The Accidental War

by Walter Jon Williams

  Plus the bureau was now plagued by a host of speculators. As soon as it was mooted that the government would acquire all Cosgrove’s vehicles, speculators had stepped in to buy as much of Cosgrove’s assets as they could find, paying the original investors a tiny percentage of their original value. Now these entrepreneurs flocked around the Bureau of Arrears and Obligations, demanding to be paid full value—and the bureau had a hard time saying no, because they had paid full value to the banks.

  The departure of the Imperial Bank’s management had delighted Lamey, who had made a fortune through some kind of side bet with Lady Tu-hon. He’d also sold some of the banks short and had collected on that as well.

  “You should have bet along with me, Earthgirl,” he said.

  “It was too obvious, don’t you think?” Sula said. “Betting based on information from my own committee hearings?”

  “That’s the best way to do it!” Lamey laughed. “That way you know you won’t lose!”

  Sula was wary of anything that might bring attention to her and lead to an investigation; but she had tried to short a pair of the banks after the scandal had broken. Unfortunately no one was left to take her bets, because it was impossible to sell a stock short when its value was already zero.

  Ming Lin had a nose for what might happen next, and therefore Sula was not surprised when the Imperial Bank’s new management announced themselves appalled at all the reckless lending that had been going on and increased the reserve requirements at every bank in the empire. Suddenly banks were required to increase their own cash reserves, and the only way to do that was to sell some of their investments, stocks and bonds as well as commercial and consumer loans. But since all the banks were in the same situation, it became difficult to sell to one another, and the result was too many sales chasing too little money. The value of stocks, bonds, and debt crashed. Much of it was sold to speculators, too many of whom were little Cosgroves operating heavily leveraged businesses on the fringes of the markets.

  Another consequence of the increased reserve requirements was that there was less money available for lending, and therefore the cost of money rose as people competed for whatever financing was available. Businesses that depended on regular access to capital—transportation, foodstuffs, mineral exploitation, certain types of manufacturing—began to slow, and businesses that had been doing perfectly well began to run into trouble. Some failed, some slowed, some just closed their doors and waited for better times. The unemployed dunned their patrons, whose finances were already being stretched. Business failures rocked the banks even more. Many of the little Cosgroves crashed. Banks began to fail, banks that had never had anything to do with Cosgrove or his businesses.

  Sula watched it all with the same horrified fascination with which bystanders view an auto crash. When she had first asked questions in committee, she’d intended to reveal fraud at the higher levels of finance and show how the most respectable institutions in the High City had been co-opted by a ruthless swindler.

  But the situation had been far worse than that. Cosgrove hadn’t operated on his own; he was a symptom of the whole shambling structure of postwar finance, where procedures and institutions intended to last only for the duration of the emergency had evolved into a half-hidden, shadow economy operating on the margins of finance and the law.

  When she’d asked her questions, Sula had thought that a few incompetent bankers might lose their jobs, but now billions of the empire’s citizens were out of work and growing more desperate by the day. She could see them from the windows of her apartment, wandering the streets of the Petty Mount looking for work, or maybe just a place to sleep.

  Had she done this? she wondered. Would things have turned out differently if she hadn’t asked questions?

  No. The collapse would have happened anyway, but the insiders behind it would have had a much better chance to hide their tracks.

  Ming Lin pored over financial reports and drank in whole floods of government statistics. She reasoned that it was possible to make money off the crisis, and Sula was willing to follow her recommendations if there wasn’t too obvious a conflict of interest with her job on the committee.

  Half the banks were for sale, and it seemed like these same banks had foreclosed on half the town and were now trying to sell it. Sula bought commercial property in the High City and apartment buildings in Grandview. She shorted a whole series of financial institutions. As she had during the war, she bought supplies of cocoa and coffee imported from other worlds and waited for the price to go up. She bought a hardwood forest in the southern hemisphere, a pecan farm, a fishing port, and a winery, each of which gave her certain tax advantages, as well as the unusual status of being a winery owner who didn’t drink wine. She also bought the mortgage on Miss Tiffinwala’s bakery and gave it to her as a gift.

