Enlightened Empire Chapter 422: Fiscal Summary and Medium-Term Plans

Chapter 422: Fiscal Summary and Medium-Term Plans

Inside Rapra Castle, the year-end summary of the southern kingdom's government continued. Once Fadelio had organized his thoughts, Brym was given the floor once again, to continue his account of the accounts.
"As previously stated, crop yields are up by 7%, mostly due to an increase in the total area of farmland. For the next year, we can expect this trend to continue. The incentives we have put in place for the local farmers — reduced taxes for every piece of unclaimed wilderness they convert into farmland — are still enticing for them, and it seems like the farmers are still not completely working at capacity for now. However, with the continued migration of local farmers into the city, we will reach a limit in this regard soon. We might want to either entice more people to stay in the countryside, or entice new people to move there. Otherwise our increase in farmland and corresponding yields will reach a bottleneck soon."
"Actually, there are already plans to that extent on the table. Maci, if you would, please."
With that, Corco motioned towards his wife. It had been her idea to begin with, so she was best suited to explain it. In response, Sumaci stood up from her seat to Corco's right and stepped up to the desk to introduce her plan.
"Ah yes, I believe there is a valuable, unused resource in both the Green Island and the southern kingdom, and that resource is fallow land. We've been eager to clear out the marshes to create more farmland, but as a result of the war, hordes of commoners have already been displaced in our newly occupied territories, and they have left their land behind, and unoccupied. At the same time, the Green Island has made a concerted effort to clean out the forests around Rasacopa and turn them into farmland as well, which will require additional manpower."
For a moment, Sumaci paused, possibly to gauge the reaction in the room. Luckily, there was someone dedicated to keeping the itinerary on track, someone who could succinctly summarize the policy.
"So, since we have such an abundance of land, and a lack of people to work it, we just provide incentives, like free farmland and tax reduction, for people to move there and work the land again," Fadelio summarized Sumaci's plan.
"Exactly. How about we grant every household one hectare of land for free after moving here and clearing the land? Afterwards, they shall be exempted from taxes for the next three years. Those were the figures from my preliminary write up, though the details may need some more consideration. This way, we are sure to increase our rural population, as well as our total area of farmland in the short term."
"That seems feasible, though I'm a bit worried that the tax breaks would set a bad precedent." Of course, Brym was once more the one with the financial concerns. "In fact, I wonder if such strong tax incentives are even necessary in the first place? If we exempt them for so many years, they will have an exorbitant amount of grain left over after the harvest, far more than their neighbors. It's an amount that won't be an extra incentive to most, since they would be able to survive comfortably on much less. At the same time, it will make their neighbors feel unbalanced, which will lead to social unrest, or a need for even further tax cuts to every farmer in the surroundings. In the worst case, our total yields will soon go down, not up."
While it sounded like Brym was concerned with social unrest for a second, it all still boiled down to money in the end. Corco wanted to argue for his wife's plan at first, but Sumaci was way ahead of him in this regard.
"No, I disagree," she said. "I wasn't planning to let former farmers return from the city back to their own land. The people who are meant to go there will be unfamiliar with the life of a medalan farmer, so they will need time to adjust. WIthout reduced taxes, they might just starve to death during their first winter. I assume that's not something we want."
In the face of Sumaci's biting sarcasm, Brym still showed no weakness.
"It would be better to get experienced farmers into the land after all. There's plenty who only went to the city recently, and even more stuck in refugee camps, so we are not lacking in potential candidates. Since they already have the experience, we won't have to reduce their taxes, and everything will be much smoother. Again, I fail to see the point of this policy."
"That's because I haven't mentioned yet who exactly this plan is intended for." Faced with Brym's repeated criticism, Sumaci grinned as if she had lured him into a trap. Corco couldn't have been prouder of his student. "Our offer for free land and reduced taxes in the southern kingdom will only apply to citizens of the Verdant Isles. And inversely, only those from the southern kingdom will be eligible for land on the Verdant Isles as well. This way, we kill two birds with one stone: In the short-term, the problem of lacking peasants is solved, though with slightly reduced efficiency. In the long-term, this policy will support our efforts to unify our two kingdoms some day in the future."
Finally, the full scope of the plan was revealed. Ever since Sumaci had taken over as the Green Queen of Rasacopa, she and Corco had come up with plans to smoothly unify their territories one day. Sumaci's farmer exchange program was an important first building block in this regard. Maybe Brym felt how important this plan was both to the queen and the king, so he didn't argue anymore. Instead, more critique came from an unexpected source.
"Not to doubt Queen's words," Antaya said, her head bowed deeply so no one could see her face. "However, will such a plan truly be fruitful? After all, they are different people, from different kingdoms. If they are simply forced next to one another, their differences will simply be amplified, which will only cause more conflict within the kingdom. In fact, this servant allows herself to pose the question whether or not it is possible for Medalans and Verdant Folk to unify at all."
