"What?" Brent asked. "Everyone we talked to wanted to invest."
"Yeah, withus .And about half of those people were going to sell their stock in some start-up to invest in you guys because they know you"ll get results."
"So? We"re respected." Brent shrugged. "That"s just the way it is in Badenburg. It"s kinda nice for a change."
"Right.There"re you guys, then there"s Guffy Pomeroy, who bilked Claus Junker out of a medium fortune, and escaped to where the lawyers can"t get at him. Right now, every investor in Badenburg is wondering whether he"s invested with the right up-timer. Bunches of them are considering jumping ship, just in case.
I"ve spent most of the afternoon trying to explain to them that you guys aren"t really all that special, which ought to be obvious to anyone who"s met you."
"Well, gee, David, if I"d known I wouldn"t have wiped the drool off Brent"s face before we talked to people."Trent spoke with some heat. "Then they would have known right off that we were Mo and Curly waiting around for the third stooge. That would be you, Sarah."
"That"s not what I meant, and you know it. While you were getting "How much can I invest" I was getting "should I sell my stock in the mattress factory" or whatever else they were invested in. I"ve been running around saying things like "Yes-to me, please. I figure I can get it at a bargain right now." And Sarah, you need to have a little talk with your sister, by the way. Her Barbie Consortium seems to be taking advantage of the general nervousness and their presumed sweet innocence to sucker people into unloading stock on them at a fraction of what it"s worth. I figure Judy the Barracuda is gonna be grounded for about two years when your dad finds out. It"s not that she"s ripping off the A-holes trying to take advantage of them. Guys that try to rip off little girls are despicable, and guys that try to rip of those particular little girls are stupid to boot. What bugs me is that they just might turn the nervousness into panic."
Sarah shook her head, caught between outrage and amus.e.m.e.nt. In the past year she had learned a lot about how her little sister and her gang operated. She wasn"t worried about the Barbie Consortium taking a loss. They had acquired a down-time merchant, Helene Gundelfinger, to do the legal stuff for their little investment group, and she was very knowledgeable about the market and what companies were worth what. The Barbie Consortium provided information on what people were doing, and who was coming up with what. Sarah seriously doubted that there was anyone in Grantville better informed on what wasgoing on in the Grantville business community than Judy and her gang. People should know better by now, but somehow everyone a.s.sumed the girls" questions were just innocent curiosity.
Then she caught up with what David had been saying. "Do you really think there could be a panic? Guffy Pomeroy wasn"t even a stock company. That was just a private deal between him and Junker."
"I don"t know. The Grantville Exchange has been dropping slowly for almost a week now. It"s ready for a rebound or a crash. I figure it could go either way. I"ve spent most of the day being just a little too anxious to buy. Seriously, I could have gotten control of the mattress factory today without half trying."
"Maybe you should have. The only reason it"s in trouble is because Mr. Jones is a horse"s hind end."
Sarah had received a couple of reports on Mr. Jones. He was one of the people who were convinced that only gold and silver could be real money. Both her parents and friends had reported on Jones and the reports weren"t favorable.
"There are a lot of reasons why manufacturing bedsis iffy right now,"Trent pointed out.
"That"s not the point. We need some way for down-timers to invest in Grantville safely without having to learn modern physics or electrical engineering."
"That sounds like a job for a mutual fund or an investment bank," mused Sarah. "But if we announce that we"re setting up a mutual fund or investment bank it"s going to do the same thing as the twin"s whispered announcement of their new projects."
Within a few days it became apparent that David was worrying over nothing. The market had taken a bit of a shock, but wasn"t really in any danger. David hadn"t known that, and the twins certainly didn"t. Sarah probably would have realized if she had given it a little thought. Certainly her parents knew, and so did her little sister.
The market was not in any real danger of crashing but waiters have big ears, and this wasn"t the sort of place where they had zipped lips to go with them. True, the waitress" English wasn"t that good, and she wasn"t all that close-but she was very interested. From the waitress to her father, the owner of the tavern, the words "mutual fund" and "investment bank" were heard. From the tavern owner to a merchant he dealt with, the rumor was spread and proceeded to change. The first distortion said an investment bank would save the market, which was in more danger than people had thought. Then, as the rumor progressed, the story expanded until it encompa.s.sed both a mutual fund and an investment bank.
