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 crew. 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.

The phones already were ringing off the hook. Overnight the White House had raised the budget deficit estimates for the next year, and the treasury bond market had tanked. There used to be a strong bid or demand, for U.S. treasuries, due to a flight to quality knee-jerk reaction from the market. An investment in U.S. government securities had historically been considered a “risk-free” investment. No more. Now there was panic that rates were going to have to go much higher to attract buyers to fund all of the new debt.

“God, I feel like I’m living under Jimmy Carter,” he said sarcastically to himself. He was having trouble getting motivated this morning. The business was slowly becoming not fun anymore.

Connor had returned to New York to take care of the trading desk, but his mind was still in the Bahamas.

He was ripped away from the islands back to New York when the news hit the tape. CNBC announced it first and the trading floor went crazy.

“Euro currency to dissolve due to sovereign debt crisis,” the talking heads grimly proclaimed.

 

 

 

June 8, 1702

Nevis

 

 

Although Nevis was a mostly dormant volcano, there was some activity ten years prior. There were also numerous hot springs and fumaroles sprinkled about the island, evidence that the geologic activity was still going on deep below.

In addition, over one hundred years of intense deforestation to support the immensely profitable sugar industry on the island made the soil on the hibernating caldera quite unstable. The coral reefs protecting the shoreline were beginning to break apart as they died from lack of runoff from the now gone vegetation, leaving less and less protection for the coastline from the savage sea.

It was a little-known fact that at this time, the West Indies sugar and slave trade provided more income to the English Crown than trade from all of the North American colonies combined. The cane in Nevis was particularly valued, as it had a higher level of sugar content than neighboring islands. This produced a bountiful crop to provide the ladies and gentlemen in England sugar cubes for their coffee.

Nevis was also a base of operations for the English privateers and pirates preying on French and Spanish ships in the region. Soon the French would invade the island to put a stop to this and change the sugar trade forever.

Whether it was a volcanic event or a mudslide caused by the unstable mountainside, we will never know. A thundering boom followed by the crashing sound of trees snapping emanated from the mountainside. A dark mass could be seen shifting down the eastern side of the caldera. The mudslide covered all entry points to Captain Kidd’s cave.