"Why not?" Sumaci shrugged her shoulder, clearly unfazed by the criticism. "You can raise your head, by the way. And I'm sure you have been told before that the manners of Arguna aren't appropriate in this room."
In response, Antaya raised her head, though her face was still a stiff mask.
"We are both Yaku," Sumaci continued to explain. "Both you and me, both the people of Medala and the Verdant Folk. We have the same religion, and we speak the same language, though with different accents. Our ways of life might be a bit different, but I believe that's only due to our respective environments. A verdant farmer will be fundamentally no different from a medalan farmer. Rather, I believe there is less difference between the Verdant Folk of Rasacopa and the people of Sachay, than there is between those of Sachay and those of Arguna. As you can see, there are already stark differences within Medala, and yet its people have been united for centuries. All we have to do is play down our differences, while emphasizing our similarities. Now is the best chance to do so. After all, the crown's authority has never been greater. There's plenty of land to go around, too. So in the short-term, there won't be any complaints from locals that their rightful property has been taken by foreigners. Once the exchange is completed, the two groups will start living together, learning from each other, and intermingling their family trees. By the time they have reason to complain, the two groups will already be deeply intertwined. By then, an integration of the two kingdoms under one crown will be a mere formality."
"Well, I'm convinced," Corco said, a smile on his face due to Sumaci's strong speech. "Anyone have any more objections?"
For a few seconds, the king looked around the room in anticipation of more arguments. This time though, no one said anything, of course. Not only had the original plan come from their queen, their king had now also given his explicit support. This land exchange policy would go through even against resistance and legitimate concerns from the ministers, so there was no reason to upset the rulers of the twin kingdoms over a losing battle. As far as Corco was concerned, it was worth it to go through with the plan, even if it reduced their tax income from farming for a few years.
After all, Maci's strategy solved a lot of their problems, and he didn't even have to come up with it himself. This way, they'd manage to unify the culture and language of several people, long before the idea of nationalities or nation states ever became popular in this world. By the time some sort of nationalist thought would arise, Medala and the Verdant Isles would already be one, unified, mono-ethnic country, despite their diversity.
Though that much was still far in the future. For now, the issue of farmland expansion had been decided, so Brym could continue with last year's fiscal report.
"In terms of trade, our income for the first half of the year was still acceptable, despite the fighting going on in the Verduic Sea," the young minister said. "However, the chaos in Saniya and the subsequent war closed down all our borders. Both transient trade from the Arcavians as well as our exports into the northern markets have been impacted, which has significantly hampered our income in this regard. As a result, our total income from tariffs is down almost 40% to about 2.4 million. Though since the war is finally over, we can expect the numbers to return back to normal, even more so if we can manage to pacify the Verduic Sea as well."
"Right, that's why for now, we'll focus on internal rectification," Corco restated their medium-term policy goals. "As far as foreign policy is concerned, we'll focus on the Verdant Isles, to make sure the war there ends as quickly as possible, while also minimizing the impact of piracy from the other colored kings. Ah, but that reminds me." Corco turned towards Antaya, "If you have spare capacity, send some more people to check out the general mood in the northern kingdom. We won't act on them for now, but strange things seem to be going on up there. If we want a chance to act once an opportunity presents itself, we need to know enough about them first."
"Very well," Antaya said, and bowed again.
"We can also use our shops in the north to gather additional information," Brym added, clearly happy that he could prove the usefulness of his shops.
"Good idea. I guess it's time we made proper use of them."
Years ago, Brym had begun to open up 'Wonders of the World'-shops in the northern kingdoms, nominally subdivisions of the Fastgrade Merchant Company. Ostensibly, they were just places which sold goods from the southern kingdoms in the north. However, in Corco's plans, they were also places to influence the local culture, as well as a potential gathering spots for spies. By now, the shops had spread all over the two northern kingdoms and had established a strong reputation among the Medalan people, so it was finally time for them to play their true roles.
"Then I will note this down, though I would prefer if I could finally finish my budgetary report," Brym complained.
"Sorry about that. Please continue."
"That's fine, we're almost done anyways. There's only the miscellaneous taxes left, which make up only a small part of the total budget, though we received a small uptick, up 5% to 3.3 million. Thus, the total for last year comes out to 29.8 million Sila. Although it is not included in last-year's revenue yet since it happened too late, we have also received a considerable sum in reparations courtesy of our peace agreement with the Arcavians. In total, 4 million Sila have been sent to us already, and if they keep their word, we can expect another 2 million Sila over the course of the year. While not technically part of last year's budget, the silver is already in our coffers, so we should work with it as soon as possible, and include this one-off income in our budget for next year. Which brings us to this year's expenses."