The story now circulated that the Sewing Circle, the people behind the Higgins Sewing Machine Company, had a plan to provide guaranteed safe investment opportunities. They had intended to announce their new project at the reception, but had put it off because of the scandal surrounding Guffy Pomeroy. Then it became...
By the time the Sewing Circle heard the words again, it was a done deal. Stories were circulating that important people, such as the mayor ofEisenach , who wasn"t at the party, had been aware of the new project for weeks and-not to be outdone-the mayor of Badenburg was also a member of the inner circle.
Fletcher Wendell and Judy the Elder Wendell were asked several times that day about mutual funds and investment banks. Not once were they told the context. It was a.s.sumed they had to know what Sarahwas planning. Besides, everyone knew how careful they were about even an appearance of a conflict of interest. The questions were general. Their explanation of the function of mutual funds and investment banks raised the level of excitement. Gretchen and Jeff Higgins were asked about it several times, and explained that they didn"t know anything. They further explained that they hadn"t known anything about the sewing machine company when it was formed either. Their stock had been a belated wedding present. Delia Higgins was asked about it, and she a.s.sured the questioners that she had heard nothing about it. She was not believed. The Partows were asked, and were believed. However, the Partows figured it was just the sort of thing Sarah was likely to come up with. They knew the boys wanted to make washing machines, and small-scale electrical generation systems. The adult Partows just a.s.sumed that was how the two projects were to be financed. They said that they would probably buy some stock in the mutual fund.
It shouldn"t have happened that way, not from a group of kids talking. Not even from kids who had started a successful business. But Grantville was a magic place. In the course of a year, Grantville had improved the standard of living in Badenburg and the surrounding towns and villages rather dramatically.
Lots of people were more than a bit intimidated by up-timers. They felt a little less intimidated by the kids of the Sewing Circle. The kids were perceived as being more approachable. Consequently, they had been constantly approached and questioned on varied matters financial and mechanical. They were well thought of.
Karl Schmidt heard about the mutual fund from Frantz Kunze, who was his closest friend on the Badenburg council, and without question, the richest man in Badenburg. Frantz was wondering why he hadn"t heard about it from Karl. Karl knew the kids of the Sewing Circle, especially David, well enough to be fairly sure that something had been misinterpreted. Karl and Frantz adjourned to a private place to talk it over. It quickly became clear to Karl that the mutual fund wasn"t a bad idea. Additionally, several important people had already gone on record claiming to be familiar with the project. If it didn"t happen, and soon, there would be a number of embarra.s.sed and resentful people whom Karl didn"t want upset with him right now.
Wanting clear information, Karl sent someone to round up the kids. David, Brent, Trent and Sarah were happy to be rounded up. By the time Karl"s messenger came looking for them, they were getting questions about mutual funds and investment banking that they weren"t ready to answer. The questions weren"t whether such companies would be started; but rather were inquiries as to when, and at what price, people could buy into the mutual fund and investment bank the Sewing Circle intended to start.
"So, David, what is this mutual fund everyone is talking about?" That was Karl"s first question when the kids arrived.
"I wish I knew, sir. The first I heard of it was when people started asking me about it at the party."
"Remember, while we were in the tavern?" chipped inTrent . "Sarah said that what we needed was a mutual fund or an investment bank. Did you have something set up?"
"No!" she insisted. "I was just talking, trying to figure out safer ways for people to invest."
Frantz started to laugh. "It was the Boar"sHead, wasn"t it?"
When they nodded, he continued. "The Boar"s Headgets most of its supplies from a moderately crafty merchant who gives them discounts for rumors. You children need to be a bit more careful where you doyour chatting. Well, no harm done. Except some people who should know better are going to be really embarra.s.sed, having claimed to be involved in a nonexistent company."
