Steel, Explosives, and Spellcasters-Chapter 545 - 101 Returning Home

Chapter 545: Chapter 101: Returning Home Chapter 545: Chapter 101: Returning Home The councilors remaining in Kingsfort unanimously passed a resolution: to abolish the old Republic of Palatu and reform the government, establishing the “Second” Republic of Palatu.

The councilors were still those from Kingsfort, and their office location remained in the Great Hall of Deliberation.

It looked like just changing a nameplate, but the reality was far from it.

In the early years of the Republic, when the factions representing the interests of the cities of Kingsfort could still suppress the old aristocratic factions.

However, with the expansion of the class of freemen with military merits, the Blue Blood Faction gradually gained the upper hand and eventually suppressed the Kingsfort faction decisively.

The Blue Blood Faction had been in power for years, relegating the Kingsfort faction to perpetual opposition—a status that lasted for over two decades.

Suddenly grafting to power, the Kingsfort faction immediately began a series of radical reforms.

...

The first law passed by the new Great Hall of Deliberation was the “Debt Restructuring Act.”

According to this act, Palatu was about to undergo large-scale debt restructuring.

The net assets of the Republic would be used to prioritize payment to domestic creditors, while foreign creditors’ debts would be compulsorily paid in a form of [annuity bonds].

The interest rate for annuity bonds was principally 3%, with a repayment period of forty years, and the Second Republic had the right to redeem the annuity bonds at any time.

Although Grof spoke firmly, his deputy [Councilor Beck] immediately sought out Vineta’s chief advisor.

Beck explained the reasons and requested understanding: “There really is no money in the treasury! Far from enough to pay the debts!”

…

For the past thirty years, Palatu’s campaigns against the barbarians were all financed by borrowing money.

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Not only were the citizens eager to buy bonds, but allied investors were also willing to lend them money because Palatu always won.

Investors from the allies were mainly Vinetan bankers, with a minor proportion from The Federated Provinces.

One reason was that United Provincials had previously suffered great losses, and another was that The Federated Provinces had few bankers.

By leveraging, Palatu only needed to pay a small amount of interest to mobilize a vast sum of capital.

These funds were transformed into weapons, armor, warhorses, army provisions, and lead bullets fired at the barbarians, bringing thirty years of victory to Palatu People.

The spoils of war were mainly land, slaves, and livestock; precious metals were rare. How would investors recoup their funds?

No matter, based on the “tradability of bonds,” Vinetan bankers invented a bewildering array of financial instruments: mortgages, second mortgages, bundling, splitting…

They even introduced the concept of insurance from the shipping industry into the bond market to hedge risks.

Marshal Ned had underestimated human greed; he could never have imagined that the little trick he used to raise military funds would evolve into a monstrous beast on its own.

In short: when Palatu won, everyone in the chain made money; if Palatu lost, the edifice would collapse like a row of dominoes.

Those hit first would be the Vinetan bankers and retail investors who had gone bankrupt buying bonds.

So, Palatu People couldn’t afford to lose; no one had thought Palatu would lose before, but this time Palatu did lose.

Someone might ask, isn’t Newly Reclaimed Land still full of unpopulated lands that could be used to settle debts?

Please don’t forget, that land is not the property of the Republic of Palatu, but of the Palatu Army.

The Palatu Army was not only allowed to engage in commerce but also to own land and maintain a state within a state.

…

That’s why the second reform from Grof was introduced: restructuring the government and confiscating military power.

Due to the historical remnants of the sovereign wars, the Palatine Army Headquarters was, in principle, a “subordinate” of the Alliance, ranking only half a level below the Great Hall of Deliberation.

Strictly speaking, their relationship was cooperative. The Hall of Deliberation couldn’t even decide on military appointments and removals but could only “advise.”

Grof Magnus reformed the [Palatine Army Headquarters] into the [Palatu Military Commission], and the new Military Commission was subordinate to the Great Hall of Deliberation.

This had long been a political demand of the Kingsfort faction—to change from a state [with an army] to a state [with an armed force].

The model of a state [with an army] was The Federated Provinces, while that of a state [with an armed force] was Vineta.

Palatu’s JG ideology was between the two, but over the past thirty years, it had been continuously falling towards the Provincials’ model.

Beyond that, there were many other reforms aimed at weakening the influence of the old aristocracy in local areas.

The new Great Hall of Deliberation issued a declaration, the “Republican Manifesto.”

The core idea was to occupy the moral high ground: The Second Republic of Palatu was established! Now everyone could live a better life! Levies, taxes, and corvées would all be reduced! Land rights will be shared, and land reclamation will be encouraged! Outside of the Second Republic are but false governments! Please support us!

Of course, there were two other vital commands: to summon the local garrisons to come to Kingsfort; and to send envoys to Alpad to salvage peace to the greatest extent possible.

…

Councilor Beck talked a lot with the chief advisor of Vineta; essentially saying one thing: We really have no money.

The treasury couldn’t even afford the interest, let alone the debt itself.

The government couldn’t even produce the Expeditionary Force’s pensions because that was an astronomical figure.

Military assets must be confiscated to fill this vast hole.

“Fuck off!” the fiery chief advisor of Vineta cursed in response: “Do you take me for a three-year-old? Prioritizing domestic debt with net assets? Who are the domestic creditors? Isn’t it fucking you councilors?!”

The chief advisor pushed the other away, storming off angrily.

…

The news of the debt restructuring sent back to Sea Blue resulted in another outburst of lamentation.