Currency

by L. Todd Wood

  What hotel am I in now? he asked himself. In the pitch black, his eyes adjusted, and he could make out the desk across the hotel room. Slowly his memory returned, and he was aware of his surroundings.

  Ah, Bahamas. I’m in Nassau.

  He sat up in the bed and swung his feet over the side and reached for the water on the nightstand to quench his thirst. He had drunk too much again. Clumsily Connor made his way to the bathroom to relieve himself.

  The nightmares were almost every night in the beginning but now began to lessen somewhat. His therapist had helped with that. God how he missed Emily, even though it had been over ten years since here death. “I’m so sorry you had to go through that Babe,” he muttered out loud to no one.

  He tried to focus. He tried to think of the business at hand.

  Aunt Clara informed him through the letter written forty years ago that he was descended from Aaron Burr through her side of the family. Connor smiled at himself as he thought of the twinkle in her eye and the obvious secrets she kept her entire life. She had been the trustee of an offshore entity that he found out included a good deal of money and other documents safeguarded in the Bahamas. The most interesting of them all, however, was Burr’s personal journal. Clara had selected Connor from all of her other family members to be the one to continue on as trustee upon his forty-fifth birthday. She always did take a special interest in me, he thought.

  Connor took a flight to the Bahamas the next day after the attorney had called, and he arrived via taxi at the prominent law firm in downtown Nassau. It was an unusually cloudy day, as the next tropical storm was passing south of the islands on its way to extinction in Mexico. He was disappointed. He had expected tropical bliss.

  The overweight tourists off the cruise ships were massing in front of the shops on Bay Street, clogging the thoroughfare for the locals. They were buying T-shirts, rum, and various trinkets.

  I guess it pays the bills, he decided.

  He was lead into an ornately decorated board room with ancient, dark, wooden pilasters lining the walls. There was a long board room table with coffee and tea laid out pleasantly. Elegantly bound books adorned the bookshelves.

  An older Englishman arrived seconds later and introduced himself. He then formally passed the trustee duties on to Connor and put himself at Connor’s service. “Our fees are taken care of by the trust,” he said matter-of-factly. He then laid an old, ornate, wooden box in front of Connor, opened the ancient padlock with a shiny, brass key, and left the room.

  Connor opened it.

  The journal was fascinating; Connor was not sure the last time it had been held. Did Clara ever read it? If so she never let on.

  The manuscript told of Burr’s time as vice president, the duel with Hamilton, and most importantly the time he spent out west trying to start another country. Connor read for more than four hours that day. He then spent another two days speaking with the attorneys and understanding his duties as trustee. That was a month ago.

  Connor climbed back in bed and shut his eyes. As usual, however, the alcohol from the night before would keep him awake. His head was throbbing like a jackhammer. It would be another long night.

  March 2, 1699

  Atlantic Ocean

 

  Kidd awoke before sunrise; actually he really never went to sleep. He lay in his berth on the near deserted ship, listening as always to the sounds the vessel made. These sounds told him many things. The health of the ship, the mood of his crew, and the temper of the sea were all told to him in a brief instant by listening. He rose in the blackness of his cabin.

  The days had passed one after the other and now ran together in a haze of time. He had taken on more crew members at Annobon, in the Gulf of Guinea, but still was dreadfully short of men to run the huge ship. It was a miracle they had gotten this far. They were nearing the Caribbean Sea.

  The ocean was fairly calm, but there was a west wind blowing. The Adventure Prize was making about five knots. The crew, or rather what was left of his crew, was exhausted. They had been making their way for almost four months now across the Atlantic from St. Mary’s Island, only twenty plus men and boys to sail this monster of a ship. It was an almost impossible task, but Captain Kidd had always asked the impossible. One man had died of exhaustion. They were getting almost no sleep, rotating ten men every six hours. Only the will to survive kept them going. Their dreams of riches and booty had been long dashed.

  This morning, however, Kidd felt something. Something was going to happen today. Something good was going to happen. He made his way to the deck.

  The sun was breaking over the horizon as he approached the perch of the night watchman scanning the ocean with a spyglass. “Good mornin to ya,” said Kidd. The exhausted man could barely mumble something in return. Official manners had gone out the window, yet the crew had bonded and worked together as well as possible.

  Kidd fumbled in his pockets for his pipe and tobacco. He would start the day with a smoke.

  “Sail!” shouted the watchman.

  Kidd jerked his head around to where the man was pointing and saw several white specks in the distance. “Raise whatever sails we have left,” he shouted. “We’ll try and run from them.”

  Naval engagements during the seventeenth century typically moved in slow motion until the bitter end. Ships targeted by pirates or opposing navies could try to outrun their antagonist for days, depending on the wind. This tactic was used if they felt their enemy had superior firepower. Once the target was within range, however, the endgame was quick and violent. The loser was either sunk or boarded and taken as a prize. The fate of the crew rested with the captain of the victorious ship.

