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73. Putting Things in Order
🕑 Added 2024-09-25 21:51:31 +0000 UTCMark eyed the financial reports handed to him by Elowen in his office while she watched in muted silence.
Land sales have been a great success; however, our funds won’t last long with these deficits.
Unfortunately, Mark couldn’t just reduce expenditure, nor did he have anybody to borrow from. The main problem he faced was that any spending reduction could cause their tiny but growing economy to churn to a halt. With war around the corner, he needed to keep them speeded ahead as quickly as possible. Once the war was dealt with, he could determine their economic fallout and deal with the consequences.
“You’ve done well. Just as I asked of you,” Mark said, placing down the report.
“Thank you, my liege,” Elowen said.
That’s going to sound weird hearing for a while.
“But we need more. With the constant influx of people into our lands and the guaranteed jobs we provide, our costs will likely continue to increase exponentially.”
“You’re right. Perhaps we should consider changing our policy. If we let this continue, our coffers will run dry.”
“No. People are coming from far and wide because they know anybody can get work here. In the short term, it is the only way we can guarantee that we will grow our population and, therefore, our army. There’s a mountain ahead of us, and if we wish to confront the wargs, we need to keep climbing it. Based on recruitment numbers, assuming we called up almost all of our able-bodied warriors across Fort Winterclaw, the Northern Mines, and Frostwind, we can probably man an army of about six to seven hundred strong. It is a remarkable improvement from what we had just months ago, but it isn’t enough. Not to mention, we still need to keep the basics running and have a few soldiers left to man the walls. These truths limit the total number we can recruit, and it wouldn’t be wise to push that figure any higher until our population grows larger.”
“Correct,” Elowen nodded. “It’s a struggle. We already bring at least one family into our lands a day. At present, we are averaging eighty new arrivals every week, which brings with it another problem. The strain that this growing population applies to our industries and food production. The rigar expansion has helped a little, but many are still wary of taking up settlement outside of the fort’s walls with the wargs rampaging across the Frontier. Until that problem is dealt with, long-term sustainability will likely be impossible to achieve.”
“And our tight rigar supplies allow us to keep the costs of food high and one of our main income sources steady,” Mark mused, thinking about the double-edged sword of their razor-thin food production. He couldn’t risk it falling below what was consumed; famine would cause far too many problems he couldn’t afford, but the high prices he was able to push because of it relieved the budget strains a little, as Mark was easily able to increase the price of processed rigar to help cover some of their deficit.
“Eighty isn’t enough either,” he murmured. “Worst of all, we can’t easily increase that number, nor could we support it if we could.”
“Exactly,” Elowen nodded.
He would be flying back to the temple to secure his marriage to Yelinda soon, and it couldn’t come sooner. Mark just hoped that the promised army lived up to the hype.
“I have a new plan. It won’t solve our resource problems in the short term, but at least we’ll have a bandaid for our deficit. We’re going to issue bonds.”
“Bonds?” Elowen tilted her head. “Bandaid?”
“Yes, bonds, exactly. And we’ll also issue loans to cover them.”
“Sorry, I don’t follow my liege. I don’t remember reading about bonds in Imperial literature.”
Right, bonds might not have been invented in this world yet.
“My bad,” Mark said. “A bond is essentially just selling our debt. We will offer interest to the purchaser, using our name and assets as collateral. Think of it this way: a bond in an investment in the future of Winterclaw itself. If you believe in this kingdom, you believe in the value of its bonds. However, I doubt many of our citizens will have the wealth to buy our bonds. So, to combat this, we will offer loans.”
Elowen shook her head. “Why would people take out a loan just to buy another loan? This doesn’t make a lot of sense.”
“To create capital. Or at least, that’s why we will do it.”
“Create capital? Out of nothing? You’re not making this make any more sense.”
“That’s it. Let me explain,” Mark grinned. “While the interest rates will cancel each other out, seemingly making this a pointless endeavor, the buyers will suddenly have capital that didn’t exist prior. A one-way loan is fine to create debt, but this way, we will be injecting wealth into our economy at the same time as creating debt. Our first client will be the bank we have already established. While I’m at it, I think I’ll make you the bank's chairman.”
“But we own the bank, don’t we? We’re going to be lending to ourselves now?”
“We do,” Mark nodded. “That is correct.”
“Sorry, I still don’t understand. Where will this made-up wealth exist? You say that people will buy the bonds and we will create capital, but where will that capital be?”
“The capital will exist on paper and on bond notes we will issue. By doing this, we will give capital or wealth to our people and the bank, and in return, they will owe us debt. This will provide us with an additional source of income, as our debt owners will have to pay us in iron coins, crowns, or gold.”
“But we will owe them debt as well, won’t we?”
“We will. But only once the bonds mature will we need to settle them, which will be at a later date. Not only that, but we’ll issue new bonds to pay for the old ones when that day finally comes.”
Elowen nodded thoughtfully. “So, people will give us real money in exchange for our fake money?”
