Lübeck Brewing Guild

That night, as Edward lay in bed, he let out a quiet sigh of relief.

It turned out that the world was the same everywhere; there truly existed hidden credits.

Unlike money, hidden credits are intangible, not visible to the eye. They stem from values such as patriotism, integrity, and honesty...

When the art student had stirred the rebellion in the brewery, he should have been treated as a traitor, yet the entire nation of Germany stood behind him.

This included judges and prison guards, all of whom sided with the art student.

It was all because of the art student's profound patriotism.

In Lübeck, the court undoubtedly stood by Uncle Müller.

And the only reason Edward had gained Uncle Müller's support was due to his hidden credits.

If Uncle Müller had seen Edward as a parasite, if he had sided with the other Hansa merchants, things would have been dire for Edward.E

ven if he were right, he would have been rendered wrong.

For knowledge of finance transcended the understanding of the time.

Much like how Copernicus was burned at the stake in the 1370s for his scientific beliefs, such fate would have been inevitable for Edward.

Even Christianity, in that age, would have condemned him as possessed by the devil for being different from the masses.

They would have labeled him the devil's instrument, for he had stripped away the wealth of more than thirty Hansa merchants and a large number of Lübeck citizens.

In that case, Edward could have been put to death, burned slowly, even with justifiable reasons.

Thus, behind-the-scenes support and hidden credits were indispensable.

Edward decided to strengthen his ties with Uncle Müller even further.

This era was rife with danger, and merely possessing knowledge was not enough to rise to the top.

The higher you climbed, the more perilous it became, and knowledge would become less relevant.

Unless one day, Lübeck took on your name and you became its ruler.

Only then would everyone fear you, ensuring your absolute safety while everyone else would find themselves in jeopardy.

It was easier to manipulate people than to be manipulated, and more thrilling to control others than to be controlled.

Especially in medieval Europe, where this truth held even more significance.The world here was unforgiving.

...

On Monday, Edward inspected his stock exchange.

Currently, Lübeck's stock exchange had a dreadful reputation, almost akin to that of a disgraced team like the "Great A" or the national football team.

Consequently, very few were engaged in trading at the exchange.

Were it not for Edward having other ways to earn money, the exchange's dismal popularity might have already led to its closure.

Edward decided to change the current ammunition spot contracts to futures contracts and instructed Little Fatty to negotiate with the manufacturers.

As for Edward, he took Uncle Müller, a lawyer, and a few assistants to the brewery to discuss beer futures contracts.

In addition to the ammunition futures, beer futures would become the second product of the exchange.

...

"I don't understand why beer should be turned into futures; there's no competitor to eliminate at the moment," Uncle Müller inquired on Edward's lavish carriage.

"Because it's a win-win situation."

"First, the brewery. A real futures contract requires payment upfront, followed by production and delivery."

"Once the brewery receives payment, it can lock in its profits, producing without the worry of loss, and it doesn't even need to pay for raw materials itself. That's a huge competitive edge."

"Next, for the exchange: with paper contracts, we can trade, selling them to speculators or investors. You've seen it yourself: a 1% service fee for every trade—this is quite profitable for the exchange. Even the Jews charge the same 1% fee."

"And then for your breweries."

"Breweries are end-users with a real demand for beer. When prices are right, they can buy up the beer contracts cheaply and redeem the actual beer at the warehouse when the contracts expire.

This will enhance their competitive advantage."

"As for you, the speculators, you can buy low and sell high, profiting on the paper contracts. After all, you control the prices."

"To the speculators, this is just another casino where they can come and play whenever they wish."

"Your reasoning makes sense, but I still can't see who is losing out," Uncle Müller responded.

"This is a new invention. Once it's created, it benefits everyone. In the future, even the mayor, if knowledgeable, could use futures pricing to adjust interest rates and other economic variables."

"Oh, don't talk too much. I get it. Futures are a tool for national and public benefit. But I can't stop thinking about how you used futures to deal with the Blue Moon Tavern."

"Because we are the rule-makers, futures are simply the tool we use to create those rules. Money is another tool. If these breweries don't want to accept our carrots, they will have to accept our sticks."

"You're terrifying. You're not even a Hansa merchant, yet you can set rules and control others. What if you become mayor? That would be something else!"

"If I become mayor, the first thing I'll do is make rules that govern and direct the other nations, especially the Kingdom of Denmark."

"I think you may actually become mayor one day."

"That's too far off. Right now, I'm just a small figure. Let's focus on getting control of the breweries first—that's more practical."

...

As expected, after Uncle Müller personally intervened, only four breweries understood the benefit and joined the Lübeck Brewing Guild, agreeing to futures contracts and accepting the guild's management.

The production process was altered so that the exchange would pay the breweries in advance for the contracts, allowing them to produce the beer. Upon expiry or earlier, the brewery would deliver the beer to the exchange's warehouse to settle the contract.

Once the breweries became accustomed to this production model, they would establish short positions on the exchange.

By selling high, they could lock in profits, then produce beer and deliver it to the warehouse to settle the short positions.

Despite the clear benefits for breweries in futures contracts, only four breweries were willing to join, and even with Uncle Müller personally intervening, many breweries rejected him due to their suspicions.

The last time Edward played with beer futures, although all the breweries made money, beer prices on the supply side had surged by 40%.

The breweries, bound by the contract, had to supply at the agreed price, feeling that they had been taken advantage of.

All the profits had gone to Edward.

These breweries didn't know why the price of beer surged by 40%, but Uncle Müller knew exactly why.

This time, as Uncle Müller personally intervened again, the breweries feared that beer prices would once again rise on the supply side.

Thus, many breweries, having learned from their previous loss, refused to comply with Müller.

The Lübeck Brewing Guild, which seemed to be a suspicious organization created by Uncle Müller to control everyone, was also something they refused to join.

They valued their freedom over profits.

After all, no one wanted to be a subordinate. However, a few breweries, seeing the importance of the Night Pearl Tavern as a sales channel, chose to join, tying themselves to Uncle Müller's leadership.

...

"Edward, I don't understand what you mean by creating a Brewing Guild," Uncle Müller asked, puzzled.

"We need an organization to manage the entire industry, to regulate the behavior of each member. You can think of it as an alliance."

"What's the point?"

"We rally some, and confront others. It's about using the masses to fight the masses."

"I don't understand what you mean."

"I want to build a market of order, not a free market. I want everyone to follow our orders. Only by following our orders will they make money. Non-allied members will end up bankrupt."

"So, this is why the Lübeck Brewing Guild exists?"

"Yes, without the guild, how would we manage the brewing industry? How would we distinguish enemies? Who do we need to bankrupt? Who do we eliminate?"

"Alright, let's see how it goes. Some breweries definitely need to be taken down."

Uncle Müller thought back to the breweries that had rejected him earlier, growing a bit angry.