Herald of Steel

".... if we are truly out of money, well we can use the taxes. Either directly move the money into the accounts or just forgive their payments for a few years in exchange."

As Lady Nanazin chimed this reply, Alexander’s eyes instinctively flickered as he had to try very hard to maintain his current facade.

This was an insane idea even he did not dare have, and figured Lady Nanazin must have picked up these unscrupulous techniques while trying to keep Ptolomy afloat.

Her salt regarding lending to merchants certainly painted such a negative picture.

However just as Alexander was about to offer an addendum, he instantly thought back to how governments bailed out banks and found it almost a one to one simile.

It was just the practice was never explicitly laid out like that, nor did he know of any governments that actually gave anyone tax relief as compensation for losing their money.

It was usually facilitated by money printing, thus debt.

But all in all, Lady Nanazin’s main idea was mostly correct- give the bank some sort of external aid, such as money from the state treasuries to make up the short fall in the immediate term and then deal with the mess later.

This was a very basic example of quantitative easing.

And it showed Lady Nanazin too knew how to keep the books in the black- through hook or crook.

"Mmm… indeed Your Highness Nananzin is truly experienced in such matters. I am reassured." Thus Alexander frankly gave a light smile towards the curly haired lady, slouching back in his chair with a relaxed posture.

While Lady Nanazin gave a small smirk, amused at Alexander’s use of her full title, it usually meant either he was very angry with her or very pleased.

"What do you think Lady Parthia?" Alexander then posed the same question to Lady Parthia and straightening herself up, the elegant queen crispily suggested,

"Indeed, this could be one way. I would also consider taking collateral, such as their land or family when giving out the loan."

"That is obvious." Lady Nanazin almost instinctively retorted the answer from the side as soon as the answer drifted into her ear as if she was a bit offended.

She did not bring such an obvious example because she thought this was a given.

Taking the land and house, and selling the debtors and even their whole family into slavery if they could not pay the loans back… all this she thought was already implied.

After all, this was the most natural form of compensation for creditors should borrowers fail to meet their payments.

Thus Lady Nanazin figured Alexander was really asking her was- ’What would happen if somehow those collaterals were unable to meet her financial obligations?’

Hence, Lady Parthia giving such an ’easy’ answer appeared slightly disingenuous to the Adhanian queen. Explore stories on NovelBin.Côm

While Alexander had also not brought up the matter of collateral because he did not know how effective such a condition would be.

For one, in this time period, it was quite hard to vet the value of land, especially if it was far away.

So Alexander would need to spend considerable manpower to send realtors all the way there to verify them. This could take weeks if not months.

Not to mention Alexander was currently in a civil war- so who could guarantee whether that land would even be there when the debtors defaulted? @@novelbin@@

Although to be fair, this argument could be made for any land really- in this dog eat dog era, real estate was paradoxically both precious and worthless at the same time.

Everyone who did not have it desperately wanted a piece.

After all, as long as you had some land and it was not completely barren, no matter what happened in the world, even in the worst case scenario, you at least would have a place to stay, put a roof over your head and have bits of grain and grass to nibble on.

And thus for the same reason, those who had it were desperately afraid someone was going to come to snatch it from them.

A side effect of this mentality was that people who already had land tended to not like taking loans.

Why put up such a valuable commodity for sale… the reasoning went.

Especially as you could get 2,500 ropals for 1 hectare of half good, half bad land, but the inverse- buying 1 hectare of farmland for 2,500 ropals was never true.

You needed to have good relations with your local lord before you were allowed the privilege to even think about such a move.

But why would the lord allow this?

For him- the taxes from the land was his largest revenue. So selling even an inch of it was like selling a part of his infinite money printing machine.

Thus the value of land was in some ways infinitely far more than what the theoretical evaluation would determine.

And rarely anybody wanted to jeopardize this guaranteed income.. even if the future potential gains from other businesses ventures were much, much higher.

Whereas people with no or very little land, the ones who had very little to lose and thus mostly likely to take risks and open up a business… well they did not have the capital to put up as collateral in the first place.

Even selling oneself could only get a regular commoner two to three thousand ropals, about one to two years of their earning.

This was not nothing- but it was also not worth selling one’s freedom for life in most cases.

Thus came the classic saying- ’The bank only gives money to those who already have it.’

…..

The difficulty of the borrower being able to put up collateral equal to the loans they wanted to take was one of the reasons banks were so conservative in ancient times.

In fact, that had always been the case- we only started being liberal with our capital in the last few decades or so.

And the driving force behind this revolution was the result of a greater understanding of how banks and credit worked as a whole in the economy.

Before we thought banks were simply like any other businesses. However the work of some prominent modern economists showed this institution was so much more.

It was the beating of the economy, the engine pumping money around.

So making it more powerful and robust resulted in a stronger and reinforced economy.

The 2022 Noble Prize in economics even went to three notable ’economist’ who contributed the most in our understanding of this, such as by helping to popularize the concept of credit score- a tool which is so useful, every modern banks universally uses it to determine who to give loans to, how much and at what rate.

It took almost all the guesswork and uncertainty about lending from before.

Sadly for Alexander, he did not have access to such 21st century sci-fi technology out here in the boonies.

Of course he still had an alternative- the easiest way to solve this dilemma would be to offer the interest free, profit based type loans, thus sharing some of the risks with brilliant but poor entrepreneurs.

However as mentioned earlier, the logistics of the loan made it difficult for Alexander to implement it right now.

…..

The pasha would keep all these extraneous thoughts to himself now. There was little point in saying them out aloud anyway.

It was not like either the ladies were going to understand him much anyway. No matter how smart they were, they simply lacked the educational foundation.

Hence flashing a satisfied smile, Alexander turned to give both of them an agreeing nod-

"Mmmm, indeed, there are a few ways we can tackle this. Good! We can discuss the exact details if ever such a problem rise. Hopefully it will not."

Then making this auspicious prediction, Alexander suddenly turned his gaze towards the Adhanian queen, and started in a flat, simple tone-

"Tell me Lady Nanazin, suppose one day I go to the market. There I decide to buy some bread for 1 ropal, a basket of apples for 1.5, a few feet of cloth for 30 ropals, a comb for 3 ropals….."

In this way Alexander listed seven items and their prices, before finally asking, "So how much did I spend?"

"77.5 ropals" Lady Nanazin managed to give the answer in an instant, somewhat surprising Alexander with her speed.

Especially as there was not even a hint of doubt in her voice- the answer was contained in an ultra crisp, ’damn sure’ tone.

The Adhanian queen had started taking note of the items the moment Alexander went past number three, quickly starting to add the numbers.

So the answer was already loaded by the time Alexander posed his question.

And as if that was not enough, in a show of even greater wit, when Alexander asked her if she could name the listed items, Lady Nanazin was well able to recite them in perfect order along with their mentioned price.

"Excellent, excellent. Having a good memory and quick math skills is vital for any good business. Truly excellent. Hahaha, indeed I chose wisely."

Alexander thus let out a genuinely pleased grin, giving the lady a hundred out of hundred on the test.

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