by Eric Flint
Then a surprising thing happened. Prince Karl Eusebius von Liechtenstein started buying guilders. True, he was buying them with Ferdinand's new silver-backed bank notes, but considering that Amsterdam was under siege, those notes were starting to look like a good deal to a lot of people.
The price of the guilders started to drop a little slower and, oddly enough, the Holy Roman notes started to rise a bit. There was something the notes could buy outside of the Holy Roman Empire, after all. This would have been fine with David, except that the guilder was still dropping against the dollar.
When the guilder hit $45, David stood up. Over the last couple of years David Bartley had gone from short and skinny to tall and skinny. His new height made him noticeable, but he still felt like he looked like a geek. Here in this room, though, people were judged by their bank balances more than by anything else. Here, David Bartley was imposing.
Trading continued. The guilder continued to drop, but people were watching him. He could see and feel it. As he stepped to the floor he made a "come here" gesture. The gesture meant "I'm buying at the last offer." The last offer had been $39 to the guilder. David was mobbed, but he kept making the gesture.
For almost an hour people sold guilders and he and Karl bought them. The price hit $37.50 to the guilder. Finally, slowly, people began to hesitate.
Why were they buying? What did they know? David could hear the murmurs. The price was holding.
David made a bid on some of the Wisselbank notes that Karl had bought, but he shook his head. David was buying, but Karl wasn't selling. Some of the players noticed. The price of guilders started to rise. David kept buying, so did Karl.
David Bartley spent twenty-seven million dollars in the space of about two hours. It was twenty-seven million dollars that wasn't his, but very few people knew that. Still, the guilder closed at $47.50 to the dollar. Smiling like he knew something no one else knew, David went back to his table and finished his cocoa.
Karl walked over to David and asked, "I know why I was buying, but why were you?"
"Maybe we ought to have a talk," said David, and led Karl to the room Sarah was using to watch the show. They had not wanted people to think that the government was exerting influence through Sarah's parents. From the prince's expression, keeping Sarah out of sight had been the right move.
Sarah grinned like a Cheshire cat when she noticed his expression. "No, you've read it at least partially wrong," she said. "Neither I nor my parents attempted to exert any influence on David. It wouldn't have worked anyway. You've forgotten that I am the CFO of OPM. While we do want to avoid the collapse of the guilder, David wouldn't have put OPM resources into it unless it was a good risk."
"So what do you know? What makes it a good risk?"
"We're gambling," David answered. "Did you know that Brent Partow is a student of military history, and his brother Caleb even more of one?" This was a total bluff. Brent Partow had been interested in all things military for about a month after the Ring of Fire. David had no real idea how deep Brent's older brother's interest went.
"You don't think Don Fernando can take Amsterdam, do you?"
"No, we don't. If he takes Amsterdam at all, it certainly won't happen very quickly. Unfortunately, that may not matter that much. The issue with the bank money is going to be availability, not silver, which will hurt you as much as us." David had dealt with Prince Karl before and knew that the prince was bright, capable and conscientious, but he had a weakness, one that David was prepared to use. Karl believed in taking care of number one, and he preferred to assume everyone else felt the same way. David was pretty sure that Karl wasn't truly incapable of non-self-centered acts, but his bias did color his vision a bit.
"So, I ask again, why?" Karl wasn't thrown off that easily.
Sarah came to the rescue. "Why did you? If Don Fernando doesn't win quickly, you're looking at having that money tied up in Amsterdam behind siege lines. That's going to make it rather harder to get to than the HRE gilders you traded for them. Unless something is done, they are going to lose more and more value. The trade through Amsterdam will die. It will take years to grow back elsewhere. Why did you buy guilders?"
Karl discovered suddenly that he was sitting in one of the chairs in the conference room. He must have sat down, he was clearly seated. He just didn't remember moving. He had had several reasons for buying guilders. First, he figured that with his connections, they were worth more to him than to a German merchant. He had also wanted to bring up the price of the Holy Roman Empire guilder in the Grantville market, largely because that's what much of his money was. He had some financial obligations that were best handled in bank money, or would have been, before the siege.
The real reason, though, was that he had seen a bargain and gotten carried away. He had been buying, David started buying and, well, face it . . . he had been caught up in the moment. He didn't really need that much bank money. At this point, that didn't matter much. If he, or David, started selling, the guilder would collapse in the Grantville market. Karl was so stunned that he didn't notice that David never answered his question.
"Well, it's stopped for now, Tony," Coleman Walker said on the phone that night to Tony Adducci.
"You think it will hold?"
"I'm not sure. The way I heard it, David Bartley and that prince from the HRE were cooperating to corner the market in Dutch guilders. I'm starting to wonder if we got took."
"The way I got it from Fletcher Wendell is that Prince Karl was trying to get Wisselbank notes because he figured that Don Fernando would honor them for him even if he wouldn't for a bunch of Dutch merchants. He is an allied prince, after all, or at least his uncles are. David saw an opportunity to make it look like they were trying to sew up the market and took it," Tony defended David. "So how much is the bank out?"
