1636: The Saxon Uprising — Snippet 06

1636: The Saxon Uprising — Snippet 06

Chapter 2

“Run that by me again, Captain.” Jeff Higgins shook his head. “I’m having some trouble with the logic involved.”

Captain David Bartley looked a bit lost, as he often did when other people couldn’t follow his financial reasoning. “Well…”

He sat up straighter on the stool in a corner of the Hangman Regiment’s HQ tent. “Let’s try it this way. The key to the whole thing is the new script. What I’m calling the divisional script.”

Higgins shook his head again. “Yeah, I got that. But that’s also right where my brain goes blank on account of my jaw hits the floor so hard. If I’ve got this right, you are seriously proposing to issue currency in the name of the Third Division?”

“Exactly. We’ll probably need to come up with some sort of clever name for it, though. ‘Script’ sounds, well, like script.”

“Worthless paper, in other words,” provided Thorsten Engler. He, like Bartley and Colonel Higgins himself, was also sitting on a stool in the tent. The flying artillery captain was smiling. Unlike Jeff, he found Bartley’s unorthodox notions to be quite entertaining.

“Except it won’t be — which is why we shouldn’t call it ‘script.'”

“Why won’t it be worthless?” asked Major Reinhold Fruehauf. Unlike the others, he was standing. Slouched against one of the tent poles, more precisely. Fruehauf commanded the regiment’s 20th Battalion. Battalions were numbered on a divisional basis, with the 1st and 2nd battalions assigned to the division’s “senior” regiment, the Freiheit Regiment commanded by Colonel Albert Zingre. Jeff Higgins’ Hangman Regiment being the bastard tenth regiment of the division, its two battalions got the numbers nineteen and twenty.

Bartley squinted a little, as if puzzled by the question. “Why won’t it be worthless? Because… Well, because it’ll officially be worth something.”

The regiment’s other battalion commander cocked a skeptical eyebrow. “According to who, Captain? You? Or even the regiment itself?” Major Baldwin Eisenhauer had a truly magnificent sneer. “Ha! Try convincing a farmer of that!”

“He’s right, I’m afraid,” said Thorsten. His face had a sympathetic expression, though, instead of a sneer. Engler intended to become a psychologist after the war; Major Eisenhauer’s ambition was to found a brewery. Their personalities reflected the difference.

“I was once one myself,” Engler continued. “There is simply no way that a level-headed farmer is going to view your script — call it whatever you will — as anything other than the usual ‘promissory notes’ that foraging troops hand out when they aren’t just plundering openly. That is to say, not good for anything except wiping your ass.”

Bartley looked more lost than ever. “But — but — Of course it’ll be worth something. We’ll get it listed as one of the currencies traded on the Grantville and Magdeburg money exchanges. If Mike — uh, General Stearns — calls in some favors, he’ll even avoid having it discounted too much.” He squared his slender shoulders. “I remind all of you that they don’t call him the ‘Prince of Germany’ for no reason. I can pretty much guarantee that even without any special effort money printed and issued by Mike Stearns will trade at a better value than a lot of European currencies.”

Now, it was the turn of the other officers in the tent to look befuddled.

“Can he even do that?” asked Captain Tadeusz Szklenski. He was the commander of the artillery battery that had been transferred to Jeff’s unit from the Freiheit Regiment.

Bartley scratched his head. “Well… It’s kind of complicated, Ted. First, there’s no law on the books that prevents him from doing it.”

Szklenski frowned. “I thought the dollar –”

But David was already shaking his head. “No, that’s a common misconception. The dollar is issued by the USE and is recognized as its legal tender, sure enough. But no law has ever been passed that makes it the nation’s exclusive currency.”

“Ah! I hadn’t realized that,” said Thorsten. The slight frown on his face vanished. “There’s no problem then, from a legal standpoint, unless the prime minister or General Torstensson tells him he can’t do it. But I don’t see any reason to even mention it to anyone outside the division yet. Right now, we’re just dealing with our own logistical needs.”

