The following morning, Arthur woke up feeling refreshed and ready to face the day. As was his custom, he started with his routine exercise, a practice he rarely skipped, knowing the importance of physical discipline in maintaining both body and mind. After completing his workout, he returned to his chambers, quickly freshened up, and enjoyed a light breakfast. Once he had changed into proper attire for the day, he prepared to discuss critical matters with his father, King Cedric, regarding the newly constructed warship and his broader vision for the kingdom's civilian and military fleets.
Upon arriving at the king's chambers, Arthur was greeted by an unexpected scene. His father was already deep in conversation with two of the kingdom's most influential ministers: Daniel, the Minister of Defense, and Henry, the Minister of Finance. Daniel, known for his pragmatic approach to military affairs, was responsible for overseeing the modernization of the kingdom's armed forces under Arthur's newly established system. Henry, on the other hand, was tasked with managing the kingdom's financial health, a role that had become increasingly complex as the nation's wealth and ambitions grew.
King Cedric noticed Arthur entering and greeted him warmly, his face lighting up with a smile. "Ah, Arthur! Welcome, my son. We were just discussing the impacts of the sweeping changes you've brought to the kingdom."
Arthur returned the gesture with a respectful nod and offered a formal salute to both his father and the ministers. Taking his seat at the table, he quickly assessed the mood of the room, noting the serious expressions on their faces. It was clear that the conversation he was about to join was of great importance.
Henry spoke first, his tone cautious yet deliberate. "Your Majesty, as you're aware, the kingdom's tax revenues have nearly doubled over the past few years, thanks in no small part to the reforms we've implemented. However, a significant portion of the budget continues to be allocated to infrastructure projects and education programs. While these investments are critical for the kingdom's long-term growth, they leave little room for other priorities.
"From what I understand, the military is currently undergoing a modernization process, which Minister Daniel is keen to accelerate. However, the kingdom simply does not have the financial capacity to modernize the entire military and navy at once without making sacrifices. To free up the necessary funds, we would need to make cuts to education and infrastructure spending. In my view, as we are not currently at war, there is no pressing need to rush the modernization process. Unlike infrastructure or education, which yield tangible economic benefits, military investments do not directly contribute to economic growth. I believe it would be wiser to continue focusing on infrastructure and education for the time being and modernize the military gradually in the years to come."
As Henry concluded, Daniel leaned forward, his expression resolute. "With all due respect, I must strongly disagree," he began. "The kingdom's growing wealth has not gone unnoticed by our neighbors, and I fear it is only a matter of time before it attracts unwelcome attention. Wealth, Your Majesty, is meaningless if we cannot protect it.
"For instance, the Kingdom of Aragon has recently imposed a 20% increase in taxes on Pendralis ships passing through the Maraz Strait. Meanwhile, our trade ships heading to the White Sea are facing a growing number of pirate attacks. This is happening because we lack a strong naval presence in the region to safeguard our interests. What's even more concerning is that these pirate attacks appear to be selectively targeting Pendralis vessels, while ships from other nations remain largely unaffected. This suggests that the pirates may be receiving support or encouragement from rival states in the White Sea region, who seek to weaken us by disrupting our trade routes."
Daniel's words hung heavily in the air, and a tense silence fell over the room. After a few moments, King Cedric broke the silence, turning to Arthur with an expectant look. "Arthur," he said, "both ministers have presented compelling arguments. In your view, how should we proceed? What course of action would best serve the kingdom's interests?"
Arthur took a moment to gather his thoughts before responding. His voice was calm yet confident as he began. "Your Majesty, I believe that both ministers are correct in their assessments. However, I do not think we need to choose between these two priorities. It is possible to modernize the military without sacrificing our investments in education and infrastructure."
Intrigued, Cedric leaned forward. "And how do you propose we accomplish this?"
Arthur smiled slightly, sensing the opportunity to present his vision. "As you know, it has been nearly a year since we implemented the financial reforms that restructured our economy. During this time, private banks have been established by major capital holders, and these banks have accumulated substantial deposits. While a portion of these funds has been reinvested into the economy through loans, many banks now find themselves with excess capital and no viable opportunities to lend it. Yet, they are still obligated to pay interest on these deposits.
"This presents a unique opportunity for the state. As a government, we have the capacity to borrow large sums of money and the means to repay it. Banks would much rather lend their idle funds to a reliable borrower like the government, even at a modest interest rate, than let that capital sit unused. By leveraging this situation, we can secure the necessary funds to modernize the military without diverting resources away from other critical sectors."
A thoughtful silence followed Arthur's explanation as the king and ministers considered his proposal. Finally, Daniel broke the silence. "Your Majesty," he said, "this seems like the most logical and efficient solution to our current dilemma."
Henry, still cautious, raised a hand. "Arthur, this plan does sound promising, but could you provide more details on how it would be implemented?"
"Of course," Arthur replied. "The first step would be to determine the interest rate for the government bonds we plan to issue. These bonds, being backed by the state, would be low-risk investments, and as such, they should carry a relatively low interest rate. However, the rate must be competitive enough to attract investors. We'll need to analyze the market thoroughly to finalize the rate, using data from the recently established statistics bureau to ensure accuracy.
"Once the rate is set, we can issue the bonds through the stock exchange, making them available to both individual investors and institutional investors such as banks. This approach will not only provide the funds we need but also strengthen the financial system by deepening the bond market."
King Cedric nodded slowly, his expression thoughtful. "This does seem feasible," he said. "But why should we rush to modernize the military now, when we could simply delay the process and avoid taking on debt?"
Arthur's gaze sharpened. "Your Majesty, there are two critical reasons why immediate action is necessary," he said firmly. "First, as an island nation, our economy relies entirely on maritime trade. Currently, our merchant ships are limited to operating along the western coast of the White Sea due to a lack of protection. This not only exposes our trade routes to piracy but also increases our reliance on intermediaries, who drive up costs and eat into our profits.
"Second, regardless of how peaceful and passive our stance may be, other nations will inevitably see our growing wealth as an opportunity to exploit. If we do not take proactive steps to defend our interests, we will become an easy target."
Arthur paused briefly before delivering his final point. "Your Majesty, I'm pleased to report that the prototype of our steel warship has been successfully completed and tested. This ship, powered by steam engines, can travel thousands of miles without relying on the wind and is equipped with advanced weaponry that ensures it will dominate in any engagement."
The room fell silent once more as the implications of Arthur's words sank in. After further discussion, King Cedric and the ministers agreed to proceed with Arthur's plan. Later, as Arthur returned to his chambers, he began to reflect on the possibilities that lay ahead. With the funds secured and the military modernization underway, perhaps it was time to send a fleet of steam-powered, steel-clad ships to explore uncharted waters. Were there new continents waiting to be discovered, like America or Australia? And if so, what opportunities might they hold?