"Nothing yet," Tony could hear the dissatisfaction in Coleman's voice. "The Bartley boy pointed out that if he just acted as an agent for the bank there would be another run as soon as the word got out. To make it work, the guilders would have to appear on the OPM books. So he proposed that we give OPM a low interest loan and a guarantee to buy the guilders at cost. He got Franz Kunze to go along with it. We probably should have gone to Herr Kunze in the first place. Anyway, for now, OPM is sitting on the guilders and the bank is just showing a loan. We won't have a loss on the books till the loan comes due and we have to take Amsterdam's waste paper at cost."
"That's great, isn't it? From what I hear, Frederik Hendrik figures that he can hold. We may come out of this all right."
"Maybe, but the longer the siege goes on the worse it's going to get."
Tony was convinced that Coleman Walker made pessimism into an art form. "The dollar has been going up against the guilder right along. By the time the siege is over, confidence in the guilder could be so low that they won't be worth what the Bartley boy paid for them during today's panic. The only way that we could prevent that from happening would be to increase the number of American dollars. We could probably manage that, but while the dollar has deflated over the last two years there has been inflation in German currencies to compensate."
"You've mentioned that before, Coleman," Tony Adducci agreed, while thinking Over and over again, you've mentioned it.
"Why would the up-timers want to save the guilder? It makes no sense. If the guilder collapses their American dollars will be worth more and they will be richer," Josef Gandelmo, Prince Karl's tutor, wondered aloud later that evening. A little more than a year earlier, Karl had called Richelieu a dotard in this room. Josef looked at financial matters in terms of what they accomplished. What David had done was stop the Dutch guilder from collapsing. To Josef, that probably meant that David had meant to prevent the Dutch guilder from collapsing. The question became: why a strong guilder? It seemed to him to be to the up-timers' disadvantage.
"It does make sense in a way, Josef. Remember the lecture series we attended. One was about exchange rates. Having an overpriced currency ca
n price you out of the export market. High value money makes import cheaper but export more difficult. If most of your spending is local, you want a low value currency because the people you buying from are using the same money, so the lower the value of your money, the less you're paying.
"If you're buying more stuff from far away, then you want a high value so that less of your money buys more of theirs. The up-timers have been running a trade surplus since the day they arrived. They apparently wish to keep doing so. Wait . . ." Karl had apparently just realized what Josef was getting at. "Do you think that David was trying to prop up the Dutch guilder?"
"It seems so. He certainly, with your help, managed to do so," Josef offered. "Now you've provided a reason for it."
"No. If he had gotten a personal loan, then that would be a possibility, but to use OPM funds? I don't think so." Karl shook his head. "Some of the up-timers are fanatical about their reputations, you know, and David more than most. Fiduciary responsibility and all that, they take it very seriously. If David used OPM funds to save the guilder at the expense of the fund stockholders, it would destroy his reputation." Karl paused in thought. "Could he have some arrangement that protected the stockholders?"
"That's possible. If he does, then we should not bandy it about. OPM has a bit over half a million Dutch guilders. As of now, Your Highness, we have more invested in saving the Dutch guilder than OPM does. Almost twice as much."
Karl and Josef paused to listen to the evening news on the up-time radio. Radio, in Karl's opinion, was a marvelous thing, as important to him as indoor plumbing, frankly. The nightly news program helped him project what might or might not happen in the surrounding area, keep up with events, and determine where to place his investments. He was shocked, though, to hear his own name mentioned.
"This is Hans Günter, reporting for Voice of America. Today was an interesting day in the money market here in Grantville. With the siege closing in around Amsterdam, the famed bank money of Amsterdam started what at first appeared to be a fatal plunge. Then Prince Karl Eusebius von Liechtenstein and Master David Bartley unaccountably began buying. The Wisselbank money finished the day at an impressive $47.50 to the dollar. The market is asking itself: what do these two young men know? We have with us tonight Karl Gottlieb, of the Street.
"Karl is an expert in the histories and psychology of the financial movers and shakers who affect the market. Karl, just how much of a surprise was today's play by these two relatively young men?"
"Very," the financial expert answered. "Neither one of them has a reputation for this sort of risk taking, though for very different reasons . . ."
Karl was a bit miffed to hear this Gottlieb person discuss his motivations for all to hear. Publicity was rapidly becoming extremely distasteful to him. Private business shouldn't be dispersed over the airways for anyone to hear, in his opinion.
The news program, had he only known, went farther and faster than he expected. It was heard in cities and hamlets within a footprint of over thirty thousand square miles. The effect of the interview was to prop up the bank money of Amsterdam throughout the CPE, an effect he was grateful for over the coming weeks.
Franz Kunze, director of OPM, first suggested it in the Exchange Coffee Shop. "Perhaps a visit to the cardinal-infante might help. Don Fernando seems to be dealing with his conquered territory gently." Quite a number of financial movers and shakers found the Exchange Coffee Shop to be a convenient place to grab a quick bite to eat. It was often full of people who played the markets and seemed to be becoming an adjunct to the stock exchange.
"That's a possibility. What should we ask of him though?" Prince Karl asked.
