Financial turmoil
Edel was acutely aware of the precarious situation facing Romania's financial sector. If left unregulated, the nation's wealth would inevitably be drained by more dominant global powers, stunting the growth of its own industries. The timing was critical, especially now, as major banks worldwide were grappling with an economic crisis. This presented an opportune moment for the crown prince to act.
The day after the financial bill was announced, key representatives from several of the world's leading banks—the Bank of England, the National Bank of Paris (BNP Paribas), the National Bank of Russia, and the German Reichsbank—all of whom had significant operations in Romania, convened to strategize their response. It was clear from the outset that these financial titans were not going to passively accept any legislation that might impinge on their profits. A robust negotiation was inevitable to find a middle ground that would satisfy all parties involved.
The meeting was intense, with each representative bringing their own perspectives and stakes to the table. Tiromotov, the head of the National Bank of Russia in Romania, was the first to voice his concerns. "This bill directly targets our operations," he argued. "We cannot simply acquiesce to these restrictions; doing so would jeopardize our entire business here." Given that the Russian bank had the most extensive operations among the foreign banks in Romania, the impact of the bill was particularly significant for them.
Mondric, representing BNP Paribas and an ally of Russia, quickly echoed Tiromotov's sentiments. "I agree with Mr. Tiromotov. We must stand firm and protect our interests," he stated. Although the French bank's business in Romania was smaller compared to Russia's, Mondric was confident in the support from his Russian counterparts. The dynamics of loss and gain were clear: any losses would hit the Russians hardest, but a victory could potentially broaden their business scope.
Ellison, the head of the Bank of England, proposed a more conciliatory approach. "While I understand the concerns, we must also consider our long-term presence in Romania. We need to maintain a respectful relationship with the government," he suggested. "Perhaps we could agree to deposit 5% as a goodwill gesture. I've heard the Romanian government is currently strapped for cash. An initial payment of 6 million pounds might demonstrate our sincerity and willingness to cooperate."
Tiromotov, however, questioned the practical details of Ellison's proposal. "And what collateral would the Romanian government provide in return?" he asked skeptically.
Ellison responded calmly, "The seigniorage could serve as collateral."
This suggestion piqued Tiromotov's interest. "If that's the case, we might consider increasing our offer to the Romanian government. Perhaps 10 million pounds would be a more persuasive figure."
The conversation then turned to Cromander, the representative from the German Reichsbank, who had been notably silent. Mondric, not one to mince words, directly addressed him. "Mr. Cromander, what is your take on this proposal?"
Cromander, well aware of the underlying tensions and the strategic plays at hand, was cautious in his response. "I need to consult with my superiors back home. This issue exceeds my authority," he stated diplomatically, avoiding a direct commitment.
Mondric couldn't resist a jab at Cromander's non-committal stance. "So, you're saying you can't make a decision on anything," he remarked sarcastically. Cromander, choosing to ignore the provocation, simply picked up his jacket and excused himself from the meeting.
After Cromander's departure, the remaining bankers shared a moment of mutual skepticism. "I knew we couldn't rely on the Germans," Mondric commented dismissively. Ellison, however, saw a silver lining. "He didn't outright refuse, which is positive," he pointed out.
Back at his office, Cromander was in a state of anticipation, awaiting directives from his government. His assistant informed him that no instructions had yet arrived. Unlike private banks, the Deutsche Reichsbank had the dual burden of pursuing profit while also fulfilling governmental mandates.
By the end of the day, Cromander received a cryptic telegram that read, 'help is precious when it's most difficult.' After reading it, he promptly destroyed the message, a standard practice for sensitive communications.
The next day, the discussions resumed with renewed urgency. Mondric, ever direct, questioned Cromander's capacity to negotiate. "Can you officially represent the Deutsche Reichsbank in these talks?" he asked bluntly.
Ellison interjected, trying to smooth over the bluntness of Mondric's approach. "Mondrick, such directness isn't very gentlemanly," he chided gently, yet his eyes were fixed on Cromander, seeking confirmation.
Cromander didn't leave them in suspense for long. "I am now authorized to negotiate on behalf of the Reichsbank," he declared, much to the relief of the others.
Tiromotov wasted no time in seeking clarification. "Do you agree with yesterday's proposal?" he inquired eagerly.
Cromander was ready with his response, albeit with a caveat. "I agree with most of it, but we need to discuss the exact proportion of capital each bank should contribute," he stated, signaling that negotiations were far from over.
Mondric suggested a seemingly equitable distribution. "How about each of our banks contributes a quarter of the total amount?" he proposed.
Cromander, however, was quick to challenge the fairness of this arrangement. "Our bank's business in Romania is poised for rapid growth. We should contribute 45% of the capital," he countered boldly.
Tiromotov was taken aback by Cromander's audacious demand. "That's impossible," he retorted. The underlying motive was clear: both the Russian and French banks aimed to curb German influence in Romania to enhance their own market share.
