He Opened A Matchmaking Agency In 18Th Century London [EN]: Chapter 66

66. The Hidden 300,000 Pound Contract

After touring the factory, Tae-oh and Lord Peterson continued their discussion in the factory manager’s office.

“Factory Manager, if we were to operate the Osborne factory normally, what would the total monthly expenses be?”

“Hmm… Considering the weekly wages, raw material costs, and other expenses for running three factories, you should expect to spend at least 700 to 1,000 pounds per month.”

Lord Peterson was startled and asked,

“What? Not per year, but that much for maintenance each month?”

Mr. Walker nodded.

“Yes, that’s correct. Initially, under Mr. Osborne’s instructions, we didn’t employ any children from the ‘Poorhouse’ [a workhouse for the impoverished] and only hired adults.

Moreover, most of them are experienced skilled workers. We initially hired experienced workers to produce high-quality cotton fabrics. As a result, labor costs are quite high.”

At that time in England, compulsory education was non-existent.

Perhaps because of this, it was common for children from ‘Poorhouses’ (orphanages) or poor commoner families to enter the workforce instead of studying.

Furthermore, the age limit for child labor was very low. Children could be employed as laborers in coal mines from the age of 4, wool mills from 6, and cotton mills from 8, working 12 to 16 hours a day, just like adults.

However, their wages were much lower compared to adults, making children more desirable for employers.

But Paul Osborne never hired children, due to his own terrible childhood experiences.

Considering that child laborers accounted for 30-50% of the total workforce in various industries across England at the time, Osborne’s choice was quite unusual.

“It’s quite difficult for adults to crawl between the narrow spinning machines to apply oil. So, I once suggested hiring children, even if only for oiling or repairing in tight spaces, but he flatly refused, saying it was too dangerous for them.”

Most children were malnourished and had small physiques, making them suitable for working in coal mines, chimneys, or cramped factories with large machinery.

However, if they were caught in the machinery, they could lose fingers or even their lives.

Lord Peterson nodded.

“Ah, so that’s why I didn’t see any children. When I visit other factories, almost half of the workers are young boys and girls, but I found it strange that there were no children in this textile factory…”

Tae-oh pondered for a moment and then asked Mr. Walker,

“Factory Manager, if we can secure enough funds to cover all the outstanding bills and debts, one year’s worth of wages, and factory operating expenses, can we immediately normalize the factory operations?”

Factory Manager Walker shook his head.

“No. It’s not that simple.”

Mr. Walker frowned and sighed deeply before continuing,

“The factory’s debt problem isn’t the only issue. The problem is that our clients no longer want to do business with our factory.

When Mr. Osborne was here, they trusted him and made contracts, but now that he’s gone and our funding is cut off, rumors have spread throughout the industry that we can no longer operate the factory properly.

So, who would want to trade with us if they don’t know whether they’ll receive their orders?”

Osborne’s absence had a greater impact than expected.

More than anything, Walker explained that the loss of their former reputation had caused their workload to plummet, making recovery nearly impossible.

“So, you’re saying that even if a large sum of money comes in now, it won’t be easy to normalize the factory?”

“That’s right. To normalize the factory, the most urgent issue is funding, but as I mentioned earlier, funding alone won’t solve the problem. We need work to keep the factory running.

But with Mr. Osborne in his current state and all the skilled workers having gone to other factories, our clients have all turned their backs on us. Even if we receive funding and rehire employees, no one will want to trade with us because they won’t be confident that we can deliver goods of the same quality within the deadline.

And we can’t sell directly… We’ll just be stuck in a vicious cycle where the factory can’t operate properly due to the lack of work.”

Just as they were getting bogged down by these difficult challenges,

Lord Peterson, who had been listening quietly, asked with a puzzled expression,

“Excuse me, Factory Manager?”

“Yes?”

“You say there’s no work? I don’t understand.”

“What do you mean?”

“When I briefly visited here two months ago, Mr. Osborne signed a contract with a Russian company worth a total of 300,000 pounds, didn’t he? Shouldn’t we start by processing that order?”