  The last was nothing—mortgages were cheap. But Sula’s feelings were eased at the thought of doing good for someone else, instead of just making money off the catastrophe, as if she were one of the rich insiders who seemed to make money off everything.

  “Cost of goods is going up,” Ming Lin told her. They were in Sula’s office at the Convocation, much improved from her first view of it nineteen months earlier. Rare porcelain gleamed from display cabinets, and a handmade Preowyn carpet dazzled on the floor. The fragrant odor of golden Comador tea rose in the room, and Sula served it in cups made eight hundred years before in the Yangtze Valley, with matching plates that held pastry made just that morning by Miss Tiffinwala.

  Lin looked at her. She still wore her student’s gown, and the strands of her rose-pink updo were tipped with black. “Prices up,” she said. “So what will the Imperial Bank do?”

  “The wrong thing,” Sula said. “I feel that almost goes without saying.”

  “True.” Lin laughed, then took a luxurious taste of her pastry. “To the Imperial Bank, rising prices mean inflation, and they have only one response to inflation.”

  “Cut the money supply,” said Sula. After nineteen months on the committee, she was beginning to develop a sense for these things.

  “Which, as you point out, is absolutely the wrong thing,” said Lin. “Prices are going up because there isn’t enough money in circulation to manufacture and purchase goods, and if the Imperial Bank raises rates or increases bank reserve requirements again, that just makes the problem worse. But they’ll never consider any other course of action.”

  At one time, perhaps, Sula might have felt a thread of pleasure at foreseeing a catastrophe that others had somehow not noticed, but now all it brought her was weariness. “How can we see this,” she asked, “and they can’t?”

  “They all belong to the same families,” said Ming Lin, “and go to the same schools. They all use the same playbook. You grew up in exile, and I’m a commoner who earned a scholarship based on my war service.” She poured herself more tea. “We’re looking at the world through a different set of assumptions. Assumptions based on the fact that neither of us could count on having money, not the way the top Peers do.”

  “Possibly so,” Sula said. Her fellow convocates on the Committee for Banking and Exchange looked at her askance, as if she had somehow caused the disasters she foretold. Their own financial advisers were the people who handled the details of their businesses, and they shared the exalted views of their masters, in which all was well as long as the same families remained on top.

  “And by now,” Sula said, “the bankers and administrators are all afraid. They know their predecessors are being investigated. They know that if they do the most conventional thing possible, they can’t be blamed.”

  Lin raised her hand comm and looked at the display. “The Guidance Committee of the Imperial Bank meets in two days,” she said. “I have a list of firms you might want to short before their announcement.”

  “Here I go again,” Sula said, “profiting off others’ misfortune.”

  Though she supposed it could be argued that this was all she’d ever done.


  After the meeting of their Guidance Committee, the new president of the Imperial Bank announced that, in response to inflationary pressures, the bank was increasing its rates on loans, discounts, and overdrafts. Over the next months another wave of bankruptcies and bank failures swept through the empire, throwing billions out of work.

  Cosgrove, who had been fleeing on his yacht the entire time, arrived in Hy-Oso, the gold-bearing seaweeds of which were the source of his fortune. But by the time he arrived he no longer owned the gold, or for that matter the weeds, and turned himself in to the authorities, along with his family and one or two mistresses. News of his incarceration went nearly unnoticed amid the long list of bankruptcies.

  Those who were unemployed, disabled, or sick were supposed to rely on their patrons, who relied on their patrons, and so on up the social order to the topmost rank of Peers. But now bankruptcy was harvesting patrons, and many Peers were under pressure.

