The Likable Lender
In all of his shady business ventures, Melvos Hammerstars makes modest coin regularly. He knows that the greedy get caught. The authorities are so overwhelmed by business deceptions going on all around them that (unless ordered to make an example of a particular individual) they tend to let the small and subtle pass, in return for pouncing on the "big ones" (which earns them the most approval from superiors).
We've seen his activities as a landlord. Hammerstars also indulges in what most Sembian merchants except the very wealthy practice on a daily basis: cointossing.
Cointossing is the practice of making short-term loans (entirely informal, with no paperwork and high interest fees). Small shopkeepers with cash-flow troubles have no choice but to try to find someone to lend them a few coins for a few days, to get in goods (particularly perishables such as food) they couldn't otherwise afford, that they must buy right now. (A Sembian who suspects he's being watched will often ask for a cointoss to pay off a debt he's being pressured to pay, purely to avoid revealing his own sources of income to spies.)
Cointoss loan amounts are small, but the interest is typically as high as one-quarter of the principal. Borrowers are willing to accept such terms for two reasons: They can largely conceal how desperate their personal finances are, and such interest rates are as little as half what licensed moneylenders charge for short-term, high-risk loans.
While there's no such thing as a Sembian moneylender free from greed, the extremely stiff rates they charge aren't all profit: moneylending is one of the activities that the government does tax. (They also regulate it through exhaustive contracts composed of clauses drawn up by government officials that licensed moneylenders are legally required to use; a contract is typically assembled by picking and choosing clauses, but the clauses themselves can't be altered by borrower or lender without hiring an expensive government agent to approve such "variances.")
Sembia holds many moneylenders and countless investors, but very few private bankers now exist. During the last three decades, the government has been busily winnowing their ranks by granting no new banking licenses and revoking licenses held by individuals when they die (rather than allowing heirs and creditors to take over the licenses). Although the average Sembian views this as one more "robbery by government" (all deposits carry a flat 10-sp fee, regardless of amount, and withdrawals are likewise subject to a 20-sp fee), this change was actually instituted to cut down on slaughter-thefts (and the hiring of wizards at ever-higher fees for personal protection, or to attack protected persons). Such slayings were escalating to fearsome levels thanks to almost every city-dwelling Sembian's need to carry and store large sums of coinage at all times, just to engage in everyday life. The creation of hard-to-counterfeit magical seals government officials could affix to officially issued, redeemable tallies (we might call them government-issued checks or IOUs; most take the form of small, palm-sized electrum plaques) made possible transfers of large sums of money without chests of coinage being involved. Tallies can be redeemed only by the person they were issued to, in the presence of any government banker, anywhere in Sembia, and so are worthless if stolen. When large debts are to be paid (particularly if the debtor wants witnesses to the payment being made), debtors often take a tally for the correct amount to a government banker with the creditor, and the banker cancels the first tally and issues a second one to the creditor. (Government fees for tally transactions are the same as for coin deposits and withdrawals.)
Hammerstars has built up enough money to do as many of the self-styled nobles in the land and other very wealthy Sembians do: engage in cointossing for amounts large enough that he could be said to be the equivalent of a private banker -- only without the license, contracts, and government scrutiny (of both the transactions and his fees, which for bankers are government-controlled). This sort of cointossing is backed by documents, but not government contracts: Instead, the borrower writes up a claim stating that the rents for a property, or the proceeds from the market sale of a particular cargo, or (if desperate) the deed to a property, are to be transferred to the lender, and gives it to the borrower. When the loan is repaid, the document is returned (or borrower and lender burn it together).
Discover some of the basics of trading in next week's article.
About the Author
Ed Greenwood is the man who unleashed the Forgotten Realms on an unsuspecting world. He works in libraries, writes fantasy, sf, horror, mystery, and even romance stories (sometimes all in the same novel), but he is still happiest churning out Realmslore, Realmslore, and more Realmslore. There are still a few rooms in his house with space left to pile up papers in . . .