Just as everyone in Lakeheart Town was celebrating the series of good news from New World, a very unpleasant piece of news arrived.
The dwarven tribe of the Eastern Rocky Mountains, the Stonemason Clan which colluded with the orcs, detained Helson, the messenger sent by Paul, and Dain, the mediator dispatched by the Iron Hammer Clan.
This is absolutely terrible.
"How dare they?" Paul slammed his fist on the table angrily during the meeting. He didn't even know if Helson was alive or dead.
The generals were outraged and unanimously demanded that a strong stance be taken against these mountain barbarians, and that revenge be taken as well— Abar had used the territory of the Stonemason Clan to launch a surprise attack on Aldor.
Officials at the Political Affairs Council are worried because the war bonds issued earlier are about to mature, and the government needs to prioritize debt repayment.
While the gold and silver deposits discovered in the New World are considerable, it will take time to convert them into real currency.
Before the news of Helson's disappearance had subsided, another warning came: reconnaissance revealed that the dwarves of the Stonemason Clan were active on the edge of the Rocky Mountains.
The Staff Department believes they are likely preparing for a new orcish invasion.
A military operation was imperative, even if limited, but it required funding—gunpowder, rations, clothing, and cannon transport, each of which required substantial expenditure.
Although gold mines have been discovered in New World, the mining, smelting, refining, and minting of coins will take a long time, and Lakeheart Town cannot afford to wait.
Paul sat in his study, gazing at the candlelight, his thoughts drifting back to the days of Crystal Radiance.
At that time, he made a bold suggestion to the royal family— military scrip.
It was a paper-based system anchored to goods such as grain, cloth, and salt produced within the royal domains. Soldiers ' pay was partly paid in military scrip, which they or their families could exchange for necessities at royal markets. Because the royal domains were self-sufficient and commodity circulation was limited, the military scrip formed a reliable credit cycle within a closed system. The royal family could maintain the army's operations without immediate payment in gold or silver, and soldiers' families could secure a stable livelihood. This system was later adopted and became a crucial financial support for the royal family's new army.
The printing of the military scrip was handled by Alda. The printing industry in Northwest Bay far surpassed that of other parts of the Old Continent; the paper was strong, the ink anti-counterfeiting, and the stamps were exquisite, making counterfeiting extremely difficult. This collaboration not only brought considerable revenue to Northwest Bay but also allowed Paul to verify the feasibility of paper money in reality.
However, the Alda army's operational needs far exceeded those of the royal new army; military scrip was far from sufficient. Therefore, what he needed was no longer a small-scale credit instrument within the army, but a universal paper currency that could circulate throughout society. But to get merchants, farmers, and artisans to accept a single piece of paper money, a stronger foundation of credit had to be established.
Gold is the best answer.
The gold mines of New World were the foundation of this paper currency. He planned to issue banknotes anchored to gold reserves—each banknote corresponding to a certain weight of gold stored in the vaults, redeemable at designated banks. People would no longer need to rely on heavy gold coins for transactions, and market circulation efficiency would be greatly improved.
Paper money will be more than just currency; it will be a symbol of national credit, liberating the Northwest economy from the limitations of metal currency and providing immediate financing for upcoming military operations.
The next day, in Lakeheart Town In the council chamber of Lords Manor, Paul convened the core members of the Political Affairs Council and first proposed the idea of implementing a universal paper currency throughout the Northwest.
"We want to use paper money instead of gold coins," he said calmly.
The hall was silent. Old Ford frowned, tapping his fingers lightly on the armrest: "Can paper be eaten? Do ordinary people even care about that?"
Hansel was more cautious: " Military scrip might work in the military because there are established channels for exchanging supplies. But if we were to implement it throughout the Northwest, who among the merchants, farmers, and artisans would trust a piece of paper with words printed on it?"
Paul did not rush to refute. Over the next week, he chaired several meetings, addressing the questions one by one and convincing everyone with a well-developed set of measures.
In terms of credit anchoring, the total amount of banknotes issued is strictly capped by the estimated mining output of the New World gold mine, and each banknote corresponds to a certain weight of gold stored in the national treasury, which can be exchanged at a fixed rate at designated banks.
In terms of anti-counterfeiting systems, the advanced printing technology used by Alda when making military scrips for the royal family is adopted, with the addition of watermarks, fibers, and special inks, and counterfeiters will face the death penalty.
In terms of circulation security, government tax revenue, military pay, and public works payments should be settled in paper money first, and all market merchants must accept paper money transactions.
Regarding the exchange network, Northwest Bank will set up currency exchange points in major towns and cities to ensure that people can exchange paper money for gold at any time. Initially, the number of exchanges will be limited daily to gradually build trust.
After repeated discussions, Old Ford finally nodded: "If there is indeed gold as a base, and the public can see and exchange it, then it may be feasible."
Hansel also acknowledged: "This is more stable than military scrip, which is supported by royal provisions —gold is the hard currency of the world."
After reaching a consensus, the Political Affairs Council quickly drafted an implementation plan. Paul, drawing on the historical experience of the transition from metallic money to credit money on Earth, instructed that it be implemented in three phases: pilot issuance, regional promotion, and full circulation.
However, while paper money solves the problems of transaction efficiency and credit system, it cannot immediately fill the huge military expenses required by Lakeheart Town for the war. The gold mine has not yet produced any gold, and the national treasury remains empty.
We still have to rely on borrowing money.
As a result, the Political Affairs Council simultaneously launched a second fiscal instrument – gold mine revenue bonds.
The bonds are issued to all merchants, landowners and wealthy civilians in the Northwest. Considering that metal currency will not be withdrawn from circulation immediately, subscriptions can be made in both paper and metal currency. The annual interest rate is 5%, paid annually, with a maturity of 10 years and a lump-sum repayment of the principal. The repayment source is a special fund established with 30% of the mining revenue from the New World gold mine over the next ten years, which is used exclusively for this purpose.
To enhance credibility, the Political Affairs Council released its first exploration report and mining schedule, and pledged to disclose gold mine production and fund reserves quarterly.
The essence of this design is to realize future gold revenue in advance. Bondholders are not investing in empty promises, but in tangible mineral veins and national credit.
When news of the banknote issuance first circulated in Lakeheart Town, the public reaction was far from enthusiastic; instead, it was a mixture of skepticism, ridicule, and unease.
At the market, a blacksmith scoffed at a customer, saying, "Paper? I don't even think it's sturdy enough to wipe a table, let alone be used as money." A fishmonger was even more blunt: "Unless you offer me a basket of fresh bass in exchange for real silver coins, I won't accept this piece of paper."
The small vendors whispered amongst themselves: "Did the higher-ups run out of money from fighting the war, so they came up with this trick to fool people?" There were even rumors that the banknotes were the work of a sorcerer, printed with curses, and that using them would bring bad luck.
When the first batch of banknotes began to be exchanged on a trial basis at Northwest Bank, the scene was very quiet. Only a few grain merchants and military contractors who had dealings with the government came to exchange them, and they were only willing to exchange for small denominations. They held them in their hands and rubbed them repeatedly, examining the watermark closely in the sunlight, as if they were afraid it was a scam.