The expressions on the faces of all the down-timers in the tent mirrored Engler’s. But Jeff Higgins was still frowning.

“I don’t get it. You mean to tell me the USE allows any currency to be used within its borders?”

He seemed quite aggrieved. Bartley was grinning, however.

“You’re like most up-timers,” David said, “especially ones who don’t know much history. The situation we have now is no different from what it was for the first seventy-five years or so of the United States — our old one, back in America. There was an official United States currency — the dollar, of course — but the main currency used by most Americans was the Spanish real. The name ‘dollar’ itself comes from the Spanish dollar, a coin that was worth eight reales. It wasn’t until the Civil War that the U.S. dollar was made the only legal currency.”

“I’ll be damned,” said Jeff. “I didn’t know that.”

He wasn’t in the least bit discomfited. As was true for most Americans, being charged with historical ignorance was like sprinkling water on a duck.

Jeff had been sitting long enough, and the stools weren’t particularly comfortable anyway. So he rose and stretched a little. “What you’re saying, in other words, is that there’s technically no reason — legal reason, I mean — that the Third Division couldn’t issue its own currency.”

“That’s right.”

A frown was back on Captain Szklenski’s face. “I can’t think of any army that’s ever done so, though.”

David shrugged. “So? We’re doing lots of new things.”

“Let’s take it to the general,” said Jeff, heading for the tent flap. “We haven’t got much time, since he’s planning to resume the march tomorrow.”

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34 Responses to 1636: The Saxon Uprising — Snippet 06

  1. robert says:

    Great! They can call it the Euro. It’ll spread throughout Europe (except for England, Norway and Sweden).

  2. laclongquan says:

    Euro is a good name for it. I dont see the problem. And why not those three countries, pray tell?

  3. Inkstain says:

    Because while England, Norway and Sweden are members of the European Union, they’re on their own currency rather than the Euro.

  4. robert says:

    @2 Just based on their history – er, future history…forget it. I was just kidding. Something about subsidizing inefficient agriculture…but then, who wants ADM.

  5. Summercat says:

    This is interesting. I wonder what is going to actually get the Euroscript backed up? The army doesn’t have much in the way of commodities, and they’re not going to get people to pay for services rendered…

  6. Denny says:

    I’m just throwing this out there (definitely NOT an economist) but considering both David and Jeff are uber-rich couldn’t they back the army’s new script with private loans (sort of a makeshift gold standard) until the currency “took off” so to speak?

  7. Willem Meijer says:

    In the 17th century omly one thing mattered about money, ant that was the amount of gold or silver in it. The only reliable paper money was backed 100% by bullion. In some of the stories about the Amsterdam Exchange Bank (in this universe) peolpe tend to see it as a 20th century bank, lending out more money than it actually has and thereby creating paper (or electronic) money. The Amsterdam Exchange accepted coin from merchants, assayed it, and credied the owner with a non-existent bank-guilder with a standard amount of silver. The Hamburg Exchange Bank went one better, and credited the owner with an account in pure silver. You cold pay someone with a draft on your account, and the money wold be transferred (on paper) the the ther perons account. There were no banknotes. When (late 17th century)there was a asmall run on the Amsterdam Exchange they proudly presented peolpe with bags of coins that were damaged in a fire decades before, and had never left the bank. You got out exactly what you paid in. Coin, and nothing else.

    In he cases promisory notes were issued (or emergency money was coined) it had to be traded in (by the city issuing it during a siege for instance) for real coin of the realm as soon as possible.

    This scrip (that’s the way I learnt to spell it) will not work. If only that you’d have to go to Grantville or Magdeburg to trade it in for real hard cash. And what trader in Grantville or Magdeburg will accept scrip that has nothing to back it?

  8. Govert says:

    By buying up such a script wouldn’t you take indirect control of an army ?

