1636: The Viennese Waltz

CHAPTER 21

June 1635

Race Track City

There was a half-finished air to the streets as the girls left the dock at Race Track City. It was clear that an attempt had been made to create a wide, tree-lined avenue, but the trees were knee-high and the grass was packed down. The street itself was just plain dirt.

“Ew,” Millicent said. “Hayley, why the heck haven’t you all paved this street?”

“Because we’re still negotiating with the turkey who owns the concrete patent.”

“Huh?”

Hayley sighed. “This is so, so. . downright stupid! Back in, oh, ’32, I guess, the current emperor’s father started selling patents on inventions that came out of Grantville. So if you don’t own the patent, you have to pay a fee to the patent holder. See? Now, if the patent holder sees that you’ve got a major project going, they figure they can hold you up for even more money. They ask ridiculous prices for the use of ‘their’ process and you can’t just do it or they’ll take you to court.”

“For concrete? That you could buy for a dollar ninety-nine a bag on sale back in West Virginia?”

“Yep.” Hayley sighed again. “The way I understand it, when Ferdinand II found out about Grantville issuing patents on new inventions, he decided that since God had placed Grantville in his empire, all the information and technology that came back with us actually belonged to him. So he figured that he could give it out just the way he gave out land. He also needed the money and didn’t respect anything that the emergency committee did, so, at least in Austria-Hungary, all the inventions that came back with the Ring of Fire and all new inventions invented anywhere, are the property of the crown.”

“Good grief,” Judy said. “Talk about a recipe for disaster!”

“The average rich guy here,” Prince Karl pointed out, “doesn’t see it that way. He figures that having a monopoly on something is the best way to organize it.”

“Oh,” Vicky squealed. “Look at that!” She went hustling off to a shop window. “They’ve got blue glass bottles. That’s different.”

Karl read the sign. “Kreuger’s Wine and Brandy. Hm. I wonder if it’s worth drinking. Most wines from Vienna are kind of sharp and thin tasting.”

Hayley said, “Couldn’t prove it by me. All wine tastes sharp and thin to me. Or else sour and, well, icky.”

The wine merchant called, “Fraulein Hayley! It’s good to see you. Please, bring your friends to try my strawberry wine.”

Herr Kreuger, now that it was summer, had taken a leaf from some of the up-time travel guides that had made their way to Vienna. Instead of long tables and benches, he had four-person round tables, with umbrellas. The girls and Karl sat down and he proudly brought out several of his new blue bottles, along with a supply of wine glasses. With a flourish, he poured the chilled wine over ice and topped the glass off with soda water.

“So you got some CO2,” Hayley observed.

“Yes, but don’t tell the patent holder,” Herr Kreuger said. “He’ll have me in court.”

“Who bought the patent?” Hayley asked.

“Prince Gundaker von Liechtenstein bought the patent on the process for separating CO2.”

“Which way of separating CO2?” Hayley asked.

“Is there more than one?”

“Dozens,” Hayley said with a sad shake of her head.

“Well, I think the patent that Prince Liechtenstein bought covers them all.”

Hayley grimaced. “See what I mean, you guys?”

“Yes, I do,” Karl said. “It is a disaster waiting to happen. I will check on what patents my family has bought.”

* * *

After their refreshments, they wandered Race Track City for a bit longer, then met at another restaurant. This one had a private room, which was immediately made available for Fraulein Hayley and her friends.

The restaurateur spoke to Hayley quietly while the others were being seated. He looked concerned, so Judy asked about it when Hayley finally sat down. “What’s up, Hayley? Did he infringe on a patent or something?”

“Laugh all you like, Jude,” Hayley said, looking a bit depressed herself. “No, he didn’t. Yet. What he did have to do was add some more credit accounts. Which means he doesn’t have the cash to buy supplies. And with our agreement, that means Sanderlin-Fortney Investment Company is going to have to front him the money.”

“What’s all this about?” Sarah asked.

“Nobody in Vienna has any money,” Hayley said. “At least, none of our customers do.”

“Oh, yes. I was meaning to bring that up with you, Sarah. Hayley mentioned it before,” Judy said. “You were telling me about how Austria is broke. Could you explain to us what you were talking about.”

“Do you remember Mom’s ‘great sucking sound’ lecture?” Sarah said.

“I remember it,” Judy said. “I didn’t really understand it, but I remember it.”