"That could be a real problem," Karl pointed out. "I need political support on a number of issues: the new craft of crucible steel, making my run for the senate, and the bathhouse guild is complaining about Ramona"s bathroom. Don"t ask me why."
"I can explain it to you," said Frantz. "Basically, they see the writing on the wall. They"re worried."
"That doesn"t change the fact that this is the sort of embarra.s.sment I don"t need right now. So have your, what"s the phrase from the Sherlock Holmes stories, "Miller"s Street Irregulars"... whatever. Have the Sewing Circle here start the mutual fund. It"s probably a good idea, anyway. From what Herr Wendell told me, a mutual fund would be a good solid investment for people who lack the time, inclination, or talent, to pick stocks for themselves."
"It would be at any other time, sir," said Sarah, "but right now with people so scared about what happened to Herr Junker... We"re afraid that a safe investment would actually damage the market just now."
"I sometimes forget just how young they are, Karl," Frantz smiled. "No, Sarah, it doesn"t work like that.
First, because you"re drastically overestimating your importance in the scheme of things. People are nervous right now, but notthat nervous. It would take a dozen Guffy Pomeroys to really damage the Grantville market. Yes, people are envious of Karl"s success, and he is careful to give you credit because it reflects well on him and his marriage to David"s mother. But do you children really think Count Guenther is going to be scared off by Claus Junker getting clipped?"
He snorted a little laugh. "I knew the microwave was a bad idea months ago. So did Count Guenther and anyone else willing to study the matter. Well over half the money in the Grantville market is invested by people employed by the company that issued the stock.They know how their company is doing.
Higgins Sewing Machine Corporation is a good company, but it"s not the only one. I am sure that people have been approaching you about investing in your plans and no doubt some are asking about selling stock to you. Some people panic easily, and some of those, in their panic, are willing to take advantage of a child. My advice is do what Sarah"s mercenary little sister is doing, and let them sell you their stock for a fraction of its worth. If you"re short of cash, I"ll back you."
Frantz Kunze had been caught between disgust and amus.e.m.e.nt as he watched Judy the Younger fleecing those who were willing to take advantage of the youth and naivete of her little group of young girls. Personally, he was perfectly willing to deal sharply, but not against a child. He had been quite impressed by the older children"s civic responsibility, no matter how misplaced it might be. Such an att.i.tude should be rewarded. Besides, the mutual fund was certain to be a good investment. The children wouldn"t insist on control as so many of their elders did. There was a tremendous amount of knowledge held by the up-timers, but no undue amount of business sense.
"No," he continued, "the addition of a mutual fund will not cause everyone to desert the market. Some, yes-but mostly it will be those who don"t belong there in the first place. Besides, what you propose to do is simply to collect the money and invest in the various stocks that people are selling to buy shares in the fund. Your mutual fund will actually add confidence to the market, especially if some of your own money is in it."
"It wasn"t a proposal, just a thought," Sarah protested. "We hadn"t gotten anywhere near a proposal yet." "I think we"re about to, though. Aren"t we, Herr Kunze?" David asked.
"Yes," Frantz replied firmly. "I think we had better have everything worked out before the mayor announces he has sold Badenburg to finance the project. It will save everyone embarra.s.sment." He smiled a gentle kindly smile. "As a matter of fact, I have a young guest. He"s a factor fromAmsterdam , here to examine the rumored city from the future and give judgment on the truth of the rumors, and the possibility of investment. He"s been here long enough to see that there is a great potential for both profit and folly. I think we should probably involve him. If the merchants ofAmsterdam can be pulled away from their obsession with tulips, they may be a good source of capital."
"How would it work?" askedTrent . "I mean, I get the part about investing the money from lots of different investors in lots of different companies. But what do the people running the mutual fund get out of it?"
"I"m not sure," said Sarah. "A salary, maybe bonuses based on how well the fund performs, or a percentage of the fund? I think it would depend on how the fund was set up."
