Trade 101


Daniel
Daniel's picture

Hi all,

Another campaign advice question.

What I like about Chelemby is the potential for all kinds of economic and political conflict as a backdrop for a campaign. Unfortunately, though I'm interested in political economy, I have some kind of learning difficulty when it comes to business dealings.

So, I've got some really basic questions about business practices, should there be anyone else out there keen to discuss these things. Alternatively, a recommendation for a good idiot's guide I could consult would be appreciated.

1. Chelemby - Kingdom 34 says:
"Feuds still occur, but they are typically fought in the marketplace as an intensification of normal mercantile practice; an ‘offended’ clan will buy up notes, corner markets, and speculate in real estate in an effort to drive its enemies into bankruptcy."

How do you "corner" a market? How does buying up notes and speculating in real estate impact on your competitors?

2. ibid. 15 says:
"There are rumours of depots scattered around the islands of the Gulf of Edérwyn and elsewhere"

What is the function of these depots?

3. ibid. 23 says:
"Possession of tax-free warehouses lets the concessionaires assemble more efficient cargos"

I understand tax-free is good, but what is meant by "more efficient" cargoes?

4. Koladis 8 says:
"He [Kal Silkan] has also launched a series of legal challenges alleging various breaches of trading laws by Clan Jâagensen"

What kind of trading laws might have been breached?

Many thanks,

Dan.

Robin
Robin's picture

So Many Issues... so little time...

I'll make a start, at least on your disquisition of huge questions. You seem to have managed to isolate and expose some very major issues. Well done that man!

Cornering Markets

Markets are notoriously difficult to corner. The basic idea, of course, is to buy up all of a particular kind of comodity and, having achieved a kind of monopoly, to raise prices through the roof. This is not the only way to exploit a cornered market: another way is to *selectively* limit supply. In Chélemby, they import wool. If one were to buy up the whole supply of wool from nearby ports, one might deprive a competitor of the materials needed to run her/his clothier's establishment. Without wool, the clothier might not be able to operate.

On a smaller scale, a clever mercantyler might simply buy up vital supplies as they arrive on the docks. Either way, cutting off supplies or adjusting prices can have interesting effects.

Buying up Notes

Chéler Clans often write substantial promisory notes. It is the quickest way to finance large transactions. Sometimes they hand over other people's notes, or what have you. Promisory notes almost work like paper money among the 'high rollers' of the City.

Most notes get discounted now and then. If someone thinks the issuer won't be able to pay, s/he might not be willing to buy it for face value.

Sometimes when a note holder tries to redeem a not with its issuer, the issuer will not have enough cash or ready negotiables and might ask the would-be redeemer to wait. In exchange for this, the issuer might make a bonus payment or write an additional note. (Going further into debt to avoid paying back an outstanding debt.)

It is quite common for usurers/mercantylers (tianalari clans) to purchase other people's notes, usually at a discount, when they have 'spare cash'. This is a good way to make substantial profits, if one has cash to spare or is willing to write notes of ones own).

Example: Joe needs cash to buy a shipment of wool and doesn't have any readies... He goes to Charlie and borrows £10, Writing a note for £11 that will be due the following month.

When the due date rolls around, Charlie comes to Joe and asks for his £11, but Joe can't pay because the wool fell in the harbour and he couldn't sell it for £20 like he had planned... at least not until it dries out (things like this happen all the time... maybe the buyer backed out... maybe the buyer was conning Joe... who knows?)

Anyway, Joe says "I can't pay now, give me another month... here's a £1 bonus (in cash)"
Charlie accepts the cash keeps the note for £11 (which is now due) and goes home.

Fred is ticked off at Joe and hears about the deal with Charlie. Fred goes to Charlie tells him a story about how Joe has had deals go bad all over the place. Charlie listens to the story, and gets worried. Mentions that he's holding a note from Joe. Fred acts surprised and sympathetic. Finally, Fred offers Charlie £8 for Joe's note. They haggle a bit and settle on £9:10:0, which Fred pays Charlie in cash (he might have written a note of his own, but probably for more). Charlie has £1 plus the £9:10:00d and has actually made a profit of 10s.

Fred maybe does the same kind of thing to buy up some of Joe's other outstanding notes.

