“So, what will you do now, sir?”
“I’ve got no choice. I’ll lower my price to 16 copper too. This way the price is the same.”
I took four copper coins from my stack.
“Then I’ll lower it to 15.”
Mia took one from hers.
“Urk, 14.”
I continued the match despite knowing that I’d already lost. At this point, Alfina was already looking at me with sympathy in her eyes.
“So, Mia is capable of dropping the price far more, right?”
“Exactly. In the competition of dropping prices, my profits will zero out once it drops to 13 copper. The expenses include my own cost-of-living, so I’ll still be able to survive. However, if Mia drops the price down to 12 copper, it’ll all be over for me.”
I raised both my hands in the air. I couldn’t win against the rich. That’s what it comes to.
“Please wait. If you also borrow money...”
“Nobody out there will lend money to a small-time trader. Even if you could find one, with the level of trust I possess, it would be impossible to get a debt at a 10 percent interest rate. And naturally, it would be impossible to borrow 200, let alone 360 silver.”
“That can’t be... Even though it was your idea...”
Alfina bit down on her lip. Sorry, I didn’t think of it either.
“Incidentally, once I finish crushing Ricardo’s store, I raise the price again and rake in even more profits. It might even be a good idea to buy Ricardo and his crushed shop altogether and put them to work too.”
Alfina was now completely frightened of the corrupt merchant with black braids. It looks like my dear secretary’s realistic acting got it across to her just fine... Though that bit at the end was a little scary for me as well.
“The expense of the acquisition of money in this case is the interest. We think of it the same way we think of the cost for ingredients being the expense for their acquisition. In short, Mia’s business used the 200 silver she had on hand and a 20 silver interest to acquire 200 more silver. Putting that together, she turned 400 silver into 640 silver. In other words, using the money she paid a 10 percent interest to acquire, she was capable of making more than a 50 percent profit. As long as you’re capable of earning more than the interest, a debt is actually favorable.”
In this case, you never pay back the capital no matter how much you make. That’s because the debt you borrowed at a 10 percent interest rate continues to produce more than 10 percent profit. Paying back the debt actually leads to a loss.
We did, of course, assume that our market scale was infinite to keep things simple. In reality, there are many cases of constant expansion causing companies to be crushed by their debt.
“As long as doing business is based on spending money to make money, the one capable of preparing more money will win. That’s the other meaning behind this lesson.”
“...It really did end up as everything being about money.”
Alfina nodded steadily as she digested the information, and she looked between me and Mia with an anxious gaze. Anyway, let’s keep going until we’re done. The reason I brought up such a depraved story was entirely for what came next.
“Now then, let’s swap this pain perdu for Weinder’s honey. Our honey enterprise can’t be as simply replicated as this confection. We’re also quite careful in concealing information about it. However, we’re about to begin increasing the production of our honey. The bigger our business gets, the easier it is for information to leak out. That means that we must be prepared before a larger merchant than us has their eyes on the method behind making our honey.”
In truth, Dreyfan already had his eyes on it, but that’s been settled, so we’ll leave it aside.
“There are two advantages to Her Grace’s investment.”
“The first is the money itself that you would get from my aunt, right?”
“Correct.”
“And what would the other be?”
“The trust born of the very fact that an archduchess is investing in us. With the funds invested in us by a grand noble, the Weinders will be capable of taking on debts at a lower interest rate. In other words, we’ll no longer lose in a competition of debts.”
It’s actually more complicated than that. Using the trust we build by gaining capital from the archduchess, we’re planning to water down the equity she has in the Weinders. That’s because if we leave all necessary funding of our business plans from here on out to Euphylia’s financing, the Weinders will basically become hers.
Our goal is to sell as few of the (currently hypothetical) stocks that my foster father holds as we can, for as high a price as we can. We’ll then compensate for the rest of them by taking on debts using the trust we build from the archduchess. This is an exceedingly difficult negotiation that would be extremely convenient for us.
“I think I understand. I’m a little relieved. That means that my aunt’s proposal is a good thing for you, right? I thought, by some chance, that you were being manipulated by her idea.”
Well, there is a fair bit of manipulation going around. At any rate, it’s like someone buying a piece of paper written by the Weinders in gold without knowing about the stock system. It’s a difficult sell for us. At the present point, it’s only a sort of “contract” between the Weinder Company and the archduchess. There are no laws to support it, making it even more difficult for us.
“Just as I explained earlier, a debt is the lifeline for a company. Having that dependent on another person means that they have your very life in their grasp. Even without having to go that far, it means that Her Grace will hold a major influential voice in the Weinder Company. Setting aside her natural privilege as an investor, the problem lies in the difference in standpoint between a noble and a merchant. What we need at most is the freedom as a merchant. That’s why we proposed such a system for the investor’s contract to Her Grace.”
“The stocks, right?”