Chapter 70. Economics And Surprises
I have miscalculated a bit. It takes a better part of two hours for all the people to wake up and find their way to the lounge and breakfast. Savory toasts are well received, though I tactfully avoid mentioning it was my idea. Cava is... less well received. In the end, only me and Bridgit drink any. The rest either demur outright, like my father and Abe, or try a thimble and refuse anymore, citing the need to keep the heart within the ribcage. Silly people.
"So... We're currently approaching Berlinger from the west-south-west. You can see the city on the horizon already." - I announce - "I'm taking it slow to avoid creating a panic in the city. If absolutely needed, we can land within ten minutes, but as it is right now, we're going to drift over the plains outside the city, giving everyone plenty of time to see the flags before we cross the wall line. So... make your preparations as needed in the expectation that there will be disembarkation in about an hour. Hiram, can you give your father a call to give him a heads up on this? Unofficially-like?"
Abe raises his brow at this suggestion. "What's wrong with making it official?" - he inquires.
"Ah, well... I would think that Kraut court would be dubious about our claims of crossing mountains overnight right until they see the airship with their own eyes." - I offer - "Hence, an unofficial warning from a family member so that the court could scramble up some sort of welcoming ceremony without looking like they were lazy or doubtful of my word."
He nods - "Well reasoned, lady Gillespie. I was about to suggest the same, and it gladdens me to know you've been grasping the finer nuances of politics so readily."
Hiram nods at that and excuses himself to his cabin. I suppose unofficial warning should be made in privacy and all that. Meanwhile, the rest continue to help themselves to the remains of breakfast or checking over various papers once again. Well, except for Marceu. Who 'inconspicuously' moves little by little to end up next to me. Now, what are you up to, little wretch?
"...Now why would you be so concerned with preserving Krauts their face, I wonder?" - he mutters softly - "One would think letting them embarrass themselves would give you leverage for better terms on that agreement, you know? Can't help but wonder why you'd go to such lengths to deny yourself an advantage."
"Don't be daft. This meeting is about THEM wanting to buy stuff from us. If they are embarrassed, they will curtail the scope of their request out of pride. No one likes a condescending merchant." - I grumble at him - "Remember what king said yesterday? Honey before vinegar. It's a good business policy in general, just so you know."
"Isn't getting the best price for your wares the core tenet of every merchant?" - he needles. OK, he either tries to figure out how well I'm heeled on the mercantile front, or he's just stupid. Or thinks I am stupid, which is stupid in itself. I'm hoping it's first, Marceu in the game was a right canny bastard.
"Best price for wares does not necessarily mean best individual price on every single item." - I explain to him calmly - "Think about it. Suppose you have a chicken farm. It's a big farm, you have things well considered, you can reliably grow a dozen of chicken each week to sell. Now, if you consider the price of feed, the salary of workers, the maintenance costs and everything, it costs you, say... six sols to raise a chicken. Now, you take them to market. You don't have the time or inclination to sell them yourselves, so you take them to a merchant who has the poultry stall so they'd buy it wholesale and resell. Obviously, the merchant will sell them for a higher price than what they buy from you for, they need to have their own profit. With me so far?"
Marceu nods cautiously. He seems to be actually interested in the example, and I can see Mihel paying some attention out of the corner of my eye.
"Now, you have a choice in how to deal with the merchant. Primo, you can put your effort into maximizing item price, and get the merchant to pay you a gold for each chicken you sell. But he would only buy one chicken per week at that price. Secundo, you can offer your chicken at the bargain price of one ecu, but in that case merchant will buy your whole lot. In the first case, you get one gold at expense of six sols, leaving you with three ecu and six sols of pure profit. In the second case, you get twelve ecus at the expense of six ecus, leaving you with six ecus of pure profit. And in the first case you're also saddled with eleven chickens that just aren't good enough to sell for a gold. You'll need to sell them for less, and this merchant is already feeling shafted over having to fork a whole gold for one chicken, so they won't deal with you further, you'll have to seek more merchants. There's only so many merchants on the market who deal in poultry, and they talk to each other, as any colleagues would. If you get one of them annoyed at you, others will be wary of you and less likely to pay you a good price for your not so good chickens. That leaves you with the rivals of your first merchant. And trying to sell to both rivals in the same time? Yeah, well, if you are young and energetic and resilient, you might be able to put up with that hassle for a while. But it will get to be more trouble than it's worth sooner than later." - I continue spinning the tale - "So... with that in mind, what are your options for maximizing your profits and minimizing your losses? Assume you can not utilize more than two chicken per week at most, there's only so many times you can have chicken soup before you get sick of it, so any chicken over two that you don't sell become a loss of six sols - no one wants old hens."
