Chapter 56: Credit Strategy

Chapter 56: Chapter 56: Credit Strategy

I

Constantinople, Galata — 8 September 1914

On the second Tuesday of the month, Zeynep spread the credit table across the long desk of the Financial Office and sent for Elias.

The table held forty-three names, and beside each name she had pencilled the Friday stock counts of the last twelve weeks.

"A war does not change what a merchant is, Elias, it only shows it sooner," she said. "I wish to sort the members into three classes, by what they have done and not by what they promise."

"By what the Friday letters say," said Elias, and he took the pencil from behind his ear.

"The first class paid within term in every month since March, the second delayed once or twice, and the third has stock that does not agree with its bills."

Elias counted eleven names in the third class and frowned at the number.

"Eleven is a quarter of the Compact," he said. "Shall we cut them off?"

"No, we shall lend to each class by a different measure, and we shall tell each member which class he is in and why." She wrote the three limits in the margin. "A man who is refused in secret learns nothing, but a man who is refused with his own figures can mend them."

II

Constantinople, Galata — 10 September 1914

The Porte had announced the abolition of the capitulations the day before, to take effect on the first of October.

Agop Kalfayan climbed the stair with the gazette folded in his hand, and he set it on the table with some ceremony.

"For four centuries the foreign houses have sued in their own consular courts and paid the Ottoman customs at rates the treaties fixed," he said. "From the first of October they will stand before the same judges as Hac? Arif."

"Then every bill that we hold against a foreign house is easier to collect," said Zeynep.

"It is easier on paper, Han?m, but the foreign houses will not forget who removed their privilege." He tapped the gazette. "They will ask for shorter terms and for gold, and the Ottoman Bank will follow them."

Zeynep considered it for the space of a breath.

"Then the House shall write every new bill in liras, name the Ottoman court in the bill itself, and require a second name above thirty liras," she said. "I do not want a clause that depends on a treaty which no longer exists."

"Allah preserve the clerk who must copy it," said Agop, and he laughed for the first time that week.

Mihran, who had been writing at the end of the table, raised his head and asked whether the old bills should be rewritten as well.

"Only when they fall due, Mihran Efendi, and each shall be rewritten in liras with the Ottoman court named, so that no bill is left in the old form," said Zeynep.

III

Constantinople, Rüstem Pa?a — 22 September 1914

Hatice Han?m, the widow who had borrowed forty liras from the Mutual Credit Society two years before, came to the warehouse office in a black veil.

She laid her hands on her bag and spoke before anyone had asked her to sit.

"My nephew was called to the army, and the two girls who sewed the bindings have gone to their families in Bursa," she said. "I cannot pay the instalment of this month, and I did not wish you to hear it from another person."

Zeynep opened the Society’s book and found that the widow had paid every instalment on the day it fell due.

"Your record is the best in the second page of the book, Hatice Han?m," she said. "I shall give you one month, and I shall give you the rule with it."

"What is the rule?"

"You will pay five kuru? each Friday in place of the instalment, so that the debt does not sleep, and the House will send you the two bindings that the stationers cannot finish."

The widow wept briefly and then thanked her in a voice that was steady.

Zeynep wrote the arrangement in the book and added a line beneath it for the next such case.

IV

Constantinople, Galata — 3 October 1914

Monsieur Barrault received the partners in the same private room, and he looked older than he had in August.

"The gold is leaving the counters faster than it comes in, and the bank is now paying much of its small business in paper," he said. "The merchants of Galata take the paper at a discount, and I cannot say that they are wrong."

"The House will take the paper at its face from every member of the Compact," said Zeynep, "but we shall post the coin value of each rate on the board every Friday, as we have always done."

"You will lose by it."

"We shall lose a little each week, monsieur, and we shall gain the confidence of a hundred shopkeepers who must otherwise guess."

Barrault wrote a line in his own book before he answered.

"I shall tell my directors that one house in Galata has made its rule plain," he said. "It is more than I can say of the Porte."

Ayaan, who had listened without speaking, laid his hand flat upon the table.

"May the House hold its reserve in three tiers whatever the paper does?" he asked.

"It may, and it shall," said Barrault.

V

Constantinople, Galata — 15 October 1914

Cevdet came to the Financial Office at dusk, and he waited until Mihran had closed the outer room before he spoke.

"A clerk of the Berlin house has visited six members of the Compact in ten days," he said. "He offers cash against stock at three parts in a hundred for the month, and he asks only to see the Friday count letters as a security."

"Three in a hundred is less than we charge," said Zeynep.

"It is less because the letters are the price, Han?m." Cevdet unfolded a paper with the six names. "A house that holds the Friday letters of forty merchants knows the stock of the whole Compact."

Zeynep read the names twice, and she did not raise her voice.

