An Objective Question

Objective, but not exactly hypothetical. I thought I'd pick the collective brains-trust. So:-

You have a nation with Minus 150K sterling in the Treasury, 100K positive in "personal wealth", 350K in gold bullion, an Economy of 5 and far too many surplus recruits (15K). What do you to do to improve Economic Health? What are the pros and cons of different actions?

Looking forward to some inventive and speculative replies, BUT, please note, this is not an in-game negotiating type posting - allies who recognise my position should NOT take any in-game action or communicate using this knowledge. I really am looking to see what kind of theoretical approaches folk take.

Turning an economy around isn't so much about the 'inventive and speculative', just common sense and time.

In terms of importance, clear the negative treasury balance first because that will increase at the rate of 10%/month.  But how to do it?

If you took the position on after a period of inactivity that would explain the high recruits figure, or your economy has been through a bad patch (famine?) and once that effect has been removed it has now stabilized at EH5 (neutral).  That suggests that your nobles have sufficient resources to borrow from, so I would clear the treasury balance by borrowing £200K from your nobles, or transfer £100K from personal wealth and borrow £100K from your nobles (always borrow a bit more than you need in case of emergencies).

I would not mint or sell the gold bullion - it is worth more in the future as bullion.  I would not use it to open a bank - notoriously dodgy institutions that rarely make a profit, although others do disagree.

Having stabilized things, what you can do to try and build up the economy in the medium/long term depends on:
1. whether you are running an annual surplus.  If not, then now is the time to get yourself into the position where you are.  If you already are, then you can plan how much you can invest and where at the start of the next year in line with your own personal objectives or where you think you have the best chance of competing.
2. how long you have to wait until the next income round.  If it is before March in the year then you are probably safe to borrow to invest, but if after March you are better off waiting even though this will be very boring for you.
3. what type of trading you do.  If you are an island or have overseas colonies then you will benefit from building ships so could use some of your recruits to crew liners and then send them out on patrol to support trade (in the first quarter of the next year).  Since liners take 3 months, you should raise them in September for use the following year. There is no point in doing this if your trade is overland.  

I would not waste recruits on trade investments unless you are investing in a new trade area.

I would also not embark on roads/canals unless they are cheap relative to the surplus you are running.  Both have upkeep implications (poor relief for roads, dredgers for canals) and if you don't fund these then your roads/canals tend to deteriorate and you will find that having waited a year to get an extra EH point, you lose it again immediately.  As an example, Scotland's roads can be built for £80K, but the canals cost £1M.  Investment in roads is likely to be beneficial, but unless you have very large trade investments, building canals is more of a vanity project since you could get a much better return for your £1M by investing in trade.

In my experience improving EH helps boost tax revenue, but it is a long hard slog.  It is possible to grow trade revenue with a low EH (by investing in foreign trade) and get a more immediate return for your investment.  Which is best for you depends on the type of position you have.  Countries with large populations (France, Russia) tend to rely on tax revenue and can get away with only minimal investment in trade, so to them EH is incredibly important.  Countries like Venice or UDP have relatively small populations, but rely more on trade so EH is much less important so long as trade revenue holds up.  It is a matter of personal choice whether you want to improve EH (and accept that annual recruit numbers will be lower), or invest in trade and ignore EH (which should keep annual recruit numbers steady).  Trade, of course, is more vulnerable to pirates and war, but if you have higher recruit numbers then you can afford to raise ships to protect it.   There is no right answer - it depends on whatever mix you are comfortable with.

Best advice, though, is to crunch the numbers.  Example, if your population is 1M, you will probably find the following breakdown.


                    Rate Earnings     Population     £/head          Tax £'000s
Nobles             5% £2,500,000 50,000          50.000           £125,000
Church            5% £2,500,000 100,000         25.000           £125,000
Commons       10% £2,500,000 850,000           2.941           £250,000
Foreigners      10% £2,500,000                                    £250,000
                                        1,000,000                            £750,000

I have assumed standard earnings of £2.5M/population group and trade of £2.5M, which gives an overall income of £3.25M.

You can see that if you tax each group at the rate indicated, you will get a total of £500K in taxes.  If EH remains at 5 then you would normally expect the same the following year; if EH rose to an average of 6 across the full year then you would expect a 20% increase (although not necessarily distributed evenly across all classes), which means you could expect c.£600K in taxes the next year (ignoring foreigners).  So if it costs you £80K to build roads, then you get back an expected £100K for your £80K investment which is good value.  But if it costs you £1M to build canals and you only get back £100K then that investment is not good value.