He mulls over the problem for a bit. "I should be able to bargain for some happy medium." - he ventures then - "Two ecu per chicken, for example. Less than gold, more than just one ecu."
"Ok. You made a bargain, the merchant agrees to buy four chickens from you. Keep in mind that the merchant has a budget too, and will not be able to buy even the most excellent chickens if you charge too much. In this case, your profits are eight ecus, your expenses are two ecus, leaving you with six ecu profit and eight more chickens to deal with. This merchant won't buy more from you, he is already at his budget limits. Now what do? Stick with this, utilize as much of unsold chicken as you can stomach, and eat the three ecu loss, bringing you to three ecus of profit and being sick of chicken eventually? Look for another merchant to sell off the rest at a lower price?" - I suggest to him.
"MMm, yes, I should first bargain with one who provides foods for high nobles and the royal court, sell the best chickens for the best price to him. Then sell the rest of chickens to merchants who peddle to commoners at bargain prices." - he concludes with a smile.
"Very good. Incorrect, but good." - I praise him. He jerks up, blinking at me.
"What do you mean, incorrect?" - Marceu demands hotly - "This is the best arrangement for getting the most profit out of this!"
"Yes and no. See, Marceu, your problem is that you think as a merchant about this. You assume that dozen chicken a week is a constant that can not and will not be changed, and try to run math from that point. You need to account for the fact that supply is not a gods-given right. What if there's a drought and you can't buy enough feed to maintain your dozen a day pace? What if there's a bountiful harvest and there's so much chicken on the market that you have to lower the prices to get the merchants to buy at all?" - I suggest.
His face creases. "OK, I understand the problem with drought. The natural consequence would be to raise the prices than to recoup the costs of feed. Same with harvest - if feed costs less, then naturally chicken price should also drop, unless I want someone else to undercut my bargain." - he admits - "How does this make my assessment incorrect, though? I agree that you can not set the price once and hold to it through summer and winter - it needs to reflect the current conditions, but the basics should remain the same. Sell the premium wares to high-roll merchants, sell the bargain wares to low-ball merchants."
I chuckle. "Simple enough." - I tell him - "An application of ingenuity and investment can alter the supply by your whim. Imagine for a moment that you have devised a scheme that would allow you to raise much more chicken at your farm. You might have to cut some corners there, your chicken will be a bit fattier than what the market usually sells. But instead of dozen per week, you now throughput a gross per week, while keeping your expenses to maybe twice over what you paid for dozen per week the old way. Now you can afford to offer bulk chicken sales at, say, eight sols apiece, if the merchant you're dealing with agrees to buy two dozens from you at once. They go for it, because while it's a bit of an upfront investment over the budget, any merchant worth their salt has a reserve just for good bargains like this one, and once they sell the first bulk, they'd be able to consistently afford replacement shipments from you from all those profits. Now you are undercutting everyone on the market, because your throughput is much higher than theirs. Mass production. In the end, old way farmers all either sign up to work at your farm or buy a license from you for your method, and continue flooding the market with cheap chicken, or concentrate exclusively on raising superb chickens solely for high-roll merchants. Whereas you are controlling a good chunk of the low-ball market. Your profits are now through the roof, and you are essentially beyond competition unless competitor also uses your new method or improves upon it."
His face slowly elongates and pales as he considers the suggestion. "This is..." - he trails off, thinking - "...I can't decide whether that would earn you Kinov's blessing or smiting. You DO realize that sharply increasing supply like this would flip the market over, right? Every merchant will want to buy from you, and every farmer would want to work for you or kill you for ruining their livelihood."
"Indeed. Now, imagine you are smart enough to foresee this, and just as the market starts to tip, you start offering bails, buyouts and licenses to your competitors? Those who want can join the corporation, or receive a license for production methods at a discount. Or just have their stock bought out at good enough prices to set them up for trying their luck in a different craft." - I imply.
"Hm. A country-wide authority on a singular product would be nice, so long as the house in charge could be counted on making the right decisions." - he hedges - "Late monsieur Konistan had attempted something similar with grain, and the results were... lukewarm."
