Herald of Steel

Lady Parthia’s suggestion to add such a clause regarding faith would be naturally met with great enthusiasm by Alexander.

This would offset a lot of the after effects of interest.

Hence he cheered,

"Hahaha, as expected of Your Highness! Indeed, your experience is not something I can catch up with. With this, the bank will surely flourish. If enough people come, we can then even start offering some of our depositors a bit of money!"

Lady Parthia’s eyes predictably became a lot softer at the praise, producing a small nod and then chimed in a correcting tone, "You mean you can start charging them a small sum…"

Lady Parthia thought Alexander had made a small mistake in his last statement, because why would Alexander pay others to keep their money with him?

It was common sense that the depositors would pay a fee for Alexander to protect their money.

"....." On the other hand, it took also Alexander a bit of time to understand Lady Parthia’s point because it was the opposite for him- you get some money in exchange for storing your money in the bank- this concept of payment was too ingrained in him.

"Ahhh… I see!" Hence realizing the misunderstanding, Alexander gave a frank chuckle, before quickly elucidating in a smooth voice,

"No, no, you misunderstand me, my lady. The ’bank’ we are setting up, will promise to safeguard the money people will store with us. We will then keep a part of it in our vaults, and lend out the rest to businesses and people who need it… for a small interest. "

"Then in exchange for the depositors letting us use their money, they will get a small portion of the profits."

Lady Parthia raised her fine eyebrows at the succinct description of how the bank would work, but instead of being impressed at the clever allocation of idle resources, found it actually incredulous.

"Give away money of your depositors to debtors? What happens if the lenders cannot pay back their money? Or even simpler… what if the clients want their money back before the loan is paid back? Don’t tell me you are going to use money from your treasury to fill up the gap?"

The Tibian queen appeared to be very much in shock, skepticism painting her immaculate face.

When Alexander said he was going to store people’s money, she thought it was going to be literal.

So instead of the people keeping their gold in their homes where it could be easily stolen or lost, Alexander was going to offer them a safe haven in exchange for a small monthly or annual fee.

In fact this was exactly how the variosu temples operated- they stored, sorted and safeguarded people’s valuables in exchange for a small cut. For some temples, especially the ones situated in richer areas… this even made up a large portion of their revenue.

But now hearing of Alexander’s variant technique… it struck her the wrong way as she found it impossible to think it was in any way wise to play with the people’s money in this way. Experience tales at NovelBin.Côm

"No, no, it is nothing as risky my lady thinks!" While Alexander tried to assuage her fears, quickly flashing his palms to emphasize his words.

He gave the following example to show just how safe this ’investment’ was-

"My lady, imagine 1,000 people each deposit just 100 ropals with us. That will get us 100,000 ropals. But how many of this 100,000 will the people use in the short to medium term? At most 20,000 I would wager."

"After all, these people only have a total saving of 100 ropals each. So there is little chance of them withdrawing all their saving in one go."

"Hence, we will keep three tenths of what they deposit with us as a reasonable ’cushion’, and lend out the rest of the 70,000 to others."

"And there is very little risk! We will have 30 times the average deposited amount."

In this way, Alexander repeated his statement twice, trying to make the lending picture as rosy as possible, and attempting to show there was not really as much danger as the Tibian queen was thinking.

But too bad for him, Lady Parthia did not seem to be in a shopping mood today.

So instead of buying it, she flatly pursed her lips, and then turning her gorgeous face quite aggressive, asked,

"But there is a chance, right? If not in normal circumstances then in abnormal circumstances. What if the stars align and everyone comes looking for their money at once? Are we going to tell them to come back a year later once the loans have been paid back?"

"..." Alexander did not immediately respond to the hypothetical scenario but turned to give the slightly irritated queen a good, hard look.

Given the normally very rational Lady Parthia was taking such an unlikely scenario so seriously told the man a lot about her- she was very risk averse when it came to money.

And Alexander quickly guessed why.

The financial problems the Tibian court had suffered in her lifetime likely led her to treasure whatever money she had very much.

A product of her time, she was like a desperate squirrel who would rather hoard all the seeds rather than plant them and wait for the resultant tree to bear multiple times the fruit.

Due to this, Alexander thus did not directly get into arguments about the made up situation and the effects of a bank run.

Instead he first laid out why he wanted to do this-

"My lady, the reason why I want to use my depositors’ money is because gold is only worth something when it is being used to make something- be it working the fields, making roads, bridges, setting up businesses, etc., etc."

"It is useless by itself. Just like a pile of gold is equivalent to junk in the midst of a famine. You certainly cannot eat gold and if there is no grain around… it really does not matter how many mountains of the stuff you have."

"In the same way, I believe it is a terrible waste to just store away money in the vaults gathering dust."

"I hope you realize that realistically, the depositors who are storing money with us… maximum of them is going to only use a small proportion in the short to medium term. So rather than waste that pile of money doing nothing, would it not be far more prudent to let those in need use some of them?"

"If I did this way, many businesses will get their much needed capital… an inn might be able to open another branch, a merchant might be able to buy a bigger cart and a faster horse.

Perhaps a poor man with no land might be able to buy a carriage and earn rent ferrying people around the city or a fisherman might be able to buy a bigger boat and better nets letting him to go deeper waters."

"A blacksmith might be able to rent out a bigger shop and hire more people, or a farmer might be able to buy better seeds or a good bull for the plow, and a soldier might be able to afford better gear letting him come back alive… the examples could go on."

"Every one of these successes will make the people richer. Which will make Zanzan richer. It will mean more employment, more prosperity, and more taxes."

"And it is not like the lenders will be using the money for free. They will of course pay interest. And a part of that interest will be given to the depositors as ’rent’... for letting us use their money."

"They will get a small piece of the pie so that instead of seeing their life savings dwindle each year like with the temple, they will see it increase! They won’t have to even do anything. Just keep their savings with us!"

"How many people do you think will be able to resist the allure of free money?"

Lady Parthia’s angry face finally shook at this rhetorical question, as she began to understand the advantages of saving in a bank.

Truly if one could just earn money by keeping it with Alexander… how many would care what he did with it? @@novelbin@@

’Even if there was some sort of withdrawal restriction… such as being able to take out a limited amount at a time or only being able to take out the money once or twice a year… I don’t think even most nobles would be able to resist, forget those poor peasants.’ Lady Parthia enlighteningly thought, finding the contract even alluring for herself.

Also the fact that she was able to so quickly think of these many ways to cover up the various flaws of the lending model really went to show how smart of a brain she had in her head.

It was not for nothing she was able to have a place in the Tibian court despite being only a wan.

Whatever shortcomings Lady Parthia might have had were more of a product of her time rather than her own lack of intelligence.

Alexander even guessed that were she to live in his times, she would likely be a very successful CEO or at the very least, a very high level manager.

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