Compare to trade investment where as a rule of thumb if I invest in an existing trade area (without recruits) in January, I would expect a 20-30% return by the end of the year, plus whatever gain in 'foreigners' tax revenue I might get in addition.  So I could invest £330-500K in trade (depending on the return) to get £100K back which is significantly cheaper than the £1M it would cost to build canals.  I may get much more back in trade or slightly less, depending on what action other players take and/or demand for the product.

The same kind of logic applies when looking at tax rates - in this example a 1% increase on nobles tax would only bring in £25K.  Is it really worth messing with tax rates for £25K?  Probably not given the honour hit.  Will reducing taxes by 1% stimulate the economy sufficiently or help increase EH?  Again, probably not.  Will abolishing taxes on nobles help raise EH ... possibly ... it will cost £125K in this example, but the tax take from the church and commoners would have to rise by over 30% to cover the lost revenue.  To run the economy 'hot' like this can work if done over a 5 year period because of the compounding, but you only get a serious benefit if you then put taxes back up and are able to take advantage of the increased £/head of nobles, and your annual recruit levels will have halved in that time.  The trick is to mess around with the numbers until you find something that works for you.  If you find that a 3% reduction in nobles taxes stimulates EH to 7, and can keep that rate for 5 years, you could well find that nobles £/head rises to £130, so the total earnings for nobles would then be £6.5M which if taxed at a restored rate of 5% would bring in £375K/year from nobles alone.  I should point out that it is rather difficult to keep EH at 7 for 5 years as it means no wars, no famines, no random happenings of any kind, so it is a highly idealised situation, and just a forecast.  Your nobles may just not be that interested in building up your economy so could just blow the lot on parties or fancy carriages so returns may be significantly lower.  But hopefully this demonstrates how some countries can power ahead in terms of money.

All these figures can be found on your annual income sheet, so just plug them in and play around with them to get the optimal result for you.

Hope this helps.

The Revenant wrote:Objective, but not exactly hypothetical.  I thought I'd pick the collective brains-trust. So:-

You have a  nation with Minus 150K sterling in the Treasury, 100K positive in "personal wealth", 350K in gold bullion, an Economy of 5 and far too many surplus recruits (15K).  What do you to do to improve Economic Health?  What are the pros and cons of different actions?

Looking forward to some inventive and speculative replies, BUT, please note, this is not an in-game negotiating type posting - allies who recognise my position should NOT take any in-game action or communicate using this knowledge.  I really am looking to see what kind of theoretical approaches folk take.

I would:

i) Loan 100K of personal wealth to Treasury and mint 50K of bullion into new coins to clear the debts of your Governent - while being a bad debtor and not paying bills for months/years was standard for the period it tended to reflect badly on Governments and make merchants unwilling to supply them or charge a lot extra in the sure knowledge that they would have to wait ages before they got paid - and in turn the merchants you are not paying have got  creditors waiting on them and eventually you get a situation were willing to offer any credit and your whole economy starts to clog up

This is reflected in the game by stopping any Government spending once you are in minus - unless you have some actual cash with characters.  Again Admirals, Governors etc using their own credit on behalf of the Crown was not uncommon in the period (Think Spinola, Wallenstein are the massive examples but lots of others did the same just to do their job) but probably did not like it that much.

ii) Probably not in game but just turning gold bullion into coins (increased money supply) does not increase the amount your farmers and industry actually produces  - Increase in money supply + no increase in production = Inflation.

Historically this was a massive problem for some countries after the discovery of American Silver.  And would do particular damage to people of fixed incomes inc many Nobles, Priest's, Soldiers and Sailors unless you give them a pay rise.  So while an increase in the money supply and even a little inflation may not be that bad I would recommend that you at least signal to Agema that you are aware of the problem and doing your best to protect people of fixed income (inc some of your main backers) so:

Turn the other £200,000 of gold into coins and use it with the 15,000 recruits in a productive manner which is going to cancel out growth in money supply by increase in production........either invested in trade or used as apprenticeships - basically get all these damn vagrants off the streets were they are probably going to turn to crime to fund their drinking!  Its a damn disgrace and our useless Govt does nothing about it!

