In the basement, once Susan had left, Cet accessed the phone systems to contact Porter. The banker sounded surprisingly pleased to hear from him.
“Mr. Killgrace, I’ve just finished arranging the stock ticker. The installation crew will be at your offices this afternoon. You’ll need a room for it.”
“That is taken care of.” It would be once the phone call was completed. “How is the process with the loan from the Federal Reserve?”
“Secured until Friday.”
“Well done, Mr. Porter.” It was amazing how simple air wave vibrations could improve a humanoid’s performance. “I will arrange two million dollars to ensure you can clear the Reserve loan by Friday.”
“Two million?” Porter sounded uncertain and Cet paused.
“Is that not the amount taken from the Federal Reserve?”
“No,” Porter said cautiously. “We operate on a fractional reserve. Are you familiar with banking?”
“Explain.”
“We don’t need the full amount, just enough to keep our reserve ratio of cash to loans above the legal limit. I took a Federal Reserve loan of two hundred thousand – enough to maintain our reserves.”
“Then what do we need to repay?”
“We need two hundred and twenty thousand from you to repay the loan and costs, and another one hundred and eighty to maintain our reserve ratio. So long as Porter & Mason receive four hundred thousand from you by the end of the week we can repay the loan and maintain our reserve ratio.” Cet recalculated rapidly. It seemed that by acquiring the bank, it had unintentionally accessed a method of creating funds at will. While counterfeiting and forgery left anachronistic traces, it seemed that this “fractional reserve system” was a temporally acceptable method of multiplying existing funds as desired. The banking servitor’s assessed expendability decreased dramatically.
It also meant only twenty-five percent of the anticipated funds were required by Friday, allowing a much greater profit margin. Should the funds perform adequately it would only need to close one position, not two.
“Mr. Porter, you have exceeded expectations. The four hundred thousand will be delivered on schedule. What would you suggest for the remainder of Killgrace’s loan?”
“Well, if you repay the same amount quarterly until the loan is cleared, you can spread your tax liability into the next period.”
“A very good idea, Mr. Porter, but I must get back to work. Good day.” Cet disconnected. It assessed its open position: performing adequately and no further margin was currently required. Then with a second impulse it sent a request for a clerk to locate and deliver several information sources on fractional reserve banking.
~
Porter put the phone down. Killgrace was quite correct: with the shares disposed of there had been no barriers to obtaining a Federal Reserve loan. The change of ownership at the bank was a perfect excuse, and better yet Porter could, without being too overt, let the reserve officials hang all the problems on Mr. Mason. The recovery of bank assets from his possession, failure of Mason to turn up at the bank and his removal from the board prior to the bank adopting a responsible loan policy could not be coincidence.
In the month since Killgrace came on board the bank had been growing beyond all expectations. The gold injection at the end of September, the extra accounts from Williams, and now this loan. Porter had looked through the funds, trying to see where the fraud was occurring with no luck. Susan had said it was similar to Hatry’s actions, and most of these funds were recently launched and cross-invested. It seemed Mr. Killgrace had extra information behind his plans. Porter just hoped the bank would survive them intact.
~
At the speakeasy, Sam was standing by the bar with a couple of gentlemen Susan did not know. She was on guard instantly, but he looked too relaxed for them to be Feds. As she walked across he looked up and smiled.
“Susan! You’re a sight for sore eyes.”
“Hi, Sam, I was only here a few days ago.” She glanced at the two men. One of them tipped his hat, but they made no move to introduce themselves. “I hear you have a problem?”
“Yeah. It’s a doozy. We got no booze.”
“What?” Susan’s shock was not feigned, and one of the men laughed. Sam continued.
“Those federal raids last week. They took out most of our shipment and we’re running low.”
“The raids?” Susan blinked, looking at the door in alarm.
“You did hear about the liquor raids last week?” Susan nodded. It had been hard to escape the headlines of ‘liquor empire smashed’ but she had been so busy with the shares she had forgotten it might affect people she knew. “Yeah, well some of that was my shipment. I ran out of Sunday, and I got nothing for tonight.”
“Well you’ve got apple here.” She pulled the small bottle out of her bag and handed it across.
“You’re a life saver. Don’t suppose you got anymore?”
“We’ve got the alcohol but no time to flavour it. I can’t magically make fermentation go faster.”
“You got alcohol? How pure?” the guy who had tipped his hat spoke up suddenly. Susan looked at him, and then at Sam who nodded. She gave the neat figures.
“Ninety-six percent, with four percent distilled water.”
“So you ain’t brewing, you’re compounding. Make the alcohol, add a flavour and dilute to taste.” He took the small bottle from Sam, unscrewed the top and sniffed, putting the bottle down before she could react. “Neat ethanol with apples in it for about a weak, right?”
“Yes. How did you know?”
“Nothing fools the nose. Bring it,” he told her, and looked at his friend. “Add cardamon and juniper and you got gin.”
“It means you’ll be short next week,” Susan warned.
“Don’t worry your head about it. By next week we’ll be back up and running.” She hid her surprise. Susan had known bootlegging was a huge operation, but the idea that the US could mount a full scale raid with thirty-five FBI teams and it would be little more than an inconvenience really brought it home to her.
“Two pints? Why bother?” his friend asked, and the guy gave him a look.
“Give me a couple of hours and that two pints is twenty-five gallons of gin. Compound doesn’t taste as good, but if it’s all that’s on the market the punters’ll buy it. Don’t suppose you got some extra space near that secret still of yours?”
“No. We’re packed,” Susan said quickly.
“That’s true,” Sam interjected, “they’ve been turning out two pints a week neat ethanol, for the last year. That’s one heck of a still.”
“Then let’s make things a bit easier. Say you stop flavouring it, give us the ethanol neat and we’ll take care of the rest?” The man suggested.
“Same price?” she asked, and Sam nodded.
“Agreed. I’ll be back in a bit.” Susan said, hurrying out.
~
