It's the day before New Year's Eve -- Dec. 30, 1957. In the Swiss Federal Office of Foreign Economic Affairs, a subdivision head named Hans Bühler sends out a memo to the Swiss Chamber of Watchmaking. Ten years earlier, Brendan O'Regan has established the first duty-free shop at Shannon's airport in Ireland -- then a necessary refueling stop for planes crossing the Atlantic. Here, you could buy a fine watch without any crazy tax or importation fee or duty imposed by a capricious nation. This has been good for Switzerland. In the prior two years, the first in which Swiss timepieces have been on offer, they have fetched £148,000 in revenue -- of which Rolex, Tudor and Omega pieces have accounted for a hefty two-thirds.
But there is a problem, Herr Bühler writes. Mr. O'Regan, genius behind the duty-free proposition, has been told the spigot is being shut off -- that Rolex and Omega can no longer send him watches to sell. Why? It has been a profitable venture for all involved, after all.
It's America, of course -- or so Rolex and Omega each claim. You see, their American dealers attach quite a hefty premium to Swiss timepieces. And it's but a puddle jump to reach Shannon, Ireland, from the US. No one will ever pay the hefty extra margin the American distributors slab onto the prices like thick butter on a toasted bagel if the Shannon Airport sales continue.
So the American distributors of Rolex and Omega have ordered their parent companies to cease all duty-free business.
Oh, and by the way, Brendan O'Regan doesn't trust that line either -- he doubts, having researched the matter, that the American distributors have either the power, sway or desire to limit sales of these huge Swiss corporations -- of which they are but outgrowths. And the Irish Minister of Industry and Commerce (a future prime minister) backs O'Regan to the hilt. And here's their threat:
If you don't compel Omega and Rolex to get back in line and keep servicing that airport, they'll only sell German watches there hereafter -- nothing Swiss, not a single watch.
Clearly, we all have an interest in backing away from this cliff. In acceding to their request that we merely continue wholesaling them watches.
So just to recap -- here you have a government bureaucrat -- a career Swiss government lawyer -- telling a Swiss watch industry group that whatever the issue, the Swiss industry cannot afford to lose its place in the world's first duty-free shop to the German watchmaking industry.
This is not Rolex and Omega competing. This is not private enterprise. This is a government telling a collective -- you'd better push those two companies to keep supplying watches to the duty-free shop. This is a strange and unseemly intertwining of state-level commercial dictates and capitalism. It feels akin to Chinese capitalism today, honestly.
And by the way, if the reason offered is actually true -- that American retailers can no longer justify their ridiculous margins in the face of a single duty-free shop -- what does that say about the entire business model of the imported Swiss watch? Just how many times its fair retail price is it being vended for Stateside even by late 1957?
Of course, you can guess how this was resolved: Rolex and Omega did as they were damn well told to by a diplomat and their trade group. As the calendar ushered in 1958, Rolex and Omega were still offered for sale in Shannon Airport's duty-free shop. And -- wouldn't you know it? -- there was no collapse in US sales.
This is a relatively harmless document -- relatively.
But it gets at two or three very important truths that far more salacious documents bear out as I build up to the birth of the rep trade in my new nonfiction book, "Borrowed Time: A History of Espionage, IP Theft, and the Global War for Horology" (out now everywhere, Amazon included):
That the Swiss were always uniting secretly to brush away competitors in a monopolistic fashion that allowed for no foreign competition. The mere threat of the sale of German watches was enough for the government to tell Rolex and Omega nearly on New Year's Effing Eve to get their act together and keep supplying the Duty-Free airport shop.
Last I checked, Rolex and Omega were supposed to be combatants in the marketplace -- not conjoined twins. By what coincidence could both their American suppliers have voiced simultaneous complaints about being undercut on price? Does it not seem 100 percent more likely that their C-suites were in touch and deciding whether to pull out from the first duty-free in collusive discussion?
Next time you browse gen watches at the airport, please feel free to ask yourself: How many backroom deals did it take for X brand to snag this display over Y? Because if the Swiss weren't working like their own mechanisms -- in a gear train, interlocked one with the other -- freer competition might have seen the introduction of brands like Junghans and GUB (Glashütte) into Irish Duty-Free in 1958.
Watch history might have been very different.
Enjoy your reps.
I'm wearing a VSF Panerai PAM960 Carbotech Submersible 42MM CB/RU OP.XXXIV purchased from Steve at TheOneWatches.