My personal view is that Agema give benefits to one of the many fashionable mercantile theories over its rivals but it is valuable for the economic confidence/Health of a position to have a Trade and a Treasury Minister who can basically "talk a good game" and seem like they know what they are sound like they are in there fighting for the interests of the people who matter.

PS I have a theory that minting new shiny coins with may characters handsome profile is good for economic confidence and my Character's standing since people know who their King/leader is......the handsome Dude on coins.  Sadly you can not do this as a muslim lands due to ban on living image  and in Rumelia they just take your new coins drill holes in them and use them as dowry jewellery.  But in principal I think small but regular minting of new coins showing your handsome mug is good.

Ref Papa Clementi comments on banks I can confirm setting up a Bank in game is a really good way to lose money (might be different for different positions?).

Concerning earlier comments on Bullion and the money supply G7 Spain decided to take income from mines as 80% trade - we use a lot of silver/gold candlesicks, spurs, snuff boxes, wine coolers and strange boat shaped things to settle our debts to the Hongs in G7.

20% (The traditional Royal fifth) goes to a Bank which mints it into nice new Peso de ocho reales which it then loans out or uses to fund insurance for merchants. Even in peace time and times when the economy is ok........the influx of 20% of Spanish Bullion production just about keeps pace with the overheads and bad debts to keep the banks capital position stable.

Can some kind person out their advise if they have a bank which actually makes a profit and how they did it? Have already tried the trained lawyers, administrators even trained farmers used as land surveyors for mortgages.

The only hope is the Agema takes pity on the trials and tribulations of Spain as it tries to catch up with countries with advannced financial systems like the UDP and England and counts Bank/Insurance losses as a subsidy to Spanish Merchants.

Mind you this is the Govt which refuses to ask "advisors" about a lot of things in case the answer upsets people and who's tax income from foreigners is so low we are considering the closure of the Rhine in upper Guiderland for a fishing contest since clearly no one is using it. Also its customs service seem to take 10 hour siesta's and leave an honesty box on the harbour/road side.

A box the French Army totally ignored when making a transhipment of about 40,000 horses and large amounts of metal goods across Flanders. Which I may add was also totally against infectious disease regulations. And now this same Army has declared war on the Doge of Genoa due a possible failure in Banking reguations at the Bank of Genoa in its dealings with the French Criminal Classes (also known as the staff of the French Treasury).

Note sure if its just G7 but Banks do seem to have a lot of problems. It they are not running up huge losses, going bankrupt (Even the Bank of England!) they are getting their hosts invaded by annoyed creditors and the like.

Going more with Stuart's idea you can write it up as your character taking decisive action to resolve the problems your economy is facing. Not forcing the nobles to give you money would make them feel better about you too. Should help your honour and related income too.

Borrowing from others at this time might incur a higher interest rate as the deficit could cause the economy to be seen to tanking and therefore a higher risk to the capital loaned ending in becoming a bad debt. Throwing good money after bad comes to mind.

Tweaking tax rates is a longer term solution subject to variables and while bullion might be more profitable later on there is probably a good possibility to get some more. Not sure I'd spend all of it on trade investments, but Papa's 20-30% seems right in my experience, though I've only really invested with recruits. I suspect investing in a particular 'product' gives better returns than just 'general' investments. Apprenticeships required a specific trade investment listed on your trade return in order to apprentice to, not just general investments, so e.g. fishing and fishermen apprenticeships.

Building liners can boost trade but then you're looking at maintaining them so now might be better to invest capital and recruits into trade areas to increase your income without increasing expenditure.

Milestones for roads has always been a good investment to my mind as each time I've done that my EH has gone up by 1. I think this is due to merchants knowing the journey distance and time so they can plan more effectively the ratio for carrying what they need to eat on the journey compared to goods taken to sell etc. There's no upkeep costs for milestones and can work even with category E roads. Can't wait to see what happens when Siberia's milestones are completed later this year.

Ref investments in specific products against general - what I would suggest is that you look at what your position or that particular trade area was historically good at so if you are playing a Chinese position you may want to invest in tea while Sweden may wish to invest in timber and other maritime products.

Or if you have colonies in the America's you may want to specific a particular colonial products like Furs from Canada, Sugar from West Indies.

