Gold is good. Gold is plenty. Yet too many are bad.
The influx of gold from the New World caused rampant inflation. Gold from Spanish Armadas enriched the bank accounts of many, but the number of goods being produced stayed the same. There was no new industrial method that exponentially produced goods to keep up with the influx of gold, thus, the prices of goods rose sharply over the years. The era was known as the Price Revolution. Inflation was about 1 – 1.5% a year, an incredibly low number in our current era, but for an era where currency was commodities or specie, it is high.
Imagine a world where a farmer was able to earn more and more since the prices of their goods increased, but their production methods are unchanged. For example, let’s say a farmer produces one cattle a year. It earns the farmer a single shilling. The next year, due to inflation, the farmer now earns 1.5 shilling. Good right?
But one must also take into consideration, that the prices of goods such as bread and wine are also increasing. Assuming that the production is constant, things ought to be fine. But what about labour in the urban centres? By right, companies would adjust wages according to inflation.
But did take that place? In our current society with high inflation, do companies give a 5-10% increment to employees year on year to account for this? Some may, but many don’t.
In the industrializing Port Mpande, many of these urban dwellers would pick up their ploughs and head back to their fields. There was plenty of lands to be had, and in a climate of increasing inflation, they would make more.
Now imagine the same situation due to gold flowing from Zoutpansberg. Jan was very worried about inflation.
In an era with no central banking systems, merchants played the role of central banks. When they gave out loans, they gave them out with high-interest rates to account for inflation. After all, this is so their profits would outpace inflation.
With high-interest rates, fewer companies were willing to take out loans, and economic growth will slow.
So there remained the question of removing the gold from local circulation in Port Mpande. To curb inflation the best he could, he needed an outflow. And there were many options.
One would be the towns belonging to other Commandoes like Pietermaritzburg or Potchefstroom. He could dump the gold by purchasing various goods or currying favour with gifts of gold. That was one way, but a very short-term way. What if the Commando perished due to a hunting accident? Then what then? And it was a waste, for the gold would only reinforce the agrarian economy of the towns, moving inflationary pressures somewhere else. But since all goods had to come and flow to Port Mpande, the inflation would come right back.
Dumping the gold into the local merchants’ hands was easy. There were many luxury goods he could get to appease the local Boers as well as other Commandoes. But put too much money into their hands, and inflation would rear its ugly head and make the prices of everything go up. Due to his purchases lowering the supply of goods in the local South Elfrican economy, every Commando would have to deal with the decreased buying power of their funds and would all look towards him for trouble.
Whatever outlet the gold went, it cannot stay in the British market. Because one must also think about the effects on the pound sterling. The Natalia Republic was reliant on the British market, reliant on the British currency. So, if he changed all the gold into pound sterling, increasing the supply of money, but the number of goods was unchanged, inflation would soon follow.
He had a plan, like the Norwegians and the Saudis, he needed a huge outlet that wasn’t the local town’s economy. Some gold can be invested locally, but not all of it. What better idea than a Sovereign Wealth Fund? Buy a couple of stocks, invest in businesses overseas, and the inflation monster won’t come after them in South Elfrica. By buying shares or useless trinkets such as crypto and NFTs, the inflation monster won’t come as it slept in 2020.
Unfortunately, since everyone in the Natalia Republic was mostly farmers with little experience in equities, he had to arrange for someone to look for a broker in Port Natal that was able to help him trade in the English stock market. No one was available, for Port Natal traded mostly in commodities.
From the report of the bureaucrat, some brokers facilitated trading in Cape Colony, and he had to head to Cape Town. He supposed it made sense, British army officers from Britain were stationed there, and some of them probably played in the stock markets as well.
He dispatched a bureaucrat with suitable funds to ferry himself from Port Natal to Cape Town and bring the broker for a consultation in Port Mpande. Funnily enough, if they were still dirt poor, they would likely have to undergo the Great Trek like the rest of the Boers. But they had gold!
While waiting for the stockbroker to come, he came out with a scheme to remove the local gold supply. And that was with bonds. With the construction of the central bank, there was a safe space for gold to be held. And with that space, people could be assured when buying a bond that their funds are kept safe.
