Financing the navy

I've been reading The Foundations of British Maritime Ascendency by Roger Moriss, and it talks mainly about the political and economic environments that allowed England to build a navy that would eventually dominate the world. One thing that struck me was that while Parliament would allocate money to the Treasury to pay for the navy, the money wasn't always available. It was generally assumed that by the end of the year the money would have been raised through taxes, but the Treasury never had the physical money up front to give the Admiralty or its many boards. So the Victualling Board (to use as an example) would place orders in the late fall for provisions for the next year, and they'd begin paying for these provisions through notes, each note being numbered, and each note redeemable at the Victualling Board as soon as it has the physical cash available to exchange, precedence being granted according to the numerical precedence of the notes being returned.

My memory is failing me, so my question is this: Did Charis have a similar arrangement in place to pay for supplies etc? Did it eventually develop one? Or is this never mentioned or touched upon, however briefly, in the books?
Its merely for my own interest, I let someone borrow my copies of the first two books and cannot go back and check.

I don't believe that there is any textev to answer your question as you have posed it.

There is, from time to time, mention of taxes to pay for the war from docking fees, tariffs on luxury items, warehousing fees, etc. The main source for financing the war does seem to come from trade. No mention is made that I recall of income taxes, etc.

I have wondered if perhaps a portion of the tithe that was sent to Zion was used by Charis to support the war. But we really don't have any textev to answer that question one way or the other.

What has been mentioned is that with the discovery of silver on Silverlode, promisory notes backed by the expectation of silver are going to be issued. War bonds may have been mentioned although I don't remember that for sure.

My impression is that even though there have been some moments of anxiety expressed by Ironhill, Charis has in the main been able to finance its war without too much trouble.

But as for specific mechanisms for doing that, information seems to be limited at best.

Don

n7axw wrote:But as for specific mechanisms for doing that, information seems to be limited at best.

There was some mention of taxes on trade, but no details. It would be nice to have a discussion with some details, perhaps in the form of a character thinking about how much difference Silverlode makes.
There is mention of a potential problem with inflation if they are not careful with the silver production. IIRC the precious metal discoveries in the USA west did produce some inflation for a time.

What really counts is the ratio between cost (labor) and final production (output and distribution). The problem with either sudden inflation or deflation is the need to adjust too quickly: they don't have even effects on all parts of the economy. Other things, usually political, also produce malinvestment. These make for harder adjustments. Look up the Austrian school of economics studies.

DDHv wrote:

n7axw wrote:But as for specific mechanisms for doing that, information seems to be limited at best.

There was some mention of taxes on trade, but no details. It would be nice to have a discussion with some details, perhaps in the form of a character thinking about how much difference Silverlode makes.
There is mention of a potential problem with inflation if they are not careful with the silver production. IIRC the precious metal discoveries in the USA west did produce some inflation for a time.

What really counts is the ratio between cost (labor) and final production (output and distribution). The problem with either sudden inflation or deflation is the need to adjust too quickly: they don't have even effects on all parts of the economy. Other things, usually political, also produce malinvestment. These make for harder adjustments. Look up the Austrian school of economics studies.

Agreed. The good news is that automating agriculture production can offset any sustained demand for output. My thoughts had flowed along the lines of increasing/decreasing access to loans/subsidies for powered agriculture machines and tools to balance war production or civilian demand. Not sure what percentage of the Charisian workforce is employed in agriculture. I am sure it is nowhere near the low levels in the US of the 21st century. Working towards that level means having a huge potential pool of workers to shift to the industrial sectors of the economy. War demands will limit how much production will be available to produce powered farm machinery, which would limit growth in the availability of labor in the industrial sectors.

Given near unlimited access to currency and the huge need for production, access to labor is the biggest threat to driving potential inflation and possibly localized depressions/recessions.

Most of cash is coming from fees and taxes. There is saying that there are only two things certain: death and taxes. Also construction programs are generating income, worker gets money, he goes to shop, buy sth and we have some of money back. Also charisian pirates are providing a lot of cash, because something like 30% of prize belong to Crown. About Silverlode if they will be pumping it into treasure slowly, there shouldn't be a big inflation.
You should remember that taxes were and will be raised, they don't have any other good option, once the Corisande repairs damage to it, it will generate a lot of income. Siddamark is generating a lot of money, but for now they eating all of it, cus they need to support 400k soldiers fighting for them.

