Black Iron's Glory - Chapter 533
Reparations Negotiations and Arms Deal
The five heads were once again united.
Two days had passed since Claude arrived in the royal capital with Thundercrash. As promised, Blancarte released all the representatives and the region's office's staff. The apprehended guard clan was sent to the 4th Folk's encampment. Claude refused to attend an audience with Fredrey I.
President Henderman and Chairman Bernard attended, however. Like Bolonik, they were completely unharmed. Skri, however, had a scar on his face and rope burns on his left arm. Like most other soldiers given honorary Titles, he had suffered substantially. As he had refused the unreasonable requests, he had been given harsh beatings for the first two days of his captivity. Fortunately, the prime minister intervened early, or he might not be in the relatively decent state he was now.
Claude put a folder on the desk before he spoke.
"Take a look. This is the so-called reparations the king is offering."
The folder landed in front of Henderman, who picked it up and smiled.
"The autonomous region's overseas bank is allowed to open branches across the kingdom in exchange for a million crowns as management fee. Our branches can offer a total of up to 20 million crowns of paper money between them, in denominations equal to a single crown and less -- granted we put ten million crowns in reserve with the kingdom's bank. The designs of the notes have to be approved by the ministry of finance, however.
"Additionally, the region's companies are allowed to invest in the Royal Aueran Railroad Company. The kingdom shall own four-tenths of the company, and the region the other six. We can hold these shares up to fifty years, after which time they are to be sold back to the kingdom.
"Our fiefs and Titles will now also be granted at half the price. Those harmed during the recent incident will have all fees waived."
"I'm sorry. Prime Minister Blancarte is really hard to negotiate with. These three conditions are the only ones we could wring out of him after a whole night of discussion," Claude said.
Bernard and Henderman were elated.
"It's already more than impressive that you got these conditions," Bernard said happily, "That lot was only willing to let us open a branch in Whitestag before. Now, we can open branches in the national and prefectural capitals. In other words, we can now export our paper currency here."
Claude took out a cigar, lit it, and took several puffs.
"Well, it's not like the kingdom will lose anything. Didn't you see the annual million-crown 'management fee'? The branches are essentially considered subsidiaries of the national bank. I recall Viscount Godic telling me the kingdom's national bank branches don't even make more than a million crowns in profit.
"Apart from the fee, the true goal is to lure our paper money in to replace actual coinage. After all, there isn't much profit in minting coins. In fact, they are at risk of making losses. Blancarte wants our bank to deposit ten million crowns in reserves to allow the circulation of 20 million crowns' worth of paper money. They're basically using us as a guinea pig."
"The money to be released here is not the same as what we have back home, right? There'll be a need for a redesign and an anti-forge seal, yes?" Henderman asked.
"Yes. It's part of the stipulations. The prime minister probably wants to replace coins altogether. It won't keep our money out of the mainland, however. People just won't be able to exchange with our notes at the mainland's bank."
"Then it's fine. It doesn't matter that the mainland's bank doesn't acknowledge our money as long as we do. As long as we open enough branches, we will just push them out of the market because people will prefer our money to theirs because we'll have branches everywhere they can use it."
Henderman looked at the second condition in the folder with a smile.
"I didn't think the kingdom would leave the railroad company with us. They really are sincere. I recall when we first arrived, they wanted us to give all our expertise, knowledge, and technology for free to contribute to the kingdom. We refused, of course. The second time, they tried to pay for it, but they only offered 300 thousand crowns."
"Looks like they've learnt their lesson. You can't build a railroad with sheer willpower. We make a lot of profit off the network back home, but it was a massive investment, not just in the construction, but the research before that. It took five generations of design just to get to where we are now, and there's still a lot that can be improved...
"They don't realise how much they're saving by buying our technology and expertise. This deal lets them get everything for nothing. They just have to give us some land. They've got a golden goose there."
"The prime minister really is a smart devil. He knows how to get everything he wants and more out of a deal," Claude mouthed between puffs, "If we connect all the major cities across the core of the kingdom, the entire network will make three million crowns a year. Doing that will cost us 20 million though.
"Before this deal they'd had the old nobility in charge of the project. They spent most of their time bickering over shares, however. They'd not even gotten started on the research, nevermind planning the business side of things.
"They're all distracted by their new fiefs, however, so they're not around to protest the whole project being yanked out from under their feet and given to us. If we have the manpower, we can have the barebones of the network finished in two years. In another seven we'll be done with the last of the lines.
"All in all we should break even in fifteen to twenty years depending on how quickly the markets in the new prefectures and territories get back on their feet and ramp up demand for transport on the lines. The best would probably be to finance this with bonds on our bank. We should be making enough that we can pay out annual dividends on the bonds in a couple years and still make enough to begin paying off the bonds at a good rate."
"It's a decent idea," Bernard praised, "Lord Militant's suggestion is brilliant. We should price the bonds at a hundred crowns and open them for sale to our region's residents. Each household can only purchase one bond and have to be registered with the bank. Every year, their dividends will automatically be deposited into their account. We nobles and council members shouldn't dip into this, however. It's about time the people back home benefit directly from our efforts. We had the meat, so leave the soup to them."