Brym paused for a while until Fadelio was done writing, before he continued.
"I won't go into any more detail regarding expenses, since it's too depressing." the former merchant chuckled, but no one else looked like laughing. Out of courtesy, Corco tried a polite smile, at least. After an awkward pause, Brym cleared his throat and explained further. "However, the main bulk of our budget for last year was dedicated to the war, obviously. Both the purchase of supplies and the wages for the soldiers were a significant burden on our country, as was the act of rescuing the refugees from Kapra. All in all, we have run a significant deficit last year, for the first time in the southern kingdom's history. Despite our strong increase in revenue, our total financial reserves have been reduced to only 8.46 million Sila, not including our precious metal reserves."
The bad news after the bad joke dampened the mood in the room further. However, Brym made no attempt to brighten the atmosphere at all.
"Oh, don't worry, it gets worse," he said instead. "For next year, we can predict that our income will increase significantly, and some of our expenses will be reduced as well. Not only have we begun to restore trade, which will increase our revenue, we have also overcome the war at last, all of which are good things. However, according to our new plans for a military reform, more than half of our current standing army will be decommissioned, which will be prohibitively expensive. Even worse, the plans for the new reservist system are too extensive as well. The implementation of both plans at once would eat up our entire available budget for the year, and possibly cause an even greater deficit than last year."
After the end of the war, there were a lot of problems to fix in the southern kingdom's military system. Corco, together with an advisory staff which included his generals, had already worked out a rough direction for these reforms. For now, they would decommission most of Saniya's 30,000 commoner soldiers. Only about 12,000 would be retained, while the rest would be turned into reservists. After all, there was no longer any need for such a large army.
About 2000 soldiers would be retained in Qarasi Castle, which was enough to hold off attacks from the north. Now that there was no enemy territory left in Sachay, there was no more need to protect any other borders. Even the shores were mostly safe, since the Arcavians were retreating from the Verduic Sea and Governor Ichilia's little adventure had destroyed most of the central kingdom's fleet. The remaining 10,000 soldiers would stay mostly in Saniya, mostly as a deterrent against any more local unrest from overambitious lords. However, after all the rebellious lords in the south had been cleaned up, chances of more trouble than a few bandit attacks were small.
In place of the regular army would step a reserve system. In the long run, this system would save them a lot of money, while massively increasing their army's strength. The large number of troops would also allow them to take advantage of their advanced production technology. For now, every man aged 18 would spend a year with the military for training, and then join the army reserves and do occasional drills until he turned 35. This way, a short-term mobilization would be enough to assemble a massive force in times of war. Of course, building such a system was expensive, but Brym was clearly exaggerating.
"I get that we would have to spend some money to build up our reservists," he argued. "But we're not training all of our reserves at once. We're starting with only one birth year, so that shouldn't be too many, right? Plus, how are we spending money on the troop decommission? Since we have fewer soldiers now, we should be saving a lot compared to before, right?"
However, the greedy minister of finance shook his head. "That might be true in the long-term, but for next year, we need to find a place for all the decommissioned soldiers to stay first. Otherwise, we would risk great social unrest. So there will be a need to launch veteran support programs together with the new draft system. And building the draft system itself will be a huge cost point as well. According to my estimates-"
"Alright, fine. I get it," an annoyed Corco interrupted his ward. "It's going to be expensive. Got it. If I want details, I'll just read your report. Still, this is something that needs to be done. We're safe for now, but we need to stay vigilant. We're still surrounded by enemies after all. So the draft system needs to happen."
"All I'm suggesting is that we suspend the implementation of the reforms for one year, until our finances are healthier."
"We can't do that." Corco shook his head. "It's going to take a few years until we've built up sufficient reserves from the draft system. Until then, we'll be weaker than before. Now that our enemies have been intimidated by us, we need to take this chance, or we won't get another. So, the sooner we start with the reserve system, the better."
After a lengthy back and forth between the king and his minister, they had moved no closer to a conclusion. Just as the argument threatened to get bogged down in details, someone had mercy to offer a different solution.
"In that case, maybe we could roll out the draft system only in Saniya and Harkay for now," Fadelio offered. "In the first place, we are lacking the officials to handle a country-wide draft. In Saniya, we already have our military training facilities. And all the territory's youths are here for their compulsory school education, so it'll be easy to draft them, just hand them a draft letter on their last day of school. Also, almost every family's already registered with the government after our last census, so costs would be modest, and the effect would be good. This way, we can also iron out any remaining kinks in our draft system, before we expand to the rest of the kingdom."
Finally, Corco sighed and relented.
"Fine. I guess that's better than nothing."