"Then we shall not forbid them to borrow, for we have no right to do it," she said. "We shall lend them the same money, at the same rate, against the same stock, and we shall ask only that the letters remain in the Compact’s strong room."

"You will earn nothing on it."

"I shall earn six members who do not need to sell their counts to a stranger," said Zeynep.

Ayaan, who had come up the stair behind Cevdet, read the six names without a word and then nodded once.

"Every one of them is a first-class or second-class name," he said. "They are good borrowers who were never offered a better door."

VI

Constantinople, Kas?mpa?a — 21 October 1914

Herr Imhof received the partners in the foundry office with a letter from Winterthur open before him.

"Keller and Son ask whether the last instalment for the lathe may be paid now rather than in the spring," he said. "They fear that the Swiss francs will be worth more, and that the post will be slower."

"How much remains?" asked Zeynep.

"One hundred and sixty liras, madame, and the franc has risen by three parts in a hundred since August."

Zeynep opened the exposure sheet and found the sum in the Geneva column.

"The Geneva account can meet it in francs, and that is a reason which Keller can check on any exchange board," she said. "I shall pay it this week, and the reserve in Constantinople will stay untouched."

Mavridis, the master of patterns, had come in quietly behind them and now spoke from the door.

"The Pera foundries have stopped casting for want of coke, Efendi, and their men are asking for work at our gate," he said. "I can use six of them for the pattern store."

"Take the six, and let Herr Imhof test each man on the lathe before the wage is fixed," said Ayaan.

Imhof wrote the six names in his book and the word tested beside each.

VII

Constantinople, Galata — 30 October 1914

The news of the raid upon the Russian ports reached the exchange houses on the evening of the twenty-ninth, and by dawn the street below the office was filled with shopkeepers.

Zeynep unlocked the door herself at seven and had the board lowered before the first clerk arrived.

The board bore the credit terms of the House exactly as they had stood on the previous Monday, with the date written beside them in her own hand.

Samuel Aboab stood at the window and watched the crowd.

"They are asking whether the House will call its loans, Han?m," he said. "Three of them asked me on the stair."

"Then answer them from the board, Samuel Efendi, and say that the table has not changed and will not change for a rumour."

"And if the Porte declares war?"

"Then the rule will be the same on the day after the declaration, for that is the purpose of a rule." She turned a page. "Open the door at eight and hear everyone who comes."

By noon the office had received sixty-four visitors, and not one of them had asked for his money back.

VIII

Constantinople, Emin?nü — 5 November 1914

Britain and France had declared war upon the Porte that morning, and the evening was quiet in the garden of the house.

Zeynep brought a sheet to the table after Mehmed had been put to bed and set it before Ayaan.

"I have called it the Charter of Wartime Credit," she said. "Read it, and give me every objection that you have."

He read three clauses aloud: no loan above one tenth of a member’s counted stock, no loan renewed more than twice without a visit by two members, and one quarter of every repayment to be set aside in the strong room.

"The last clause reduces what the House may lend at the moment when merchants most wish to borrow," said Ayaan.

"It does, and it is meant to." She pointed to a column of figures. "I have taken the three worst months of the Balkan year, and the House could have met every call with this reserve and some left over."

Ayaan read the column and then read the three worst months again.

"I find no objection that a clerk could not answer," he said. "This is the credit strategy that the House needs, and it will be worth more in the second year than in the first."

"You said that a war would last years," said Zeynep quietly.

"I did, and I still have only a precaution to give you for it." He signed the sheet. "You have turned the precaution into a rule, which is better than any reason that I could write."

IX

Constantinople, Galata — 30 November 1914

Hac? Arif read the Charter of Wartime Credit aloud to the assembled Compact in the hall below the Financial Office, clause by clause, with his spectacles pushed high upon his forehead.

When he had finished, a spice merchant from Emin?nü rose and asked who would judge the third class.

"The table judges it, and the table is open to any member who wishes to see his own name," said Zeynep. "Any man may bring his Friday letters and mend his figures within thirty days."

Forty-three members signed that evening, and Agop Kalfayan witnessed every signature with his own pen.

Later, when the hall was empty, Elias carried the credit table up the stair and laid it before her.

Eleven names had stood in the third class in September, and now there were six.

Agop Kalfayan paused at the door of the office on his way out and looked at the table for a long moment.

"A table that shows a man his own fault and gives him thirty days to mend it is a better creditor than any court," he said.

"Allah willing, the court will see very little of us," said Zeynep.

Zeynep took the small ledger of the office from the shelf and wrote beneath the entry for the first of September.

The second quarter of the office: War between the Porte and the Entente. Charter of Wartime Credit signed. Members in the third class: six. Loans called: none.

She closed the book and set it beside the lamp, where Samuel would find it in the morning.