I doubt if it makes the sightest difference but I also like to balance major trades with a trade zone between exports and imports so if playing say Russia exports of furs and timber to the Martime trade zone would by joined on top five items with wine carried by ships on their return trip.

A lot depends on how you want to play a position for some General trade is just "income" same as taxation from Nobles, Church or the Commons used to fund their in game objectives. For others "Trade" is the came with policy focussed on market access on good terms, they would never dream of shooting a good customer but can get really niggled if you ban their opium trade or tax their tobacco trade out of existence.

Is war = diplomacy by other means or is it case of war = trade rivalry by other means?

Interesting how different players read the question as described.

I didn't necessarily see the situation as one of an economy in crisis.  If there was -£150K cash balance and EH was 1, that would be an economy in crisis, but in this case EH5 is 'normal'.  This is one reason why I suggested only making minor changes in the short term, then dealing with the medium/long term.

I would still be reluctant to mint bullion, but it does depend on whether your position has regular access to more bullion.  Clearly if you have your own gold mines then one option would be to mint some (not sure of the rate, whether it is £1 bullion = £1 currency, or whether this could be improved).  But you can probably get a much better rate by finding someone who wants to buy bullion and selling it to them to support their own investment in banking.  (I agree with Stuart's comments on banks, but there are still some players out there who insist on setting them up and trying to run them at a profit.)  So an additional option could be to transfer some money from personal wealth to the state treasury, then sell some bullion to a 3rd party (at say £2 currency for £1 bullion), to clear the deficit.

The economy of G7 Spain is unlikely to be replicated in any other game, so although some things Stuart has done may be transferable, I cannot in conscience suggest anyone try the same thing.  Trying to establish which bits of Spain's income are the result of legitimate economic activity and which are from piracy, fraud, double-accounting, hidden actions from 3rd parties, taxing English ships sailing past Gibraltar, marine 'insurance' (protection? provided by (ex-)pirates who are running large parts of the Spanish state and several colonies), dowries from native girls forced to marry Spanish nobles, 'banks' (that offer 'loans' which are never expected to be repaid, to countries/individuals/factions to encourage them to sustain Spanish trading monopolies and turn a blind eye to all the smuggling and nefarious activities which make up 'Spanish' trade), etc, etc, so confuses the Spanish tax office that they have given up and declared their returns are "no more than an honesty box"; it is down to Jacobite Naval Intelligence to uncover what is really going on.  Given the current situation in G7 you will understand why I can't comment in more detail about this, although Stuart's remark "Is war = diplomacy by other means or is it case of war = trade rivalry by other means?" does tend to illustrate the difference in principle between our approaches.

How you present your actions is more of an honour thing than economic, but I agree with Stuart and Marshall that it can mitigate any negative impact.   Not one of my strong points, as I tend to issue factually concise orders and leave the GM to deal with the writing up of them.

When I suggested borrowing money off nobles, I was not suggesting a forced loan.  It was quite normal for nobles to lend money to the state at a 'normal' interest rate of 5%.  The interest rate rises if you start borrowing several times your annual income and it can become counter productive forcing nobles to mortgage their estates to lend money to you just so you can invest in the economy and take the profits yourself tends to cause EH to fall.  But at low levels (few million?) you should be OK.

I agree with Marshall's idea on milestones - I am building them in games , but until they are ready I can't validate their impact from my own experience.  It might be that they work better when EH is 5 or lower than they would if EH is higher?

I try to avoid investing using recruits unless in a new trade area so my 20-30% return was based on existing trade area (already seeded with recruits).

Liners do require upkeep, but if you have sea-based trade I still think they are a good option despite having to pay the upkeep.  But it depends how you use them.  If you have £2M/year from trade area A, but only £200K/year from trade area B, you are probably better off using them to grow trade area A initially because you will cover your costs more quickly and get a greater boost percentage-wise.