From there the discussion went into technical details of how such a business would be set up, and who would control what. Fletcher and Judy the Elder Wendell were sent for, as was the factor fromAmsterdam , Kaspar Heesters. After much discussion it was determined that it would be an open fund. The fund managers would take up to three percent of the gross capital each year to pay any expenses incurred. There was some argument over the percentage, but Fletcher suggested that since it was unknown how large the fund would eventually be, and impractical to predict the percentage that might be needed with any precision, they should set it up so that the board could take less if it turned out that less was needed. He also suggested some sort of incentive to encourage the board to use no more money than they really did need. Bonus payments to the fund managers could only be made if the income of the fund was greater than the expenses.
To give it a stable base, the kids would put in some of their HSMC stock. Frantz would invest and arrange more from other sources in Badenburg and surrounding towns. Karl snuck out of the meeting to spend some time with his new bride. In pa.s.sing he directed the mayor to the meeting. Informing him privately-where others could hear-that since the news had broken the principles were gathering in (mumble-mumble) and a servant would guide him.
Meanwhile, back at the rumor mill that the wedding party had turned into, the absence of the Sewing Circle, Karl, Frantz Kunze, and later, the Wendells and Kaspar Heesters had been noticed. The flurry of financial speculation went up a notch. When Karl collected the mayor and hadhim escorted somewhere, potential investors started lining up. Who got called first quickly became a matter of status. In minutes, everyone knew that news of the prospective business had broken too soon, and the principles were doing damage control. The inclusion of Frantz Kunze, the richest man in Badenburg, and Kaspar Heesters, a factor fromAmsterdam , meant that the business was larger and better financed than expected.
The reception had been a big party, in fact the biggest party held in Badenburg since the start of the war.
Financial and social movers and shakers from as far as eighty miles away were in attendance. As the financial feeding frenzy gathered steam, Karl and Ramona slipped quietly out the back. They were not heard from again for a week. * * *
Fletcher and Judy Wendell left the meeting shortly after Karl did. They had been asked their opinion on the project, and in general they approved of it, although Fletcher was concerned about issues of possible insider trading. No sooner did they reach the street, than they were mobbed. While they had strong opinions on the matter of conflict of interest, they didn"t feel the need to mention that the new mutual fund had been born only minutes earlier. They satisfied themselves with refusing to recommend, officially, this mutual fund. They explained that, because their daughter was involved, any recommendation on their part would be a conflict of interest. When asked if they would be investing in it, they acknowledged that they probably would, and that was another reason for them not to tout it. They spent the rest of the afternoon explaining mutual funds in general.
Judy the Younger was very annoyed, heartily embarra.s.sed, and ecstatically pleased all at once. The annoyance was because somehow, her sister, who couldn"t keep a secret if her life depended on it, had not let slip one word about a mutual fund or an investment bank. She was embarra.s.sed because her friends in the Barbie Consortium expected her to have the low-down on the activities of the Sewing Circle. Heather and Susie had already made pointed comments about the lack of warning. She was pleased because the rumors of the mutual fund were causing some investors to sell their stock in good companies at ridiculously low prices, now that rumor said there would be a safe place to put their money.
The Barbie Consortium was getting some amazing deals. Judy figured that the consortium would probably double its a.s.sets today. As far as the fund itself was concerned, she would tackle Sarah on that tonight.
II.
Karl and Ramona had spent a lovely week in the best room in the best inn inJena . Karl found that he liked the up-time custom of honeymoons. He was even considering making it an annual event, until they hit the city gate on their return.
It wasn"t that disaster had struck in his absence. In a way it was the reverse. "Herr Schmidt, Herr Kunze needs to talk to you before you talk to anyone else. I was told to tell you that it is vitally important that you see him before you make any statements to anyone, on anything."
The nervousness of the guard bothered Karl. It seemed as though the guy was afraid Karl would have him hanged if he gave offense.
When they arrived at Frantz"s home, Ramona was whisked away to talk to the ladies while Karl was led to the study, only to be met with: "You picked a fine time to wander off." But Frantz was smiling when he said it. "We"ve been working all week getting the fund organized. Have you seen a movie called "Other People"s Money"? The Wendells have a copy of it. I"ve spent the week trying to convince the parties involved that it"s the perfect name for the fund."
