#The Stockholm Negotiation July 1671
After months of stalled negotiations over the purpose of the Nordström Bank, Joao traveled to Stockholm to negotiate directly, as it was clear the Riksbank either didn't want to or didn't understand the project.
The meeting room was austere, lit by the harsh afternoon light. Around a large oak table, the faces of the Riksbank's advisors were marked with a caution bordering on suspicion. Opposite them, Joao's calm voice contrasted with the nervousness of the moment.
President of the Riksbank, the oldest, with a grave voice: Count de Carrasca. Your proposal is audacious. I would even go further: it is dangerous. You propose that we, the Riksbank, renounce our monopoly on minting banknotes. Allow me to remind you that we learned the hard way, with the credit currency affair, how fatal such a concession can be. Holland almost brought us to our knees without firing a single shot. Why should we repeat such a mistake?
Joao: You won't repeat it. That's precisely the point of my proposal. The mistake back then wasn't issuing banknotes, but getting them accepted abroad and indexing them to physical currencies, like copper, which can have significant variations. Metals like gold or silver have no use, unlike copper or iron, except as a monetary reference. My proposal is different; it's a defensive currency, not an offensive one: the banknotes are indexed to a certain quantity of silver. For example, in Portugal, 4.5 grams of silver is a basic daily wage; it's pretty much the same here. So, 4.5 grams of silver should be broken down into several banknotes. Trust is even more important for Nordström than for the Riksbank: our purpose is to provide small loans to artisans, small traders, and small manufacturers who don't have access to these loans otherwise, with the condition that their suppliers are Swedish. Since it's not exchangeable internationally, I need your help to issue these banknotes to make this project a reality.
Advisor (younger, looking skeptical): A currency that would only be valid in Sweden? What would be the point of such a currency? The wealth of a nation is measured by its ability to trade with the world.
Joao: A nation's wealth is first built from within. Our artisans, our carpenters, our farmers... they don't need an international currency that fluctuates at the whim of Amsterdam. They need a currency that gives them confidence, that circulates among them, and that allows them to invest. If a carpenter can buy his tools with the banknotes he received from selling his products, he doesn't need Dutch money. Such a system is intrinsically linked to a reasoned mercantilism, as stipulated by Dom Luis, my colleague and friend.
President of the Riksbank: Reasoned mercantilism?
Joao: (He smiles slightly.) Yes, sir, "the big business, the big profits, must be partly reinvested in the country—that's the principle of reasoned mercantilism." So, the 20 tons of fine silver that I would make available to the Nordström Bank are not a starting capital, but a maximum credit line. A visible, physical guarantee that the people can verify and, therefore, accept the ongoing reinvestment. The Riksbank retains absolute control. We will not issue more banknotes than there is silver in reserve according to the indexation, and every transaction will be recorded. You have the power to turn off the tap at any time. My project doesn't compete with you; it gives you a new tool to stimulate the national economy.
Advisor (seeming increasingly intrigued): And why such a ceiling? Why 20 tons?
Joao: Because it's a small amount. It's a test. I'm asking you to give me the authority to prove that this system can work, in a controlled test area, before applying it to the entire kingdom, if it succeeds. I'm not asking to replace the Riksbank's currency, but to add a supplement to it that can be used not to manage state affairs and wars, but for local production, like a shield. A currency that will allow Swedes to face the manipulations of those who seek to weaken us, for example by causing a flight of reserves through a massive exchange of banknotes by a foreign power... like Holland, for example, which has commercial practices that go as far as selling at a loss to bankrupt competitors, to later impose themselves...
President of the Riksbank: That's undeniable.
The President of the Riksbank remained silent for a long time, his gaze lost in the distance, perhaps imagining the Dutch sails of years past. Joao had presented the facts, without passion or threat. The rest was no longer up to him.
Conseiller 2: Ladies and Gentlemen,
We are gathered today to examine a proposal that holds great interest for the economic and political future of our kingdom. In just two years that Sir Joao and his peers have been among us, their achievements are already impressive and fully deserve recognition.
