A Magical Medieval City Guide (DnD Other)/Trade and Economics
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Magical medieval trade and economics are often mistaken for anachronistic modern concepts. Things like supply and demand, purchasing power, and the market do exist, but in a proto-form of its developed descendents. Magical medieval economics are not capitalistic, socialistic, free trade or restrictive. It borrows traits from all four systems and creates an economic system that is neither here nor there to modern economic thinking. The biggest difference between magical medieval economic thought and modern thought is the purpose and conduct of business. Maximizing profits is not the goal of magical medieval trade. Making a profit is much more important. Magical medieval societies do not have the modern tools, resources, or ideas that allow modern societies to hone maximization of profits to an art form. Most people make the goods they sell. There are fewer middlemen in commercial transactions in a magical medieval society. Usually, the only cost associated with a good is the cost of materials and the craftsmen's time. Only wholesale merchants are concerned with base costs and selling goods for more than they bought them, but even wholesale merchants usually buy their goods from the actual craftsmen and producers. Since most people make the goods they sell, a large inventory is not a typical practice in most workshops. A large inventory means things are not being sold or that something has been sitting on the shelf too long. Expensive items are not kept in inventory because they cost too much to make. This is especially true of magic items, expensive in either material cost or the level of skill required in their creation. A ring of protection +1 only costs 4,000 gp, but its forging requires a 12th level caster with the forge ring feat. Expensive or unusual items typically have to be specializes in weapon manufacturing is unlikely to pay much for a party's spare mundane weapons. To incorporate supply, demand, and circumstantial factors into trade and economics, see Chapter Five: Economic Simulator.
 The Market
Statements like "the market will not bear it" do not apply very well to magical medieval economics, partially because prices are not set. In a bargaining society where price is always negotiable, the only effective market is a party of two, the buyer and the seller. The seller does not sell if the price is too low; the buyer does not buy if the price is too high. Guilds play a large role in regulating prices, but these regulated prices are not concerned with maximizing profits. They are concerned with maintaining social order. Guilds usually set a low limit price to avoid undercutting prices in competitions between merchants and craftsmen of the same guild. Occasionally maximum prices will be set, but such is only typical in famine situations and usually only effects grain.
 Coin and Specie
Even within cities, lots of business transactions are barter or paid in kind. This is especially prominent among the city's craftsmen and wholesale merchants, where people may conduct business without ever exchanging coin. Besides being a simpler form of financial interaction, it also removes the difficulty involved with species. For example, a wine merchant sells 100 barrels of wine for 100 ells of cloth. By trading goods, neither merchant has to produce large amounts of coin or worry about its safe transportation and exchange. Any man can spend coin, but not everyone can turn 100 ells of cloth into money. Merchants who have worked with each other before often rely on IOUs. They are lighter and more secure than payment in either kind or specie. In more developed magical medieval societies, banks may honor notes of credit drawn on their accounts. There may even be networks of banks in the largest cities, but remember that such endeavors are private enterprises of mostly patriciate class individuals. When banks lend to kings or strong landowners, they should be able to accept the consequences of a bad loan if they hope to continue in business. Of course, they had better be willing to lend to a king or a strong landowner if they want to continue business in their demesne as well. If expensive or unusual items are bought on site, they are probably the craftsmen's personal belongings. Magical medieval economics differ from modern economics because price is not set or static. A merchant may want 5 gp for an item but he'll be willing to sell it as low as 3 gp. But he'll start his negations at 8gp or better so he has room to negotiate down. Depending upon the skills of the purchaser, the merchant may receive 6 gp for his item and be a bit happier.
There are no fixed prices in a magical medieval society. The craftsmen who make the items determine their worth, and they have the power to negotiate the price. The prices listed in the core rules are suggested prices for GMs' and PCs' ease in buying and selling. But when a PC buys a bedroll, it does not come with a tag labeled "1 sp." In a magical medieval society, prices change due to local and regional production, supply and demand, and the interaction between buyer and seller. For example, wine is cheaper in winemaking regions than in areas that import their wine. A peasant buying a chicken for dinner pays much less than a PC fighter encased in 50 pounds of metal with three weapons, a nice cloak, and boots, even with a high bluff or diplomacy check. In kingdoms at war, everything costs more, from wheat to weapons. A city that
Banking in a magical medieval world is an esoteric affair, controlled by tight-lipped, rich members of the patriciate. Bankers rely mostly upon bills of exchange, and many merchants simply rely upon IOU's and their reputation. Magical medieval banks are not banks in a modern sense; they are simply rich families or a small group of rich people who lend money in one location and have the borrower deposit money in another. For example, a merchant borrows money to buy goods in city A that he transports to distant city B. After selling his goods at B, he pays his loan to B's local branch. This branch provides him a notarized copy so he can prove he paid his loan. Borrowers are heavily scrutinized, a process relying on the banker's personal knowledge (or on the personal knowledge of his friends) of the prospective borrower. People who are not solidly rooted in their community have no hope of receiving loans. Even respectable merchants are charged a substantial surcharge (interest). Such systems rely heavily upon location of branch offices. Generally there are only a few bankers in any continent-sized grouping of magical medieval societies, and they have branches in only a few important trade cities. Each house usually has a particular area of the continent claimed as theirs, and fiscal competition can be fierce, both to expand and defend territory. In magical medieval continents with different currencies, currency speculation occurs through bills of exchange. A merchant may receive a bill of exchange in city A and redeem the bill of exchange in city B, when city B is experiencing a specie influx. He then keeps the large amount of specie B until the city experiences a shortage of specie (common around markets and predictable landing of ships carrying expensive cargo, like spices). In this way the merchant has collected specie B when it was plentiful (when he received many B coins for his A coins), and used it when it was rare (when he wouldn't have received as many B coins for his A coins). This way he makes a profit by exchanging specie at a beneficial time, as well as gaining goods to sell. excepting luxury products that can produce even yearlong treks. Merchant houses send couriers ahead of their long merchandise trains, and these couriers perform most of the bargaining for the goods. They sell the goods, sight-unseen, and instead of exchanging coin, exchange credit instruments. Most goods are purchased in this manner, by paper reckoning, so that by the time the merchandise arrives, a significant portion is already sold. At the end of the fair, there are several days of accounting. All the books are balanced, and all affairs settled. Settling affairs requires a notary who records the transaction and the specifics of the transaction. This well paid third party figures civic taxes on the transaction and can be called upon to testify to any fiscal wrongdoing.
