Banks & Taxes: rules/suggestions?

[taliesin15]

I don't recall medieval banks being a way to store wealth; more a place that had a lot of wealth that made more by loaning it out. Banking for the masses wasn't the norm. Paying interest on money in the bank was essentially your cut for your money's leaveraged wealth.
Extrapolating out to a larger scale, you don't deposit money into a bank, you *buy* into the bank. Your money buys you shares of the bank's total capital. Realistically speaking, a banks' equity should be mostly non-cash and of the interest bearing form (meaning liens against property, stores, merchants, etc).
Robbing the vault essentially takes the petty cash; the portion of capital that isn't earning its keep but needs to be kept around to handle the daily operations of the bank.
*as far as medieval realism, yeah, this makes sense--however, I was, going into this thread, hoping to find a spread of different banking paradigms, some based on history (like yours) and some based on myth--someone just early mentions a Dragon's hoard (let's use Smaug's as a reference point)--seems to me that the historical medieval banking paradigm you outline here is one end of the extreme, the other being the Smaug-hoard, and that there's got to be a number of examples in between


Wait, do you mean a toll (pay this to enter the city) or a tax on sale?
*sure, that, but originally I was more or less citing that little section in DMG 1.0 "Duties, Levies, Tolls and Taxes"--besides road tolls, bridge tolls, sales taxes and the like, that you are suggesting here, I think there's also notions duties and levies that function more or less like capital gains taxes, or like the value-added tax--adventurers are taxed not just when they sell the ten short swords, but anything they bring into the city in the first place gets taxed, and if they don't want to be taxed everytime for the armor they wear, they need to keep the receipts...etc.


The flip side is the town will have to provide some value for the onerous tolls/taxes making it worthwhile. Realistically speaking if one town decides to stop charging fees for people with orc-loot, they get all the traffic from the orc killers and get a massive boost in the economy with a lot of supplemental taxes income (call it the taxation loss-leader). Or do you end up with a tent-town outside the real town to serve the people who don't want to pay the city fees? (Sounds like a great setup for the thieves guild)
*just for grins, what I've done is have taxes for arms/loot deferred if adventurers bring proof to the Citadel that they have killed Orcs, etc.--IOW, for each pair of Orc-ears, taxes are deferred for each suit of armor and set of weapons

*I've started reading the archived thread The Common Commoner, which has some relevance to this thread

 

[aco175]

If actual banks existed in the game, they would most likely be something similar to the Savings & Loan, from the movie, It's a Wonderful Life. Bad things would happen if there was a run on the money from a shortage.

Also, I think banks being started had something to do with the church during the middle ages. Don't quote me on this, but the Christians had problems with the Bible letting you lend money to others for profit, but the Jews did not. Maybe you can tie this in with your campaign, where some religions are able to secure and lend money. They might even be able to protect it better with a golem or two.

Do not forget the money changers. Each nation would want you to use coins from their realm and not from the neighbors, to help from their own money becomming destabilized. They might charge 5-10% of the total, depending on where it is from. This also works with old coins from ancient tombs and dungeons.

Speaking of old coins from buried tombs, the local lord of the area might also charge a finder's fee of up to 20% the total worth of goods. All of this stuff might be a pain to some players, but it does add some realism. As a reward to players, some taxes and levies can start to become waived for certain deeds that they do. This tends to make them want to do more good deeds.

 

[kigmatzomat]

*as far as medieval realism, yeah, this makes sense--however, I was, going into this thread, hoping to find a spread of different banking paradigms, some based on history (like yours) and some based on myth--someone just early mentions a Dragon's hoard (let's use Smaug's as a reference point)--seems to me that the historical medieval banking paradigm you outline here is one end of the extreme, the other being the Smaug-hoard, and that there's got to be a number of examples in between

Well, interim steps are:
- Escrow via nobility. You hand over your cash to the local nobles and if any valid merchant inquires, he will tell them how much you have stored. (or a smaller amount you've said he can admit to.) This can be used to create situations where you spend the same 1,000gp with three different vendors. After all, the noble only says you have 1,000gp, not if anyone else has a claim on it.

-Storage via commodity. You buy a few thousand pounds of iron/copper/etc and pay to have it stored. People may pilfer a few silver worth of your wealth but they won't be carting off a few thousand gold pieces in a backpack.

-Trade of Indulgences. Buy yourself some "get out of sin free" cards and sell them as needed. Essentially it's a gift certifcate for "atonement", "bless" or other divine interventions.

*just for grins, what I've done is have taxes for arms/loot deferred if adventurers bring proof to the Citadel that they have killed Orcs, etc.--IOW, for each pair of Orc-ears, taxes are deferred for each suit of armor and set of weapons

*I've started reading the archived thread The Common Commoner, which has some relevance to this thread

Yeah, I had a lot of fun on the Common Commoner page.