  9. Mike says:

    @5 – While you are correct to the best of my knowledge for OTL, in the NTL, especially in the Gazettes – even several of the printed ones, not only the electronic ones – the former N.U.S dollar (and the CPE and eventually the U.S.E. dollar) are not backed by gold and silver bullion. It is largely similar to the post-1972 United States system of being backed up by faith and value of that country. Several of the stories dealing with David Bartley and his friends touched on some of these issues. They even used USE dollars to prevent a run on the Wisselbank in Amsterdam. There is also a series of charts on the 1632.org website that shows a progression of acceptance of the uptime currency and it’s accepted rate versus listed rate.
    Most of the logic for the currency having value was due to the uptimers having the manufacturing base to build just about anything from a downtime perspective and that the Abrabanel extended clan of Jews supported them so if they did, then the uptimers were likely solvent.

    Bottom line – the USE currency is largely not based on bullion. (At least, NUS and CPE weren’t and there isn’t evidence to the contrary) That being the case, there isn’t any difference in terms of how the USE currency and the 3rd division currency will function. The big hurdle is for people to BELEIVE it is worth something. If they get the currency listed at a STABLE exchange rate to any currently accepted value currency, then it will work just fine. In some ways, Stearns support isn’t the only one that would make a difference. There is already prior canon example of a Gazette story that David Bartley himself buying up the currency would make people view it as acceptable – he has the track record. (Granted, it’s hard to do the same thing as he did before since he’s not physically present)

    This does raise two interesting questions though – what did all of the formerly independent German states that minted their own currency do with the bullion that was backing it? If the USE dollar is the only one as currently used domestic tender in the USE, that would imply conversion of everything else – and that the bullion is no longer a medium of exchange, but an asset by itself. On the same line of thought, if those formerly independent German states get wind of the 3rd division currency, would any of them start reissuing currency of their own? How about individual USE states or imperial cities? Like say, Hesse-Kassel? Great way to have a neutral currency in a civil war by a USE state not aligned directly with either main bloc. Just a thought…

  10. Robert H. Woodman says:

    Eric needs to make sure that he distinguishes between “scrip” and “script” in the text. I think that the text, as written above, is in error. David Bartley should be saying “scrip” and then pointing out that it sounds like “script.”

  11. wombatcombat says:

    who said they had stopped issuing their own currencies

  12. Todd Bloss says:

    You still cannot get away with army issued money if it’s not backed up by some realized sense of value -whether that be gold, land, or the economy of the issuer, it must have some value, at least at the start, that people, both farmer and Banker, can recognize. Otherwise it will seem (and be) just a ponsi/pyramid scheme.

    The 3rd Div. has no economy; it doesn’t produce anything and it has no bullion.
    It only exists at all because it is fully funded by USE tax dollars -a rabbit hole expense, that just like today, will never show any kind of monetary return.

    In fact, though there may be no law against printing their own currency, the fact they are a wholy subsidized entity of the USE government (not mercenaries) would imply their money was gauranteed by the USE -just as American scrip was in WWII and Korea. This could create all types of legal problems later as the farmers and the USE would both have good legal arguments for and against that implied gaurantee. Even if the USE could win the case in court, they’d probably stiill pay or warranty the money, otherwise they would be seen as having defaulted on one of their currencies (thus devaluing the dollar)

  13. robert says:

    Too bad nobody made David Chancellor of the Exchequer.

  14. Robert H. Woodman says:

    @11 — Robert

    If this were real life, I’m sure it would happen eventually, probably in another 15-20 years, though. David’s still a little young (in the eyes of many) for such a lofty position, even if he is certainly capable of holding such a position and managing it quite well.

  15. morgulknight says:

    I’m wondering what else David’s got brewing; he strikes me as the type who’s smart enough to have as many cash-generating schemes going as possible.
    Not that I’m terribly qualified to comment on any financial machinations. I’m still trying to figure out the whole credit-default swap mortgage-backed mess, how it was supposed to work in theory, and how it worked in practice.

