Lübeck Armaments Guild

The matters regarding the beer guild would take three months before the newly established factories could produce beer. Edward left the management of the guild to Uncle Muller and returned to the exchange.

Meanwhile, Baron, the chubby fellow, had also taken care of his own affairs. As Edward entered the exchange, he was greeted with enthusiasm by Baron, who eagerly reported, "Boss, all six of the city's munitions factories have chosen to join the Lübeck Armaments Guild. They are very interested in futures trading."

Edward was taken aback. Could it be that Baron was so capable? Edward and Uncle Muller had faced various setbacks while establishing the beer guild, yet Baron had single-handedly set up the armaments guild so easily.

"How did they all choose to join?" Edward inquired.

"Since the war ended, some of the traditional merchants who didn't opt for paper artillery have been selling off their stockpiles of real artillery," Baron explained. "A large quantity of artillery suddenly flooded the market, but no one was buying. These six munitions factories, which produced artillery, also found their products unsellable. Once I mentioned futures trading, they all chose to join."

"For them, any outlet to sell their products was a lifeline," Baron added.

"Did you explain the rules to them? By joining the Armaments Guild, they must adhere to the exchange's management and follow its directives," Edward asked.

"I did. For them, as long as they have orders and can stay afloat, they're willing to comply with anything," Baron replied.

"Didn't expect that, after just talking with Uncle Muller about the story of overproduction economics, the artillery industry would already be facing an overproduction crisis," Edward mused. "These people worked overtime during the war to produce artillery, but once the war ended, many merchants started selling their stocks, and the market suddenly became flooded with excess supply."

"We need to solve this surplus crisis. Baron, do you have any cargo ships?" Edward asked.

"I don't, my family deals in salt. We own several saltworks," Baron answered.

"It looks like I'll have to build a fleet. We must transport the surplus artillery out of the German market and export it abroad," Edward decided.

"A fleet? It's not easy to find a good captain these days, and there are pirates at sea, not to mention storms. Once the ship encounters an accident, we'll lose everything," Baron cautioned.

"Methods are always more plentiful than difficulties. I'll go to the port and see what I can find."

...

Edward went to the Lübeck shipyard. The price for a small cargo ship remained the same.

Ordering a small cargo ship would cost 20,000 gold coins, with a manufacturing time of six months, as other merchants were also having their ships built.

If Edward were to buy a second-hand ship, it would cost 40,000 gold coins, and there was no guarantee that anyone would sell. Since it took six months to build a small cargo ship, the profit from it would certainly exceed 20,000 gold coins. Thus, the 40,000 gold coins price was simply 20,000 for the ship and 20,000 for profit. (Ancient people had no concept of depreciation.)

Edward was dumbfounded. The shipyard's small cargo ships had a capacity of 100 crates and were powered by wind sails. It was clear that no matter how much one saved, encountering pirates at sea would make escape impossible.

For such a primitive cargo ship, the price was a staggering 40,000 gold coins.

Edward suddenly realized an investment opportunity.

Was this some kind of loophole? He could order a ship for 20,000 gold coins, wait six months for it to be built, and then sell it to someone urgently in need for double the price?

Edward hurriedly inquired about his idea to the shipyard staff.

The worker looked at him with disdain. "If money were that easy to make, do you think it would be left for you? Wouldn't our shipyard do this business instead?"

Edward handed over a silver coin. "Please, explain in detail."

The worker took the coin and responded, "Well, we've tried it before, making an extra ship to sell to those in urgent need of one, but it didn't work out."

"Why?"

"Because hardly anyone is willing to pay 40,000 gold coins for a small cargo ship. In the end, we sold that extra ship for 20,000 gold coins."

"Then why do you price it at 40,000 gold coins?"

"Because the 40,000 gold coin price allows us to negotiate with merchants who have ready ships. If the price is below 40,000 gold coins, no one will even talk to us."

"So now, you only take orders and build ships?" Edward asked.

