Chapter 726: Open the Door to Free Trade

“Explain your reasoning, Padrick,” High King Gawain said, fixing his serious gaze on the Empire’s head of commerce and finance. “You know that implementing fiat currency is a rather radical move. And when reforms come too fast, the difficulty and risks rise sharply.”

“Yes, Your Majesty,” Padrick adjusted the collar of his black tailcoat, took a deep breath, and spoke deliberately. “The main reason I propose this is… Typhon.”

“Typhon…” Gawain paused thoughtfully. “Go on.”

“Your Majesty, you once said a war between us and Typhon was inevitable. In my view, that war has already begun—you likely agree. We narrowly avoided a real, armed conflict, but economically, the struggle is just starting. At this stage, the essence of this struggle is a battle over gold settlement.”

Gawain met Padrick’s eyes, his expression softening with approval, silently urging him to continue.

“Typhon’s substitute currency is gold-backed. Their banks issue banknotes redeemable for gold. But when it comes to orders involving Cecil, since no new currency interface has been established, we still settle directly in gold. We import large quantities of textiles and other primary industrial goods from Typhon, while exporting magical components, trains, and railways. Though railway orders are few, their value is immense. Overall, Typhon’s gold is flowing slowly and discreetly into Cecil.”

“Your Majesty, you should know that Typhon’s aristocratic reforms are far more ‘moderate’ than ours. They’ve retained many old nobles who, while stripped of privileges, still hold vast personal wealth.

“To put it simply, Typhon still harbors numerous noble treasuries beyond imperial control. Much of the gold paid to us actually comes from countless noble families within Typhon, pooling private investments, fundraising, and financing. Less than half originates directly from the Typhon Imperial Bank’s coffers. So for a long time, Typhon won’t realize their gold is leaking out—it’s a massive, long-term statistical challenge. Plus, many nobles go to great lengths to circumvent Rosetta Augustus’s restrictions on railway investments, hiding these small but substantial gold flows…”

Listening to Padrick, Gawain recalled Daniel’s report:

Typhon’s middle and minor nobles, vying for a share of railway profits, find every possible way to insert themselves into projects. To bypass Rosetta Augustus’s obstacles, their most common tactic is borrowing from banks with family or joint guarantees, then “collaborating” with banks—since half of Typhon’s banking system is controlled by nobles—to transfer debt claims to Cecil’s railway investment company. They then repay the debt in installments from their family treasuries, effectively acquiring shares and profiting from railway operations through shell companies.

This intricate, “brilliant” maneuver evades regulatory oversight.

Rosetta Augustus may be a brilliant, iron-fisted emperor who subdued Typhon’s powerful upper nobility through palace intrigue and intimidated the lesser nobles nationwide. Yet in the overlooked corners, among nobles transitioning into capitalists, the “creativity” and “drive” people show when chasing profit clearly exceed the emperor’s expectations.

Thus, Typhon’s gold quietly and fragmentarily flows outward.

“To maintain this trend, the key is to preserve the current gold settlement system,” Gawain said, following Padrick’s line of thought. “If we establish a substitute currency system, economic logic dictates that the two countries will eventually create a new currency interface, mutually guarantee each other, and settle in the new currency. Once the settlement currency is a new fiat currency fully controlled by banks, Rosetta Augustus can effectively curb gold outflows—he might even detect the traps we’ve carefully laid in their industrial and economic development. With his cunning, he could quickly neutralize these risks.”

Issuing fiat currency to create new currency settlement barriers between Typhon and Cecil is a way to maintain gold settlement and buy time before Rosetta Augustus reacts.

“Yes—we want to ‘help’ Typhon’s investors keep this ‘golden shortcut,’” Padrick nodded. “Of course, even if we adopt fiat currency, we can still demand gold settlement. I support fiat currency for another reason.

“Typhon won’t only trade with us—they know factory-made goods must be sold to have value. Cecil, as a fellow magical industrial power, won’t quietly accept their exports, so they’ll seek new markets…”

Just then, Amber, who had been standing nearby seemingly lost in thought, suddenly interjected, “Typhon might be negotiating with the Gaoling Kingdom, possibly over the Blue Rock territorial dispute. If so, the talks should be nearing conclusion.”

“They’re preparing to trade with Gaoling, maybe even eyeing the Silver Empire’s market,” Gawain immediately guessed, then looked at Amber with some surprise. “That’s intelligence from the southern continent. Has our intelligence agency penetrated that far?”

“This morning I met Sonia. She casually mentioned the Silver Empire recently re-surveying the Blue Rock disputed logging area. Also, three days ago, a technical exchange document between the Silver Empire and the Arcane Technology Department mentioned that Typhon’s magic network units can operate under standard conditions. Besides the Blue Rock triangle, Typhon and the Silver Empire don’t share borders or direct contact. The most likely way the Silver Empire got Typhon’s magic units is through Gaoling—probably trade samples Typhon gave Gaoling. These three countries have had a tangled history, mostly revolving around Blue Rock. I just connected the dots,” Amber said matter-of-factly, as if this were just idle speculation.

