Beer Futures

In the office of the Night Pearl Tavern, a kindly-looking middle-aged man sat behind a desk, his yellowing beard curled and his black attire complementing his contemplative demeanor as he puffed on a pipe.

Who could have known that this seemingly benign man was the mastermind behind Lübeck's largest underground criminal network?

His family had controlled the city's underworld for over a century.

"Mr. Muller, you summoned me?" Edward stood before the desk, flanked by two imposing bodyguards.

"Edward, don't be nervous; our debts have been cleared. But I need you to do something for me. I'm sure you're penniless by now."

"Mr. Muller, what would you have me do?"

"My rival, the Blue Moon Tavern, has a cartload of beer on the way. I need some fresh faces to rob it. I think you're perfect for the job. I'll give you five gold coins as payment."

"I'm afraid not, Mr. Muller. Since my near-death experience, I've decided to change my ways. I no longer wish to involve myself in the underworld."

"…Young man, you're naturally suited for the shadows. You're not going to give up the path that suits you just because of a few setbacks, are you?"

"Mr. Muller, there's a legal way to take down the Blue Moon Tavern."

"My family has controlled Lübeck's underworld for over a century. The courts are ours. In all this time, one of my ancestors even became the mayor of Lübeck. Why would I bother with legal means?"

Edward fell silent. The question was well-asked, and it left him speechless.

Ah, the cursed Holy Roman Empire.

It was neither holy, nor Roman, nor truly an empire.

Cities like Lübeck, independent and free, had become common in this era of the Germanic Holy Roman Empire, many of them modeled after Venice in Italy.

Later generations would describe the Hanseatic League as a network of commercial powers, essentially a country within a country.

Indeed, Lübeck was the capital of the League, where over 160 cities followed Lübeck's legal framework, creating a de facto state.

In the future, Prussia and Austria would arise as nation-states from the very same loose governance of the Holy Roman Empire.

As Edward pondered, Muller, watching him intently, seemed to question if the young man had become mute after a beating.

"In truth, my family's influence has been waning," Muller continued. "Young man, tell me, how would you use legal means?"

Edward snapped out of his reverie and glanced at Mr. Muller.

Indeed, even with immense power, unlawful means could not be relied upon indefinitely.

If Lübeck's entire governance could be reduced to a single man's will, it would be better for the city to carry his name.

He collected his thoughts. "Mr. Muller, it's quite simple. All we need to do is monopolize Lübeck's beer supply."

"I don't have that much money, and even if I did, I wouldn't be able to sell so much beer."

"It's futures trading. I'll structure futures contracts and purchase all of Lübeck's future beer production capacity. That way, your competitors will be forced to look to Rostock or Hamburg for supplies."

"I don't quite understand. What do you mean by 'futures'?"

"It's quite simple. We take all the future production of the breweries and turn it into a contract—a piece of paper. Then, I'll manage this paper, distributing it to you and other merchants, while denying the Blue Moon Tavern any access."

"I think I understand. So, Blue Moon Tavern won't be able to buy any beer from now on?"

"In this economy of scarcity, goods are currency, and these beers will sell themselves. The extra contracts, I'll sell to merchants in Malmö, Sweden."

"That seems feasible. If it works, I'll still give you your five gold coins."

"For this task, I'll need a lawyer, and I suppose your two bodyguards should accompany me as well."

"You want to assemble a team? Why not recruit some of your noble friends?"

"They're nothing more than fair-weather friends, and their family's influence means little in Lübeck. If I want your trust, this plan will take at least three months, and without your trust, it will fail."

"You seem to be growing wiser... I used to think you were a simpleton, a man of brute strength with no brains."

"People change."

"Alright, three months. Let me see how you plan to use these futures contracts against the Blue Moon Tavern. The courts are mine, I should have thought of turning future production into contracts myself."

"Agreed. I'll handle it. By the way, could I borrow a gold coin? I'm a little short on cash."

"Sure, but know this—if you fail after three months, I'll make sure you're beaten to near death, understand?"

"Oh, a wager? Agreed. I accept the challenge."

...

The following day, a middle-aged lawyer and Edward's two bodyguards made their way to the Jewish district.

They arrived at the lavish goldsmith's shop once again.

Edward, with a newfound confidence, entered and spoke with determination.

"Open an account, please. I would like to deposit one gold coin and exchange it for some copper coins."

The plump owner remembered him from the previous day. He was surprised to see the young German again.

"Certainly. We charge a 1% annual wealth management fee."

Edward nodded, feeling a surge of admiration.

No wonder the Jews made money so efficiently—they charged over 10% interest on loans while collecting a 1% wealth management fee. They were playing both sides.

These goldsmith shops thrived due to the difficulty of currency exchanges, the poor's reliance on high-interest loans, and the profits from large transactions.

Big transactions involved dozens or even hundreds of gold coins, far too much for anyone to carry around, leaving merchants with no choice but to rely on the Jews.

As Edward observed the Jews amassing wealth, he resolved to quickly build his own fortune and open a modern bank in Lübeck.

By utilizing the economic advantages of the time, he would outpace the Jewish financial systems and leave them no room to maneuver.

...

Edward and his team soon arrived at a local beer factory.

The moment they entered the factory yard, the smell of brewing beer brought back memories of his past life, where he had visited the Wuliangye distillery as a shareholder.

The Germans of this era, like the Chinese in later years, were incredibly industrious.

But they had been ensnared by the Jews, who held power over them through financial means.

Edward, seeing an opportunity, thought, "Why not let me make a profit off these financial strategies?"

He had already notified the security, and soon the factory owner arrived, accompanied by a group of employees.

Edward smiled and extended his hand to the leader.

"Hello, I'm a purchaser for the Night Pearl Tavern. I'm prepared to take on all of your beer production for the next three months."

The owner was taken aback. "What? You're taking all of it?"

Edward confidently replied, "Yes, I'll take as much as you can produce."

The owner hesitated, "But... my other customers need beer too."

Edward interrupted, "In these times of scarcity, your beer will always sell. However, you cannot afford to leave production capacity idle. With my contract, you can produce to your heart's content without worry."

The owner was intrigued but, realizing that the terms of the deal could be adjusted to maximize profit, suggested, "For bulk orders, the price must rise."

Edward was again struck by the absurdity of this age—bulk purchases should result in price discounts, not hikes.

Yet here, the demand for beer only made prices soar.

"Sir, we are the Night Pearl Tavern, the largest in the city. Stick to the current price; you'll make plenty. You really shouldn't upset us."

The owner finally relented, recalling the Night Pearl Tavern's formidable background.

"Alright, we'll proceed with the current price."

Seeing the shift in the owner's attitude, Edward smiled. The people of this time were still simple in their dealings, their negotiation skills childlike compared to the cutthroat world of the modern era.

"Let's sign the contract. One contract per week, two copies per contract. With these legally binding documents, all you need to do is produce, and our team will take the beer upon completion, paying you immediately."

The owner nodded. "Fine. Once the contract is signed, we'll abide by it. Any breach will go straight to court."

Edward instructed his lawyer to finalize the paperwork.

Thus, the world's first futures contract was born.

Although the contracts were primitive by modern standards, Edward's lawyer, who worked alongside the opposing lawyer, penned the agreements diligently.

With 12 weeks of contracts, they wrote a total of 24 copies, each signed and stamped to finalize the deal.

These contracts were simple—a single sheet of paper, unlike modern contracts that could be volumes of legalese.

Once finalized, the deal was sealed, and Edward's business venture was set into motion.