Factory Manager Walker asked back with a look of disbelief.

“What? What are you talking about? 300,000 pounds… A contract? We did?”

“Oh? Weren’t you aware, Factory Manager?”

Although it was revenue, 300,000 pounds was a huge sum, well over 40 billion won [approximately $30 million USD] in 21st-century terms.

Peterson explained in detail to the bewildered Hester Walker.

“I found out by chance when I went to the office in the Third Factory. I even saw the contract myself. It was a three-year contract for ‘Flannel’ [a soft woven fabric] and ‘Muslin’ [a finely-woven cotton fabric] products, starting in February or March of next year, worth a total of 300,000 pounds. The contract should still be in the Third Factory office.”

With the specific details emerging, Walker couldn’t help but believe it.

“Really… A 300,000-pound contract? The contract is in the Third Factory?”

“Yes! I’m sure of it.”

“If that’s true, we need to find it quickly! Let’s go to the Third Factory right away!”

Walker, with a doubtful expression, rushed to the Third Factory ahead of everyone else.

*

Heading to the Third Factory, Hester Walker confirmed several times.

“Are you sure it was a ‘Flannel’ and ‘Muslin’ contract?”

Lord Peterson nodded emphatically.

“Yes. It’s certain. My father showed me the contract himself at the time. The contract was based on the Anglo-Russian Treaty of Commerce of 1766 between England and Russia, for the conclusion of Flannel (a light fabric made of cotton or wool blend) and Muslin products.”

‘Flannel’ is a fabric that originated in the Wales region of England and is mainly used to make clothing and bedding using woolen or worsted yarn.

It greatly developed during the Industrial Revolution in England in the late 18th century and gained worldwide fame.

‘Muslin’ was a traditional cotton fabric hand-woven by Indians, which was very popular among Europeans in the 18th century as a top-quality product.

However, this ‘Muslin’ product required highly skilled craftsmanship, and the long-standing handcrafting skills and productivity of Indian cotton fabrics were not yet easily replicated by Europeans.

However, Osborne’s factory had several skilled workers who had learned in India, enabling the production of excellent Muslin products.

Walker, looking perplexed, asked Lord Peterson,

“By the way, what you mentioned earlier, the 1766… Anglo-Russian… Treaty? What is that?”

“Ah, that’s a trade agreement that establishes regulations regarding certain content between countries before entering into individual trade contracts, allowing for various private trade transactions within the scope of those regulations.”

“…?”

In the late 18th century, in trade between England and Russia, English merchants had a firm lead in trade with Russia more than merchants from any other country in the world.

The foundation for this was the trade agreements concluded with Russia in 1734 and 1766, as mentioned by Lord Peterson.

However, examining these agreements reveals that English merchants had very favorable trading conditions with Russia compared to merchants from any other country.

According to the contents of this agreement, English merchants could build or rent houses in foreign residential areas in all regions of Russia, including Moscow, and could also buy and sell them. They were also exempt from the ‘lodging burden’ obligation to provide accommodation when Russian troops were stationed, unlike merchants from other countries.

Furthermore, they enjoyed the status of most-favored nation in terms of tariffs on import and export goods, receiving the same tariff rates as Russian merchants.

In addition, special tariff discounts were applied when exporting popular British flannel.

It seemed that Osborne had signed a ‘Flannel’ contract with a Russian company after learning about this.

Lord Peterson said with conviction,

“The contract must be in the Third Factory office. We need to find the contract, confirm it, and then start operating the factory quickly!”

“Well, if it’s really such a contract, we should, but we’ve never signed a contract with a Russian company before, so we don’t know how to export, and the tariffs will be different, and…”

Lord Peterson interrupted Walker.

“Those contracts are nothing special. Rather, dealing with Russia because of those tariff issues is an opportunity for us to gain even greater benefits. Even now, English merchants are enjoying more benefits in Russia than Russian merchants themselves.