Through their considerable deposit of 150 tons of fine silver at the Riksbank, they have strengthened our metallic reserves like never before, ensuring the monetary solidity of our kingdom. Their commitment is not limited to the financial sphere: they have founded Karl's Harbor, a true strategic economic and military gem, demonstrating an exemplary patriotism by supporting Sweden's defense with key infrastructure such as dry docks for our fleet.
Furthermore, their contribution to the rise of commercial power is felt through a notable improvement in the hemp and textile trade, strengthening vital traditional economic sectors for our craft and for our entire population.
Their generous donation to the Crown, as well as their role in military defense, attests to a deep attachment to the prosperity and security of Sweden. Their technological innovations, such as the introduction of the "Cat' and Mouse loom," as he promised upon arrival, promise to further increase the productivity and modernization of our economy.
Beyond their individual successes, the project they propose—a monetary system where banknotes would be strictly backed by metallic reserves and limited to internal exchanges—is a real protection against the flight of money abroad. It guarantees the stability and sustainability of our economy in the face of the uncertainties of foreign relations.
By supporting this project, the Riksbank affirms its desire to support the most solid and patriotic economic actors, while respecting our monetary sovereignty and the stability of our kingdom.
I therefore urge you, my peers, to consider this initiative with the greatest attention, as it combines financial rigor, support for the local economy, and respect for strategic imperatives.
Thus, Joao obtained a license for the Nordström Bank, although it was closely monitored by the Riksbank.
________
August 1671
The setting sun painted the sky crimson above the calm waters of Karl's Harbor.
The warships of the Swedish royal fleet, lined up at anchor, formed an imposing mass of wood and rigging.
Their massive, robust, and familiar hulls represented the kingdom's ordered power. But this order was suddenly disturbed by the arrival of two anomalies.
Out at sea, two ships proudly flying the Swedish flag cut through the waves, their strange silhouettes drawn against the fiery sky. These were not the ships the sailors were used to seeing—one captained by Luis and the other by Diogo.
They did not have the noble stature of a ship-of-the-line, nor the finesse of a conventional frigate.
It was a hybrid, a monster forged for battle.
Their hulls, surprisingly thick for ships of that size, evoked the solidity of a first-rate vessel.
Their bow was not the elegant figure of a classic warship, but a kind of promontory, a massive protrusion, that seemed designed to ram or hook.
Their decks were low and clean, but it was the rigging that caught the eye. Sails, of a shape never seen before, were deployed on a beam reach, not square, but triangular.
They adjusted perfectly to the winds, and the ships glided with unexpected agility for their massive proportions.
As they approached the fleet, surprise gave way to a curiosity mixed with worry.
Sailors on the deck of the Öland, a traditional frigate, clustered along the gunwale, pointing at the newcomers. An officer, his spyglass screwed to his eye, let out an exclamation: "Great God... Look at their cannons!"
Indeed, the main deck was almost devoid of cannons, but at the front and back, a double line of gunports opened, revealing the gaping maws of heavy cannons. This was not a configuration for a long-distance duel, but for close-quarters, vicious combat, where the ship would rush its opponent, harass it, and board it.
A sailor murmured: "It looks like they were designed to jump into the lion's den."
"Not into the lion's den," corrected a more experienced officer, his eyes bright with a nascent understanding.
"More like to grab it by the throat. Super frigates... to slip behind the lines of a ship-of-the-line and beat it at its own game."
The two ships passed slowly in front of the rest of the fleet, their sails transforming into squares at the last moment, as they reduced their speed to anchor.
They anchored far from the Öland frigate and the rest of the fleet, their strange silhouettes symbolizing a radical and ruthless future that the Swedish sailors were only just beginning to glimpse.
"Hehehe... so they managed to make them..."
The sun was still low on the horizon, and the air of Karl's Harbor smelled of pine resin and fresh sawdust.