At 'just the right moment' (when Joe doesn't have any cash). Fred goes to Joe and demands payment in full. Joe can't pay cash, and Fred won't accept wool or other comodities. So Joe either has to sell something for cash quickly in order to pay Fred, or buy back his note(s) with *bigger* notes. Fred has Joe over a barrel and can virtually dictate terms.

Robin
Robin's picture

Next Issue: Depots in the Eder Wyn...

Any depots which may or may not be scattered around the islands of the Gulf of Edérwyn and elsewhere, would exist to provide logistical support (in most cases) for the movement of seagoing vessels, which may or may not need them... if they are there... not that I'm saying they are there.

There... that seems clear enough to me :)

Fástred
Fástred's picture

Legal challenges to trade law

Hi Dan

There are any number of trade "laws" that clan Silkán might *allege* that clan Jâagensen have breached:

* most importantly, they would probably argue that the Téstrad "improperly" granted Jâagensen a license to fish the Kôladis herring banks, given the "traditional" rights of Kalínby, Banága and Silkán. (Franchises in Chélemby require the approval of both the Tia-Nalári clan and the local authorities, in this case the Kolâdis Téstrad).

* they might argue that if clan Jâagensen are to be permitted to make use of Kolâdis to land and process their catch, ought to pay a special "tax" to make use of the facilities that the Silkán, Kalínby, Banága and other clans have built up over the years.

* even though "concessionaires" are supposed to be exempt from hawking and bonding fees in Kolâdis, Silkán might argue that this only applies to clans with clanhouses and/or nalâri (estates) in the Kolâdis district. Thus they could argue that Jâagensen are 'interlopers' from Chélemby Antánalâri (district).

As noted in the Kolâdis module, Kâl isn't too worried if his legal action is "justified" - he wants to make life so unpleasant for Jâagensen and their allies that they decide to take their business somewhere less difficult...

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Fástred na Beréma,
Rówanti na Sávè-k’nôr

Robin
Robin's picture

I think that leaves only one

I think that leaves only one question to answer: How does having a concession house make the gathering of cargoes more efficient?

Ships (and even wagons for that matter) are most efficient when they are 'full'. A ship that's half in balast is a wasteful ship. Therefore, it pays to assemble cargoes sufficient to 'fill' one's ship, before loading and shipping happens.

In a locale where one has to pay a bonding fee, there is money flying out the windows whenever one imports a cargo with the intention of shipping it out again (this is called 're-export', and is the blood in the veins for many trading centres.

Example
Joe decides to assemble a 50 tun cargo in Chérafîr. Because he is planning to re-export the goods rather than sell them in Chérafîr, he does not have to pay a hawking fee, but he must put his goods into the government bonding house and pay a monthly bonding fee. It takes Joe twelve months to assemble the 50 tuns he needs:

Month 1: 20 tuns textiles.......... £10:00 /2,400d
Month 4: 2 tuns wine.............. £4:00 / 960d
7 tuns wool.............. £3:10 / 840d
Month 7: 10 tuns textiles.......... £5:00 /1,200d
1 tun wine............... £2:00 / 480d
Month 12: 10 tuns textiles.......... £5:10 /1,320d

The bonding fee in Chérafîr is 3%. It must be paid on the total value of goods, every month (or fraction thereof) in advance.

Month 01 Amount in Bond 2,400d, Bonding fee: 72d
Month 02 Amount in Bond 2,400d, Bonding fee: 72d
Month 03 Amount in Bond 2,400d, Bonding fee: 72d
Month 04 Amount in Bond 3,360d, Bonding fee: 101d
Month 05 Amount in Bond 3,360d, Bonding fee: 101d
Month 06 Amount in Bond 3,360d, Bonding fee: 101d
Month 07 Amount in Bond 5,040d, Bonding fee: 151d
Month 08 Amount in Bond 5,040d, Bonding fee: 151d
Month 09 Amount in Bond 5,040d, Bonding fee: 151d
Month 10 Amount in Bond 5,040d, Bonding fee: 151d
Month 11 Amount in Bond 5,040d, Bonding fee: 151d
Month 12 Amount in Bond 6,360d, Bonding fee: 191d

Total bonding fee: £6:02:01d 1465d (about 23% of the total value of the assembled cargo).

