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10-December-1920
''As I told you, if you establish your company here, in the Baltic, and create a company with at least fifty workers, the State will immediately purchase a portion of its total value at market price. For that, shares will be issued and later distributed among the company's workers'' I said while looking at one of the representatives of several British companies that had been arriving in Riga for some time to do business.
''Twenty percent?'' the Briton asked, leaning slightly forward. ''Allow me to make sure I have understood, Your Highness. If I establish a company here, build facilities and hire, let us say, two hundred men, your Government will provide capital equivalent to twenty percent of the company's value and, in exchange, shares will be issued that will remain in the hands of my workers.''
''In that hypothetical case, it would fall into the category of a large company and the State would have to purchase twenty-five percent of the company's shares, which would also have to enter the Riga Stock Exchange from the beginning of its operations'' I replied to the Briton's question.
The man remained silent for a few seconds before continuing.
''Then my next question will be quite obvious to you, Your Highness. What rights come with those shares? Because if you are telling me that I can build a company valued at one hundred thousand pounds and your Government is willing to contribute twenty-five thousand pounds without demanding control of the company, I must admit that it is an extraordinarily attractive offer.''
He made a small pause and swallowed.
''But if those workers can gather their shares and decide who runs my factory, prevent a capital increase or sell that twenty-five percent to a third party, then the matter changes considerably.''
''The shares may have normal characteristics, with voting rights or without voting rights. If you decide to issue them without voting rights, they will have to pay considerably higher dividends. That is a decision you may make according to what you consider necessary for the administration of your company.''
I adjusted myself slightly before continuing.
''However, you must understand one thing. Those shares belong to the social apparatus of the Baltic State, and it grants them to your company only so they may be administered for the benefit of its workers. The corresponding dividends must be distributed annually among them, regardless of any other form of profit distribution contemplated in the company's statutes.''
The Briton remained attentive while I continued explaining.
''Since those shares are property of the State's social apparatus, they are not inheritable, cannot be sold and cannot be transferred. The corresponding percentage will be divided equally among all the company's workers who are citizens of the Baltic while they maintain their employment relationship with the company'' I said, repeating practically the same message I had already had to explain many times to the British investors who had been arriving in Riga for some time.
The Briton raised his eyebrows slightly.
''That is quite different from what I expected to hear.''
He took out his notebook and began to write.
''Then I will need to know four other things before I send a telegram to London: who determines the value of the company, what happens to that twenty or twenty-five percent when we increase capital, what taxes we will pay and whether I can convert my profits into pounds sterling and repatriate them to Great Britain'' said the business representative.
''At first, the State will pay the corresponding percentage by taking as reference the nominal value of the investment made by the company when it arrives in the country. During its first year of operation, the Riga Stock Exchange will be responsible for economically evaluating the real value of your company, and that valuation will be the one we use as reference. If the value increases or decreases, the necessary adjustments will be made to pay the corresponding difference or recover any excess delivered by the State.''
I raised my gloved thumb as I answered his first question.
''But from that first year of operation, the corresponding dividends must already begin to be paid to your workers. You will be responsible for distributing them and we will only supervise compliance with the law.''
Then I raised my index finger.
''In the event of a capital increase, the percentage of the company destined for the workers must be maintained. The difference necessary to preserve that percentage will initially be financed by the company itself and later paid through a portion of the dividends corresponding to the social fund over a period of between five and fifteen years, depending on the amount.''
I made a small pause before continuing.
''The Bank of Riga will act as guarantor of that operation. The social fund will recognize the debt with your company, but the Bank of Riga may advance you the corresponding money immediately. Afterward, a portion of the dividends generated by those shares will be deposited as payment until the debt is fully covered.''
I raised another finger.
''In addition, your company would fall under the special British statute, so for the next ten years it will only have to pay eight percent in taxes. Once that period ends, we will negotiate with your Government the conditions under which that statute will continue and whether the rate should be modified.''
Finally, I raised one last finger.
''And yes, you will be able to convert your profits into pounds sterling and repatriate them to Great Britain without restrictions. Naturally, it will be subject to the exchange value existing between our mark and the pound at the time the operation is carried out, but aside from that there will be no additional limitation'' I concluded.
''Hum… well, we will take it into consideration, then. It is good to know that the Baltic State is willing to invest when businessmen want to do business here. Although, well, it is somewhat problematic to have workers with decision-making capacity in these matters, but I suppose it will be my boss who ultimately determines whether the investment is made or not. So I thank Your Highness for your time'' the British representative said while putting his notebook inside his coat.
I nodded while watching the Briton leave.
Things had been rather mad lately.
Germany had annexed Austria-Bohemia, which was not too strange either considering that the Germans had spent decades dreaming of a single State instead of two German empires with completely different interests. Since 1848, that dream of a unified Germany had existed, and now it finally seemed to have been fulfilled.