Do you know how much opposition there is from other French, Dutch, Spanish, and Portuguese merchants in our Anglo-Russian trade? Why do you think that is? It’s all because England receives enormous benefits.”

“……”

“The Anglo-Russian Treaty of 1766 certainly exists, and we can take great advantage of it until 1786, when this agreement expires, so we can make good use of it for the next 10 years.

Besides, it’s flannel, flannel! Osborne’s factory has been famous for producing very high-quality flannel products, right? Exporting this to Russia will probably generate several times more profit than we earn domestically.”

Unlike English aristocrats or gentry who have little knowledge of economics or commercial transactions, Colin Peterson, despite being from an aristocratic family, had a considerable level of knowledge in economic and commercial theory.

Moreover, having studied economics in France for several years, his insight into international trade transactions was significantly different from that of ordinary people.

With sparkling eyes, Lord Peterson continued,

“First, we need to find the contract, examine it carefully, and then look for specific export volumes, shipping dates, and ships. I even gave Mr. Osborne supplementary explanations after seeing the contract last time. Above all, the tariff rates specified in that trade agreement…”

His extensive explanation continued, but Factory Manager Walker had a blank expression. He just blinked his eyes.

He had more experience than anyone in spinning yarn and making fabric, but he seemed to know almost nothing about theories or related laws regarding international trade or commercial transactions.

To him, what Lord Peterson was saying was no different from a foreign language.

‘Hmph… So that’s why Mr. Osborne was so disappointed in Lord Peterson. He must have been amazed that he knew everything about the flannel contract with Russia and even the benefits and various tariff issues that came with it. He couldn’t help but look like anything but an aristocrat, since he was so familiar with matters that only merchants would be interested in, especially the gains and losses and legal issues of international commerce…’

The fact that a trait that would be greatly welcomed and praised in modern times was seen as unaristocratic and vulgar in this era of England was truly regrettable and absurd.

But Lord Peterson, who had been dismissed for his perceived vulgar behavior, was now back to save Osborne’s factory, so the world is truly a mysterious place.

*

Osborne Textile Third Factory Office.

Lord Peterson, who had taken out the contract from the drawer in the Third Factory office, shouted triumphantly.

“Look at this! The phrase ‘based on the Anglo-Russian Treaty of Commerce’ is clearly visible here, right? And the total amount that can be received upon completion of the contract is also clearly stated as 300,000 pounds. However, there is a restriction that the volume of orders received each year must be certain.”

Tae-oh and Factory Manager Walker approached and examined the contract.

From a modern person’s perspective, the contract, which involved a huge sum of 300,000 pounds, looked quite crude.

However, as Lord Peterson said, it clearly stated the details of trade transactions between England and Russia, as well as various conditions and dates, which could be considered the best treatment that all other countries’ merchants would envy.

If the Anglo-Russian Treaty of Commerce continues until 1786, it can be applied for nearly 10 years.

It was necessary to make the most of it until then.

Factory Manager Walker, who had been examining the contract for a while, said with a sigh.

“Ah… So that’s what Mr. Osborne was talking about two months ago when he mentioned flannel.”

“Did Mr. Osborne say anything about this contract?”

At Tae-oh’s question, Walker scratched his head and replied.

“Actually, I’m a bit ignorant, so I don’t know the exact details of difficult contracts. Mr. Osborne has always led all the contracts, so I just focused on making and shipping the products as ordered. Mr. Osborne didn’t like to talk about the details of the contract either.

But when I think about it, two months ago, Mr. Osborne bought a large amount of wool, the raw material, and piled it up in the warehouse to make flannel. And he also prepared a relatively small amount of cotton to make muslin.”

Flannel was a very useful fabric in cold regions like Russia because it was light, soft to the touch, and had excellent warmth.

“But since wool prices are quite expensive, I was a little worried when I saw so much piled up in the warehouse. But now that I see it, Mr. Osborne prepared it because of this contract, haha.”

Walker’s face brightened noticeably after confirming the existence of the contract.

If the factory could be normalized quickly with a contract of this size, it would be able to withstand it for several years.