If Joe had assembled the same cargo in Chélemby, and if he were a concessionaire, there would have been no bonding fees at all. That's what I call a more efficient cargo.

Obviously, this is an extreme case. Most shippers go to extraordinary lengths to avoid taking a whole year to assemble a cargo ... time is money. However, rushing the process can also cause problems. Where one has to pay a bonding fee, one always tries to assemble and turn cargoes over as quickly as possible.

Another advantage to having a concession house is that holding goods becomes a viable possibility. Since it costs (in effect) nothing to store goods, one has the luxury of buying goods on 'spec' and holding them until the price is right. Also, if your warehouse has 900 tuns of goods... there is a fair chance that you can assemble a reasonable cargo whenever you want to... this can be a marvelous economy.

There are probably other reasons why having a concession house lets one assemble more efficient cargoes, but for now, I'm very tired... I home *some* of this makes sense :)

Daniel
Daniel's picture

Thanks

Robin and Jeremy,

Many thanks for very clearly (and patiently) answering these questions at length, and particularly for providing examples. Very helpful.

I wonder if Wiley have released a For Dummies book on Medieval Trade?

Dan.

Jack
Jack's picture

Ooh, scenario idea!

You know, a warehouse full of 900 tuns of wool and wine and who-konws-what-else is just BEGGING to be burned down by a rival clan . . . Talk about intensifying a clan feud in the marketplace!

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Old style heraldry: Sable, the pale argent.

New style heraldry: Oreo, resting on edge.

rbs
rbs's picture

And getting caught

And getting caught committing arson in a close-built town with a lot of wood construction provides an opportunity for role-playing a trial and execution.

"Well, I never liked that PC anyway and was looking for an excuse to roll up a new one."

Balesir
Balesir's picture

Example of Buying Up Notes

Just to add to what others have said, there is a lovely example of 'buying up notes' in the James Clavell book 'Tai Pan'.

The book is about the early opium/tea trade in HongKong, and our hero Dirk Struan of Struans' (the 'Noble House' - i.e. the biggest merchant house in the China trade). Struan's sworn enemy, Brock, manages to buy up all of Struan's paper (i.e. promissory notes) having heard that the Struans' bank in Britain has problems and has sent no cash.

Struan is in trouble but manages to cut a deal with a Chinese merchant who supplies around a ton of silver in return for a debt note and four halves of broken coins. Struan/the Noble House takes on an obligation to do 'anything in its power' for any individual who presents one of these four coin halves in the future (after it has been checked against the other halves, held by Sturan, obviously - how's that for a plot hook?).

Having brokered this deal, Struan has the silver piled up (under cover of darkness) on the beach, under a tarpaulin. When Brock demands payment for all the notes that just 'happen to be in his posession', Dirk announces that 'the Noble House has decided to pay cash!' and has the tarpaulin removed. 'It's all yours' he grins as he leaves Brock with a huge pile of precious metal on a beach full of longshorement, soldiers, merchants, sailors and sundry other townsfolk...

Robin
Robin's picture

Roleplaying Trade

Citing my second favourite Clavell was a good idea. That book can certainly be used to set a mood.

Another prima facie anachronistic period piece is the BBC (or ITV?) TV series: The "Onedin Line". It is about a ruthless man running a shipping business in the age of the clipper ship (hence the anachronism). This kind of thing can set the mood, but it can also offer useful (and rather timeless) ideas on how businesses operate.

It is difficult to role-play trade. In theory, the GM has to know where every ship is, what it's carrying, what it paid for its cargo, and what the prices are for each comodity in each market. I haven't figured out how to do that yet... but I'll let you know when I do.

Meanwhile, I do have some rough and ready rules for operating 'patronage investments'. If I thought anyone would be interested, I might make them available ;)

Daniel
Daniel's picture

Patronage Investments

"If I thought anyone would be interested"

Yes, definitely. But not if it interrupts work on Chelemby City. :)

Dan.

Fástred
Fástred's picture

Work on Chélemby proceeds apace :)

Don't worry - I won't let Robin be distracted...

J.

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Fástred na Beréma,
Rówanti na Sávè-k’nôr


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