Although the British and French had interfered throughout the entire process.
Parts of Bohemia and Moravia had been turned into an independent State, although it seemed quite certain that Germany would later try to influence it or directly annex it. A significant German population still existed within that new State, and expelling them would only serve to hand Germany, on a silver platter, a justification to intervene and claim the entire territory.
In the end, it had ended up resembling the Munich Agreement from my old life quite closely, although Germany seemed to have annexed some additional territories. A large part of its claims had focused around the Czech mining regions, trying to keep as many natural resources as possible by using the presence of a German population as justification.
We had been forced to renegotiate numerous agreements with Germany, since many of them had been signed directly with the Austrian Kaiser.
The former monarch had moved to Ukraine together with his relative Vasyl, since he did not have many safe places to seek refuge and no one knew exactly what might happen to him while the situation finished stabilizing.
So Ukraine had become, as strange as it might seem, a kind of Habsburg bastion.
We would simply have to keep a closer eye on them.
The last thing we needed was for some member of that family to start thinking that Ukraine should receive greater autonomy or become some kind of Habsburg restorationist project.
Besides, December had finally arrived and with it the date for company dividend payments.
Orders had already begun to be issued to distribute among the workers the corresponding percentage of annual profits, once operating costs, necessary investments in new technologies, facility improvements and industrial expansions had been deducted.
It did not take long for the distribution of business profits to begin.
For many workers, that represented their first true enjoyment of being part of a company's capital.
For me, it represented an enormous headache as I tried to keep inflation under control.
From one moment to the next, millions of marks had been released directly into the pockets of the workers. In some cases, certain employees had received dividends equivalent to six months of wages all at once.
That was because practically all our companies had been operating according to previously estimated demand, so the factories maintained good records of sales and income and, as a result, many of them had ended the year with considerably high profits.
All of that had been coordinated with a campaign aimed at encouraging workers to reinvest their earnings in the Riga Stock Exchange, buying shares in the state companies corresponding to the percentage we planned to sell.
Since multiple programs had been launched to teach workers how the market worked and what they should do when the majority of a company eventually came under the control of its employees, many had already begun reinvesting part of their earnings in the same companies listed on the exchange.
But, as with everything in life, there were also many who simply spent what they received.
Which was not necessarily bad either.
A market for luxury products had begun to appear, and that had caused multiple microenterprises of between one and five workers to begin forming within the Duchy over the last few days. These focused mainly on supplying luxury goods or simply covering needs that the Government could not satisfy because we lacked sufficient resources or because it was not economically viable to do so, considering everything we still had to finance.
Watchmakers, glassmakers, opticians, goldsmiths… There was an enormous number of small businesses beginning to emerge, mainly because there was now quite a bit of capital available among the population.
In addition, considerable collaboration was taking place within communities to establish small businesses. In some localities, community loans were even being organized to help someone gather the necessary capital to, for example, open a watchmaker's shop in one of the many colonial cities.
In many of them, there were not even any watchmakers, while practically everyone was beginning to want their own pocket watch.
That had slowly become a kind of status symbol.
I used one, my officers carried one and the foremen did as well. Things like that had caused many people to try to imitate certain aspects of my style, due to my popularity among a good part of the German population.
The only thing that truly bothered me in all of this, and that I did not know how to control, was the enormous consumption of cigarettes among the population.
Some campaigns had been launched to reduce their consumption, although so far they had not amounted to much more than pamphlets placed in factories and shops explaining the harm caused by smoking.
I did not know whether that had achieved any significant result.
But I also could not, in the current economic situation, completely prohibit a business that generated taxes and money for the Government.
There were British companies dedicated to importing products from their country, and among them came cigarettes that were later sold inside the Duchy.
In addition, proposals had appeared in some cities to buy agricultural land or build greenhouses intended for tobacco cultivation, attempting to imitate the enormous prestige that the Flower of Herzegovina had among the Russians, a variety of tobacco highly coveted for its supposed quality.
I understood that a good part of the consumption came from former soldiers, since during the war one of the few things they could do to deal with the horrible stress of constantly hearing explosions was smoke to calm their nerves.
So, in a certain way, I could not simply arrive and establish a total ban on consumption. Instead, I was pushing some laws intended to prevent smoking in public places, trying to keep consumption within the private sphere.
After all, I would gain nothing by completely banning its sale, beyond provoking the appearance of smugglers and a black market that would end up benefiting from the existing demand.
''Mein Herzog… some Swedish businessmen have arrived'' one of my assistants said while I continued reviewing some books.
''Let them in if they wish to speak with me'' I replied while breathing deeply.
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If there are spelling mistakes, please let me know.
Leave a comment; support is always appreciated.
I remind you to leave your ideas or what you would like to see.
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