  16. robert says:

    @13 It worked exactly as it was designed to work. And with all the unintended consequences that the geniuses who designed it ‘forgot’ about designing out. Which was hard to do since the worst of the consequences depended on the venality of the ratings agencies. Once garbage got a A, AA or AAA rating then all the buyers and insurers of the mortgage bundles could be and were screwed.

  17. Mike says:

    @9 – While it isn’t stated all the other currencies formerly minted by the various formerly independent german states are no longer issued, this passage definitely implies it:
    ****
    Szklenski frowned. “I thought the dollar –”

    But David was already shaking his head. “No, that’s a common misconception. The dollar is issued by the USE and is recognized as its legal tender, sure enough. But no law has ever been passed that makes it the nation’s exclusive currency.”
    ****
    Szklenski wouldn’t be under the impression the dollar was the exclusive currency if formerly independent states now within the USE were still minting their own money. If anything that would make David’s case for them printing their own money easier because they’d be one of many currencies minted within the USE that is accepted as having value in the USE.
    However, to counter my own point, the issue came up in 1635:Dreeson Incident that SoTF (specifically Grantville) was still issuing its own citizenship to anyone (re: Duke de Rohan’s double agent) and it was even wondered why that was still occuring. While that doesn’t prove that other currencies are being minted, it does go to show the USE federal government isn’t acting as the sole authority as it theoretically should be in all cases of federal authority.

  18. KimS says:

    David will need someone to guarantee the scrip is good business. My best guess is the CoC. Even as he spent money on supporting the arts following the USE loan to stabilize the guilder, he wouldn’t forget Gunter. Gunter, Gretchen and Spartacus are keys. If the farmers and merchants know the CoC supports the scrip, then it is good. No problems.

  19. dave o says:

    #18 My guess is that the scrip will be guaranteed by SOTF, rather than USE, or CoC. I wonder who will get the scrip: it doesn’t seem likely that Bohemian peasants will find it acceptable. Paper money? What’s that? You mean I have to go to Grantville to get coin? On the other hand, it’s somewhat more likely that millers will accept it, and a lot more likely that corn factors will. I don’t know whether there is an active trade in grains in Bohemia, like in the Netherlands and western Europe, but it’s at least possible.

  20. laclongquan says:

    Let’s just mention the event of this alternate timeline, not our own. Cut down on the confusions.

    First, money is represented an amount of value. Bullion-backed money is just a paper stated that it represented an amount of value translated into an amount of bullions. With too much gold/silver and money based on them, and not enough society’s production of goods and services to back them up, the amount of value in any piece of paper will go down, regardless of the bullions in the bank.

    Second, money also represent the value of trust a population put in the goverment issue that money. When people use a USE dollar, they accept and trust that dollar will exchange an amount of goods and services in the USE. Any German principalities can issue its own money, but people wont trust that money (‘doesnt worth the paper it’s printed on”) then that kind of money is worthless. One reason that many German nobles want the extented clan Abrabanel opened a bank of their land is because the that clan’s bank note held in high trust among people. Read 1632, and 1633 for this type of economic phenomenon.

    Third, in this sensem, the scrip David and Mike plan to use is a type of promise from Mike : “Now and in future, when Mike become the leader of a land/nation/goverment, this scrip will have worth”. And if they got its exchange rate in Grantville market to favourable level, people will also feel more confident in this scrip. It’s kinda like the paper money that monarchs and commanders use before, but with more respect and hope involved in.

    SImple, really.

  21. Patrik says:

    @3 Not to be a nitpick or anything, but Norway isn’t a part of the European Union. The country you’re thinking about is Denmark. England, Sweden and Denmark were the only countries to reject the Euro as it’s currency.

  22. TimC says:

    Of course if Mike were NOT to gain or hold power the scrip would be useless. I still have some ‘Japanese Occupation of Burma’ rupees. My father confiscated them from a Burmese civilian in his military hospital outside Rangoon in 1945. The guy had accepted them for services he rendered to the occupiers. Big mistake.

  23. TimC says:

    And in an American context I suppose Confederate dollars were not likely worth much during Reconstruction?