“In essence, yes. But our bonds are not just fake money. It is wealth secured by our very kingdom. If you spend your wealth to build a home for yourself behind our walls and a business to run beside it, you are already investing in Winterclaw. Everyone who has moved here has invested in Winterclaw. This will just give an opportunity for savvy investors who realize the potential to grow their wealth.”
“I think I get it. But I’m not sure people will understand the value of what you're offering. No matter how good your plan is or isn’t, it won’t succeed without buyers.”
“I understand that all too well, Elowen. That’s why we’re also going to give people reasons to want to buy the bonds: by introducing licensing and contracts. That’s what we’ll sell. We don’t need to flood the market; we just need to get a few buyers through the door, and others will follow. For example, we’re running the caravans between our settlements. This can be sold as a contract. The contract owner will have exclusive rights to run the trade caravans and earn the money collected from them. And the brilliance of it is they won’t even need to spend their wealth to settle the contract. They’ll just need to exchange debt for bonds, and in turn, we’ll be paying them the coins they pay us. And there will be one less job for our coffers to directly cover.”
Mark wanted to add taxation, but he held off for now. Lack of taxation had been a unifying topic for the Imperials under his rule, and he wanted to keep it that way until they grew stronger.
“Okay, I can organize that,” Elowen said, her mind spinning with ideas. “Oh, we could enforce licenses for brewing,” she raised a finger. “We’ve had a few cases recently of people getting quite ill because of the home brewing that has popped up across Winterclaw. It is a growing concern for such a small population, especially when we need our people healthy to fight the wargs.”
“Brilliant idea,” Mark said. “Now you’re getting the hang of it.”
“Just one question: why not just sell these contracts and licenses? Why add another layer of complexity?”
“Piling debt without adding wealth to our little economy is likely to weigh people down and cause austerity. We don’t want people tightening their purse strings, so they have money to pay their debts. We want to fuel our economy. A strong economy is the only way we’ll get more people moving here looking for a better life. At least in our current state. By making the bonds, we will be flooding our markets with additional wealth and hopefully spurring it to greater heights.”
“Please, forgive me if this is out of turn, my liege. But isn’t that reckless? We’re essentially creating wealth. What if these bond notes lose their value?”
“You’re right, it is. But this is a time of war. Once the threat to our lands is dealt with and our population has settled, we will sustainably organize our finances. Until then, we need whatever we can come up with to give us a boost.”
A knock sounded at the door, interrupting the pair.
“About time. Good discussion, Elowen. Did you understand it all? I hope I can trust you to get the operation started?”
“Yes, I did—I think. Do you have any special instructions for the creation of the bonds?”
“Just make sure they can’t be easily forged.”
“Yes, my liege,” Elowen bowed and climbed up from her seat, opening the door to let a former acolyte in as she left.
“My liege,” the boy bowed.
“Any word on my stray knights?”
“A scouting party has spotted their tracks heading south. They appear to be going in the direction of the temple.”
The temple? They didn’t think they would go and loot that place themselves, did they? Damn it.
Groaning, Mark rubbed his temples and sighed. Flying was risky, as it would take him too close to the battleground where the throne ships were. He might have taken one out last time, but he couldn’t risk underestimating his enemy. If they sent a dozen after him, there wouldn’t be much he could do about it.
“Ready some horses and a retinue of soldiers.”
“Yes, my lord,” the boy bowed again and left.
Letting the newly minted knights of the order I just created get themselves killed is going to be a bad look.
Rising from his chair, Mark prepared to leave. There was so much to do, but at least he had competent people filling in where he needed them.
Time to save the kids again.
**Callum**
“Faster, they’re catching on us,” Callum yelled back at the older men from the temple who struggled to keep up with their flight through the forest.
“They’re not going to make it,” Erin said.
They had a headstart from the wargs, slipping out under cover of darkness after the wargs had left the temple, but it hadn’t taken them long to pick up on their trail, and now they could see the silhouettes of the beasts bounding across the open snow under the silver light of the moon, beside the forest that they ran through.
“What are we going to do?” Radic sneered, sword in hand. “The forest is slowing us down even more. And nightfall hasn’t slowed them at all. Heck, it might be making them faster.”
“We have no choice. If they catch us in the open, we’ll be slaughtered,” Callum said. “We have to keep going. Get as close to Winterclaw as we can and prepare to defend ourselves.”
“There’s dozens of them,” Clay said, visibly shaking.
“He’s right. This is madness. Leave the old men to the wargs, and the rest of us can probably make it back,” Radic said.
“Those old men are a valuable resource to Winterclaw; we can’t just abandon them.”
“So, we all die then?”
Callum shook his head, unsure how to answer. “We’re not going to die. We can still get out of this mess. We just have to keep going.”
“How? You want to act like our captain, then you need to make difficult decisions,” Radic roared as they ran, hopping over snow-covered undergrowth.
“He’s right,” Erin said. “They might be useful, but what good will it be if we’re all dead? Just leave them, Callum. I’m sure King Atlas will understand.”
“I–I,” Callum gritted his teeth and glanced over his shoulder at the old men struggling to run through the dense forest and its undergrowth. This wasn’t how his first mission was supposed to go.