"I still say it sounds like we"re putting up a sign saying "we"ll rip you off"," said Sarah. "I think we should call it "A Rumor of Wealth." That"s how it started after all." "This is what you paid the gate guard to direct us here for?To get my opinion on the name of the kids"
latest project?"
"No, Karl. We got you here to tell you who has been involved for months in setting the project up, and the delicate negotiations about which of the investors would be on the board of directors. You"ll need to explain that the mayor was asked to serve on the board, but like you, felt he had to decline due to his extensive responsibilities. Likewise, three council members, including my miscreant son, have declined the opportunity to serve on the board."
Said miscreant son, Bernhard by name, bowed graciously to his father without rising from his chair.
"Speaking of miscreants, go ahead and sit down, Karl. Marlene will have your Ramona describing your wedding trip in detail for at least the next hour. Ah. Your face should turn red. All the suffering you"ve caused all the men of consequence in this town. That Karl Schmidt would become a figure of romance I never would have imagined in my worst nightmare. You realize that I will have to hear about your wedding trip for who knows how long?"
By now Karl"s face was an interesting shade of red, a sight David, Sarah, and Adolph never imagined seeing outside the heat of the foundry. The youngsters were having a certain amount of difficulty keeping their countenance bland. The idea of Mr. Schmidt as a figure of romance did not bear thinking about, especially for David and Adolph. On the other hand, Mr. Schmidt being teased was a rare joy.
Kaspar Heesters came to the rescue. "We have all the craft masters on the council, and about half the rest of the council as investors, and it worked out that each group would have one representative on the board. Herr Schroeder will be the representative of the crafts, and Herr Kunze for the patricians. There are several more from other towns in the area. In total there are forty-six initial investors including the Sewing Circle. About half are investing cash, the rest are contributing stock. The important thing here, Herr Schmidt, is that the names of those initial investors are secret. Not to keep people from knowing who they are, but rather to keep people from knowing who they aren"t. This is to avoid the embarra.s.sment to people who have claimed to be investors before there was anything to invest in. That includes most of the forty-six members, by the way. In exchange for that double layer blanket of discretion, they have made certain concessions we couldn"t have otherwise obtained.
"The size of their investments is generally large. They have agreed to a seven person board and to its makeup. The board will consist entirely of down-timers, but Johan Kipper will have a seat as the representative of the Sewing Circle. The Sewing Circle will not be required to quit school and work full time for the fund. The whole project almost foundered on that point. It was only the threat of exposure that prevented it. We brought you here because it was vitally important that you know what answers to give when you are asked questions."
"Very well.What did I know? And when did I know it?" Karl asked.
"Primarily, that it was long planned, and kept secret so as to avoid potential problems in the market. The secrecy was so that every effort could be made to insure the safety of the investors before any money changed hands. In other words, the way we should have done it," said David. "Instead, we"re perpetrating the next best thing to a fraud in order to protect the reputations of people who should have known better."
"Yes, we are, and you know why too, or should by now. I"ve explained it to you often enough in the last week." Frantz wasn"t smiling now. "These are important people. They don"t take well to being made to look foolish. If what actually happened came out, they would be forced to deny it, and the only way thatthey would have any hope of being believed is if they blamed it on someone else-which would be you four and the up-timers in general. "No I didn"t pretend to be involved in a business that doesn"t exist. I was told about the fund weeks ago. When they didn"t get everything they wanted, the up-timers lied and tried to make a fool out of me." They would have to follow that up with strong and public condemnations of the Grantville Exchange, and that would do all the damage you were afraid of. Nor is it always their fault. The mayor ofEisenach wasn"t even here, but he would be made to look just as foolish as the others.
More than half the investors never claimed any knowledge whatsoever. Several of them publicly denied it, but were not believed. Now enough! The disaster is averted, and will remain so. We all stick with the story."
The young,thought Frantz, not for the first time that week,can be horribly self righteous.
"So how much money will you start with?" Karl asked. "I a.s.sume that there will be enough to start either the Washing Machine Company or the Home Power Plant Company."