Absolutely I'm positive Charis can afford the war. But things happen in the silver mines and the monthly shipment of silver is a little less than normal, combined with some bad weather that forces ships to stay in port and others can't make it into port, thus those taxes and fees on shipping aren't being collected... well then how does the Charisian Navy pay for the food it needs now without the silver to exchange for it? Does it issue promissory notes? How long do they last? And how much faith do people have in them? British Royal Navy notes were discounted slightly (so if you sold the Navy 100 pounds worth of goods you might get promissory notes worth 105 pounds, because who knows when you'll get the actual cash. meanwhile that note isn't a tradeable commodity so the bearer of the note is short 100 pounds)

Darman wrote:Absolutely I'm positive Charis can afford the war. But things happen in the silver mines and the monthly shipment of silver is a little less than normal, combined with some bad weather that forces ships to stay in port and others can't make it into port, thus those taxes and fees on shipping aren't being collected... well then how does the Charisian Navy pay for the food it needs now without the silver to exchange for it? Does it issue promissory notes? How long do they last? And how much faith do people have in them? British Royal Navy notes were discounted slightly (so if you sold the Navy 100 pounds worth of goods you might get promissory notes worth 105 pounds, because who knows when you'll get the actual cash. meanwhile that note isn't a tradeable commodity so the bearer of the note is short 100 pounds)

The monetary system in use on Safehold hasn't really been discussed, so it is not clear exactly how things are being done. We do know that there are promissory notes, and that they appear to be tradable. Thee also appears to be large amounts of gold being shipped around, and much of the currency appears to be coinage. We don;t know if there is actual paper money, and if so, is it a full reserve or fractional reserve currency.

fallsfromtrees wrote:The monetary system in use on Safehold hasn't really been discussed, so it is not clear exactly how things are being done. We do know that there are promissory notes, and that they appear to be tradable. Thee also appears to be large amounts of gold being shipped around, and much of the currency appears to be coinage. We don;t know if there is actual paper money, and if so, is it a full reserve or fractional reserve currency.

I think we do know that there is no paper currency. But as promissory notes, letters of credit, etc. are widely in use (Duchairn discusses this once, the Siddarmarkian banks do have them, and then the Charisians have them for sure), producing large amounts of virtual money shouldn't be a problem for the EoC. But I'd like to point the attention to one interesting aspect. The largest producer - and thus creditor of the EoC - is Ehdwyrd Howsmyn. And I don't think that he'd demand the real thing if the EoC should run into dire straits coinagewise.

We do know that paper currency isn't used. Here are the evidences I base that on:

1: It hasn't ever been mention, ever. All transactions are either made in marks(blank number of marks, like the cost of galleon) or in some form of coins. Examples would be several passages where someone needs to pay for a meal or tip a waitress. Coins are used.

2: The issue of debasing coinage and inflation. Rhobair Duchairn talks about both. In either How Firm a Foundation or in Midst Toil and Tribulation. I forget which. But the relevant points are he is talking about lowering the precious metal content of coins which is not an issue with paper money. He talks about inflationin fact he invents the use of the word inflation to describe the concept since it is unknown on Safehold. If paper money were used inflation would already be known about. Finally he talks about how the are issuing more notes than they had the money to back. If this were a fractional reserve system that would be par for the course. Rhobair would be talking about how they were decreasing their reserves not how they didn't have the money back up there notes.

3: Again it hasn't ever been mentioned. This is really important as there is a vocabulary to paper money that doesn't work with coins. Folding it. Putting it in a 'bill fold'. 'Folding' it into a wallet. Crumpling it up in anger. A 'crumpled' bill. An old worn out bill(Use of words like faded, rather than worn down. Coins get worn down, bill get ripped and fade).




Note about money and payments. The problem you are talking about is equivalent to a payday loan for a state. I can see three different options for how this can be resolved.