The rules don't provide much guidance on this so I'm reluctant to be too precise.  There was an old rule which stated that there was assumed to be 1L available for each £4K/year of profit generated in a trade area.  Of course what it doesn't say is whether that profit is net of upkeep costs, but I think it probably has to be otherwise the numbers don't make much sense.  So as a minimum you should expect each liner to generate £6K of increased trade revenue.  So for your £3500 raising cost for a liner you are generating £6K, but have to pay out £2K in upkeep, giving a return of 15%.  That seems way too low to me based on experience, and I suspect that the increase is actually closer to £10K/liner which would give an unadjusted return of double original cost. But, before getting excited, we haven't made an allowance for the cost of the recruits - investment with recruits should return double the investment without recruits, so we need to do a bit more tweaking.  The unknown variable is the cost of recruits.  The base price for slaves in 1700 from a very old game was £10/head ... so applying that to the 150 recruits you would need/liner and you get £1500 for the recruits and £3500 for the liner = £6K nominal cost.  £10K return on a £6K investment is over 60% (i.e. double the 30% I would expect without recruits), and as it happens equal to the £4K profit the old rules implied.  So it may be coincidence, but unless anyone has a better method, I'm comfortable with using the ratio 1L generates £10K of additional trade income, all other things being equal, and assuming they are sent out on patrol helping trade in the first quarter of the year.

There are additional advantages to using liners rather than just investing the recruits directly into trade, not least that liners can be recalled to port and swapped between trade areas.  So if some competitor starts trying to crowd you out of a particular market, or your trade starts being hit by pirates, you can simply recall your ships and send them out serving a different area.  Messy and disruptive, perhaps, but it can help to keep a close eye on these things which was the original reason why I set up Jacobite Naval Intelligence.

Basically agree with most of what Papa Clementi said (with exception of the slander of the G7 Spanish Economy - all lies spread about by trade rivals keen on putting people off visiting our modern and charming ports to trade and sample our very superior fine wines and brothels).

Had assumed the production of bullion was a regular event and option was keeping it as bullion or using it to clear Govt debt. I would use it to clear debt but if someone willing to give a higher price because they need it to give a bank stability or issue bullion backed paper money (scary option) then that is a no brainer.

What I am still not sure off is if it is possible for a trade minister or the like to "talk up" a economy or if one can be talked down in the same way as other character can impact honour........anyone managed this?

I can also confirm having played the Corsairs in G10 that crime or in their case perfectly legal privateering just does not pay - returns are dire.

Which needs to confirm Spanish Trade in G7 as boring and legit. It is a classic colonial/historic set with stuff like Hides, Grain, Tobacco, Sugar produced in the colonies and manufacted goods like silk from Milan, Flanders lace, Spanish cloth and metal goods sent in return. With some processing happening both at home and in the colonies. So bog standard for positions like Spain, Portugal, France, England, UDP even Denmark and Russia if you count Siberia as a colony.

Where it may differ from some is that G7 Spain is a hard core free trader based on fact that its colonies are larger than home country so in theory and historically Spain unlike France and England could not supply its colonies from own manufactureing base resulting a massive amounts of smuggling. So it threw open its doors to all and just went for volume over profit max.

If you are playing other positions or even Spain you may want to limit trade with your colonies by means of navigation acts etc to max out your profits but have yet to see one method proved to be better than the other.

Other oddity is that while other may be sweating their colonies to make a profit and everything is based on England, France or UDP. G7 "Spain" has a German King an Italian Queen and the greatest Grandee in the whole of Spain the Duc of Midina Sidonia now lives in Mexico City has married a local and considers New Spain fully the equal of Kingdoms like Leon, Aragon, Castille or Naples.

When some colonies have a harvest surplus of 50m tons of grain in a single year......mostly used to brew beer and feed live stock which every year get a little bit further north you really do start to wonder were is home base and do I care more about recovery of small market towns pinched by the thieving French or the progress of the Wine Industry in Chile (Reds starting to look good).

When over half your orders refer to the Church in the America's, an Opera Tour also in the America's and you are trying to breed an improved Lama. Think its time you owned up to fact that you are going Native!

Would lot be so bad but in scabble I am playing the HEIC........fine upstanding Brits........hardly pro-Indian at all.

Thank you one an all - I knew I'd come to the right place for a diverse, informed and creative set of views and options. My main take-way from it all is to eliminate the negative balance asap (which I fortunately can do from bullions and personal wealth). Trade is already heavily-invested in, but I'm thinking to throw a good chunk of my surplus recruits into backing them up (mainly as a way of reducing the drag on the economy). I've reduced my out-going for next year drastically, so now I just need to sit tight, grit my teeth, and specialise in orders without financial costs attached.... (i.e more politicking and Special Characters)

Thanks again everyone, much appreciated (and enjoyed)