  Lady Gruum and Lord Tork together announced the formation of the Steadfast League, an organization to help the unemployed. To Sula it seemed a way for Peers and patrons to share the costs of looking after their clients, by organizing the clients into units that might share resources such as food, housing, and child care. Tork offered retired or unemployed petty and warrant officers to organize things. The destitute were housed in barracklike accommodations and fed in street kitchens. Those who needed work were deployed in make-work battalions, cleaning and mending the streets, dredging and cleaning the canals, repairing and refurbishing buildings, and beautifying parks and neighborhoods, work for which they were paid a modest sum. Sula couldn’t help but suspect this was a scheme to increase the value of buildings and districts for the benefit of property owners, but on the whole it seemed useful, and a better solution than depending on the erratic good intentions of patrons.

  She had profited from the crisis and gave the League a modest donation, and in return the exterior of one of her apartment buildings in Grandview was cleaned, and nearby trees were pruned. She hadn’t asked for a quid pro quo, but the organizers provided one anyway.

  It seemed she couldn’t escape the trading of favors.

  More amusing were the Steadfast League’s marches and demonstrations, in which they rallied for Public Sanitation or the Rule of Law or the Purity of the Praxis. Squares were filled, guest speakers offered bromides, and the League members were encouraged to maintain a Positive Attitude. A Positive Attitude, apparently, would cure the crisis.

  Sula had to consider her own Positive Attitude a complete failure. It was a long time since she’d been very positive about anything.

  Now that Peers were falling into financial difficulties, the Court of Honor became active. Sula had achieved nothing on the court in her first twenty-two months as a convocate. Lady Tu-hon never communicated with her about the business of the court, called no witnesses, viewed no documents, and analyzed no data. Anyone accused of collusion or bribery was found innocent without the necessity of a hearing, and those guilty of other offenses were allowed to resign before hearings were held. It was clear to Sula that Lady Tu-hon and her allies were ruling on the cases without involving anyone outside their circle. Sula considered being offended, but decided she couldn’t bring herself to care about the cases one way or another. The Convocation was the Convocation, and Sula was unlikely to change it.

  But now the Court of Honor was called upon to review the cases of several convocates who had committed what was for their class the ultimate crime: they had lost their money. Lamey, of course, was delighted. None of them were his allies, and there were a number of high-ranking Peers with whom he’d reached an understanding, and whose names could be put forward as replacements.

  Some of the bankrupts were talked into resigning before their hearings were scheduled, but others maintained a deranged optimism and a belief that everything would somehow work out. They were in the process of being evicted from their homes in the High City, their debts stood at many times their net worth, and they could no longer pay their office staff, but they were full of plans that would assure their future and were convinced that soon the heavens would open up and shower them with money. They were maintaining a Positive Attitude. Some of these were friends and allies of Lady Tu-hon, and she was determined to save them.

  The hearings were brutal. Sula had to keep pointing out how the numbers submitted didn’t add up, and that there was no hope of solvency for any of those brought before the court.

  “You are well known for your prophecies of doom and despair,” Lady Tu-hon said to Sula, “but I remind you these are not chiseling pawnbrokers or criminal financiers. Rather, these are Peers of unblemished ancestry and honor.”

  “I am not indicting their ancestry,” Sula said. “Just their bank balance.”

  Lady Tu-hon’s peg teeth clacked in anger. Her orange eyes glared at Sula, and Sula realized she was not about to be forgiven for opposing the committee chair. “And whose fault is it that they suffer financial embarrassment?” Tu-hon said. “They are the victims of economic crimes!”

  “Very likely,” Sula agreed. “If so, they may seek remedies in the law courts. But they are as insolvent as Cosgrove himself.” She suppressed a smile. “But of course, there’s no law that bankrupts may not serve in the Convocation—it is only a custom.”

  An elderly Torminel on the committee who dozed through most meetings was now brought to full alert by an apparent threat to tradition. “A venerable custom,” he said. “A custom that has served us for millennia. Would we see convocates begging on the streets for marrowbones?”