The bonds he offered weren’t going to have crazy yields. At most 2%, as a little encouragement for families to procure bonds. After all, you’re going to make more the more it is kept. And just in case, he had discussed with merchants the possibility of loans if he couldn’t pay back the interest.
But it should be fine, since the supply of gold ought to increase, and he planned to raise taxes soon to fund the bonds.
He wasn’t accepting cattle. A bond market revolving around cattle would be a nightmare. Cold hard cash, or coin, or gold.
These funds were special. Because instead of the merchants setting interest rates, he was going to set interest rates, because he was going to give out the loans. To be more accurate, they were more like grants. Since only locals investing in the Natalia Republic could borrow, all funds from the loan are reinvested back into the local economy. The yields are likely low, but that’s not the point. The point is that merchants won’t provide farmers loans because it was likely they wouldn’t do so without a credit score or any sort of relationship with one another. So, he had to step in.
Stolen from its rightful place, this narrative is not meant to be on Amazon; report any sightings.
This paired with taxation would mean all the money would flow back into his coffers either way, and he would easily pay back the interests from the bondholders. If need be, he would scrape some from the sovereign wealth fund.
Such schemes doubled the bureaucratic workforce, which led to more men and women having more gold in their pockets. Which led to him quickly thinking up a way to tax these funds out of their pockets to clamp down on inflation.
What was a good number? He looked at all ten fingers of his hands and found his answer. 10. A flat 10% tax on income.
For farmers, that would mean 10% of their product or its nominal value in pound sterling.
For salary workers, that would mean 10% of their income.
How to sell the idea of taking money away from people? Defence. Every Boer knew that the lands they stood on were extremely dangerous, with elves lurking around the corner behind every brush. The bush might be hiding an entire ambush party, scouting party or war party looking to have them all massacred. All men and women know they have to contribute funds to the Commando so that the Commando can procure arms and arm them in an event of a conflict.
For those who are unhappy, Jan’s only suggestion was to have them move away to somewhere else. Because people who don’t contribute to the local town’s funds are parasites on the system, and if they wanted to be as free as their traditional Voortrekkers ancestors, they are very welcome to live in isolation away from here. But because they chose to settle here, unlike their Voortrekker ancestors, they will shut up and pay up.
Those who don’t pay? Well, the Natalia Securities Exchange had a debt collection department specialized in breaking those resistant to paying their debts. A government contract given to that department should solve the issue. He didn’t want to be mean, but if he needed to make an example of any dissenters, that meant a couple of additional bullet holes in their bodies.
Writing up a decree, he gathered his various Veldkornets for a meeting regarding the taxation and they did not object to it. In principle, it was a fund for defence. But as Sun Tzu said, “The supreme art of war is to subdue the enemy without fighting. Supreme excellence consists of breaking the enemy's resistance without fighting.”
Jan had no intentions of fighting, and he was going to make the elves have an interest in cultivating good ties with them. When your standards of living massively improve due to your Boer friends handing over various goods, you would seek to keep the trade link open instead of fighting your Boer friends.
The plan was to simply be the Singapore of Elfrica. Singapore served as the gateway of Asia, more specifically, Southeast Asia. In the old world, Rwanda sought to do the same even though they’re landlocked…
For many Westerners not wanting to leave the comforts of Western civilization, to throw themselves into the savage East, they would stop in Singapore where they can stay within the boundaries of their all-so-sacred Western Institutions. But whilst Singapore is westernized, the country is not Western. As the Westerners called it, “Disneyland with a death penalty”. It is a police state where the law is followed. If the rules aren’t followed, aka, no drug trafficking, one can be hanged.
That is what Port Mpande would seek to do. Jan would have his people put on Western masks, letting any foreigners from Europe think that they are Western with their white skin and thought. However, Boer culture was distinct from European culture, just like how elven culture was distinct from human culture.
Port Mpande would serve as the linkage between the Xhosa, Zulu, Boer, and various elves within South Elfrica and any foreigners seeking to do business in the country. Inadvertently, this would allow his town to supercharge their growth as more and more citizens would be able to serve in financial roles due to foreign investment. They would take advantage of the domineering position they held in trade due to Port Mpande while preparing to diversify the economy for the inevitable seizure of Port Natal.
