In the days that followed, the castle’s crier had a lot of work as he announced countless new job postings.
“Construction worker, 2 coppers a day…”
“Mason, previous experience required, 5 coppers a day…”
“Blacksmiths, 5 to 10 coppers a day based on experience…”
“Scribe, must be literate in writing and numbers, a whole silver a day…!”
Among them were also many positions the locals surely had never heard of—such as blast furnace operators, technicians, compounders… And of course, calls for healthy men and women to apply for selection to the army. A competitive pay of 4 coppers a day plus food and board, and the ability to advance in rank to higher pay and benefits, regardless of one’s status.
I looked on with hunger in my eyes as a longer and longer line of people formed each morning in front of the castle gate. New workers, new cogs in the great machine of industrial civilisation.
At last, things were back on track. The train of progress was chugging along—
Until it got derailed.
***
I winced as I looked over the crudely written financial sheet. Despite her progress with math, Lili’s handwriting couldn’t be helped. Still, the problem was clear. No matter how many times I redid the calculations in my head, there was only one conclusion.
We were quickly going broke.
“I finally added together all the coins we got from the local nobles with what we recovered from Rand… And it’s not good.” Lili presented the results in a concerned tone. She was visibly exhausted, no doubt from both having to care for her father and attending her day job. “Erika’s convincing some of the villagers to forfeit half of their promised gold coin helped a lot, but even that is not enough. Not nearly enough.”
“It’s that bad, huh?” I mumbled to myself as I ran the numbers yet again, despite the foolishness of the action.
“Mhm. We are in big trouble!” Lili confirmed. “With all the new expenses you want, we will be broke before the end of spring.”
“It is correct.” Erika approved her conclusions with a grim expression. “We all calculated the numbers together.”
The rest of the medics, whom I had been teaching maths along with Erika and Lili, also nodded.
I sighed and slumped back into the padded throne.
Argh. Why do things have to cost money?
I mean, I knew at the back of my mind that money would eventually be the problem.
I just hoped it wouldn’t be a problem so soon.
When the Duke sent off his sons, he gave each a development fund of 300 gold coins. Even for him, it was an immense amount of money—enough to buy a small castle. Because of this, I didn’t worry too much about the cost of my plans. I figured that by the time it became a concern, I would already have a sustainable economy to fund further projects from. Or field a sufficiently large army to go borrow some money from a neighbouring domain, should it come to that.
However, that cursed idiot Henrik’s betrayal cost me more than three-quarters of my gold. And the amount of hard cash we captured from the castle’s treasury and the local petty nobles amounted to less than a dozen gold coins. Sure, there was some jewellery and tapestries and such to sell, but I had no idea what a fair price for them was. Nor would the local merchant guilds even trade with me after the news of my actions spread.
All in all, we were indeed in big trouble.
“Perhaps you can consider lowering the wages for some positions? They are unusually high.” Erika offered a solution once she saw me staying silent for a while. “You could even demand some of the more manual labour for free as the new lord. You didn’t name it explicitly when we proclaimed the abolishment of most taxes…”
“We could also cut pay for the apprentices,” Lili added with a nod. “It is unheard of anyway. We never paid them, either. They get food and board already. And the chance to learn.”
“We could also cut all the extra benefits, too.” Erika continued. “Literacy bonuses and meal allowance sound popular, but maybe best we leave them once we are in a better place—”
“Oh, and that sick leave thing, too!” Lili spoke before Erika even finished. “Why pay workers when they can’t work? It doesn’t make sense. And, and—“
“No.”
I raised my hand to stop them before they concluded that it’s best we just enslave everyone.
“There is a reason I wrote the terms as they are,” I explained as I rose from the throne. “Higher wages are to incentivise people to come work for us. Same as with all the benefits. Especially the literacy bonus. An educated workforce is the prerequisite for a proper industrial society, and money is often the best way to get people to do something.”
“I understand that, but it won’t matter much if we run out of money before—“
“There is another reason, as well.” I continued. “We have to spend money to make money.”
Everyone in the room looked at me in bewilderment. It was understandable. People in this age mostly understood wealth as the height of the coin pile in one’s clay pot or castle treasury.
“Right now, the economy is mostly based on the exchange of goods. You give me some grain, and I give you a new sickle. You give me a cow, and I trade you two sheep in return. But an industrial economy can’t function like that. Instead, it requires money to be the primary means of payment. And if we want that to happen, we need to inject money into the economy. As much as we can.”
“So you don’t want to have money…?” Lili asked with a confused glance.
