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Chapter 1123: The Feast of the Financial Magnates

Prince Poniatowski inquired urgently, "What exactly do you mean by that?"

"I am all too familiar with the Russians' tricks," Kościuszko declared, waving his hand with such force that the medals on his chest rattled. "They are likely massing their armies within their borders as we speak."

"Once they are ready, they will use the chaos in our eastern provinces as a pretext to launch an invasion. It is the exact same tactic they used a few years ago."

Ignacy Potocki immediately added with a look of fury, "Then what do you suggest we do?"

Kościuszko turned to his old comrade-in-arms. "Your Highness, I recommend that we immediately reinforce the line between Mozyr and Minsk. We must ensure at least seventy thousand troops are stationed on the eastern front for defense."

"At the same time, we must conduct a thorough investigation of those in the Great Sejm who still harbor delusions about Russia. Their presence will only erode the fighting spirit of our citizens!"

A few days later, the Polish Great Sejm voted by an overwhelming margin to reject the proposal to restore diplomatic relations with Russia.

Simultaneously, the Polish Third Guard Infantry Division departed from Warsaw, rushing toward the Dnieper River defense line in the east.

Another half-month passed before Prince Poniatowski received a report from intelligence agents in Saint Petersburg. It confirmed that Russia was indeed conducting a large-scale mobilization, with dozens of wagons filled with supplies leaving warehouses in Moscow, Kasimov, and other locations every day.

In reality, this was Paul I preparing for his march into India. However, in the eyes of Prince Poniatowski, it perfectly corroborated Kościuszko's earlier assessment—the Russians were preparing their forces to invade Poland.

While Kossakowski and another member of parliament from the eastern provinces were giving a speech in the square outside the Royal Castle advocating for the "restoration of trade with Russia," several investigators from the Polish Committee of Liberty and Security stepped forward and shoved them into a carriage.

Over the course of three days, all twenty-one members of parliament who were either Eastern Orthodox or deemed insufficiently anti-Russian were placed under house arrest. Shortly thereafter, the Great Sejm issued a national mobilization order.

Meanwhile, the Russian special envoy, Igelström, had only reached Smolensk when he received notice from the Polish government that his entry was denied.

...

London.

The armed merchant ship Gassen slowly drifted from the River Thames into the Port of London.

On the pier, Salomon Rothschild hurried forward to meet a familiar figure, greeting him with a firm embrace and a smile. "My dear brother, why have you come? Frankfurt is certainly no short distance from here."

Amschel, the head of the Rothschild family, patted him on the back and immediately pulled him toward a roadside carriage, whispering, "For heaven's sake, why didn't you consult me before making such a massive move? Is the agreement signed?"

Salomon nodded with a bright smile. "Yes, it was signed five days ago. I wrote you a letter; I didn't expect you to rush to London yourself."

Amschel paused in his tracks and looked at him. "What is the total amount?"

"Eight million pounds."

Salomon's tone made it sound as if he were speaking of a mere eight pounds.

Sweat broke out on Amschel's forehead. He climbed into the carriage with his brother, slammed the door shut, and then growled, "Eight million pounds? God! Have you lost your mind? Setting aside the immense risk, we simply don't have that much money!"

Salomon loudly instructed the driver to return to the heart of London, then smiled at his elder brother. "It is not a lump-sum payment, but a tiered loan spread over three years."

"The first installment is only five hundred thousand pounds, which I have readily available. As you know, my profits from investing in sugar futures last year were quite substantial."

Amschel struggled to calm himself and continued his questioning. "Then what about after that? What of next year's payments? The family's liquid capital will be exhausted by the second half of this year!"

"You needn't worry, dear brother. If things are managed smoothly, we might not have to give the British government a single penny in the second half of the year," Salomon said, waving a hand dismissively. "In fact, they might even have to pay me."

"And how exactly do you intend to manage that?"

Salomon picked up a sugar packet from the wooden table, tore it open, and poured it into his teacup. "The British need a vast amount of sugar. But as you know, sugar can currently only be purchased with francs. Therefore, the British government must take their gold to the Bank of France, exchange it for francs, and then trade in the futures market."

"However, the British government is loath to part with so much gold."

"So, I loaned them the sugar as a credit denominated in pounds sterling. I charged them about eight percent above the market price. You see, even before the interest is due, we have already turned a profit."

Amschel narrowed his eyes. "You used the family's French national bonds?"

"Precisely. I used them as collateral with French sugar merchants to purchase futures contracts with longer delivery periods—say, six months or more."

"Then I handed these contracts over to the British. To them, it is the same as having bought the sugar."

"During those six months, we continue to collect interest on the French bonds. Simultaneously, the British must pay us interest on their loan."

"If the British want more sugar, they will have to pay me in cash."

Since French bonds were denominated in francs, they were easily exchanged for sugar.

Amschel nodded thoughtfully. For the British government, this was equivalent to trading pounds for sugar, so they could accept a certain markup.

Salomon continued, "The portion paid in sugar accounts for about 1.8 million pounds over three years. This means we only need to provide the British with an additional two million pounds in loans each year."

"After deducting the interest and the profit from the sugar price difference, the actual annual payout is approximately 1.7 million pounds."

"Yes, I know that even so, the family's funds are still insufficient. I have already reached an agreement with the Wallenberg and Hope families. They will provide us with financing at eight percent interest when necessary."

"Oh, and by the way, the interest rate on our loan to the British government is 16.5 percent."

Amschel's expression darkened again. "Have you considered why others aren't jumping at this high interest?"

"Because the risk is astronomical!"

"Even in Frankfurt, I have heard the news. Twelve dead and over seventy injured in Manchester, with over a hundred arrests. If their Ninth Cavalry Regiment hadn't moved quickly, Manchester City Hall might have been seized by rioters. This is already the third major riot in Britain this year!"

He was referring to the riots in Manchester two weeks prior, sparked by yet another increase in income tax—British income tax was now thirty-five percent higher than it had been the previous year. The rioters had somehow managed to seize over a hundred flintlock muskets from a militia warehouse, and for a time, the militia sent to suppress them didn't dare approach.

However, the rebels lacked sufficient ammunition. After a frantic volley of shots, their fire went silent, and they were quickly dispersed by the cavalry.

"There are already those in the British Parliament preparing to impeach their Prime Minister," Amschel said, gesturing emphatically. "No, that isn't even the most serious issue. You must realize that Britain is very likely to go to war with France again."

"Looking at the current situation, they failed to hold Lisbon, they have completely retreated from the Caribbean, and they couldn't even eliminate the natives at the Cape of Good Hope."