Chapter 36: The Credit System

Although the young nobles present were inexperienced, they were not fools.

In European history, there have been instances of monarchs borrowing money from their vassals. However, as the ultimate authority, monarchs generally disliked repaying their debts, resulting in very low royal creditworthiness. After all, a monarch might not have the financial ability to repay, but they certainly had the military power to refuse repayment.

This led to a significant issue—lending money to a monarch was a highly risky endeavor. Most who voluntarily provided financial assistance to a monarch never expected to be repaid. Instead, they often hoped to gain court positions or fiefs through their money, essentially "bribing the monarch."

Those who could provide funds to a monarch were typically high-ranking nobles. Unlike the small and medium nobles present, these major nobles had a much stronger capacity to withstand risks. For the nobles in attendance, a single failed investment could result in their entire family's ruin.

Therefore, John's proposal made these young nobles cautious. Aware of the small nobles' concerns, John added, "Rest assured, I would never deceive you. If I succeed in Ireland, I will distribute land according to our agreement. If I fail, I will compensate you financially."

The implication of his words was clear: this was a guaranteed profitable venture. Medieval nobles lacked the caution of later financiers and often overlooked risks in the face of substantial benefits. If these nobles had been more prudent, they wouldn't have traveled all the way to the Middle East to join the Crusades.

"If that's the case, we are willing to support Prince John's cause," the nobles collectively agreed, leaving John momentarily stunned.

John hadn't realized that nobles of this era spent money extravagantly and rarely scrutinized financial matters seriously. This was also why the royal guards found John peculiar; his behavior seemed more akin to a merchant's.

Seeing the nobles unanimously express their support, John was initially taken aback but quickly regained his composure. He raised his glass again, as if celebrating the agreement.

"Thank you very much for your support. However, I must ask you to stay in Rouen for two more days. I will have my secretary draft an investment plan for you, outlining various investment tiers and corresponding returns."

This statement should have been made earlier, as it was John's main objective. What John aimed to do was akin to selling national bonds. He sought to raise funds through these nobles and, after achieving victory in war, reward them with land, money, or other spoils.

This was not merely a simple loan but a step towards establishing a national credit system.

As time progressed, the traditional feudal economy began to loosen its grip. In the old feudal economy, land was the sole form of wealth. However, currency was now gradually entering the historical stage. Establishing a national credit system meant that the state could utilize money more efficiently—for example, borrowing money quickly and using it to recruit a highly professional army. This was much faster than the traditional method of summoning feudal troops, and it placed the country ahead of other European nations in terms of organizational structure.

To pave this path, John planned to start with the nobles, as they were currently the wealthiest, possessing large amounts of land, unlike the emerging bourgeoisie. 

John had many ideas, but the nobles did not think that far ahead. They saw it merely as an opportunity. Investing in a potential future king could bring great rewards in the future.

"Your Highness, I have a question. How long will it take for us to see a return on our investment?" asked a noble who appeared quite different from the others, holding up his glass towards John.

This noble's question naturally drew discontent from the other nobles, who began murmuring among themselves. As previously mentioned, overly concerning oneself with economic benefits was seen as ungenerous among the nobility. Bringing up such a question in front of their liege made this noble appear uncouth.

If it were Henry II, he would likely be furious and at the very least have the knight drive the noble out. But John was not Henry II, nor was he a traditional noble; he was a prince with a modern soul. This noble's question gave John the perfect opportunity to elaborate.

"That's a good question," John said. "I need one to two years to complete the conquest of Ireland and then redistribute the land and wealth of Ireland."

The noble listened attentively, seemingly indifferent to the murmurs of the other nobles. He even asked, "So, can we recover our costs within ten years?"

Ten years.

As soon as these words were spoken, the nobles present could not remain seated.

"How dare you be so disrespectful to His Highness!" a knight stood up and shouted at the noble.

The noble glared back at the knight. "What's wrong with clarifying these matters?"

"There has never been such a thing throughout history. Ten years, do you understand what ten years means?" the knight retorted. "If this money could be repaid in ten years, would His Highness need to borrow from us?"

The knight had a point.

In this era, similar loans took decades to repay slowly. These nobles never expected to make a profit from their investments. They merely hoped that the prince would owe them a favor. This was why the knight was displeased with the noble's penny-pinching attitude—they were all doing this for the sake of a favor, while this noble was treating it purely as a business deal.

However, John was treating it as a business deal.

He stopped the knight and then addressed the noble, "According to my plan, you should recoup your investment within five to eight years after the redistribution."

Recovering costs within five to eight years.

This news shocked all the nobles present. They suddenly realized that if this business venture indeed yielded returns, it would be highly profitable.

Such efficient returns were astonishing throughout Europe.

The noble also started calculating in his mind. John's offer was indeed tempting, so tempting that even with higher risks, the nobles were willing to invest.

"Your Highness... isn't this kind of business a bit..."

Some of the more conservative nobles began to worry about John, thinking that such an approach could easily lead to financial problems.

John was unfazed. He was confident in his plan.

The method to ensure the nobles recouped their costs within five to eight years was simple—make the Irish bear the burden.

But John still needed to explain it clearly to them. "I have already made arrangements for these matters. You don't need to worry about me. With your financial support, the conquest of Ireland will be swiftly completed, and you will all receive dividends."

After speaking, John raised his glass again, saluting the nobles present.

Many years later, these nobles who invested in John still hadn't realized that they were the ones standing at the turning point of an era.