“Well, ideally, we only have as much money as we need to cover everything, and not much more.” I clarified. “Piles of money sitting in a vault are wasted money.”
“So you will not give up on your plans,” Erika concluded with resignation. It was clear she didn’t fully understand my thought process. However, she knew by now that if I wanted something done, I would get it done. “We need to find some other way to get money, then.”
I nodded.
But despite my insistence on pushing through, I didn’t really have a good idea in mind.
A long silence settled.
Alois chose that particular moment to shuffle through the door with a fresh stack of parchment tucked under his arm, depositing it on the corner of the table without a word before retreating again.
Around the table, the medics shifted uncomfortably, waiting for me to produce a solution from thin air as I usually did.
I stared at the ledger. Then, at the small stack of coins beside it. Then back at the ledger.
One of the younger medics raised a cautious hand. “C-could we not just… give everyone a copper and say it has the value of a silver for buying grain or something?”
A few polite but dismissive sounds came from around the table. Lili outright snorted.
I opened my mouth to agree with them.
Then stopped.
If you set aside the value of the metal, nothing makes a silver inherently worth a silver. Nobody is going to melt it down, so its value exists because everyone agrees it does.
So why does the agreement need to be stamped in metal at all?
***
“So this is your plan?” Lili questioned sceptically as she held up a thin piece of coloured paper to the light. One side had a simple repeating pattern imprinted on it, while the other held a large circle with a number one written in golden ink in the middle of it. “You will give this to the workers instead of coin?”
“Indeed,” I answered with a tired smile.
The whole project took several days—and sleepless nights—but it came out a success.
Just like Gutenberg, I borrowed the Count’s wine press and remade it into a very primitive printing press. It was not a movable type press like I originally wished, just a few simple lead moulds that could be pressed onto paper. But for making batches of identical prints, it would be sufficient.
Meanwhile, I had the medical corps work on recreating something akin to the Kraft process, converting wood pulp into rough but durable paper. The finished product was not at all good for printing books, but perfect for something that needs to survive daily wear-and-tear.
Something like a paper banknote.
“Bah, I would laugh out whoever tried to pay my father with it,” Lili concluded as she set the bill down.
“Yes, it will certainly not be easy to convince people to accept a piece of this paper—as you call it—instead of money.” Erika mused as she inspected another note a bit more closely.
“That’s true,” I confirmed. “Trust is the most important part of a fiat currency. Which is why we will let people exchange it for actual gold or silver coins when they wish. So in the beginning, it will just be one extra step from getting the money to them getting coins.”
“If people can exchange it for actual coins, they will probably do so.” Lili countered with a frown. “And then we didn’t solve our starting problem. It doesn’t get us any more actual money.”
“Heh. This is where the secret is.” I smirked. “The hope is that not all of the banknotes will be immediately exchanged for the money.”
“Why not?” Erika asked. “I don’t know about nobles, but we commoners feel most at ease when we feel the weight of a coin in our hand. And something like this—a promise—has little weight.”
“Well, we will require all the official taxes and dues to be paid with these notes, so everyone will need to have at least some on hand.” I continued my explanation. “So everyone will have to accept at least some. And then, when a soldier gets his pay, it might be more convenient for him to not go to the castle to exchange the banknote for coins, but just directly buy bread with it. And if the baker has more than he needs for taxes, he might use the extra to pay for grain because the peasant supplying the grain also pays his tax with those same bills. And when those taxes arrive, we pay the soldier again with the same bill. The bill just goes around in circles while the coins stay in our treasury. Or better yet, get invested in something else.”
“Hurm. This seems like a con in some way, but I just can’t figure out how…” Lili pondered in a suspicious tone once I finished the explanation. She was clearly not satisfied with the plan.
Erika, on the other hand, seemed much more enamoured with the concept.
“I see. This is… a fascinating idea. If I understand correctly, it means we can give out much more money than we actually have. As long as we make sure the people don’t come to claim their coins all at once.”
“Yes! Yes.” I nodded enthusiastically. “It means we can make as much money as we need.” I paused for a moment. “Or, well, a reasonable amount. We don’t want to be the next Weimar, after all…”
“W-weimar?” Erika looked at me with a confused glance. “I never heard of such a domain.”
“Ah, never mind…” I smiled nervously and averted my eyes as I realised my slip.
“Whatever,” Lili concluded with a shrug. “I still want my payment in silver coins.”
I smiled to myself.
I only hoped the people would be more accepting of my Marks than the one in charge of handing them out.