This is actually the original of what became my HackTrade article. I wrote it because a player had too much money, and wanted to invest some. I came up with a modified version of what I call "The core crunch" on the spot (it was more generous, and made a positive return likely), and then built the article around it. When I got into Hackmaster a bit later, I polished the idea into HackTrade.
Capital and Caravans
Basic Investing for Castles and Crusades
There comes a point in many games when the characters simply have too much money. They may have purchased everything the CK will let them purchase, may be on the move and unwilling to buy real property (houses, bars and the inevitable stronghold), or may simply be wanting to make more money when they’re in that limbo between being having to scrape every last copper and being able to destabilize the local economy without half trying. Some mercantile-minded players may turn their minds towards investing some of their rewards in commercial ventures, hoping for a return in wealth and influence. Unless you truly wish to be playing Capital and Caravans, however, most CKs will seek to abstract this process a little, letting the game flow without preventing the character from spending his wealth as he sees fit.
Investments are of two different types: caravans and in-place businesses. Many of the same principles apply to each, but some modifiers will have different effects depending on whether or not the business venture travels.
The Core Crunch
Before I spend a long time discussing the options in dealing with investment, let’s look at the core mechanic of simple investing: 2d8*10%. That’s the average return on investment for the gentleman adventurer. For those who don’t do the probabilities in your head, this means that, on average, an investor will see 90% of his money back; if he gave the merchant ten gold pieces, he gets back nine, for a net loss of one gold. This is intentionally not fair. A great many business ventures lose money, and if all the character has done is toss money at an investment, he will likely lose money. This number is, also, simply return on investment. It does not include taxes that might need to be paid or fees that accrue, which tends to drive returns even lower.
The average time for maturity on any investment is one month. This allows a trade caravan to make it to another city, sell its wares, buy more, and sell those upon return. For an in-place business, this covers a period of purchases and sales. Some investments may take longer to mature, or players may look to make quick money through short-term loans of a few days or weeks. All of these can be handled through similar mechanics, but shorter-term investments tend to carry a LOT more risks, while long-term ventures tend to be more stable. For short term investments, I suggest a return of (1d20-1d4)*10%; you’re far more likely to lose your shirt, but your returns will rarely be much higher. For longer-term investments, I suggest (2d6+1d4)*10%; the floor is higher, the ceiling about the same, and the average about the same.
What makes merchants (and adventuring venture capitalists) profitable is research, hard work, and a bit of luck.
Taxes, Fees, and Other Naughty Words
In my experience, a great number of CKs tend to ignore taxes in their games; while it’s included in game advice at least as far back as the 1st edition DMG, most simply do not bother to include taxes on adventurer loot. If there are taxes, they’re usually assumed to be part of the price of items, rather than something imposed upon characters directly and visibly. In some ways, this cheats players out of the joy of smuggling and such activities, though PCs are usually well-off enough that they can absorb a five gold piece surcharge on buying swords, or whatever the local equivalent is.
With investment income, consider how a government is making its money. Does it have a simple head tax, which only citizens need pay? An entry fee at the gates which buys you so many days in town? A property tax, based on number of windows or street frontage? Excise taxes, charging additional amounts for certain goods? Tariffs, wherein they charge for goods coming in from the outside? For player-investors, the most important of these will be tariffs and excise taxes.
Historically, most taxes have been tariffs and excise taxes; while income taxes are not new, they were not permanent parts of the tax structure, usually only being levied in times of war or similar crisis. Tariffs and excise taxes are much easier to administrate, since you only need to deal with a few members of the population (merchants), while the costs get passed on to everyone. Tariffs usually exist to increase the price of foreign goods and thus promote local industry. For example, if a city or nation has a young textile industry, they may impose a tariff on incoming textiles. This means more people will buy local textiles, giving that industry a local boost, helping to overcome some of their early costs. If you are investing in a trade caravan, knowledge of tariffs is crucial; any venture that includes fighting a tariff is going to have a much smaller profit margin. On the other hand, a tariff usually does not do a lot for a local business from an investors point of view; while it shores up investments, it does not add substantially to their profitability. A tariff subtracts 2d6% from the profit of a caravan venture, but only adds 1d6% to the profit of an in-place venture. Depending on the investment, there may be no tariffs at all.
Excise taxes are on specific goods and services, either because the government wishes to discourage them or because they are viewed as being more costly in some way. A good example of a modern excise tax is that on tobacco in the United States; state and federal taxes serve not only as a discouragement to buying them, but also are supposed to offset health costs associated with tobacco use. In the world of Castles and Crusades, these taxes might exist on certain foods, colors or types of clothing, or certain weapons or armor. If you have a brisk trade in magical items, these would also be likely to attract an excise tax. Excise taxes generally do not add to the profitability or lack thereof in a venture; they become part of the cost of the item, and usually do not add to the costs of the merchant.
Where both types of taxes become vitally important to the value of an investment is illegal commerce... smuggling and tax evasion. A large tariff or excise tax creates a market for goods that avoid this tax. While there are some legal means of avoiding such taxes (dispensation from the local ruler), those are usually role-playing opportunities, rather than hard and fast numbers. Smuggling and tax evasion, however, are explicitly illegal ways to get around paying the taxes. Prices are usually a bit higher than the base because of the risks the smugglers run, but lower than the taxed price. Smuggling is also used for goods that are strictly illegal in a given location. That may include exotics like poisons, slaves, or dangerous magics, or more common-but-restricted items, like goods from an embargoed country or icons of a outlawed faith.
Smuggling can be incredibly lucrative, but also carries a lot of danger, even for investors. A venture that involves itself in smuggling or selling stolen goods adds 3d100% to the profit, and ignores modifications for tariffs. However, there is a base 5% chance that any investment in a smuggling operation is completely lost, and a 20% chance that a completely lost investment will result in the investors being questioned by authorities; how they’re questioned and what the results are will depend on the nature of the authorities and the politics involved. Lawful characters will likely avoid smuggling ventures, at least from a money-making perspective. These same numbers can be used for in-place ventures that deal in stolen goods.
The Secrets of My Success
Many of the situations described above are beyond the control of the player; if they’re setting the tax rates or import laws of a city, chances are they’re less concerned with a few hundred gold in investment income. For the investing PC, however, there are several things that can be done to increase profits, and pitfalls that can be avoided with a bit of work.
The simplest thing that can be done is to follow a trade route. If there’s a regular flow of goods between two points, costs tend to be lower, roads safer, and markets more assured. Following a given trade route increases profits by 2d4%, which is frequently, but not always, enough to offset any tariffs on the trip.
Magic and Religion or, How to Succeed in Business Without Really Working
Cheat Sheet: The Numbers
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