Just like how immigrants are relieved to reside in their exclaves in foreign nations, foreign investors are relieved to trade with fellow humans that share similar culture and thought instead of directly dealing with foreign species.
The broker from Cape Town took a short break in Port Natal before travelling by wagon to Port Mpande. The man sneered at the uncivilized surroundings that required much development. The roads were mostly dirt, and the trip was bumpy. Led by the bureaucrat, he was escorted to Pietermaritzburg, when he found some indications of stone roads.
“Seems like a shithole,” The broker remarked, shifting his feet back from the cowshit found on the ground.
Nevertheless, for the ordinary people living in Pietermaritzburg, having some foreigner calling your town a shithole was gravely insulting. They all glared at the foreigner. The broker sneered but held back once he noticed the guns by their side.
“Hey, so when are we going to reach there? Seems like the place you talked about. A relatively developed town. I assumed you were exaggerating,” The broker asked the bureaucrat, who politely kept his cool in the face of the man’s growing rudeness.
“One more trip, and we will be heading to Port Mpande,”
The broker sighed, “Get the man to Port Natal, I can’t stand the sight of shit on the ground everywhere. Tsk, the authorities in Cape Colony knew how to run things better.”
“Please be patient, SIR,” The bureaucrat let out a little hint of frustration which shut the broker’s trap. He was already regretting coming over here.
“A simple farmer wants to trade in equities. Bold. But since you paid for my trip here, I suppose I should spend some time to hear you out,” The broker from Cape Town remarked.
Jan glanced at the man; business attire soaked with sweat. Not good for the Elfrican climate. No doubt, the man must be furious about coming over here, but the man seemed more surprised than anything.
“I’m surprised. I don’t see much shit on the ground in your little town. How? And there are so many elves. Are you not afraid of them?”
“Like you sir, I don’t like to accidentally step in shit while taking a stroll in town. So, I levy fines on people if they cannot keep their cattle in order. The local police force does a good job.”
“So that’s what the women were for…” The broker lightly nodded his head, before remembering that every one of those women he saw had guns. He decided not to ask why.
“As for the elves, let’s just say, they have something I want, and I have something they want. So, we cooperate, that is the business we conduct.”
The broker seemingly satisfied with such a short answer remarked, “Very well, I won’t pry into your secrets. Tell me, you must be wealthy, sponsoring me to come out here. How much money do you want to invest?”
Jan reached out for something underneath the table. He slowly retrieved a gold bar and placed it on his desk. The broker baulked and shifted backwards from his seat, making the chair scrape against the ground.
He began putting another gold bar onto the table. And the broker’s jaw dropped.
“I have many more. So, tell me which stock exchanges you can reach, and tell me what I can invest in.”
Clearing his throat, the broker began his prepared speech.
“We offer services regarding the procurement of equities in the international markets for our customers. Markets involve the Bolsa de Madrid or Madrid Stock Exchange, Börse Frankfurt or Frankfurt Stock Exchange, Borsa Italiana or Milan Stock Exchange, the London Stock Exchange and finally the New York Stock Exchange. Every transaction has a commission fee for the service we provide.”
Jan homed in on the two most important stock exchanges, the London Stock Exchange and New York Stock Exchange. The superpower of this era is Great Britain, and if things go according to history, and Americans manifest their destiny, the United States of America was the next superpower.
The other stock exchanges were ruled by monarchies. And like the Jews serving the European monarchies of old, he was afraid of his wealth being confiscated or seized due to the whims of a king.
Plus, investing in Spain was a horrible decision. Spain was in a decline. And if history follows, they will lose Cuba to the Americans, as well as deal with a civil war. Plus looking at Spain’s modern GDP Per Capita compared to France and Germany, it was obvious any investments won’t grow quickly.
Germany was bad because they would have to deal with numerous wars for German unification. This was bad for business.
Milan? Same thing if they tried to unify Italy.
London and America were the best. And he conveyed that to the broker.
The broker handed him a list of popular stocks from the various markets. And due to the influence of the modern world seeping in, he focused all his attention on American stock.
“Buy Citigroup Inc, JP Morgan Chase & Co, Proctor & Gamble,” He listed out some companies in the list that were famous household American brands that had high stock prices.
The broker nodded fervently and took notes and Jan listed company after company.