In the heart of the shipyard, a crowd of workers and onlookers had gathered to witness the day's event: the launch of a new Swedish fluyt, the last of a long series to be built.
On the platform overlooking the launchways, the master shipwright, a stocky man with calloused hands and a face weathered by decades of work, watched the crowd.
He looked with an almost paternal gaze at his work, a ship that, to the rest of the Baltic, would have looked like a typical Dutch fluyt, with its wide stern and low aft mast.
But there was a difference, and not a minor one. The rigging of this new boat was as strange as that of the two war monsters that the Sith company had ordered in France and England, and which had arrived earlier in the day.
The masts seemed ready to support triangular as well as square sails, an innovation that promised it unprecedented agility and speed for a merchant ship.
A signal was given. The rollers of the launchway groaned under the weight of the ship. Iron hammers struck the last wooden supports, making them splinter.
A handful of men with bulging muscles released the retaining ropes, and the ship began to slide, slowly at first, then faster. With a deafening cry of wood rubbing against wood, it plunged into the port waters, raising a spray of foam and a wave that crashed onto the docks.
The crowd erupted in cheers. The master shipwright, his eyes shining, let out a satisfied smile.
While tugboats bustled around the new ship, another vessel approached the shipyard.
It was a merchant ship that had seen better days. Its hull was blackened, its sails tired, and its deck worn by countless crossings.
Its foremast was twisted, and its figurehead, that of a lion, had lost its grandeur over the years.
It was one of the company's oldest ships, which had been built twenty years earlier, but its time was over. It headed toward a part of the shipyard where carpenters were already at work, with impatient looks, saws and axes in hand.
The exchange was symbolic. The old ship of the Baltic Trade Company was coming to the end of its life.
It was going to be dismantled so that its wood, ropes, and iron parts could be reused, and so that the new well of technology could come into being. It was not a death, but a rebirth.
The company was renewing its fleet, as desired; it was not so much the ships that had interested the Baltic Trade Company, but the Baltic sailors, and the launch of this Swedish fluyt became concrete proof of that.
_______
The Karl's Harbor Machine
When winter had set its icy grip on the Baltic Sea, freezing ports and sails, activity at Karl's Harbor had never stopped. Far from being a place of rest, the port had been transformed into an instrument of production, an ingenious system, introduced by English experts and Dutch defectors, where each element was a piece of a larger whole.
Away from the frozen docks, the Sith Company's sawmills turned relentlessly, powered by the current.
An almost hypnotic sound filled the surroundings.
Inside, frame saws, driven by waterwheels, cut pine and oak planks with astounding precision and speed.
These planks, all of standardized dimensions, were then stacked in drying sheds, waiting for spring to be transformed into the hulls of future Swedish fluyts by the skilled hands of the master shipwrights.
A few steps away, in a forge workshop heated by large fires, hammers beat the rhythm.
The Master Blacksmith, a giant with a face blackened by smoke and hands of steel, supervised a dozen young apprentices who were not from a guild or simply no longer wanted one.
In front of them, on workbenches, were wooden templates, sculpted with millimeter precision for nails of all sizes, bolts, and iron parts needed for a ship.
Each apprentice ensured that their metallic creation corresponded ideally to the model. It was a work of precision, far from traditional craftsmanship where each piece was unique.
In another, quieter building, the sound of looms rose like an incessant chorus. Joao's innovation had found its way here. Weavers, operating the "cat and mouse looms," produced sails of constant size and resistance.
A Master Sailmaker, also hired for the cause, ensured that the quality of the flax and hemp was excellent, knowing that each sail had to meet the same high standards for the fleet's ships.
These parts—whether the standardized planks, standardized nails, or standardized sails—were the fruit of the winter's work.
They were the promise of a revolution, a system where each element was prepared in advance so that in the spring, the two teams of Master Shipwrights at Karl's Harbor had only one task: to assemble the hulls of the ships that would carry the future of the Baltic Trade Company with speed, precision, and quality.
