Potter Cash: 1,000 Galleons... - Gringotts Bank

[Steve]

No: HPFGUIDX 162029

---  "a_svirn" <a_svirn at ...> wrote:
>
> I am kind of butting into this thread, so sorry if it
> was discussed already, but do we have any idea how 
> does Gringotts work at all? I mean, in real life money
> always works to make more money, but how does it work 
> in the WW? We don't hear anything about loans, 
> mortgages, venture capitalists and so on. The twins 
> called Harry's contribution "a loan", but in fact, it
> wasn't, and applying for a Gringotts's loan didn't 
> seem to be an option. So how do the Goblins manage to
> stay afloat? To quote Antonio "is their gold and 
> silver ewes and rams"? 
>
> a_svirn
>

bboyminn:

For Fan-fiction/fantasy purposes, I have given this 
matter some thought.

First, the Goblins are 'treasure hunters', I suspect
both 'for hire' and independant. It is possible that
the Egyptain government hired the best treasure hunters
in the world to seek out treasure on their lands for
a cut of the 'booty'. That is very much how modern 
treasure hunters work. But I also think that Goblins
act independantly, in a sense, like pirates or smugglers.
They seek out and find treasure in various countries,
then quickly smuggle it back to England where they 
slowly sell it off to create a steady flow of income
for the bank and its principle backers/investors. 

Note, I said /slowly/ sell it off. When Harry first 
enters Gringotts, I believe, he sees the Goblins
counting and weighing large gemstones (rubies, emeralds,
etc...). If Gemstones as large as lumps of coal were 
to hit the market, it would be from page news, and 
would likely send the gemstone market in to a crash.
Being wise businessmen, the Goblins would keep their
gemstones primarily in the wizard market, and only let
them leak into the muggle market at a controlled rate
to keep the selling price high. 

In the past, I have speculated that Lucius makes his 
money as a parton and facilitator of business. For
example, he may lend money to the potions ingredient
shop (as they are one of his partons) to purchase
rare and expensive herbs. Lucius would then take
either an interest commision on the sale, or would take
a share of the profits when the herbs are sold.

I see Gringotts working the same way, though with 
considerable interest rates. They provide short term
loans to facilitate business transactions. I also
suspect that they do provide more long term business
and personal loans. My intuition tells me that they
prefer business loans though. If a business fails or
if it simply technically defaults, the Goblins can
swoop in and claim the business. Owning or owning a
controlling interest in, and better managing these 
many defaulted businesses would also provide a revune
stream and a source of investments for the Goblins.

I also suspect that the Goblins are involved in long
term investments, though I haven't quite decided 
whether I will let them dabble in the muggle investment
market or not. I suspect that if you allow the Goblins
access to your vaulted money, they can return a 
substantial interest rate on it. 

To some extent, I am reminded of mean Uncle Ralph in
the book and movie 'Nicholas Nickleby'. Mean Uncle Ralph
made his money by acting as a broker and facilitator to 
invest other people's money in various aspect of business,
which I can only assume involves both long and short term
investments as described above. I modeled how I preceive
Lucius Malfoy making money partly on Uncle Ralph Nickleby.

I have also suspect, that in their role as /facilitators/,
the Goblins act as liaison between the muggle world and
the wizard world. Though I'm sure they use intermediaries;
they don't personally interact with muggles, and of 
course, they do this in the interest of making money.

As an example, when Mr. Weasley bought his land which 
clearly seems to be in a muggle area and would therefore
have originally been muggle land, he engages the goblins,
who in turn sent him to a real estate broker with ties to
the wizard world. That broker acted as an agent to 
negotiate to purchase the muggle land, and the Goblins
acted to convert wizard money to muggle money and get it
transferred into the muggle world. Now any one who has
ever exchanged money in Europe knows that this is not 
done for free. Every exchange bring as commission to the
money changer. Again, another revenue stream for the 
Goblins. Additionally, though I cringe at the imagined
interest rate, the Goblins may have loaned Arthur the
money to buy his land.

Notice also that the Goblins in general are fine 
craftsmen. The finest things we see in the wizard world
are Goblin made. I suspect Goblins quietly give 
preference to Goblin enterprises when it comes to leading,
changing, and facilitating. 

Now the books don't say any of this, but in our previous
discussion of how business in general works in the wizard
world, this seem to be fair supposition.

Speculating and Supposing Steve/bboyminn