Gawain’s eyes widened.

After a moment, he withdrew his gaze and smiled, nodding. “Very good. Well done.”

Amber crossed her arms, her pointed ears twitching. “Of course—I am a Chosen One, after all.”

“Your Majesty, it seems the situation is exactly as I suspected,” Padrick bowed his head. “Typhon is establishing markets in the southern continent. Gaoling has likely opened its doors to them, and the Silver Empire will probably establish some trade ties as well. Though we have good relations and technical cooperation with the Silver Empire, that won’t stop the elves from buying Typhon’s goods. On top of that, the smaller city-states allied with the Silver Empire and Gaoling will naturally become Typhon’s markets.

“Typhon will build extensive commercial activity in the continent’s west and south. In these areas, trade will be settled in Typhon’s currency. Except for the Silver Empire, which can rival Typhon, Typhon will dominate economically in other countries.

“I call this the ‘Typhon Settlement Zone.’

“We’re doing something similar. We’re expanding trade with the Ogure Tribe Nation—you’ve already planned to extend the railway there. Up north, Grant Chancellor Victoria is establishing ties with the Violet Kingdom and attempting contact with the Holy Dragon Principality.

“Many northern steppe city-states have begun buying our alchemical potions. Though small individually, their confederation forms a huge market.

“Undoubtedly, the Cecil Empire will become the ‘economic leader’ in these regions, where settlements will be made in our currency.

“By analogy with the ‘Typhon Settlement Zone,’ much of the continent’s north and west will become the ‘Cecil Settlement Zone.’”

Padrick spoke rapidly, his face flushed, his slightly stout frame trembling with each breath. In his eyes shone an inexplicable light.

Gawain fixed his gaze on Padrick, unconsciously leaning forward.

“So… this is no longer just a matter between Cecil and Typhon,” he said quietly.

“Yes, Your Majesty. It’s no longer just Cecil and Typhon. Typhon is building their settlement zone, and we will build ours. Two settlement zones, two competing currency systems. In the long run, with large-scale, high-speed, continent-spanning commerce growing rapidly, fiat currency has greater ‘capacity’ than substitute currency and can better withstand crises.”

Padrick paused. Gawain’s voice dropped to a low murmur: “When the day of a bank run comes, substitute currency collapses faster.”

Amber glanced between Gawain and Padrick.

To be honest, though gifted in intelligence work, she was completely lost in this economic discussion.

Yet a chill ran down her spine.

“As long as the Cecil Empire doesn’t collapse, as long as there’s no international credit crash, and our industrial and economic systems continue steady growth, the Great Wall remains standing, and we avoid reckless unlimited currency issuance, then fiat currency is almost equivalent to having near-infinite solvency,” Gawain continued. “Typhon and its commercial partners’ gold reserves will eventually hit a bottleneck. The larger and faster their market grows, the sooner that bottleneck arrives. Factories’ gears are heavy wheels that never stop turning. This wheel will force them to over-issue currency. Our task is to, before Rosetta Augustus catches on and before Typhon plugs their leaks, do everything possible to let Typhon’s gold flow into our side…”

“May their noble investors keep working hard,” Padrick chuckled.

Gawain smiled in return. “May this ‘peaceful situation’ last a few more years.”

He stood and walked to the map hanging by the bookshelf.

Once, a full map of Ansu had hung there, but now it was replaced by a map depicting the entire continent.

The ruins of Gondor stood out prominently. Surrounding the wasteland were Cecil, Typhon, the Ogure Tribe Nation, Gaoling Kingdom, Silver Empire—countries interlocked like jagged teeth, occupying ancient ancestral lands.

For centuries, these nations had developed peacefully, with some exchanges but an invisible barrier separating them all.

For centuries, the heroes of the stories were knights, princesses, castles, and fields.

Quiet, peaceful, pastoral.

But times have changed.

Open the door—to free trade.

His gaze slowly swept across the continent on the map, which he had drawn himself based on satellite images. Between those precise lines, his eyes drifted past the Gondor wasteland, settling on the jungles and cities of the Silver Empire.

“If only we could connect the continent’s north and south…”

“Your Majesty?” Padrick asked, curious, having missed the last words.

“No, it’s nothing,” Gawain shook his head, though the matter on his mind was beyond what Padrick, the head of commerce and economics, could handle. “Let’s get back to discussing the issuance of currency. No matter how essential credit money may be, actually putting it into circulation… is far from simple.”

“Yes, Your Majesty.”

(End of chapter)