That got a snort from Kaspar. The one thing this venture wasn"t was under funded. The Washing Machine and the Home Power Plant companies were to be funded, and as quickly as possible handed off to others so that the twins would be available to consult on other projects brought to the fund.
III.
Other People"s Money had rented, at rather great expense, offices in downtown Grantville near the exchange. Frantz had won the fight over the name.
David Bartley"s secretary did not have good legs. His figure wasn"t anything to write home about either.
On the other hand, after a six-week intensive course he could take shorthand and was learning to type on a custom-made typewriter. He had been hired because he was conversant with down-time business practices, and getting that way with up-time ones. Leonhard was punctual, proper, and respectful. He was also something of a pain. He scheduled everything. The love of his life was a daily planner. At least that"s how it seemed to David.
On David"s schedule for today were a series of projects to make various things. There were two proposals to make refrigeration units. One of the standard type, though they wanted to use something else as a compression gas. The other was something called anabsorption refrigerator. David had no idea how they were supposed to work. He flagged both forTrent to check out and put them in his out basket. Sitting right there on his desk was an in basket and an out basket. Every day when he got out of school, he came here, to his office, to find the in basket full and the out basket empty. The really funny thing was,he sort of liked it.
He hated telling people no, but it was worth it for the ones he got to tell yes. Especially for the ones he got to rescue. There were a lot of ideas running around loose. That was the problem. They were loose.
All too often, they were loose cannons.
A good idea is a dangerous thing. "Wouldn"t it be great if" or "I can make one of those."
Sure, they could make one of those-but how many could they make, and how fast and how muchwould they cost to make? Thank G.o.d for Trent and Sarah. The sewing machine company could have gone that way if it hadn"t been forTrent fussing over details and Sarah asking how much everything would cost.
A lot of it was thinking beyond the times.
You can do this because we could up-time.
You can"t do that because they couldn"t do it down-time in our universe.
Increasingly, the newU.S. was neither down-time nor up-time, but something new. There were things that could be done in the newU.S. , things that would have been harder to do up-time because up-time there was already something that was better, or at least already established. Now they were at the start of an industrial revolution, with a road map that showed places to avoid as well as places to go. One of the cla.s.ses that David was really looking forward to next semester was comparative history.
He picked up the next item. This was a proposal to buy into the little light bulb shop a down-timer had set up. It was suggested by one of the backers. David had bought light bulbs there but not many, because they were expensive as all get out. Perhaps a bit less hand-making and a bit more ma.s.s production could turn the place around. Another project for the twins, David decided. Brent and Trent were starting to get irritated. They wanted to start their companies, but OPM had been so flooded they hadn"t had the time.
Proposals cycled through David to the twins, to Sarah, then back to David.
Next item."Leonhard, what the heck is this?"
Leonhard didn"t even look up "It"s a play, Herr Barkley. Proposals of a new sort are always pa.s.sed up to you."
Ah.Battlebegins anew,David thought.Almost from the day he was hired, Leonhard had determined that his role was to keep David from having to deal with silly ideas. The problem was Leonhard"s knowledge of what David was coming to think of as "new-time" tech could do was lacking. He lacked David"s grasp of up-time tech, and more importantly the new combination of up- and down-time capabilities. In his first couple of days as secretary, Leonhard had trashed a potentially profitable idea. When the applicant approached David, he had not known what was going on. Leonhard had almost lost his job over that one. Fortunately for Leonhard, two things saved his position. David had to have a secretary as a practical necessity, and having a secretary was part of the price of letting him stay in school. Leonhard was supposed to make David"s time at work be more productive. The other thing that saved Leonhard was that he never actually threw anything away, no matter how silly he considered it. He filed it. So when David asked him about it, he had it quickly to hand, and no harm done. What was worse, for tools to make tools reasons, the project wasn"t practical to do it this year but David had hopes for next. The project had been moved from the silly file to the later file and Leonhard looked for new silly ideas to plague David with.
"Would you see if Sarah has a minute, please?" David asked. That brought Leonhard"s head up. "If she does, I"ll go over there." David picked up the next item in his in basket.