A bond of a hundred crowns and a total valuation of 20 million would mean 200 thousand households could get bonds. It would be a great boost in confidence in the administration. Now that the region's economy was developing rapidly, saving money in the bank netted the people a small interest. However, those who bought the bonds might see them double in a mere decade.
Claude knew well that Bernard was trying to please the people. After all, the councillors were now hereditary nobles. They only had to pay an elevation fee and land-purchase fee to own their own hereditary fiefs on Freia.
If word got back to the region, sentiments of being abandoned would no doubt fester. There might even be those who made use of those sentiments to cause trouble. The people had to feel like their rulers were thinking of them.
The rest didn't comment on the railroad, their silence was tacit approval of Bernard's suggestion. Next came the last offer: the half discount on fees related to the fiefs and Titles. It was the biggest discount the royal family had offered to anyone, apart from the blood relatives of the royal family or the nobles that had greatly supported Fredrey I's ascent to the throne.
Not to mention, the nobles hurt due to the queen's actions were exempt from all fees. Skri laughed as he stated he had saved 200 thousand crowns by taking the beating, which turned out to be quite worth it. The others hurt by the incident were satisfied as well.
Bernard and Henderman were happy about the reparations and discounts. As Blancarte told Claude, the ministers were initially ferociously against the region's nobles enjoying the same benefits they did. However, all dissent vanished following the queen's rash actions.
When word came about Thundercrash's march towards the royal capital, the nobles and ministers of the royal capital devolved into chaos. Some blamed the court for discriminating against the region and said they should've given them benefits. Others quietly took leaves and left the royal capital to prevent being embroiled in the matter. Some honorary nobles who lingered around the royal capital even spread rumours about the king's inept handling of the matter.
Had Queen Christie not gotten into conflict with the region's representatives like that, the king wouldn't have an excuse to use to give the region any discount. However, the incident provided both sides an opportunity to compromise. The king gave the region the benefits to make amends whereas the region's representatives were happy they didn't get left out of the deal.
Claude was thankful he didn't really use force against the capital. If the representatives hurt could forgive and forget the whole business thanks to the king's apology, it wouldn't be Claude's place to stand out and fight.
Maria had come to him the previous evening to put in a good word for her daughter, in fact. She knew Claude's current status and power as the undefeated Lord Militant. She knew better than anyone how easily he could wipe the kingdom off the map.
Nobody, not even she, had thought this nobody boy she'd taken in as a disciple at least partially on a whim would become such a powerful figure. The vast canyon between their statuses was still there, even wider and deeper than it had been at the beginning, only now Claude stood on the high ground and she was the one staring up at him.
Her status had not diminished at all. She'd been the king's sworn sister back then, now she was the queen mother after a fashion. Claude, however, had been the peasant son of a local bureaucrat when they'd met, but now he was the Lord Militant of an autonomous region at least as large as the kingdom, and several times more powerful. It had an economy several times more developed, stable, and liquid than the kingdom, and he controlled it all. He was a king in all but name and wielded the most powerful, advanced, and trained force in the world.
The two had carefully avoided any talk of his purpose in the capital during their reunion, opting instead to talk pleasant nothings about the early days of their acquaintance.
Maria was quite concerned about Angelina, Claude's sister, having heard that she was already a mother. She bemoaned the swift passing of time. The obedient girl had become a mother. She said it was a real shame her foolish son had ruined the chance she'd organised to take Angelina as his wife and make her Maria's daughter-in-law.
She didn't speak of her daughter, nor did she ask for leniency. When she departed she left a notebook she asked Claude to give to his sister. It was her research journal from the last two decades of her work. Claude couldn't bring himself to tell her Angelina had abandoned herbal medicine for firearms. The old woman gushed over Angelina's talent for the field every chance she got and it would break her to learn that the girl was no longer a practicing apothecary.
Since the representatives of the region weren't going to pursue this whole business, Claude went with the flow, though he couldn't deny that part of it was on account of Maria.
Henderman closed his eyes in thought and frowned.
"Even if the king offered us a one-half discount and exempted the ones hurt, our 30 million crowns still isn't enough to pay for everyone's fiefs. We're still short 17 million."
"Why don't we just say 30 million is all we have, and if they don't take it, we'll leave? Let's get them to slice the price more," Bernard suggested shamelessly.
Claude almost burst out laughing.
"Turn the page. Blancarte included two more conditions. Our region is to provide new rifles and an ironclad fleet to the kingdom to make up for the 16.4 million crowns. I have to make clear that Lord Militant Bolonik was the one who agreed to those two terms."
Bolonik, who had been silent the whole time, flushed.
"Yes... The kingdom's factories already recreated our rifles. A few shipyards have also teamed up to research ironclads and have made good progress. However, the prices they quote are ridiculous. A rifle is 45 crowns and a round a thale. One ironclad is 6.8 million crowns.
"I believe that, rather than let the old nobility profit off making arms, it would be better to have the region take care of it. I agreed to provide 400 thousand new rifles and 40 million rounds. We'll also build a fleet of 16 ironclads, which should be just enough to make up for what we still lack."