by Stuart Bailey Sat May 26, 2018 4:55 pm
I think interest payment on loans is just another government cost & the more government costs you have the less you have to invest in economic and trade development. But the same can be said about a larger Army/Navy and players do not seem to worry about all the cost and waste of productive recruits involved in building up their armed forces.
Think if you take a loan and spend it on Palaces and Wars this will probably have have a negative effect on your economic growth unless you wars gain you lots of nice new Provinces.
But good investments should have the opposite effect. In G7 for instance Portugal found Gold in South America and borrowed £2M from the Royal Bank of the America's @ 10% interest secured on the production of the mines. No attempt has yet been made to repay the capital and Portugal seems happy to pay £200,000 interest out of its Government Revenue and pocket circa £400,000 of Bullion per year.
Guess the question for any new Government of Portugal would be do reduce your reserves by £2M to increase your net revenue by £200,000 per annum. Or can that £2M be used in a more productive manner?
The other consideration for Governments with loans is that if you owe a Bank a lot of money and have a good record of making your payments its a form of Insurance since a) The Government of the National you owe the money too is unlikely to attack you and damage its own Bank and b) Its also likely to take a dim view of seeing its loans endangered by third parties.
So if you are running Portugal, Sweden or Poland you might like to borrow lots of money from Banks in the Maritime Powers to develop the Port Wine Trade, open copper mines, flax mills or clear new farm land. Then when the Spanish,Russians or Prussians invade you and lay siege to Porto, Danzig or Riga see how interestingly some English and the Dutch players can blow up when they start to see a £1m plus hole being blown in the bottom line of the Bank of England or the Bank of Amsterdam.
Would not work in all games and with all players but I think we can all think of some (Godolphin cough, G10 cough cough) who would come screaming to the rescue of their endangered loans and trade before you can say compound interest.