 Magic in the City
Spellcasters are abundant in magical medieval urban environments, both in number and percentage of the population. Besides creating familiarity with magic and spellcasters, magic in the city affects how the city operates, power centers in the city, the level of magic and wealth distributed in the city, and the role of spellcasters in the city. The larger the city, the more familiar its populace is with magic. The more spellcasters and higher-leveled spellcasters there are within a city, the more magic plays a role in civic power centers and wealth.
 Complex Financial Interactions
Magical medieval societies do have complex financial interactions. Even though there are fewer middlemen than in later societies, magical medieval societies explore many different types of financing at great fairs, where large transactions occur. Great fairs are held in rotation through a continent, and they are the magical medieval equivalent of international trade. Fairs are held a few months apart in different locations, due to transportation issues. Great fairs only occur where trade spheres overlap. Merchants from one sphere travel as far as they can to sell goods, which are purchased by another group of merchants, who have traveled as far as they can to buy the goods. Great fairs occur where merchants from multiple lands are unwilling to travel further to buy and sell goods. Generally merchants do not travel more than 60 days to transport goods,
Peasants and Laborers: Most peasants and laborers in the city have little better knowledge of how magic works than the peasant on the countryside, but they do have more experience with it through living in the city. Peasants in urban environments have more potential to see and know the various ways magic works than their country counterparts. They know the difference between divine and arcane magic, but only through a social environment. Stick a wizard in clerical robes, and the average peasant won't know the difference. Bardic and druidical casting styles confuse peasants, mostly because they heal but are not a part of a church.
Craftsmen: Craftsmen have a more refined understanding of magic than peasants. Removing some of the superstition and misinformation peasants have, craftsmen know about magic they encounter in their trade or that which helps in their particular craft through associations in the guild. They do not necessarily know the name of a spell, or the fundamental difference between arcane and divine magic. For example, a roofer knows about feather fall, a tavern keeper knows about charm person, and a bailiff serving in the court knows about zone of truth. They may also have some basic magical items (potions or low priced magic items) if they are wealthy craftsmen in larger cities. Craftsmen also know basic things like familiars typically belong to arcane users, not divine, but a friendly animal does not immediately mean a person is an arcane spellcaster. They are not aware of most spellcasting classes' limitations, but know armor and arcane magic do not mix very well. Craftsmen also know that if someone is casting a spell at them, try giving a swing.
Merchants: Merchants, having more money and possible need for paid magical assistance, are more familiar with the particulars of magic than craftsmen. Merchants are more likely to stockpile magic items than craftsmen, especially well-off merchants and members of the patriciate. Merchants are familiar with different types of spells and can identify common spells by their effects. Merchants understand any spell that has physical effects, though that not necessarily by name. For example, a merchant identifies a cure spell, but not the power of the spell. Merchants, by virtue of their wealth, have the opportunity to learn more about spellcasting and how magic works through proper education from a private tutor, religious training, or studying arcane sources.
Static and Adventuring NPCs: These figures have reliable knowledge about magic and its limitations. They know a command spell does not last very long, that spreading out prevents certain attack spells, and that your best friend may suddenly attack you without warning, but it's not his fault. Though some NPCs' magical knowledge revolves around their profession rather than adventuring and combative uses, many of the misconceptions and superstition surrounding magic disappear at this level of society. intense magical war can bury a land in fire and ash faster and more enduringly than historical medieval war.
 Wealth of Cities
Though cities have a determined amount of wealth calculated in core rulebook II, this does not mean all cities are equal. The wealth listed in the core rules determines how much a city can buy and sell at a given time, mostly for the benefit of PC adventurers trying to unload treasure for coin. Assuming the presence of magic grows along side the city, a portion of a city's wealth may be held in magical resources due to the city's age. Older cities, as well as older guilds, buildings, and established families within the city, have magical resources of the current generation and previous generations.