Arthur had finally completed his plans and designs for the introduction of paper currency. However, to implement them, he required his father's approval. Gathering the documents containing his proposals, he left his chambers and made his way toward his father's study.
Upon reaching the door, the royal guard stationed outside entered the room to inform the king of Arthur's arrival. After receiving permission, Arthur stepped inside. The king, Cedric, was not alone. Present in the room were the Chancellor of the Exchequer, Henry; the Minister of Defense, Daniel; and the Foreign Secretary. They were engaged in a discussion when Arthur entered.
"You have arrived at the perfect time, Arthur," King Cedric said, glancing at his son. "We were just discussing the impact of the rising tensions between the Syvatoslav Kingdom and the Usman Empire on trade in the eastern White Sea. As you know, our presence in the eastern White Sea is not as strong as in the west. The Usman Empire's control in the region is weak, and if the Syvatoslav Kingdom defeats them and captures Constantell—the empire's capital—along with the straits, they will have easy access to the White Sea from the Black Sea. This would grant them dominance in the eastern White Sea."
The king continued, "Currently, the Usman Empire controls the eastern White Sea. However, Syvatoslav's main objective is to reach the White Sea, where trade is at its highest. Pendralis, having undergone significant industrialization over the years, has become the most active trading nation in the White Sea. By securing control over the Maraz Strait, we have established a foothold in the region. Additionally, our fleet stationed there protects our merchant vessels, reinforcing our growing influence in the western White Sea. However, our presence in the east is considerably weaker."
Arthur listened attentively, recalling that the Usman Empire still held control over various islands stretching from the eastern White Sea to the Black Sea. He then turned to the gathered officials.
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"It is not in our interest for the Usman Empire to fall," Arthur stated. "We have already committed to providing significant support if war breaks out. However, if despite our assistance they begin losing, we must intervene directly. Unlike the Usman Empire, which is plagued by weak central authority and economic instability, the Syvatoslav Kingdom possesses a highly centralized and disciplined government. If they gain access to warm waters, it will only be a matter of time before they turn their attention to us. We cannot allow this to happen. If the Usman Empire begins to falter, we should guarantee that we will send a fleet to the Black Sea to halt Syvatoslav's advance. In return, the Usman Empire must permit us to establish a military base on the island of Cybrus in the eastern White Sea. Regardless, if the Syvatoslavs gain control of the straits, we will have no choice but to enter the war. We must use this opportunity to strengthen our influence in the eastern White Sea."
King Cedric pondered his son's words. Although the Usman Empire was vast, it suffered from weak governance. Local rulers often refused to support the central government during times of war, and internal revolts from various ethnic groups had eroded the empire's strength over the past century. Nevertheless, its military still possessed considerable power. The Syvatoslav Kingdom, on the other hand, had a strong central authority. After hearing about Pendralis's victory in the Maraz Strait War, King Nikolai I of Syvatoslav had significantly expanded investments in firearms and military logistics. The kingdom's well-organized administration gave them a logistical advantage over the fragmented Usman forces. However, King Cedric remained skeptical that the Syvatoslavs could push far enough to capture Constantell. At most, he believed they might seize some Black Sea territories in the north.
After considering Arthur's suggestion, King Cedric spoke. "Arthur, while I do believe the Syvatoslav Kingdom will win this war, I do not think they will push beyond the Black Sea. Attacking Constantell would be a major risk for them. However, I agree that we must use this situation to increase our presence in the eastern White Sea."
Turning to the Foreign Secretary, the king continued, "Send envoys to the Usman Empire. Inform them that in addition to financial support, we will also enter the war if the Syvatoslav navy attempts to attack Constantell. In exchange, they must not only open their markets further to Pendralis goods but also allow us to establish a permanent naval and military base on Cybrus."
Next, he turned to the Minister of Defense. "Daniel, what is the current status of our naval modernization?"
Daniel responded, "Your Majesty, following the Maraz Strait War, ship construction has accelerated. Production continues at a steady pace, and this month alone, we will complete five new ships: two light armored long-range cruisers, one heavily armored battleship, and two support ships for troop and cargo transport. If war breaks out and we must intervene, we will be fully prepared."
Pendralis's military budget had been increasing annually, with nearly half allocated to the navy. New steel mills were being established continuously, reducing steel prices. However, despite the growing supply, the navy's high demand kept prices from falling too drastically.
Arthur, unlike his father, had a deeper understanding of King Nikolai I's personality and ambitions. He was an authoritarian ruler with expansionist policies. Arthur knew that even if Syvatoslav gained control of Black Sea territories, they would not stop there. Eventually, they would push south, directly threatening Pendralis's interests. He also understood the Syvatoslavs' rigid culture and their aggressive nature—they could only be deterred by sheer force. If his predictions were correct, they would need to deal a severe blow to the Syvatoslav Kingdom, ensuring they remained weakened for years. However, today was not the time to discuss such matters.
Clearing his throat, Arthur spoke, "I actually came here to discuss another matter today."
King Cedric turned to him. "Go on, Arthur. What is it?"
Arthur took a deep breath before explaining. "Over the past few years, Pendralis's increasing industrial output has led to greater wealth. Both domestic and international trade have expanded significantly. However, these transactions are still conducted primarily in gold and silver. For example, when a merchant ship returns from the White Sea after selling goods, it often carries tons of gold. Transporting such large quantities of gold creates logistical difficulties. Even within domestic trade, I have observed that merchants increasingly use promissory notes issued by banks as an alternative. To simplify transactions, I propose transitioning to a paper currency backed by gold. This will make trade more efficient, secure, and practical."
King Cedric and the other officials were initially puzzled. "Arthur," the king asked, "gold is valuable because it is scarce. Why would people accept paper instead of gold?"
Arthur nodded and began explaining. "To understand this, we must first understand what money truly is. Money is simply a medium of exchange. Imagine a farmer who has a ton of wheat but needs tools. He could go to a blacksmith and offer wheat in exchange for tools, but this would be highly impractical. Instead, because gold is scarce and valuable, people use it as a medium of exchange. Our paper currency would be backed by gold reserves, meaning that people could exchange banknotes for gold at any time. This will eliminate the burden of carrying heavy gold while maintaining trust in the currency."
Arthur proceeded to outline the design of the paper money, the establishment of a central bank, and policies to ensure its adoption—such as requiring tax payments in paper currency. As he spoke, the officials began to understand the feasibility of his plan.
However, Henry, the Chancellor of the Exchequer, raised a concern. "Your Highness, as you said, gold is valuable because it is scarce. Paper, however, is abundant, and with recent expansions in the paper industry, it has become even cheaper. What if people begin counterfeiting these banknotes?"
Arthur had anticipated this concern. "You're right, Henry. The risk of counterfeiting is significant, which is why I have designed security features. First, our banknotes will be made of 75% cotton and 25% linen. We will employ pantograph engraving and intaglio printing techniques to make forgery extremely difficult. Additionally, counterfeiting will be punishable by death or life imprisonment. A specialized unit within the Treasury will constantly monitor for counterfeit notes."
After listening to Arthur's thorough explanation, King Cedric and Henry were convinced.
After a thorough discussion, King Cedric reviewed the designs before nodding. "Very well, I approve the use of paper money. The central bank would oversee its issuance, and additional metal coinage containing silver, tin, and copper would be minted for smaller transactions. With the meeting concluded, Arthur left the palace to meet with William, who will be tasked with designing the printing presses and minting machinery necessary to bring this monetary system to life.
With a detailed financial framework in place, the Pendralis government began preparing for a gradual but decisive shift towards paper money, ensuring the economic future of the kingdom would be both secure and prosperous.