“Since the price of grain has dropped, the farmer down the way who was a bit slow to take up the new ways or just had a bad year can’t make the rent. His family gets thrown off the land and they come into town looking for work. But there is no work. The carpenter has a drill press that he got from the USE and not only isn’t hiring, he’s laid off a couple of journeymen who are also out looking for work. Meanwhile, the money that might have been spent on the price of wheat went to the USE and there is even less available to pay anyone for anything. Causing unemployment and the lower wages you talked about. Unemployment must be even worse than we thought back in Magdeburg.”
“It is,” Hayley said. “We’ve been hiring people just because we couldn’t stand seeing them out of work. In fact, that was the whole basis for SFIC.”
“That won’t work on a large scale.” Sarah shook her head sadly. “We don’t have enough money. Not all of us put together.”
“Then we get the money. Get others to put it up,” Judy said. “We need a project. . something impressive. Then we get investors.”
They tried to talk her out of it. Susan for business reasons, Sarah for economic reasons, Hayley for political reasons, Gabrielle because it looked like a lot of distraction from getting a better understanding of down-time medical science. But Judy had an impulse of iron. It was an impulse to do good, but it wasn’t a real plan.
“How do you form a corporation in Austria-Hungary?” Susan asked.
“They have a lot of laws, but not all that much in the way of corporate law. Moses Abrabanel has been pushing for limited liability laws, but with very little success. I have a lawyer who is familiar with the state of corporate law.”
“Good.” Judy commanded, “Susan, you and I will go talk to Hayley’s lawyer and set up a stock corporation agreement with the best protection we can get for potential investors. Then we need a project, something to excite people, get them interested and involved.”
“Well, like Hayley said, they need living space,” Trudi said. “How about a tram like they have in Grantville to make the land outside the walls more accessible?”
“I’ve been testing the waters about that. There’s not much interest and considerable opposition,” Hayley said.
“Why opposition?” Sarah asked.
“They don’t want to make it easier for the hoi polloi to get to town,” Hayley said. “It’s the whole peasant villager versus citizen thing. And the ferry boat to Race Track City hasn’t helped, either.”
“That’s stupid!”
“Stupid or not, it’s real,” Hayley said. “I don’t see them getting excited about a few miles of track till they see it in operation, and maybe not then. I do see the city council stopping the trams at the city gates and searching the passengers to make sure that they aren’t smuggling in bread or beer to sell in competition with the city bakers. They’ve occasionally done that to the ferry boat.”
“A building then, like the Higgins or some of them going up in Magdeburg,” Trudi said. “Only bigger. A combination hotel and office building. Prince Karl is getting to be a pretty good architect, isn’t he?” She looked at Sarah.
“Oh my God!” Sarah complained. “Don’t get Karl involved in this.”
“Yes!” Judy said. “Karl is crazy for architecture! And he’s actually good at it, too.”
* * *
Two days later, at the meeting with Hayley’s lawyer, Jack Pfiefer, it was pointed out that there was no law against selling stock in a corporation registered in the USE in Austria-Hungary. And, not to put too fine a point on it, the girls owned all or part of several. In fact, they had American Equipment Corporation. . just sitting there. With Prince Karl already owning several million dollars worth of preferred shares.
“We better talk to Ken Doll,” Judy said.
“Ken Doll?” Jack asked.
“Prince Karl Eusebius von Liechtenstein,” Judy said in her snootiest voice. “Otherwise known as the Ken Doll of the Barbie Consortium.”
“Oh,” Jack said, sounding confused.
Trudi, who was with them, giggled. “By majority vote of shareholders, AEC can issue as much preferred stock as it chooses to. That’s in the charter, right?”
“Yes,” Susan said. “What about it?”
“Susan, what exactly is the difference between a preferred stock certificate and a dollar bill?”
Susan started to answer, then stopped. She didn’t have a clue what the difference between a dollar bill and a preferred stock certificate was. Neither did anyone else in the room. They were all quite sure there was a difference, but when they actually thought about it, they couldn’t think what it was.
This was a job for Sarah.
* * *
“That’s a good question, Trudi,” Sarah said, pleased. “There are a couple of differences. I guess the first is that money is issued by governments. There have been exceptions to that, company scrip that’s only good in company stores, but the results are usually bad. I’d say universally bad, but I can’t prove it. It ties people into a single supplier, the company that issued the script because who else would take it? Money issued by governments is-or at least can be made-legal tender for all debts public and private, so if you have a debt measured in that money, they have to take it. The second difference is that preferred stock is an investment that is generally expected to pay dividends. Interest of some sort anyway. After all, why would someone loan you money if they weren’t getting interest?”
“Like the AEC preferred that the Ken Doll has,” Susan said “He’s made a bundle on that.”
Which was true enough, Sarah had to admit. “That’s participating preferred. If you guys do well, he gets extra dividends, but if you don’t, he just gets more paper. You’ve been lucky so far.”
“Don’t confuse skill with luck, Sarah,” Vicky said. “Sure, we were lucky at first, but we’ve gotten good at it.”
Trudi interrupted before the conversation got totally derailed. “Why do people loan governments money for no interest? That’s what money is, a loan. You’ve said that lots of times.”
“Another good question,” Sarah said. “Because money benefits everyone. . well, everyone who has it. It is a transferable debt on the government, true enough. But the key there is it’s transferable, which lets it act as a medium of exchange. A dollar in your pocket is a dollar in your pocket, whether you got it from the government or from the local bookie.”
“So if we issued preferred stock in AEC, it would work like money.”
“No,” Sarah said. “People wouldn’t accept it. Not if they had any choice in the matter. You wouldn’t know about company scrip, at least not the term. But when a company out in the boonies paid its employees in company scrip, it was because that was the only job available and it locked them into using the company store where prices were jacked up. It was a way of keeping people locked in perpetual debt. It didn’t work in cities where people had other options.”
“It’s not so different from a village shop that gives credit,” Trudi said. “It’s not like you can take your credit to another shop. Shopkeepers often act as local banks, loaning people money that goes on their account and is paid when the harvest comes in.”
“Sort of,” Sarah acknowledged. “But the loan is going the other way. It’s the shopkeeper giving the loan, not the company getting it. It’s always easier to get people to accept a loan than to give one.”
“Not always,” Trudi said. “Often enough the shopkeeper will pay people in credit at the shop. Sometimes my father paid people in credit in local shops. My father wasn’t a cheat, but after Kipper and Wipper, we didn’t have the cash. Almost no one did and the shopkeepers knew we were good for it.”