Becoming an Assistant at the Bank (4)
High interest rates were a burden for the borrowers, but for the lenders, it was a means to earn a substantial amount of money.
However, making big money from interest wasn't always possible.
'Usury comes with its own risks, after all.'
What if the borrower decides to default on their loan?
This risk had to be taken into account, so goldsmiths like Carter couldn't afford to set the interest rates too low.
It was necessary to prepare for dealing with unscrupulous debtors.
'So that's why the monthly interest rate is as high as 6 percent? This number didn't just come out of nowhere. It must be derived from the correlation between the unscrupulous debtors and the rate of interest earnings.'
Still, a monthly interest rate of 6 percent was considered quite high.
'But it's undeniable that this is a high interest rate.'
Carter continued with further explanation.
"Even if you return the borrowed gold coins in just a day, the interest is calculated for a full month regardless. The interest for a month applies right from the moment you borrow it. And if the borrowing period is a month and a half, then it is calculated as two months without exception. You get the general idea, right?"
"Yes, I will keep that in mind."
Carter stroked his beard while mentioning the possibility of unfortunate incidents.
"In this moneylending business, you meet all kinds of troublemakers, but unlike those in Lyon who'd lend gold even to dogs and cows, I've never had major issues since I'm more selective. Those in Lyon, if someone doesn’t pay back, they use thugs to make sure they get their money no matter what."
"So, what did you do if someone refused to pay? Did you also use thugs?"
"I never lent to such people in the first place, so I wouldn’t know."
"Have you ever been cheated out of money?"
"Of course, it's happened. But every time it did, I became more cautious. Now, I only lend to people as creditworthy as a lord. That's why I've hardly ever been cheated out of money."
"I see."
"However, I've always struggled because the operating funds are limited, making it hard to profit from interest. Rolling over such meager sums never made anyone rich. But, as you suggested, if I secretly use the gold entrusted by my clients, this round of interest games might be quite fun."
Moneylending, a business of lending money to others, was still thriving.
After all, there were always plenty of people in need of money.
"With enough gold coins in hand, what would there be to worry about? Not everyone is a bad debtor, and there are many clients in urgent need of money who have good credit."
Having finished all explanations, Carter began the conversation with Rockefeller, a smile tinged with greed on his face.
"Then, let's start making money from today. I hope taking you in turns out to be a good decision."
Rockefeller's feelings were not much different.
"I, too, am counting on your guidance."
However, the dreams they were envisioning were different.
'Real money-making actually starts with deception.'
Carter was oblivious at the moment.
To the real game that Rockefeller was envisioning.
'In that sense, shall I start the real deception?'