The orc ears are a good idea. Now start the secondary market on orc ears. People with full plate to sell or a magic weapon will pay good money for orc ears and at least one or two people will try to manufacture "counterfeit" orc ears. Some freak will start a "catch and release" program to get ears from poorly equipped orcs for later use.

Have the orcs decide "enough is, wait, what did you say?" and beseige the ear-taking city. Or just take the eyes from every farmer that supplies said city.

 

[Hand of Evil]

Be careful here, if you are going to uses taxes and such be sure to control the treasure you give your players, as said it will not bother a party after one or two levels and then toll booths and such just become an NPC event. You may want to not deal with taxes and look more to guild fees and what they cover. For taxes, you have to own things:

Sword/weapon taxes: 1gp for each item when entering a town/city
Animal Tax (livestock/work animals not counted): 1gp for each item when entering a town/city

Now buying passes. This is the right to be in the city/town, if you are a citizen and can prove it fine but what about if you are not? This is 1 gp for day of stay, if you are stoped and it has expired, time in jail and fines (lost of all goods).

Guild fees? What I mean by this are membership fees, wizards guilds, church, and adventuring companies, all should have benefits attached to them, one being taxes are covered in dues/fees. This means bypassing a good bit mundane stuff like taxes. Players enter a town, at the gate the guard gives them their passes for five days, tells the party members they should check in with their guilds within two days and get their passes valadated, failure to do so can result in fines.

Banks on the other hand is a place for the players to store their money, with services like line of credit and balance knowledge (magical ledger that shows balance). I also give the option to the players, bank of investment house; bank just holds the money for a fee and a investment house will invest the money into adventures and is a chance for lost moneies (it is also the place the player finds jobs ).

 

[Meeki]

My solution to banking in a fantasy world is the demi-plane. I use a demi-plane that is specifically designed for trading and banking, completely riddled with magic of all sorts. It won't imbalance your material plane economy. I wouldn't let the PC's gain interested on it however just let them keep it there for a small fee and have it protected. If you want a bank on the material plane it better be very well protected. I would rather carry my 100,000 gold in a cart with me from place to place than put it in the bank of some city that isn't protected by some sort of magic or divine powers. Its just not worth risking it, since I can guard it better than the bank. Do your PC's even want a bank? With 100,000 gold they can build their own vault.

 

[Jesus_marley]

Of course you could simply implemant a very simple banking system...

Bedder's Interdimensional Bank

The bank is so secure that it cannot be robbed. However, they pay no interest on your deposit. You merely need spend a flat rate of 5gp per month for unlimited access to your funds. With Branches throughout the known realms.

 

[taliesin15]

I appreciate the feedback for an area neglected by the rules...

aco175 writes:
Bad things would happen if there was a run on the money from a shortage.

*that actually brings up something I was going to raise in terms of RL verity: what about shortages of grain, livestock from hoof & mouth disease, famines, and so on caused by disasters natural and magical--sure seems to me that there should be some kind of rule or guidelines for these things happening...seems like I've seen a table that includes earthquakes and tsunamis as a rare weather occurence


Also, I think banks being started had something to do with the church during the middle ages. Don't quote me on this, but the Christians had problems with the Bible letting you lend money to others for profit, but the Jews did not. Maybe you can tie this in with your campaign, where some religions are able to secure and lend money. They might even be able to protect it better with a golem or two.

*I think the first actual banks were created in the Islamic world (Baghdad I think?)--but here's one other good point to consider--most of the oldest extant samples of writing in various media usually involve commercial transactions (Sumerian and Babylonian clay tablets come to mind)--which makes me think that they wanted such things to be "set in stone"--many of these transactions not involving currency but trade goods, fwiw...course imagine a currency-less campaign!!!


Do not forget the money changers.

*and of course counterfeiters. But part of my intent was to get input on official rules since I can foresee the possibility of a powerful Rogue character wanting to engineer bank robberies--the golem idea is brilliant, btw


Speaking of old coins from buried tombs, the local lord of the area might also charge a finder's fee of up to 20% the total worth of goods.
*right--well, the PCs aren't too happy about the taxes--one idea to throw in that hasn't been raised here is the notion of characters with access to the equipment just melting down all the silver or gold and selling it as trade goods in order to skirt the law

 

[taliesin15]

kigmatzomat writes
Well, interim steps (between buying bank shares and the Smaug-hoard extremes) are:
- Escrow via nobility. You hand over your cash to the local nobles and if any valid merchant inquires, he will tell them how much you have stored.

*this more or less is the system I have set up, with the added twist that the bankers are a guild of gold-refining Gnomes who rigorously enforce the gold purity laws throughout the continent--which I use as a way of explaining why they're into practical jokes, because they are so serious when it comes to accounting


-Storage via commodity. You buy a few thousand pounds of iron/copper/etc and pay to have it stored. People may pilfer a few silver worth of your wealth but they won't be carting off a few thousand gold pieces in a backpack.

*right--or land or grain or timber--a combination of the two really was pretty common, so was trade of commodity for commodity--again, what an idea: imagine a campaign without coins!!!