"Do you know what zero inventory means? Once we take an order, we build the ship, and that means we're using the customer's funds to buy the raw materials. We don't take on any risk. After all, we can only sell for 20,000 gold coins. Why should we prepare any ships in advance?"

"But if you built the ships in advance, the customers would be able to buy them right away, and they'd think your service was better."

"What good is service? Lübeck has only one shipyard. Even if our service is poor, customers will still come to us to buy ships."

Edward was speechless.

Now, a problem appeared before Edward's eyes.

Buying a ready ship would cost 40,000 gold coins, and there was no guarantee that anyone would sell.

A custom-ordered ship would cost 20,000 gold coins and take six months to build, but Edward had no time to wait for six months.

The perversion of the shortage economy once again made Edward feel the terror.

But the surplus economy was equally terrifying. Edward felt like he was going mad.

Edward desperately wanted a cargo ship of his own, but the reality was that even with money, he couldn't buy one.

...

Edward went to ask some Hansa merchants who owned ships if they would be willing to rent them out.

These Hansa merchants treated their ships as their wives, and Edward was curious about their mindset—why would anyone want to rent someone else's wife?

Edward didn't realize that the merchants of this era would be so attached to their ships. They treated them as precious as wives, and no man could touch them.

An ancient version of "ship girls," perhaps?

Well, renting ships was out of the question.

Edward had no choice but to go to a familiar Swedish merchant and try his luck.

He arrived at the Swedish merchant's office in the port district, only to find him idly reading the Lübeck Times.

Edward knocked on the door.

"Ah, my friend, what brings you here? Please, have a seat!" the Swedish merchant warmly greeted him.

Edward sat down in a chair.

"I've been busy with the exchange lately. As for the beer deal I promised you, I've indirectly fulfilled it. You now have beer to sell."

"Oh, has the beer trade ban been lifted?" the merchant asked.

"Not yet, but you can buy some beer and store it for now. The ban should be lifted soon. After all, Lübeck just finished the war and needs foreign trade to replenish funds," Edward explained.

"What do you mean by 'indirectly fulfilled'?"

"I've opened a securities exchange and turned beer into a futures contract. The purpose of this is to change the outdated and primitive rule that buying goods requires connections. With futures contracts, you no longer need connections to buy goods. Do you know what this means?"

"It means that foreign merchants like me can now buy goods in bulk."

"Exactly. I set up the exchange to serve foreign friends like you. All you need to do is buy paper contracts, and when the contracts mature, you can come to my warehouse to pick up the goods."

"Sounds tempting, but you need to move quickly to get the beer export ban lifted."

"When you have free time, you can visit the Lübeck Securities Exchange. Besides beer futures, the artillery futures are also at a low point, so if you're interested, you can buy some. There's no export ban on artillery."

"The Lübeck Securities Exchange, hmm, I'll check it out. I see its ads in the paper every day."

"By the way, I also run this newspaper. If you ever want to advertise or publish articles, you can contact me. You should understand the importance of having a foothold in public opinion."

"What? You run this paper? It's only one copper coin, can you really make money from it?"

"It's a loss-making venture. But the foothold in public opinion is crucial. For example, if something big happens in Sweden, say Denmark is about to attack you, and you want Lübeck's help, you can publish an article in my paper."

"So, by doing that, you'll make money?"

"Yes, you'll pay me a fee, and then I'll publish your article so the people of Lübeck can hear your voice."

"I understand your business model, but speaking on behalf of the Swedish kingdom is a diplomat's job. What really interests me is your securities exchange. You're a genius for eliminating the need for connections."

"Actually, it's a form of empowerment. Even if you don't have connections and can't buy goods, I have the connections and can buy the goods. But I don't know how much you want, so I decided to empower the exchange with my connections. That way, when you come to the exchange, you're essentially renting my connections to buy your goods."

"That's the principle behind it. Well, this afternoon, I'll go check out your securities exchange."