"That's because he was a rank idiot." - I tell him bluntly - "He insisted all farmers under his aegis produce exactly the same sort of grain. Obviously, it created a shortage of other sorts and an overabundance of this one. Moreover, he insisted on dictating the prices at which the grain would be bought from farmers, and his prices were just a denier short of blatant robbery. Visit Grenwille sometime later, you'll find the situation had changed a lot under my management."
"...What do you mean, your management?" - he inquires slowly.
"Huh, you don't know? I bought out Konistan's business wholesale. He was on his way to Mersaille to retire with a quite generous payment I offered him for everything he owns as a merchant, when he was slain by a brigand in a robbery gone tragically wrong. Everything he had and the stuff I started on my own or bought out is currently folded under the Northern Trading Incorporated." - I tell him, and he gapes like a fish. I see Mihel copying his expression over yonder.
"YOU own that!?" - Marceu yelps, pawing at the chair's armrests - "...Just... you... ugh!"
Now's my turn to be puzzled. Why is he acting like this is news? I did submit everything to Merchant Guild, Mihel should have been aware of this.
"Ok. What is going on?" - I demand of both of them, turning to include Mihel into my line of sight - "I know for a fact that I have submitted the papers to the Merchant Guild in the most expeditious matter, my registration should by now be a matter of public record. Why are you acting like it's complete news to you?"
"...many apologies, but... I was just flabbergasted you'd marry Konistan for that. That man was vile, no matter how much he'd pretend to be a respectable merchant." - Marceu tells me with a grimace.
"What do YOU mean, married." - I demand - "I BOUGHT the whole trading house from him, cash up front. No marriage of any sort was discussed, considered, agreed upon or enacted."
He exchanges a helpless glance with his father. Mihel stands up with a sigh, and ambles to his cabin, coming back shortly thereafter with a thick ledger.
"This is one of the guild registry copies." - he explains, as he cracks it open - "It contains a summary of every official registration or interaction that was conducted through the guild." His finger traces the dates back, until he points out one entry.
"Northern Trading Incorporated, reregistration. 'Due to change of owner and overhaul, a name change was requested and granted. The old name "Konistan trading house", the new name "Northern Trading Incorporated". Registrar - XXXXXXXXXXXXXXXXXXXXX madame Konistan."
He frowns, as he scratches at a large blotch after "registrar". "This is odd." - he mutters - "The name should have been written in full, not just the last name. And that blotch..." He continues leafing the registry backward, pointing out several more similar blotches followed by "madame Konistan". How interesting.
"Go further back. There should be a registration for a shop "Sweet Dream"." - I request - "Let's see if there was anything hinky with it."
He continues turning pages, and sure enough, there is yet another blotch followed by "madame Konistan".
"How very... interesting." - I drawl, as I consider the situation - "I'll be honest, it does not look well for the guild. Let's hope it was a case of grifter fooling whoever is responsible for filing this, not a case of willful cooperation."
Mihel turns a jaundiced eye towards me - "That's a serious accusation."
I nod - "Quite. See, "Sweet Dream" was also registered as a cause for issuing my membership in the guild, and there is no mention of any transaction regarding this shop henceforth. So, either my personal entry in the guild membership had been also changed to "madame Konistan", in which case I will very literally eat the clerks of your guild with bean dip and red wine, or there exists an... inconsistency."
It takes little time for Mihel to verify this much. "Gods damn it." - he grumbles, as he sees the pristine registration that DOES bear 'Opening of "Sweet Dream" shop' in the notes explaining the issuance of privileged rank without prior membership - "Lady Gillespie, it seems that the Merchant Guild has done you wrong. You have my personal word that as soon as we return, whoever made the alterations will be surrendered into your custody."
"Fair enough." - I agree - "We shall confer upon the results of interrogation to decide what to do from that point on. Was it an attack against me specifically, or just a part of some bigger effort to defraud the guild members? Is there any other registry entry regarding this madame Konistan?"
"Lady Gillespie, as much as the guild had done you wrong, we can not surrender information about other members." - he objects.
"I'm not asking to know what the interactions were, I'm asking you to check if there is anyone else or not." - I tell him, and after a brief stare-off, he breaks down and opens the registry again, scanning through it.
"...No, it does not seem so. I believe whoever that is, they are targeting you personally." - Mihel finally offers, shutting the book.
"Very well. I will deal with it once we get back." - I conclude - "But for now... Berlinger awaits."