by Eric Flint
"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 Gunter, 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. Now; 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.
In the Wendell kitchen, back in Grantville, the trip was of more immediate concern. "Judy, I really think I ought to go." Fletcher went to give her a hug. "I don't think I'll be gone more than a couple of months at the most."
"I wish I could go," Sarah muttered, flopping down into her favorite chair. "It was my idea, partly, anyway."
"I know the school is being fairly understanding about absences due to work, Sarah," Fletcher responded. "But your education is more important, as far as I'm concerned. David's going, that's all the teenager I want to have to deal with."
"Sarah, you'll get your chance to travel," Judy the Elder noted. "Just not right now. It's bad enough that your dad is going. Yes, Fletcher, I know you need to do it. I'm not that crazy about it, considering you're going to be traveling through a war zone, but I understand. Just try not to get hurt."
Fletcher circled Judy the Elder with his arms and placed a kiss on her cheek. "Have I ever mentioned what a good little wife you are?"
Fletcher hadn't thought it out. He'd hugged Judy from behind. Her elbow met his midriff with some force. "Omff."
Judy the Elder turned around and frowned at him. "Don't get any ideas, buster. I'm not that happy about being left to deal with two girls on my own. Still, I understand. If you can keep the European economy stable, well, you need to."
Outside Amsterdam, in Vredenhof, the villa Don Fernando was using for a headquarters, Miguel de Manrique held up a sheet of paper. "I have an interesting letter here, Your Highness."
"Yes?"
"It's from Prince Karl Eusebius von Liechtenstein and a group of merchants. They would like to visit to discuss the economic effects of the siege. They request 'a little of your time if it would be convenient.' A Spaniard, Don Alfredo de Aguilera, will be coming, too, as well as several German merchants of generally good reputations and large purses, and an up-timer financial expert."
"Well, merchants generally show up at a siege. This is a rather unusual group, though. What do we know about the prince and the up-timer?"
"I'll find out."
Some days later Miguel had an answer. "Your Highness," Miguel spoke quietly, "I have that report you asked for."
Don Fernando looked up with a sigh, "Which report, Miguel? I seem to fill my days with one report after another. Please tell me this one is at least amusing."
Miguel shrugged. "Not amusing, then, Miguel?" Don Fernando asked. "What is it then? More supply problems? The fleet wants to move a few more miles out to sea just to be safe? The Inquisition has gone on a rampage?"
"I doubt the inquisitors would dare, Your Highness. I believe we were fairly firm with them. No, this is about the people who want to visit you, Prince von Liechtenstein and his party of merchants."
"Ah, yes… that report. I don't suppose the up-timers are here to sell me a marvelous siege engine, one that will reduce Amsterdam's walls to gravel?"
"Not at this time, I fear. I have quite a bit of information, though. One visitor is the 'chairman of the board of directors' of a very wealthy entity called 'Other People's Money.' It is a mutual fund, I'm told. Another is called a 'financial expert' from up-time. I have a prospectus here, and an annual report from this OPM, as well." Miguel passed the papers over to Don Fernando and waited patiently as the prince read through them.
"Is this true, Miguel? Does this OPM truly have this kind of money?"
"Of that, I am not sure, Your Highness. It will take some time to confirm. I do have some information on Prince Karl, also. It seems that his father was in business with the traitor, Wallenstein, a number of years ago. A bit later in their lives, he tried to have Wallenstein executed for treason, which, you must admit, is fairly standard for Ferdinand's court. A very wealthy young man, and, unlike his uncles, Gundaker and Maximilian, who support His Majesty, Ferdinand II, it appears that young Karl is making certain overtures to Wallenstein."
"Yet another traitor, Miguel?"
Miguel shifted a bit uncomfortably. "His lands, many of them, are now in the territory claimed by Wallenstein. I'm forced to admit, were I in his position, I might have to do the same."
"All right, set up a meeting. It might prove to be amusing after all."