Ellison, hoping to mediate the escalating tension, suggested they come up with a compromise that all could accept.
After intense negotiations, they agreed on a total payment of 8 million pounds. The final investment shares were painstakingly adjusted to reflect strategic interests and alliances: the British at 17.5%, the French at 15%, the Germans at 32.5%, and the Russians at 35%. This arrangement, while not perfect, was a testament to the complex interplay of power, diplomacy, and economic interests that defined international banking in Romania.
Edel was deep in thought, considering how best to counter the aggressive financial maneuvers of major foreign banks. He understood that any effective strategy would require substantial funds; these were the ammunition needed to combat the capitalist forces arrayed against him. With these thoughts in mind, Edel made his way to the office of the old king, Carol I, seeking his support in these turbulent times.
Upon his arrival, King Carol I looked up from his desk, his expression grave. "Edel, what are your thoughts on our current predicament?" he inquired.
"We must first secure a significant amount of money to hold off our adversaries for a few days," Edel replied, his tone resolute.
King Carol I listened intently, his mind racing with thoughts. He and his son had underestimated the response their financial policies would provoke. He blamed himself for his optimism; he had hoped to leave Edel a prosperous and stable kingdom, but now they were cornered with no easy way out. The king realized that many were watching to see how the government would handle this crisis. The outcome would determine whether political power could still dominate capital or if it would be the other way around.
"If we lose," the king pondered silently, "the credibility of both the government and the royal family will suffer immensely. Calls for governmental reorganization will surely follow, and royal authority might be significantly diminished." This was a scenario that Carol I, the founder of the modern Romanian kingdom, could not accept. A victory, however, would secure the royal family's authority for at least another two decades.
In the current climate, the European bourgeoisie was growing stronger and more assertive, demanding greater power and status. Edel's financial bill was an attempt by the royal family to check these rising bourgeois forces. King Carol had also hoped to leverage the financial crisis to tighten control, but he hadn't anticipated that several foreign banks, representing different European powers, would unite so solidly against them. It seemed that the stakes involving Romania had managed to bridge traditional rivalries.
King Carol and Edel summoned the director of their financial affairs, Viscount Adri, to report on the royal family's assets. "Due to investments in oil, automobiles, bicycles, and other industries, the royal family currently has 3.8 million pounds in liquid assets," reported the Viscount.
After the director left, Edel and his father discussed their options. "We need at least 10 million pounds to withstand the onslaught from these banks," Edel stated, his knowledge from future experiences lending him insight into the severity of their situation.
"It's still too little," the king remarked, thinking of the director's report. Although the royal family owned substantial real estate, these assets were illiquid and could not be easily converted into cash without significant loss or political repercussions.
"There is, in fact, a way to secure the necessary funds," Edel said, capturing his father's full attention. "The Americans have always been keen on the European market. We could approach them for a loan, secured against some of our assets. I believe they won't turn us down."
After further deliberation, the plan seemed viable, and Edel proceeded to discuss it with Prime Minister Stewart. The prime minister, a staunch supporter of the monarchy, listened carefully to the crown prince's proposal. "Your Highness, you must act swiftly and discreetly," he advised. "Give them no time to mount a counter-strategy."
Meanwhile, the executives of the four major foreign banks convened to discuss their next steps. "This maneuver of ours will force Romania to capitulate; no one can withstand the combined pressure of our four institutions," declared Tiromotov, a hint of triumph in his voice. The others, despite their reservations about collaborating with a rival power, agreed, recognizing the strategic necessity.
"We must first isolate any smaller entities that resist our directives," Tiromotov continued. "We'll reduce their credit lines and hike interest rates to coerce them into alignment. We must also keep a close watch on the palace and government movements; they might be planning a counterattack."
"Agreed," the others nodded, realizing the importance of a united front.
Back at the palace, Edel discreetly summoned Captain Carust of the royal guard. "Go and bring Mr. Smith here without attracting any attention," he instructed.
Carust executed the task with precision, and soon, Mr. Smith, disguised as a palace guard, was brought before Edel. "Your Highness, how may I assist you?" Smith inquired, aware of the sensitive nature of his summons.
Edel handed him a document. "I need you to deliver this telegram to Mr. Rockefeller of your company," he said. The document outlined a proposal for a substantial loan secured against shares in Romanian Petroleum and Volkswagen, along with some royal lands, in exchange for American capital's entry into the Romanian financial sector.
Smith, sensing the importance of this mission, assured Edel of his swift action. The document reached John D. Rockefeller that very night. After reviewing the proposal, Rockefeller discussed it with his son and then contacted J.P. Morgan to co-finance the deal. Both American magnates recognized the opportunity not only to aid a royal family in distress but also to extend their influence into Eastern Europe.
As these international financial maneuvers unfolded, the stakes for Romania and its royal family continued to escalate, setting the stage for a complex battle of wills, capital, and power.