  In the end, Lady Tu-hon did manage to rally her allies on the court and save a pair of her friends, essentially by admitting that financial solvency was no longer a criterion for membership in the empire’s highest body. Lamey, visiting Sula’s office, burst into laughter when he heard. “I’ll offer marrowbones for votes!” he said, and marched off to rally the destitute to his cause. Sula thought he might well succeed: Lady Tu-hon might have saved their seats in the Convocation, but she would hardly part with enough money to let them keep their palaces.

  Lady Tu-hon had already shifted her energies to another forum, and now she introduced a motion in the Convocation. “The financial crisis is the greatest threat to order since the Naxid Rebellion,” she said, “and it is time to restore to the empire the financial system imposed by the Great Masters, and under which we achieved our greatest height of peace and prosperity. I speak, of course, of ending the unjust tax on equity imposed during the late rebellion, and returning the burden of taxation to the exporters of goods, where it belongs.”

  Roland and Lamey rallied their own forces against the proposal, and Sula duly spoke against it with the authority of someone who had studied the numbers. “We can’t afford the change,” she said. “Coping with the crisis has already put a strain upon the Treasury. And in a moment of economic crisis we can’t afford to increase taxes on those who are most responsible for our remaining prosperity.”

  Lady Tu-hon rose to reply, and her orange eyes blazed with rage. “It is the peddlers, moneylenders, and merchants who are responsible for the crisis!” she said. “We must keep their grasping hands away from our wealth and resources!”

  Lord Saïd, who could read a budget, quietly had the motion sent to several committees for review, which effectively kept it bottled for the present.

  “We can kiss any recovery good-bye,” Ming Lin explained, the next morning in Sula’s office. “Lady Tu-hon’s just introduced uncertainty into the situation. People aren’t going to invest in merchant ventures if they suspect they might be taxed out of existence. So we won’t see new ships, or any new industries aimed at export, and the industries that already exist aren’t going to be expanding anytime soon.”

  “I should consult my advisers,” said Lady Koridun. She had come to Sula’s office that morning to carry an invitation to a soiree and had been invited to join Lin and Sula in their morning meeting. They drank tea and ate pastry, while Lady
Koridun lapped at a dish of blood warmed to body temperature and enjoyed some raw quail eggs topped with fish paste. Sula’s office staff had stocked food acceptable to the palates of any member species of the Praxis, which was only courteous, but the reek of the fish paste would linger in her office for some time.

  Lady Koridun had become a frequent visitor, and Sula had invited her to the dinners and receptions she was obliged by her position to host. Lady Koridun was a little too worshipful to become a true confidante—Sula preferred companions who weren’t quite so completely impressed with her—but she was pleased to have found a friend, even though somewhere in an uneasy corner of her mind she retained the paranoid suspicion that Lady Koridun was enacting some impossibly baroque form of revenge.

  “Consult your financial advisers if you like,” Sula said, “but consult Miss Lin first. She’s predicted almost every stage of the financial crisis.”

  Lin blinked. “Thank you. I try to do my homework.”

  Sula turned to Lady Koridun. “I hope your financial condition isn’t too alarming?”

  “The clan is basically sound,” Koridun said. “But there are increasing outlays on behalf of our clients, and there’s a certain amount of chaos in the accounts, after so many deaths in the family.”

  “Miss Lin can probably give you some good advice,” Sula said, “but I’m beginning to find it depressing to so consistently profit off everyone else’s misery.”

  “You’re profiting off the people who are creating the misery,” Lin pointed out.

  “I hope so.” Sula regarded Lin as she sipped her tea. “Are you sure you want to stay at the university?” she asked. “I could set you up in your own office as a financial consultant.”

  Lin was astonished. “Are you serious?”

  “Certainly. Why not?”

  Lin ran her fingers through her pale-rose hair. “Well,” she said, “you’re not my patron.”

  “I could be,” Sula said. “If your own patron isn’t willing to do right by you. Or I could speak with your patron and recommend that you be set up in business.”