Translator: CinderTL
Just as Alden Town was celebrating the string of good news from the new continent, a jarring piece of news arrived.
The dwarf clans of the eastern Rocky Mountains—specifically the Stonemason Clan, who had colluded with the orcs—had detained Paul's envoy, Helsen, and Dain, the mediator sent by the Ironhammer Clan.
This was a disastrous development.
"How dare they?" Paul slammed his fist on the table during the emergency meeting, his voice trembling with fury. He couldn't even confirm whether Helsen was still alive.
The generals were incensed, unanimously demanding swift and decisive action against these mountain barbarians, seeking both retribution and revenge—Abal had used the Stonemason Clan's territory to launch his surprise attack on Aldor.
Meanwhile, officials from the Council of Administration were deeply concerned. The war bonds issued earlier were nearing maturity, and repaying these debts had to take priority.
While the gold and silver mines discovered on the new continent held immense promise, converting these resources into usable currency would take time.
Before the uproar over Helsen's disappearance could subside, another alarm sounded: reconnaissance revealed that Stonemason Clan dwarves were mobilizing along the Rocky Mountain foothills.
The General Staff concluded that they were likely preparing for a new orc invasion.
A military operation, even a limited one, was now imperative, but it required funding—gunpowder, rations, uniforms, cannon transport—each item demanding substantial expenditure.
Although gold mines had been discovered in the new continent, the processes of ore extraction, smelting, refining, and minting into coinage would take considerable time. Alden Town couldn't afford to wait.
Paul sat in his study, gazing at the flickering candlelight, his thoughts drifting back to his days in Crystal Glare.
During that time, he had proposed a bold idea to the Royal Family: military bonds.
These were paper certificates anchored to tangible assets produced by the Royal Family's directly controlled territories—grain, textiles, salt, and other commodities. Soldiers' wages were partially paid in these bonds, which they or their families could redeem for essential goods at Royal Family-managed markets. Since the Royal Family's territories were self-sufficient with limited external trade, the bonds circulated within a closed system, creating a reliable credit cycle. This allowed the Royal Family to maintain its army without immediate cash outlays, while soldiers' families received stable access to necessities. The system was later expanded and became a crucial financial pillar for the Royal Family's establishment of the New Army.
The printing of the military bonds had been entrusted to Alden. The printing industry in Northwest Bay far surpassed that of other regions in the old continent, producing durable paper, counterfeit-resistant inks, and finely detailed seals that made forgery extremely difficult. This collaboration not only brought substantial revenue to the Northwest but also allowed Paul to validate the practical feasibility of paper currency in real-world applications.
But the Alden Army's operational needs far exceeded those of the New Royal Army, and military bonds alone were insufficient. What he now required was not a limited-scope credit instrument for internal military use, but a universal paper currency circulating throughout society. To ensure merchants, farmers, and artisans would willingly accept paper money, a stronger foundation of trust was essential.
Gold was the perfect solution.
The gold mines of the new continent provided the backing for this paper currency. He planned to issue banknotes anchored to the nation's gold reserves—each banknote representing a specific weight of gold stored in the treasury, redeemable at designated banks. This would eliminate the need for cumbersome gold coin transactions, dramatically improving market efficiency.
The banknotes would not merely serve as currency; they would symbolize the nation's creditworthiness, liberating the Northwest's economy from the constraints of metal coinage and providing immediate financing for upcoming military campaigns.
The following day, in the council chamber of the Alden Town Lord's Manor, Paul convened the core members of the Council of Administration and formally proposed the implementation of a universal paper currency across the Northwest.
"We will replace gold coins with paper money," he stated calmly.
The chamber fell silent. Old Ford frowned, tapping his fingers lightly on the armrest. "Can paper feed people? Will the common folk accept this?"
Hansel, ever cautious, countered, "Military bonds work within the army because there's a fixed system for exchanging them for supplies. But how can we introduce this across the entire Northwest? Merchants, farmers, artisans—who would trust a piece of paper with words printed on it?"
Paul didn't rush to refute him. Over the next week, he chaired several meetings, systematically addressing each objection and presenting a comprehensive set of measures to persuade the group.
Regarding credit anchoring, the total issuance of paper currency would be strictly capped based on the estimated gold yield from the new continent's gold mines. Each banknote would correspond to a specific weight of gold stored in the national treasury, redeemable at designated banks at a fixed exchange rate.
For anti-counterfeiting measures, they would adopt the advanced printing techniques Alden used to produce military bonds for the Royal Family, incorporating watermarks, embedded fibers, and specialized inks. Counterfeiters would face the death penalty.
To ensure circulation, government tax collection, military payrolls, and payments for public works projects would prioritize paper currency. All market merchants would be required to accept paper currency transactions.
As for redemption networks, the Northwest Bank would establish currency exchange points in major towns, ensuring the public could readily exchange paper currency for gold. Initially, daily redemption limits would be imposed to gradually build trust.
After repeated deliberations, Old Ford finally nodded. "If there's truly a gold reserve backing the currency, visible and redeemable by the people, it might work."
Hansel agreed. "This is more stable than military bonds backed by the Royal Family's grain reserves—gold is a universally recognized hard currency."
With consensus reached, the Council of Administration swiftly drafted an implementation plan. Drawing on historical precedents from Earth's transition from metal to credit currency, Paul directed a three-stage rollout: pilot issuance, regional expansion, and full circulation.
However, while paper currency addressed transaction efficiency and the credit system, it couldn't immediately cover Alden Town's massive war expenditure. The gold mine had yet to produce, and the national treasury remained empty.
They still needed to borrow money.
Thus, the Council of Administration simultaneously introduced a second financial instrument: Gold Mine Revenue Bonds.
These bonds were offered to all merchants, landowners, and wealthy commoners in the Northwest. Recognizing that metal currency wouldn't immediately disappear from circulation, subscriptions were accepted in both paper and metal currency. The bonds carried an annual interest rate of 5%, paid annually, and matured in ten years with a lump-sum repayment of principal. The repayment source was a dedicated fund established from 30% of the new continent gold mine's projected revenue over the next decade, earmarked exclusively for this purpose.
To enhance credibility, the Council of Administration released the first exploration reports and mining progress schedules, promising to publicly disclose quarterly gold mine production and fund reserve status.
This design essentially monetized future gold revenue in advance. Bondholders weren't investing in empty promises but in tangible ore veins and the nation's credit.
When news of the paper currency's issuance first spread through Alden Town, the public's reaction was far from enthusiastic. Instead, it was a mix of skepticism, mockery, and unease.
At the market, a blacksmith sneered to a customer, "Paper? It's not even sturdy enough to wipe my table with! How can it be used as money?" A fishmonger was even more direct: "Unless you exchange real silver coins for my basket of fresh sea bass, I won't take these paper scraps."
Small merchants whispered among themselves, "Did the war drain the treasury dry? Is this just a trick to fool us?" Rumors spread like wildfire, claiming the paper currency was a Wizard's dark magic, imprinted with curses that would bring misfortune to those who used it.
When the first batch of paper currency began its pilot exchange at the Northwest Bank, the scene was desolate. Only a handful of grain merchants and military contractors with government ties came to exchange, and they only accepted small denominations. They repeatedly crumpled the notes in their hands, held them up to the sunlight to scrutinize the watermarks, and meticulously examined every detail, fearing it was a scam.
(End of the Chapter)
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