Sarah looked around at the others. “Right after the Ring of Fire, what Mom and Dad were most afraid of was that we would trash the local economy by sucking all the money out of it. We avoided that by introducing the American dollar, but that was just locally. For the past four years almost, we’ve been sucking money out of the rest of Europe. That’s how our economy has grown so fast. Like China’s did, back up-time. But the down-time banking system isn’t up to shifting the money back and frankly most of Europe doesn’t have the credit to borrow the money. So the money goes to the manufacturers in the golden corridor, and all too much of it stays there.”

Sarah hesitated, clearly looking for words. “Europe does have stuff to sell and it has people who want to buy that stuff. But, there isn’t the cash and that makes figuring out what anything is worth hard. And that’s strangling the economies of every country, except the USE. And the Netherlands, sort of. The Union of Kalmar, a bit. Everybody isn’t suffering the same amount, but almost everybody is suffering.”

“So what is needed is more money?” Karl asked.

“Yes,” Sarah said. “But you’ve got to find a way of introducing it that won’t cause more problems than it heals.”

“What do you mean?” Judy asked.

“To put it bluntly,” Sarah said, looking at Karl, “most of the governments of Europe don’t have enough financial credibility to be able to add to the money supply without people losing confidence in the money. Even here, where they aren’t materially increasing the money supply, the shift to paper silver certificates has devalued the paper in spite of the fact that it’s backed by a consistent amount of silver and the crown claims to have the silver in its vaults to buy every silver certificate out there.”

“I think they actually do have enough, or at least close to it,” Karl said.

“It’s possible. From what I’ve been hearing, there has been little increase in the money supply, but there has been inflation. That effectively means that there is less money available. And that in turn means that every improvement in productivity makes things worse.”

“That makes no sense at all,” said Hayley. “Making things better for less has to be a good thing. Especially when there isn’t enough money.”

“It would seem that way, wouldn’t it?” Sarah agreed. “But it hasn’t worked that way. Not since the Ring of Fire. As long as the value of money was determined by the amount of silver or gold in the coin, the down-time economists were right. You sold your stuff abroad to get more silver and then used that silver to run your economy. And it was stable because you can measure the amount of silver in the coins.”

“Oh my goodness,” Judy whispered in pseudo-shock. “Sarah has turned into a silver nut.”

Sarah returned a repressive look. “No. Having your economy dependent on whether some miner happens to hit a large vein of silver strikes me as a very bad idea. But full faith and credit are hard to measure. In fact, the only real way to tell is how willing people are to take your paper.”

Judy very theatrically wiped her hand across her forehead.

Karl grinned at Sarah, and Sarah grinned back at him in a disgustingly sappy way. Judy grinned. “Stop drooling, Sarah and explain.”

“What you have is sort of stagflation!”

“That can’t be. The prices have been going down gradually for the last. . well, at least since we got here.”

“Inflation is more complicated than it seems in economic-ese-which is as weird as medical-ese or engineering-ese. Inflation actually means ‘the devaluation of money,’ not simply the ‘increase of prices.’ What has been happening is a lack of faith in the reichsthaler silver certificates, which is being hidden by increases in productivity.”

Judy, in spite of herself, was following this. She couldn’t help her upbringing. “So the prices are going down but they should be going down more if the reichsthaler was respected as a currency?”

“Mostly, but if you will notice some prices aren’t going down. Eggs, for instance. Anywhere that the cost of production hasn’t decreased, the prices are actually going up.”

“But the price of wheat and rye are both down,” Hayley said.

“Sure. Because they can dump half their tenants off the land and still get in the crop with the new plows.” Which was overstating the case somewhat, but not unreasonably. That was why there were so many people in Vienna-because after getting thrown out of their homes, they didn’t have anywhere else to go.

“Speaking of which,” Karl said. “How are you managing this place, Hayley? It’s more active than I expected. There is a strong feeling of industry here.”

“Between the cash up front that Ron Sanderlin got for his 240Z and my drawing account with the Abrabanel family, SFIC had the start-up cash. But fairly soon we ran into the same problem everyone else in Vienna has: none of our potential customers had any money. It wasn’t that cut and dried. Most people had some money, but not enough to keep us going. So we had to offer credit to keep customers. But we are getting close to our credit limit and I am afraid that Moses Abrabanel is going to cut us off if we don’t get some sort of cash infusion soon.”

Trudi, who had been listening quietly, said, “You’ve told me before, Sarah, that money is a loan.”

Sarah nodded.

“So why don’t we make our own loan? Make our own money?”

“Because no one would accept it,” Sarah said. “If the governments of Europe don’t have the credibility to introduce new money, certainly we don’t.”

Trudi didn’t say anything else, but she had a thoughtful look on her face.