One:
If the Charisian crown is short one month and cannot pay hard cash they might defer payment until another month. This could be a partially done by deferring big payments(Such as a full payment for 10,000 rifles) until next month. If your word can be trusted this isn't an issue as long as the receiver of the payment has enough reserves to make payroll themselves. This couldn't be done to pay off sailors who just got off the ship. But the larger purchases from foundry owners and shipwrights probably make up the majority of payments anyway.

Two:
A better way of dealing with this is to maintain a month's(or more) reserve. So if you fall short one month you still have the cash to pay out and as long as the shipments of bullion from the mines do get to the treasury eventually it will even out and you will be fine.

This is the best way as the reserve can be built up over pervious decades and once built up will not cost any income to maintain unlike the other options which could cost money in either interest or late fees of some sort.

Three:
Get a loan. From a bank. This is what banks do if they are a bit short at the end of the day and need to balance their books and meet the required reserve percentage. A government could also do this, though it should noted that such a system would require time to set up and couldn't be created in a month.


Edit:
anwi, you are correct about Ehdwyrd Howsmyn. I would also like to add that payments to him are probably figured out months in advance and the money to make the payments gathered accordingly. So it is unlikely that the Charisian crown would find itself without the money to pay them as they would know they needed to make the payment far in advance. Unless of course the crown is actually running out of money all together. But that is a different issue.

Highjohn wrote:We do know that paper currency isn't used. Here are the evidences I base that on:

1: It hasn't ever been mention, ever. All transactions are either made in marks(blank number of marks, like the cost of galleon) or in some form of coins. Examples would be several passages where someone needs to pay for a meal or tip a waitress. Coins are used.

2: The issue of debasing coinage and inflation. Rhobair Duchairn talks about both. In either How Firm a Foundation or in Midst Toil and Tribulation. I forget which. But the relevant points are he is talking about lowering the precious metal content of coins which is not an issue with paper money. He talks about inflationin fact he invents the use of the word inflation to describe the concept since it is unknown on Safehold. If paper money were used inflation would already be known about. Finally he talks about how the are issuing more notes than they had the money to back. If this were a fractional reserve system that would be par for the course. Rhobair would be talking about how they were decreasing their reserves not how they didn't have the money back up there notes.

3: Again it hasn't ever been mentioned. This is really important as there is a vocabulary to paper money that doesn't work with coins. Folding it. Putting it in a 'bill fold'. 'Folding' it into a wallet. Crumpling it up in anger. A 'crumpled' bill. An old worn out bill(Use of words like faded, rather than worn down. Coins get worn down, bill get ripped and fade).




Note about money and payments. The problem you are talking about is equivalent to a payday loan for a state. I can see three different options for how this can be resolved.

One:
If the Charisian crown is short one month and cannot pay hard cash they might defer payment until another month. This could be a partially done by deferring big payments(Such as a full payment for 10,000 rifles) until next month. If your word can be trusted this isn't an issue as long as the receiver of the payment has enough reserves to make payroll themselves. This couldn't be done to pay off sailors who just got off the ship. But the larger purchases from foundry owners and shipwrights probably make up the majority of payments anyway.

Two:
A better way of dealing with this is to maintain a month's(or more) reserve. So if you fall short one month you still have the cash to pay out and as long as the shipments of bullion from the mines do get to the treasury eventually it will even out and you will be fine.

This is the best way as the reserve can be built up over pervious decades and once built up will not cost any income to maintain unlike the other options which could cost money in either interest or late fees of some sort.

Three:
Get a loan. From a bank. This is what banks do if they are a bit short at the end of the day and need to balance their books and meet the required reserve percentage. A government could also do this, though it should noted that such a system would require time to set up and couldn't be created in a month.


Edit:
anwi, you are correct about Ehdwyrd Howsmyn. I would also like to add that payments to him are probably figured out months in advance and the money to make the payments gathered accordingly. So it is unlikely that the Charisian crown would find itself without the money to pay them as they would know they needed to make the payment far in advance. Unless of course the crown is actually running out of money all together. But that is a different issue.

I would agree that the key to how things are afforded in a timely way is the reserve. Sometimes the reserve will both ebb and flow according to what happens in a given time frame.

Also promisory notes can serve the same function as paper money and be publically traded and exchanged for goods and services.

Don