"Perhaps a public statement that he won't loot the Wisselbank," suggested Sarah Wendell.
"Do you think he would actually agree to something like that?" Kaspar Heesters asked, caught between hope and doubt. His father was in Amsterdam. Herr David Heesters had apparently had an opportunity to get out of the city. Kaspar had chosen to stay in order to watch over the family's business interests there.
"It's possible," Don Alfredo de Aguilera said. "He's not obligated to, you understand. Wisselbank silver would clearly be the just spoils of war and the campaign has to be stretching his finances to the limit. He might do it though, if given adequate reason."
"To keep every market in Europe from collapsing! To keep millions of people from losing everything, that's a reason," Kaspar replied, exaggerating more than a little. "You know as well as I do what will happen if the Wisselbank is looted by Don Fernando and the Dutch guilder is rendered valueless."
"Don't overstate the case," Don Alfredo corrected, waving to the waiter for another cup of coffee. "The economy of Europe is not dependent on the Dutch guilder. At most there will be a minor correction in the money markets. Some will lose, some will gain." Don Alfredo was understating the case just as much as Kaspar had overstated it.
"Don't make light of either," Prince Karl said in turn. "Yes, the markets will correct themselves but not that quickly and not without damage."
David considered the suggestions for a moment. "I think Herr Kunze and Sarah have come up with an excellent approach. We go see Don Fernando and explain what the consequences of his looting the bank would be and ask for his public assurance that he won't. How would we arrange a visit?"
"However we arrange it, David," Karl Schmidt, his stepfather, interrupted. "You won't be going. Amsterdam is still a war zone. I doubt Delia would agree and I know your mother wouldn't. I prefer a reasonable amount of peace and quiet in my household. Besides, if you plan on graduating with your class there is only so much school you can afford to miss."
David got a stubborn look on his face. "Karl, I decided to invest in the guilders. I'm obligated to see it through. And I'm far enough ahead that a couple of months away wouldn't hurt me at school. If anyone goes, I'm going."
Don Alfredo accepted a glass of wine from one of the von Liechtenstein servants. "I do not know if it will help or not. But, I think we must try to speak to him," Don Alfredo finally agreed. "A delegation, do you think? You, me, some of the others, Franz Kunze, particularly, I think."
Prince Karl nodded in agreement, pleased by this development. It had taken some days to get Don Alfredo on board. "Yes. I also believe we must. David will be coming, you know. Having invested OPM's money, he will insist on it. We need an adult up-timer, though."
"Why?" Don Alfredo asked. "Are we not men of substance ourselves? Up-timers are not the only people of knowledge in the world."
"To look after David." Karl grinned. "Sarah Wendell suggested it. No, Alfredo, I am not seriously suggesting we take along a nanny for David Bartley or that we lack substance. Still an up-timer will add weight to our arguments and answer technical points that are still new to us."
For the second time in less than three years Mike Stearns was busy forging a new government out of bits and pieces of whatever he could find. This time it was in Magdeburg. He had more pieces now, but it was a bigger government. "What is it now, Francisco?" he asked, with a tired-sounding sigh.
"Apparently Horace Bolender wants to send Fletcher Wendell to Amsterdam. A bunch of merchants want to have a little chat with the cardinal-infante and they want him to go along. Prince Karl Eusebius thinks Fletcher, with his knowledge of the way economies work, will be a good addition to their delegation."
"Why do a bunch of merchants want to talk to Don Fernando?" Mike asked. "What good will that do?"
"There was an aborted panic about the Dutch guilder when the siege of Amsterdam was closing in, Mike," Don Francisco explained. "It seems like these people think they can talk the cardinal-infante out of looting the Wisselbank. They think, and I stress think, that if he promises not to loot the bank it will help keep the economy stable. Anyway, Horace has Tony and Coleman signing off on the request. It seems Mr. Wendell is fairly good at economic theory and making it understandable to others."
Normally, Mike would have paid a bit more attention to such a plan. N
ow; however, he was in the process of forcing the USE down the throats of a whole bunch of nobles. Most of these nobles wouldn't have agreed to the measures Gustav had planned for the CPE two weeks earlier, much less the program Mike had in mind.
The relatively minor matter of several merchants going to have a chat with Don Fernando of Spain was given about five minutes of his time. Then, he turned the matter over to Francisco Nasi.
"Fine, if Fletcher's willing to go and you think it's wise. Make sure they don't do anything to upset Rebecca's apple cart, Francisco. Very sure! Oh, and try to keep them from getting themselves killed."
Francisco Nasi was rather busy himself these days. Still, he was a bit more involved with the markets in Grantville than Mike was. For now he tentatively approved the plan. He would leave whether Fletcher Wendell went up to Mr. Wendell. If Fletcher did decide to go, Francisco would have a chat with him when they came through Magdeburg on their way to Amsterdam. He sent a message to that effect and turned his attention to the many other matters he was concerned with. One of those concerns was to send notification to the Amsterdam diplomatic mission, and prepare Rebecca Stearns for the arrival of the trade delegation.