-Trade of Indulgences...gift certifcate for "atonement", "bless"

*tithing, ennit?


The orc ears are a good idea. Now start the secondary market on orc ears. People with full plate to sell or a magic weapon will pay good money for orc ears and at least one or two people will try to manufacture "counterfeit" orc ears. Some freak will start a "catch and release" program to get ears from poorly equipped orcs for later use.

*maybe the larger cities have a bureaucrat in charge of "tasting" the ears to see if they are orc or boar (ale-taster was powerful and influential govt post in small towns and large villages in medieval England)--OTOH, maybe some ranch-hand has a dog who can sniff the difference, like truffle-hunting dogs


Have the orcs decide "enough is, wait, what did you say?" and beseige the ear-taking city. Or just take the eyes from every farmer that supplies said city.

*sure, well, the city in question is kind of on the borderlands, and is constantly under threat of raids from humanoids...

 

[Sigurd]

In my campaign the financial outlook is

1. There are no banks, as such where currency is recognised. All currency is measurred in weights or valuable metals or promises to redeam for such. Reality of many active realms is that promiseary notes often are used against other promisary notes. For example a promisary note for 10000 gold is used to buy 5000 in product. The holder of the big note must finde someone who can redeam the whole 10,000 and supply enough for the transactions. Bad reputations and mistrust are _very_ expensive.

A character, who could not aquire enough gems, has a 10,000 gld note and wishes to buy a 1000gld item. There are immediately at least two points of discussion 1) what is the sale price of the Item 2) what is the immediate value of the note. Bigger notes are notoriously hard to get close to full value for especially from a second source. Some notes stipulate that they may only be redeamed for so much a year and many cannot even be redeamed in coin.

The town of your example might be forced to issue such notes as rewards for valour. They might even be non transferable as a way of keeping the characters around to protect the town. Good characters might see it as a duty to buy the towns notes. That would give the town much needed currency for its defences and mercenaries.


Successful characters typically have much much more disposable wealth than nobles or even whole cities. My characters tend to use their standing and history with powerful bodies (the church, money lenders, etc...) to try and stay liquid with not too much expense. I don't think its unreasonable for 30% of a coin hoard to be eaten up by confidence games -- even more if the players are stupid. The alternative is to hoard wealth and thats not very safe either (as the characters well know).


Interdimensional banks are elegant and easy but they shouldn't be available too easily. I think players must decide to either travel through unknown lands with huge amounts of wealth or buy a note from someone honourable enough and powerful enough that their promis will be honoured when they arrive.

Safety for their investment is really relative.

No bank is going to guard a vast fortune just in case you want it back - its too risky and expensive. Powerful characters deposit huge amounts of money -- the bank is going to haggle and buy up undervalued promisary notes. When they have enough they are going to travel to the most profitable place to redeam those notes and look around to buy notes appropriate to their return trip.

If you are known to have a huge fortune you will attract more unwanted attention -- beggars, spies, thieves, assassins poor nobles etc....

If you build a keep and store your loot you have to pay for the upkeep of the keep and leave it behind to make more. If your reputation is not good enough to write promisary notes of any size you will have to go get your money to pay bills. This makes your movements predictable.

And we haven't even touched the relative values of different mintings of coins by different realms.

At least thats my .02

btw The Medieval Christian church held that Usury (that is charging exorbitant fees for changing currency) was a sin based on the story of Christ throwing the money changers from the temple. They frowned on or made money changing illegal. I also imagine that church coffers didnt get much money from the largely secular lenders of the world. Jewish communities, who were not allowed to own land, acted as money lenders probably because they were a relatively large pool of honourable law abiding people who could trust each other to gather money and keep their promises. As a body of merchants and tradespeople they had some money to invest and enough trust to invest it.

 

[taliesin15]

Hand of Evil writes:
Be careful here, if you are going to uses taxes and such be sure to control the treasure you give your players

*HoE, yr right on track here--one of those archived threads "How to Get My Players to Role-Play Better" or whatever its called, that's one relevant note in addition to yours--also there was some thread a few months back from a GM complaining about how s/he's let high-level (presumably loaded down with multiple powerful magic items each) PCs take over the campaign--all of which I think can lead to a boring milieu--just as one without rewards is boring...


Guild fees?

*right--that's a good one for campaigns with active guilds like the classic Nehwonesque Thieve's Guild and Assasin's Guild...and pretty much the Druids and Monks in first edition AD&D were pretty much closed Guild-like societies too


Banks on the other hand is a place for the players to store their money, with services like line of credit and balance knowledge (magical ledger that shows balance). I also give the option to the players, bank of investment house; bank just holds the money for a fee and a investment house will invest the money into adventures and is a chance for lost moneies (it is also the place the player finds job

*right...partly I wanted to see if there was something in 3.0/3.5 that I was missing--I'm under the impression that many PCs simply put their wealth into magic items and costly gems

*maybe we should do a poll...?