  24. “David will need someone to guarantee the scrip is good business. My best guess is the CoC.”

    Jeff, the currency ummh, will in the end be honored by the USE, or Gretchen will want to have a chat with you. Contemplate learning to sing soprano.

  25. Mark L says:

    “I suppose Confederate dollars were not likely worth much during Reconstruction?”

    They were worth something to currency collectors, however, not at face value. Not for a long time.

    Back in the 1960s I had a friend whose great-grandfather had belonged to some Michigan regiment during the American Civil War. He came back home with a suitcase filled with Confederate money. Story was that during the 1890s and 1900s he would show the thing to his kids and grandkids as evidence that pops was a millionaire. Anyhow, the suitcase got forgotten after the man died and was not rediscovered until the 1950s when the old family place was sold. My friend’s father got the suitcase because he was a Civil War buff. He then proceded to sell the contents (actually only 90% — he kept a good bit of the paper himself) to collectors at well above face value during the Civil War centennial. And used the proceeds to help put his two kids through college.

    Of course, he had to wait 100 years to realize that gain. But since great-grandpa had not had to pay anything for it, the ROI was still pretty good. One of these division by zero things.

  26. frederic says:

    If we want to speak about money issued by military in OTL, what about AMGOT money?

    The ones printed by the US army did or did not have any value depending on which country it was printed for (and spent in).

  27. Jonathan Fisher says:

    Offer a tiny amount of interest on the new currency, print their year of issuance on them, and call them ‘3rd Division War Bond-Dollars’

    It (eventually) lends an air of up-time legitimacy to the scheme, at least once the newspapers spread the idea, and makes it seem like there is a stronger govt. backing to them than there (currently) is.

    I predict the CoC members will love it, and probably start using them for personal transactions wherever they can. And acceptance is the first step in the legitimization of a currency.

    Minor problems: yearly changeovers- the idea of interest makes them more attractive, but does it force yearly devaluation when a new year of ‘bonds’ comes out, or does the market experience deflation in anticipation of the new year’s ‘bonds’? Probably a combination of both, which savvy traders will make small fortunes in…

    Also, even ignoring my idea, the Division needs to exercise the monetary *discipline* to create a stable currency, which means *rules*: rules made by David, which make little sense to non-David people under him at the time. Especially if they outrank him.

    They *better* get Mike in on this. He outranks everyone in the 3rd Division, and can put his authority behind David’s rules, and keep the high-ranking idiots from meddling with the Hangman’s Fed, which would happen if the scrip/currency gains any sort of legitimacy.

  28. Summertime says:

    I’m not clear on why the 3rd Division financier wants to issue scrip for the debts they incur rather than just using regular USE currency. Why bother, and mess with all the ramifications?

  29. @28 Because they are short of USE currency?

    Being short of money is a general in-period issue for armies.

  30. morgulknight says:

    @29, It’s been an issue a lot longer than that; the phrase, “War is less a matter of weapons than of money” is attributed to Pericles of Athens, some 2500 years ago. From what I can tell, not much has changed since then.

  31. dave o says:

    #28, #29 The 3rd division was expected to forage (steal) for what they need, just like everyone else. Only the fact that Mike won’t put up with it means they need some way to pay for stuff.

  32. Mike says:

    @ 28, 29, 31 – The other reason the 3rd division needs scrip is that while the USE Army currently is paid regularly and well (both far from normal for the time period) there might be some uncertainty about whether the 3rd Division specifically will continue to get sufficient funds routed to it as the drama with Ox and Wettin in Berlin plays out. Having already established your backup prior to needing it is a good idea.

  33. laclongquan says:

    That too. The Swedes had been restraint many times in the past in their European endeavours by the tight-fisted purses of Richelieu. Read 1632 for details.

  34. ET1swaw says:

    @31, 32, 33 – Don’t forget guys, 3rd Army is in an ALLIED country – Bohemia – not in any sort of enemy territory. It would be like foraging during transit of one of the USE provinces. NOT a good idea or the way to treat Friendlies!!!

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