  Kidd didn’t have the crew to engage one ship much less several. His only hope was to outrun them. Perhaps I will never see Sarah and my daughter again.

  “There are three ships and they’re not moving, Captain,” responded his first mate. “They’re in trouble. The sails are not being tended to. I see no one on board.”

  This changed the situation altogether.

  Kidd stared at the vessels lying dormant on the horizon; his greed got the best of him. He had to make a decision.

  “We will board them,” he said with determination.

 

  Chapter Four

  March 25, 1699

  West Indies

  Kidd didn’t dare try to off-load the ship in the daylight. The night was his friend. He didn’t trust strangers to help him either. He had anchored in the evening two weeks earlier on the eastern unpopulated side of the island and to his knowledge had not been discovered. There was not a large population on this side of the archipelago.

  The ship, however, stood out in the twilight even with her sails furled, like a series of crosses highlighting the horizon. The small landmass of the island seemed misplaced in the vast ocean surrounding it. The sun was setting now in the west. The dark green of the lush vegetation created a stark contrast to the deep blue sea surrounding the land.

  Luckily, for this task, it was positive he had such a skeleton crew. More than ninety men had left his legitimate privateering mission to turn pirate, and they had missed the biggest score of all. Although it was almost impossible to sail his four-hundred-ton ship the Adventure Prize with a crew of twenty plus, he had done it. He had done it through sheer force of will.

  Captain Kidd was an extremely resourceful man.

  What the pirate Culliford, or anyone else for that matter, would never know was that Kidd had secured three prizes during the trip back from Africa to the Caribbean. They found them roped together floating aimlessly in the Atlantic, three Spanish galleons on a return trip from the Spanish Main.

  Upon boarding they found all of the crew dead. They had been dead for some time, according to the decomposition of the bodies. There was nothing alive on the vessels. Even the rats had died from starvation. Kidd knew what killed the cr
ew. In addition to starvation and dehydration, it was the plague. Most of the victims had evidence of a gushing of blood from the nose, a clear indication of the Black Death.

  Kidd had a decision to make. Did he take a chance on infecting his crew by searching the ships? Or did he just leave and burn the floating morgues? He chose the former. He ordered his crew to search the ships quickly.

  The shocking find was that each of the holds was filled with gold bullion. Obviously the gold had been mined and shaped in Latin America, and the bars were being shipped back to the homeland to fill the king’s coffers. The Spanish were very efficient at harvesting for the Crown the precious metal from their colonies. There was no mint in the New World so the treasure was shipped home in the form of bullion. Trillions of gold and silver in today’s dollars were ferried back to Spain over the span of a century. The Spanish in turn used the immense wealth to expand their empire and launch wars across the globe.

  Kidd could now repay his investors a thousand times over. He was elated. The crew was overjoyed. In their exhausted delirious state, they reveled in thoughts of the luxurious future to come.

  The Adventure Prize was a huge ship and almost empty, so he had the gold transferred aboard her. There was gold everywhere, in the hold, on the deck, everywhere.

  Now that he had reached his destination, he would return home in another ship that he could purchase somewhere inconspicuously so as not to invite questions regarding the Moorish galleon. He was immensely rich. He still clung to the notion that he could save his three-year mission, make money for his backers, and return home a hero. He longed to hold Sarah and his daughter.

  Kidd was no stranger to this place. He had been depositing gold, silver, and precious stones here on the island for almost twenty years during his frequent travels around the world and multiple years at sea. Many moons ago, he defended the island from the French. He plundered their ships unlucky enough to sail nearby. At that time, the governor of the island had even given Kidd his own ship, the Blessed William, only to have Culliford steal it a few years later.

  Yes he had deposited much wealth here. It was his insurance policy, his nest egg. He wondered if he would ever get to enjoy it. This trip was the largest deposit ever, immense. The Spanish galleons he had captured saw to that. This would be the last of many nights needed to bring the treasure to shore.

  The longboat was heavily laden and sat deep in the water as they set out from the ship. There was no natural harbor here. The waves attacked the craft mercilessly, soaking the sailors with the salty water. Tonight, the current was worse than on their previous trips, and, they were tired.

  Through brute strength the men persevered and eventually approached the shore. Kidd ordered a brief rest.

  William Kidd and two of his most trusted men and several slaves strolled onto the beach. Their sea legs betrayed them, and it took a few minutes to get used to the change in circumstances.

  When he arrived weeks earlier, he had approached his usual contact on the island to provide the necessary men and materials. He learned that his old friend had died a year earlier; however, his son was eager to help, for a price of course. Since then, the son was there on time every evening and provided the number of mules requested for this now routine exercise, twenty to be exact. He hoped they would be enough for this last load.

  They spent the better part of two hours hauling the precious metal from the boat to the mule train. Then the trek up the side of the mountain began.