They had arrived at the siege of Amsterdam almost a week before. Now they were seated around a large table in the dining room of the estate Don Fernando was using as his headquarters. It was the third day of talks between Don Fernando and the Grantville merchants. The group had made their request and Don Fernando had agreed to it without hesitation. However, simply assuring the world that he would not loot the Wisselbank didn't strike him as all that good a solution. He wanted more information on effects of the siege. Now, finally, they were getting down to the reasons the merchants felt this action had been necessary.
"If the Dutch guilder disappears or is drastically devalued, more money must be introduced into the economies of the nations that that use the guilder as currency for large-scale transactions," Fletcher Wendell explained. He knew he was being too technical, but he didn't want to sound like he was talking down to Don Fernando. "In the United States of Europe, the guilder represents a small but significant percentage of the money supply because of its consistent value. New United States dollars were initially set at a price in guilders. After their introduction, the dollars have been allowed to float, but we still use the guilder as the primary currency they are compared to. The sudden…"
"I am interested in how your American money works," Don Fernando interrupted. "This dollar, it is not backed by anything, no gold, no silver. You seem to print it at need. Yet, from what I'm told, it is generally accepted in the German states. Why?"
"The dollar is backed by the full faith and credit of the New United States, Your Highness," Fletcher said, "And we don't print it as we need it. We print just enough to keep the economy running."
" 'Full faith and credit'? Those are just words. Why could I not start printing money?" Don Fernando demanded.
It was immediately apparent to Don Fernando that he had said something silly or perhaps offensive. The clear desire of everyone in the room was to have someone else explain his gaffe to him, just so they wouldn't have to. People were looking at one another with that "you tell him" look that he had occasionally seen in his tutors when he brought up an indelicate subject. "Prince Karl, it appears I am in need of correction and my other guests are not anxious to provide it. Would you kindly explain?"
"Ah, it is a somewhat delicate subject, Your Highness. Forgive me, please, for being blunt. The question becomes 'whose words can be believed'? The Spanish crown has found it necessary some three times in the last century to default on its loans. That experience has… ah, weakened the faith placed in the Spanish crown and somewhat limited its credit."
Don Fernando nearly asked what printing money had to do with getting credit, but the up-timer, Fletcher Wendell, stepped in. "At heart, at the most basic level, money is a loan. It's a loan from the people who use the money. The same things that cause a government to default on a loan cause them to inflate the currency. If a country defaults on a loan, people lose fait
h in that currency."
Don Fernando looked at Karl and Fletcher, somewhat startled. The prince had indeed been blunt. On the other hand, Don Fernando had not himself been involved in those defaults, so was prepared to listen. "Very well, you have explained why I can't but not why the up-timers can. Why can they print money and have it accepted?"
"Not once in the history of the United States has it ever defaulted on a loan. Not once. Not back in the up-time U.S., and not here in the down-time," Fletcher answered. "Not through revolution, economic boom or bust, wars and world wars, and not even now, after having a small part of the nation transported through time to the middle of a war."
"More than that," Karl added, "you can't look at the cliffs left by the Ring of Fire and not know that it must be the work of God. That gives the up-timers, ah, well, a certain amount of credence to start with. They arrived with good references." He held up his hand when it looked like Don Fernando was about to explain why the origins of the Ring of Fire didn't matter.
"I am no theologian, and I make no pretense of knowing God's intent in placing them amongst us. Still, after seeing the Ring Wall, as it's called, the question isn't why should we trust them, but why shouldn't we. So far they have not given anyone reason to doubt the value of their currency. Nor do I think it likely that they will."
"Yet, what you ask me for is simply my public word, my word, that I will not loot the Wisselbank. I won't break my word if I give it, but why do you believe that I won't?"
"The guilder has not collapsed, not yet," Franz Kunze answered. "It's fallen but not collapsed. How far it falls depends in part on how likely most observers think you are to actually take Amsterdam. If you give your public word not to loot the Wisselbank, that is one more bit of assurance that the money is safe, still good. Some people will trust the guilder because they don't think you'll take Amsterdam. Others will trust the guilder because you have given your word and they believe it. Some of the trust will be partly for one reason and partly for the other.
