that crap is out, thank God."

"All out? It's all out?" Balterman shouts. "I thought we were getting rid of the substitution on the substitution."

Danzig groans. "These guys never give up. Nothing's dead unless you chop it up, stab it, hit it on the head, and even then, it'll come up again." He thinks for a moment and then pronounces a verdict on what the experience of bargaining with Walter Schneider is like: "Walter is like a sumo wrestler. Just when you think you've got a half nelson on him, he gets out of it with a toe hold."

When it is all over, everybody leans back in their seats. One of the secretaries comes in with a tray upon which are piled sandwiches, another tray bearing bottles of Ganadian Club, Chivas Regal and a number of glasses, and a third tray of aspirin, Alka-Seltzer and Brioschi. That signals the end of the negotiation. They have a deal.

It is late afternoon. The day is bright and sunny, but the light diffuses through the haze that covers the sky, so there is a sort of miasma of light that hurts the eye without offering warmth or heat or any pleasing aesthetics of nature. Gray, hazy. There is no nourishment in it; it is a brutalized, inhuman atmosphere. It is compounded partly of the smoke and pollution visibly rising from stacks and partly from atmospheric density and partly because, in numerous offices in numerous buildings in sight of the 48th floor of the Empire State Building, similar dialogs have been taking place this day, similar encounters enacted, and all that human energy is gray, hazy, brutalized, inhuman. Energy makes civilizations. Too much energy misapplied or misused pollutes the environment.

"Here's the score card," Schneider says, in his Mercedes, on the way home to Great Neck, where he lives modestly in a neighborhood of $50,000-to-$100,000 homes. "They wanted my guarantee on the mortgage, a mortgage on the lumber inventory, model park, etc., etc.; they wanted the accounts receivable. I won all those points. I had to give up on the substitution of lots, they won that; I have to pay Schoonie seventy-five thousand in mortgage reduction if I sell the commercial piece, they won that; and they won a very important point, that I am buying the stock and not the assets. But I'm happy with the deal. I'll tell you the truth. At that lunch in the Dutch Pantry, if Schoonmaker had said to me, six hundred thousand, all cash, take it or leave it, I would have taken it." He grins. "Yeah, that's right. I know I didn't sound that way, but it's true."

Within the week, Schneider has commenced negotiations for the sale of the stock of lumber. He has an offer of $100,000 cash and $100,000 credit against future lumber purchases. The water plant in Wappingers Falls he was thinking of giving as a present to his children. He was putting the 11 homes of the model park on the market at about $35,000 each. And as for the Schoonmaker company itself, he was considering a possible sale to a third company, or perhaps going public with it. There were, he said, several underwriters who were very interested, and he was negotiating with them. Going public as an over-the-counter stock had been one possibility all along. He has already begun making projections: $500,000 profit the first year, times 20, because Wall Street is very trendy and at the moment, at least, you can get times 20 on a company like this, which is hot now; that makes $10,000,000; sell off 200,000 shares at ten dollars, that's $2,000,000, leaves $8,000,000.... His mind skips a year or two further on, to the merger. Ah, the merger. Some larger company is going to want to pick up this Schoonmaker company, which has such a rosy picture, so well managed, listed at ten and shot up to 23....

Of course, this is not as flippant as it seems. Schneider is not just wheeling and dealing the company. By no means. "I buy it. I improve it, then follow the market conditions to my best route. It takes experience and careful planning," he says, sounding, for a moment, like a civics textbook or a pamphlet on how responsible businessmen really are.

Thinking of it, Schneider smiles. "I can't tell about the future," he says. "Who knows what could happen? I'll go where the biggest profit is. Right now, I feel secure. Listen, it's all protection. One guy can make do with a rowboat. Another guy needs a yacht to survive." He clears his throat once, twice, a third time. "Sure, we like to make the last nickel on a deal, but professionalism tells you not to go for the jugular, not to kill and bury the guy all at once. Otherwise, how could you ever sell? Most real-estate men, when they hear of somebody else's good deal, they get a flutter in the pit of the stomach." Schneider clears his throat one final time. "Personally, I enjoy hearing of someone else's good fortune."

Epilog: 75 days after consummating the Schoonmaker deal, Schneider resold the entire package to Shelter Resources, Inc., a real-estate and mobile-home firm listed on the American Stock Exchange. The transaction returned to Schneider all the cash he had put up, along with more than a million dollars in Shelter Resources stock. The exchange was tax free. Schneider told one of Playboy's researchers: "I got more from that deal in two and a half months than Schoonmaker got holding the company for twenty years."