Piketty notes in Capital in the 21st Century that one of the main ways to get around usury laws was to loan money to a noble, not against interest, but against the future production one of a nobleman’s holdings. The creditor then gets into the tax farming business, which we have discussed in Lords of Men. I didn’t think of the potential for this to be used in conjunction with  creating an island in Transforming Mythic Europe, but the opportunities are obvious: by creating farmed land, you create credit. You also create a method of providing credit free of sin, and the congruent attraction of demons, because the magi can sell the right to tax-farm their land to nobles needing credit, in exchange for political favors.

The question, then, is how much credit can you create?  My initial view was that you can probably create enough land to crash the market for credit, in the short term. That is, Europe lacks the capacity to offer enough credit, against the new land, for the price to remain high enough to be useful to the vendor. Then I remembered that for a time, the banking houses basically controlled the royal  household of England, due to the debts of one of the Edwards…and if they can manage that, then a sparsely-populated place like the new island is likely to be easily absorbed. The price must, I presume, be a lot lower than I initially thought.

There’s an article at (http://www.british-history.ac.uk/manchester-uni/london-lay-subsidy/1332/pp93-135) which notes on one transaction the interest was 3.5% per month, which is to say 42% per year. This number is not a dependable one, because it contains other benefits for the bankers (they get to act as the king’s bank, meaning they can loan out his money without telling him, and can use credit rather than silver for many of their transactions) and to the debtor (He may not have actually paid all of the interest: it may have been nominal.)  It’s obvious that although the loan was against the king’s revenue, both sides knew it was not going to be invested to earn revenue, or paid for from general income. The king planned to diminish his capital, squeeze the money out of one of his nobles, get bailed out by parliament, or win a war.

So, it’s tricky to work out precisely how much credit a new island of magi could create, but the story design opportunities are interesting.


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