The hotel was gloomy, spacious and comfortable. It was the old-fashioned sort of grand hotel still to be widely found in Austria, and the sweet synthetic scent of polish hung in the air: an indication of manual work. An ancient lift, crafted of brass and mahogany, lurched upwards inside a wire box with a wheezing sound, and sudden rattles, that persuaded me to use the stairs for the duration of my visit. There was even a man in black waistcoat and green baize apron to carry my bag.

An Austrian named Otto Hoffmann had met me at the airport and made sure I got a comfortable room in the hotel. 'At the back overlooking the river,' he said in his powerful Austrian accent, and a chilly draught hit me as he opened the window and peered out to be sure the water was still there. 'No traffic noise, no smells of cooking, no noise from the terrace café. Tip the porter ten schillings.' I did so.

Hoffmann was about forty years old, a short, hyperactive man with merry little eyes, a turned up nose and smiling mouth. His manner plus his large forehead, his pale unwrinkled skin, the way his small features were set in his globular head, and his sparse hair, all gave him the appearance of an inebriated baby. I don't know how much Hoffmann had been told about 'Fledermaus' but he never mentioned that name. He knew that my cover story of being a stamp dealer was completely untrue and he'd obviously been chosen for his knowledge of philately.

'And now I shall buy you a drink,' he said as he closed the inner window and put his hand on the radiator to be sure the furnace was working. He meant a cup of weak tea. Because he kept his money in his back pocket, in a large roll secured with a rubber band, he had a disconcerting habit of tapping his behind to make sure his money was still there. He did this now.

He briefed me while we were sitting in the hotel lounge. It was a cavernous place with a celestial dome where angels cavorted and from which hung an impressive cut-glass chandelier. Around the walls there were potted plants set between other small tables and soft chairs where fellow guests, unable or unwilling to face the crowded streets, sat drinking lemon tea in tall glasses together with the rich pastries, or gargantuan fruit and icecream concoctions, that punctuate the long Austrian days.

He ordered two teas and a rum baba. He told me they were delicious here but I was trying to give up rum babas.

'The auction sale consists almost entirely of Austrian and German material,' he told me. 'Of course the biggest market for that is Austria and Germany, but there will be American dealers, bidding as high as the present exchange rate of the dollar permits. Also there will be compatriots of yours from London. London is an important trading centre for philatelic material, and there are still many important German and Austrian collectors there. Mostly they are refugees who fled the Nazis and stayed in England afterwards.'

The waitress brought our order promptly. The tea came in a glass, its elaborate silver-plated holder fitted with a clip from which a spoon was suspended. She put two large chunks of lemon on the table and splashed a generous amount of an alcoholic liquid upon a shiny sponge cake which bore a crown of whipped cream. 'Are you sure…?' Hoffmann asked again. I shook my head. The waitress scribbled a bill, put it on the table and sped away.

'And what am I doing here?' I asked, keeping my voice low.

He frowned. Then, as he understood me, he twitched his nose. On the table he had two beautiful catalogues. He passed one to me. It was an inch thick, its coloured cover, magnificent art paper and superbly printed illustrations, making it look more like an expensive book of art reproductions than a commercial catalogue. They must have cost a fortune to produce. He opened it to show me the pictures of stamps and old envelopes, tapping the pages as some picture caught his attention. 'Most of the really good items are from the old German states. Württemberg and Braunschweig, with a few rarities from Oldenburg, Hannover and so on. Here too are some choice things from old German colonies: mail from China, Morocco, New Guinea, Togo, Samoa.'

As he leafed through the catalogue Herr Hoffmann lost the thread of his conversation. His eyes settled upon one page of the catalogue. 'Some of these Togo covers sound wonderful,' he said in an awed voice, and read the descriptions with such concentration that his lips quivered. But he tore himself away from the wonderful offerings to show me the auction schedule printed on the inside cover. The hours – eight o'clock in the morning until approximately three o'clock in the afternoon, with an hour off for lunch – were listed to show the numbered Lots that would be offered in each session. There were several thousand Lots for the sale, which would last five days. 'Some rich collectors employ agents to come to the auction and buy selected items on their behalf. The agent gets a nice fee. You will be such a person.'

'Why don't they bid by post?'

He gave a slight grin. 'Some collectors are suspicious of these auctions. When you bid by post the amount you authorize the auctioneer to spend is supposed to be your tip-top offer. The auction house undertakes to charge you no more than one step above the next best bid.' He squeezed lemon into his tea and chased a pip around with his spoon but, after testing the side of his glass with his fingertips, decided it was too hot to drink.

'And?'

He gave another sly grin; his face slipped naturally into this expression, so that it was hard to know whether he was amused or not. 'Whenever I bid by post it always seems that someone has mysteriously kept bidding right up to one step below my maximum offer. I find I always pay the whole of whatever I bid.' He picked up his fork and looked at his cake with the concentration a demolition expert gives to placing dynamite.

'So collectors have agents who make sure the bids and the bidders are real?' I said.

'Exactly. Even then it is difficult to know if there is a swindle. Sometimes there will be an auction official on the phone taking phone bids and the auctioneer will have in front of him the postal bids. It is difficult to be sure exactly what is happening.' His conversation had been marked by the little smiles but now he became serious as he took his fork and ate a section of his rum baba. 'The pastry chef is Viennese,' he confided as he savoured it.

'And what else will the agent have to do?'

'He should have examined the Lots for which he is going to bid, to make sure they are not damaged, or repaired or forgeries.'

'Are there many forgeries about?'

'There are some Lots in this auction with estimated prices of about one hundred thousand U.S. dollars. That is a great deal of money by any standards. Many people pay less than that for the lease of a house to live in.'

'You make your point, Mr Hoffmann,' I said. 'But don't the auction houses have experts? Don't they know enough about stamps to recognize a forgery?'

'Of course they do. But auction houses get their percentage of the sale price. What inducement do they have for detecting a forgery? And what do they do then – accuse their customer of dishonesty? If the forgery is sold they get a nice share of the money. If they send it back they lose a customer and make an enemy and lose their percentage too.' He stopped abruptly and ate some cake. Two men who'd been sitting at a nearby table had got up and were walking out. They were Americans to judge by their clothes and their voices, neatly dressed with fresh faces and polished shoes.

'You make them all sound like a lot of crooks,' I said.

'I hope I don't. I know dealers I would trust my life to. But it is a precarious trade,' said Hoffmann and smiled as if that was what he liked about it. I had the feeling that the idea of selling forgeries did not offend him in the way that it should have done. I wondered if he was in some way connected with the forgeries that the Department commissioned from time to time. Reading my mind perhaps, he gave me a sly grin.