Thus, about 16 Swedish fluyts could come out of the shipyards per year.
A quantity clearly insufficient for Joao, but limited to that for now.
So, the Baltic Trade Company was already equipped with 12 fluyts in this month of August 1671...
_________
August 1671
The August sun beat down on the Indian Ocean, but the arrival in Mozambique Bay was a relief. The Sith Company's fleet, a dozen merchant ships, glided slowly into the port, their full white sails contrasting with the deep blue of the water. The port, dominated by the imposing Portuguese fortress of São Sebastião, offered a spectacle of exotic colors and sounds: terracotta roofs, the smell of spices and fruits, and the sound of seagulls mingling with the cries of local merchants.
Anchoring was a matter of routine. The ships had held up well at sea, and the carpenters had little work to do: a few ropes to retighten, a plank to repair here and there, sails to patch. The freshwater barrels were filled, and the holds were restocked with tropical fruits, rice, and dried meat. The activity on the docks was that of a well-orchestrated ballet, far from the urgency and chaos of a port at war.
For the sailors, it was a time to rest. After weeks at sea, the smell of land and the possibility of sleeping on solid ground were a blessing. They were seen relaxing in the shade of palm trees, swapping stories with local merchants, and enjoying a cold beer. The atmosphere was one of relaxation, a well-deserved break before the long road ahead. After a week of this salutary rest, the ships raised their anchors. The sails swelled again and the Sith Company's fleet left the port, heading south, towards the unknown, leaving behind the calm of Mozambique.
For the Portuguese, it was business as usual, far from the cold winds of Sweden, but for the Swedes, it was a new experience. One of their military ship captains was taking part in the voyage and began to write his report to the admiralty.
_________
Confidential Report to the Swedish Royal Admiralty
Subject: Critical observations on the naval doctrine of the Sith Company fleet, following a confrontation with pirates.
The methods of the Swedish fleet, built for the confined waters of the Baltic, are obsolete. This is not an opinion, but a truth that I have seen with my own eyes on the high seas.
During our passage off the Comoros, a band of pirates aboard two fast ships tried to board our convoy. Our escort frigates, with admirable discipline, fired the usual warning shots. But the response that followed is what should hold our full attention. Far from panicking, the "Indiamen" of the Sith Company, these vessels that we so often despise, immediately began to load their own cannons. Their crew, without direct orders, took up their battle stations with a calmness and efficiency that shames the preparation of our own ships-of-the-line.
What I understood then is that resilience on the high seas is not a simple commercial fact, but a much more rigorous discipline than that of our own navy.
A crew capable of facing months of storms without flinching is not simply trained for survival; it is forged by endurance. A ship that can withstand the assaults of the ocean is a ship that can absorb fire and continue to fight.
The Sith Company, with its transoceanic fleet, proves unequivocally that an admiral who understands the resilience of his ships will have tactics that will surprise any admiral trapped in traditional doctrine. He can take risks that we could never consider, because he knows that his ships can take a beating, while ours would already be sinking.
It is imperative that we reform our navy. We must learn from this unexpected discipline, this endurance, and this self-sufficiency. To ignore the lessons of the high seas would be a fatal error.
Recommendations
To begin to bridge our gap, I propose the immediate implementation of a specific training phase in the North Sea, a more demanding theater of operations than the Baltic. This phase would have the following objectives:
Prolongation of sea missions: The fleet's vessels will no longer have to refuel as frequently as they are used to. They must learn to manage their resources to last longer at sea.
Intensive maintenance drills: Drills will be put in place to practice complex repairs and maintenance on the high seas, away from the protection of ports.
Training in endurance sailing maneuvers: The crew must practice maneuvers that are not for battle, but for optimizing speed and preserving the ship over long distances.
This training phase is crucial. It does not only prepare us for new battles, but for a new era of maritime warfare.