RP Event Game Financial Woes In The Archipelago Ii

Responses from the Open Seas Merchant Guild:
The Open Seas Guild spent cash credit on reserve to buy up Kade wood while it was being sold at dirt cheap prices to cut off the supply and provide a much more steady turn-out to hopefully re-stabilize the market. Unfortunately, the Guild had not taken into account the response of the Kade Consortium, who as soon as the Open Seas Merchant Guild made a more than usual move on their wood supplies, spiked their selling price threefold as they suddenly assumed the demand for wood had drastically increased. The budget used for the purchasing of wood from the Kades depleted much faster than assumed, and purchasing ground to a halt again. As soon as this occurred, the wood price crashed hard again, making it evident that bulk purchases were a bad idea as the greedy Kade merchants immediately responded to the increased demand by squeezing more money out of it. The 40% of the original prospects of wood purchased by the Guild was stockpiled in various warehouses, prepping for a more staggered sale. This measure was half successful. The original prospects would have been good, had the Kade Consortium not immediately jumped on the situation, thus nullifying this measure almost.

Over in Kavosikion, the Guild (and the Countess) granted permission for the local workers to join the Kade retinues to Etosil. The Wodenstaff employees were supposed to be sent to replace the Tzavaras workers, but this measure only worked to some degree. Many of the Wodenstaff workers refused to be sent over 200 miles from their family and home to a strange land where they did not speak the language, to work in an industry for which they were not schooled to make consumer goods for women. Only the most desperate workers who realized the economic folly of being laid off at the Wodenstaff lumber industries took up the position, thus leaving the Tzavaras cosmetic industries severely understaffed. Ironically enough, the demand for cosmetics in Regalia also decreased with the upcoming warfare period, the idea prevalent that excess riches were no longer in high demand when the men were fighting on the other continents. Switching some assets around, the Tzavaras were able to prevent their business from going in the red, as both supply and demand had dropped at a roughly relative rate. The Tzavaras business thus lost some profit income, but generally stayed profitable throughout this decision. The Wodenstaff business left behind had to lay off some workers that refused to move to Kavosikion, shutting down their lumber mills and closing their shipments. With the entire Wodenstaff wood business grinding to a halt, no more profits were expected, and the company would now just continue to bleed finances for warehouse maintenance and land permit contracts. Worse yet, the government still required the Wodenstaff to supply their tax worth of wood, meaning this wood had to come from the Guild's stash that they had acquired from the Kades, further diminishing the profits from that prospect.

The Guild's decision to try and save the banks was received with a very mixed response. The wood that was supposed to be sold from the Kades at a higher price but a slower tempo was gnawed at from all sides, both their lack in supply as well as the second price crash, as well as the fact that small quantities of it had to be shipped off as Wodenstaff taxes. The trinket finance that trickled down from the profits, the financers eventually decided that it would not be beneficial for the Guild to receive dividends on the profits of the wood sale, so all profits of the wood went straight to be banks and the guild families saw nothing. The financial boost did successfully keep the banks alive, preventing any of the weak family banks from collapsing, the wood price did however not go up as the Guild only managed to buy a small quantity of the total supply and the Kades were still dumping the price while the Guild could not afford to buy more at the risk of causing a third price hike and crash.

In summary:

• The Kade Consortium hiked prices on wood as soon as the Guild started buying, diminishing the purchase quantity.
• The price of wood immediately crashed again following the stop of bulk purchases.
• The wood supply was then diminished by payments of taxes from the Wodenstaffs.
• Many Wodenstaff employees refused to work for the Tzavaras family.
• Tzavaras supply halved, but demand also halved, meaning the market equilibrium was maintained and the Tzavaras did not end losing much profit overall.
• The banks survived the asset crash, though the actual financial assistance poured into the banks meant no-one of the guild saw financial profits.
• Overall, all Guild members comparatively lost financial credits in their investment in wood, while the Wodenstaff continue to bleed money as the Tzavaras business stabilized, with yet unseen consequences from the men sent to Etosil.
• The Tzavaras family pulled out of the Open Ocean Guild, sending back the Wodenstaff workers and fading away from the open Economic foreground, as did the Blackwater family.

New Events:
The Government in Regalia took note of the unstable wood price (the first crash and then the second crash caused by the Merchant Guild) and the ministry for finance started cautiously discussing the possibility of a price bottom guaranteed by the government within the Imperial Isle, meaning the government would set a minimum price for resources and pay the loss on any sale of resource sold below that. The sides opposing the implementation were many, ranging from the conservative spectrum and especially the jingoist movements. The idea was very popular among the liberals however, supposedly proclaiming it would provide a stable and safe investment environment while the Jingoists denounced it as helping weaklings exist by taxing tax money to pay for their incompetence. Most guilds made some sort of plea to the government in support or against the idea, to see if they could swing favor one way or another as the government itself seemed pretty split on the idea. A bottom price would allow the Wodenstaff family to resume production at a much safer rate, but the danger of a bottom price was that cheap and low quality businesses would flood the market, or worse yet, that shady businesses would just bleed money from the central government with normally unhealthy production supplies.

The Wodenstaff woes weren't quite over yet. While the production was shut down and all workers were basically fired (since the Tzavaras family pulled out of the Guild), the company still paid its warehouse and dock fees for its ships and storages, as well as the payments for the stewards and managers. The government additionally also required tax payments to be made in wood from the Wodenstaff business, so finances were still going in red there (though arguably a lot less catastrophically so had they kept their employees). The idea was raised by one of the others Guilds in Regalia to support the notion of production sensitive taxes, instead of flat product tax rates for all companies. This would support the idea that the Wodenstaff's would not have to pay taxes when their businesses stopped running, but it also meant that the bigger businesses who operated fine would have to pay more taxes comparatively. Many other guilds jumped up to support or oppose this from various sides, some even supporting the idea of a tax ceiling to prevent bigger businesses from paying more taxes under the slogan of "trickle down economics". The government would entertain the stances of the guilds before making a decision on this regard.

On the dockside, a rumor started circulating about a massive impending hike in the silver price. Speculation on the market ups and downs had always been common, but the noise circulating the silver production was exceptionally high this time. The rumor implied that the Emperor was about to announce Gold as a "Produit de Bouillion", a produce mostly intended to anchor finances in place as a solid asset before the potential issuing of government "Argent Produit", an Ithanian idea to provide contracts with financial value to exchange for goods. The idea seemed very outlandish, but there was a supportive notion that the Palace culture saw a slow shift away from Gold jewelry, and into Silver jewelry as the new trend. How the individual guilds would respond to this, remained to be seen.

 

There is proportional tax based on production output, but there's also a flat tax for land ownership and business ownership. Basically the land which the wodenstaff's have is government land, all land in Regalia is owned by the government which has a certain overhead tax. It's not as big as the proportional tax from the production of the business, but still enough to eat away at the wood supply.