  It was actually not a mountain. The natural edifice they were climbing was the caldera of a long dormant volcano. The vegetation was dense like a jungle, and the first night they had to cut their way through. It was difficult if not almost impossible work. They had made this trip every night for two weeks now, so the path was becoming well worn.

  It’s been so long since I have been here, he reminisced to himself the first night out. What has it been? Three years?

  They reached their destination right before sunrise and began the reverse procedure of off-loading the metal into the cave. It took almost three hours this time to finish the process. They were exhausted. Kidd surveyed the cave, remembering and checking on his past deposits. Nothing had been disturbed. When finished, he took one last satisfied look at the treasure and made his way back to the opening.

  Now it was time for the dirty work. He could not afford the chance that anyone would know where the gold was stored.

  He ordered the slaves to the back of the natural cave. The two white men with him pulled out their multiple muskets they had previously loaded. He saw the eyes of the poor, wretched men widen. They began firing. Only three white souls left the cave alive. They left the bodies where they fell, a natural deterrent to the superstitious natives if the gold was found. It will be harder to man my leaking ship without the additional help, but it is a risk I have to take, he thought to himself.

  They made the trek back to the shore quickly and rowed themselves to the ship. No questions were asked by the crew. No one said a word. They knew better.

  Captain Kidd then ordered the mainsails unfurled, and the ship quietly moved away from Nevis.

  Historically, money in the form of currency has predominated. Usually (gold or silver) coins of intrinsic value commensurate with the monetary unit (commodity money) have been the norm. By contrast, modern currency, as fiat money, is intrinsically worthless.

  -Wikipedia-

  June 21, 2017

  New York City

  Connor stepped off the Metro-North commuter train with the hordes jockeying for position. Unfortunately, the train passengers had disembarked on the lower level. This meant that he had to fight the throng of people to climb the stairs to the upper level of Grand Central Station. The time was 6:32 a.m.; the train was right on time. At least that still works, he noted as he slowly put one foot in front of the other up the metal steps, all the while feeling like he was in a herd of cattle. There was a slow, elderly person in front of him, and that only added to his frustration.

  What New York does to you, he thought as he exited the stairwell. Grand Central was as loud as ever this morning. He almost collided with several other commuters as he crossed the main floor and started up the stairs to the western entrance.

  He arrived at the trading floor twenty minutes later, having made the hike across Midtown Manhattan. Strangely enough, the walk always unnerved him, as he pictured himself incinerated by the latest terrorist attack on the city. There was something vulnerable about being a pedestrian in the city.

  It will be nuclear at some point, he concluded. It’s inevitable.

  But the biggest threat to the U.S. at this point was not a nuclear weapon, although probable down the road; it was the economy and the debt situation.

  Over the last several years, the debt had exploded. The initial estimates at the beginning of the decade were for a trillion a year for ten years, and then the deficit was to be reduced. This was not the case. It was 2017, and the total outstanding debt for the United States was over $20 trillion. The health care bill and other entitlements had cost much more than the Congressional Budget Office predicted. No one could fathom this amount.

  The uncertainty this yoke created restrained growth in the economy, which reduced economic growth and tax revenues. It created a vicious downward spiral.

  It was a nightmare, and no politician seemed to be able to step up and lead the country out of the morass.

  For centuries nation states had based their currencies on something of value. Typically this store of value was a precious metal, usually gold, silver, or copper. This was no longer the case. No developed country in the world used this system. It was all fiat money, the supply of which was created by a central bank or monetary authority. They could print all the money they wanted.

  The problem with printing money was that if too much was printed, the currency became worthless. There are examples throughout history
of this happening, the German Weimar Republic for instance.

  With the surrender of Germany following World War I, the Weimar Republic began printing money at an alarming rate to pay its war reparations under the Versailles Treaty. At the end of the war, the German Mark was exchanged at 4.2 per U.S. Dollar. At the end of 1923, the rate was one million marks per U.S. Dollar. Hundreds of factories were employed just to print the paper money needed to keep up with demand.

  Obviously unsustainable, the currency was reset to the 4.2 exchange rate in late 1923, but the damage was done to the economy. This gave Hitler an opening.

  The United States was heading down this path.

  This impacted Connor through the bond market.

  "The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. Dollars as it wishes at no cost."

  - Ben Bernanke -

  Chairman of the Board of Governors of the Federal Reserve System

  Connor ran a group of bond traders and salesmen, who created revenue by trading fixed-income sovereign and corporate securities.

  As more debt was created by an issuer and the risk for investors increased, the buyers of this debt required more compensation to take on the risk of being paid back by the creditor─in this case the United States. This caused interest rates to rise, which limited economic growth and reduced the country’s standard of living. If not controlled, it became an unsustainable situation.

  He put all of this out of his mind as he reached his Bloomberg terminal and began the process of booting up the system. Although he was the boss, he preferred to work out on the floor with his troops rather than holed up in his office. He liked to feel the vibration, the action of the trading floor.