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Worlds of Design: The Cost of Trade

This is related to world building, and also related to player characters when they choose to invest in or participate in trading activities in your world/campaign. In some rulesets the characters need lots of money, in others they don’t. Trade has the potential to make lots of money.

merchant-pull-1398066_1280.jpg

Picture courtesy of Pixabay.

If you don’t take a hard look at risk, it will take you.
--Larry Hite

Trade in general is a mysterious thing. When the trading is between different nations, usually both are better off for it. In other words by some alchemy nations trade and both increase their wealth. Think about that for a minute, and you won’t be able to think of many other things where two nations (or even individuals) can do a simple activity that benefits both, sometimes massively.

The key to trading between nations is the cost of production. Nation A can produce good A cheaply, but it costs a lot to produce good B. Nation B can produce good B cheaply, but producing good A is expensive. The difference may come from the skills of the workforce or from natural resources readily available or from differences in infrastructure. When nation A trades their good A to nation B for their good B, both are better off. They both acquired a good for much less than it costs them to produce it themselves.

Trading was a big road to national wealth in the ancient near East, and countries fought over trade routes. One example of trade was the Assyrian trade in textiles to the Hittites in return for certain metals. The Assyrian population produced textiles easily, kind of a national industry, while the Hittites had many metal resources available in Anatolia. Everyone benefited. We can name many more recent examples, of course.

The cost of transportation had to be figured into this. In the modern world the cost of transportation by sea is so ridiculously cheap that we can have even the simplest things produced in China or Mexico and shipped to the USA, more cheaply than producing them in the USA (the difference is in the cost of labor and the cost of living). Transportation for the Assyrians and Hittites was human and four-footed pack animal, but still cheap enough to make the trade worthwhile.

The same forces are at work whether trading in the modern world or trading in a fantasy world or science-fiction world. Where one side can obtain a good cheaply, the other side will trade their own cheaply produced goods for it, assuming there’s demand. The Romans traded wine to the Germanic barbarians (who could not at that time grow grapevines owing considerably to climate) in return for slaves, which the tribal chiefs acquired in their wars with one another. This is after the Romans no longer engaged in aggressive wars and consequently no longer collected prisoner of war slaves in large numbers.

So in your world building or your campaign the first question is always what can be produced cheaply in one place and traded to another place that has a good that they can provide cheaply in the trade, assuming both want/need the cheap goods. But a question nearly as important is the cost of transportation. Keep in mind that transportation by water is always much cheaper than other forms of transportation, but is subject to availability, warfare, storms, and piracy. Yet even when pirates were rampant there was lots of sea trade because the profits could be so great, when you traded for something that was in great demand such as spices or even just tea from the Far East.

If player characters want to trade then you’ll have to decide how dangerous the transportation is, whether they go along or not. If they go along on the trip then it’s obviously an opportunity for adventure. For example, Sinbad’s famous stories (which are pretty innocuous for modern readers, but weren’t innocuous a millennium ago) derive from his trading voyages. If the characters are not going along then you can estimate the percentage chance that the trade and voyage will be successful and roll the dice, and either the characters benefit or they lose some or all of their money (depending on whether the ship/caravan makes it back it all). The origins of the company as an institution are tied with trading, where a group of people pooled their money to support trading ventures while reducing their individual risk.

Trading profit margins are much smaller today because there’s little risk and cheap long-distance transportation. But that was not generally true in the ancient and medieval worlds, the risk was quite large, so the returns tended to be quite large or the trade wouldn’t happen.

For science-fiction worlds, many people believe there would be very little interstellar trading because the cost of transportation much exceeds the cost of highly advanced means of production. For example, if you need a particular metal you’d be able to set up factories that could convert one metal, or even just rocks, into another, and every solar system is likely to have lots of large bodies that can be mined for ordinary materials. (Think of 3-D printers even today.) Why trade in that situation?

Trade may not always be exciting, but under the right circumstances it can be profitable for everyone involved. My question to readers is, how often have you seen player characters get involved in trade, especially long-distance trade?
 
Lewis Pulsipher

Comments

Ulfgeir

Adventurer
If I recall correctly, they used to say something to the effect that rivers where what connected pieces of land, and forests were what kept them apart.
We don't quite see it the same way today.
 

Tonguez

Legend
I’ve done a couple of Trade based games ranging from “the apple supplies from Pedleys Orchard havent arrived for our cider vats - go find out why” to “the Grand Merchants League wish to establish a Trading Post in distant Khitai” and they were fun.
But the Trade elements were largely handwaved as roll persuasion “okay you acquire the supply of mithrilfor 250gp instead of 500”

The problem Ive found with Trade in games is that its just too damn complicated. You need to map your Goods Production distribution across the ‘setting’, determine yields (supply) and then market demand, relative cost of poroduction, length and risk of trade routes and cost of travel/inmvestment AND then you need to gammify the maths and add random encounters/events.

It can be done (I’ve used a variety of yield equations) but its not always fun
 

Dioltach

Adventurer
But the Trade elements were largely handwaved as roll persuasion “okay you acquire the supply of mithrilfor 250gp instead of 500”
I'm pretty sure your average professional merchant has an incredibly high save bonus vs attempts to get stuff for a lower price. (Speaking from personal experience, I once ended up paying more than the original asking price.)
 

Tonguez

Legend
I'm pretty sure your average professional merchant has an incredibly high save bonus vs attempts to get stuff for a lower price. (Speaking from personal experience, I once ended up paying more than the original asking price.)
Yup. The buyer in this case was a PC Merchant v Dwarf Miner, so the PC had the higher negotiation skill. Of course the Dwarf trick is always to start the price high...
 

Erekose

Adventurer
Never thought of it before but my players never trade in D&D but we almost always trade in Traveller :)
 

aco175

Hero
We done some of this, but not since 2e/3e days. We have had campaigns where the PCs would acquire land or a business and mostly turn it over to a NPC to run in their stead. The players would be involved only partially in rolling how the quarter went and if they needed to deal with problems like bandits on the road or the river being dammed.
 

MNblockhead

A Title Much Cooler Than Anything on the Old Site
You have to know your players of course. I ran a game once for a friend of mine and our four sons. It as an Adventurer's League game, I think one of the one's from the Volo's monsters series. Any way, the hook was to go from Phandelver to meet up with some village head who was also the village's bar owner. My friend got the idea of buying a cart load of goods and Phandelver and selling them for a profit in this village, since they were going there anyway, might as well make some coin. We spend the first 45 minutes of the game shopping, selling, and calculating profit margins. This kids were not impressed. :)
 

John Dallman

Explorer
Keep in mind that transportation by water is always much cheaper than other forms of transportation, but is subject to availability, warfare, storms, and piracy.
I've had the interesting experience of having to explain this to the DM. I have an AD&D1e dwarven character whose tribe needed to move. They settled in a depopulated city, and found themselves attracting human immigrants, refugees of a major war a decade earlier. The humans are in the majority now, but the institutions and culture are rather dwarven, and mercantile.

The DM had plenty of history of the setting that caused interesting things to happen, but was under the impression that long-distance trade in basic ironwork by pack animal was economically viable. Instead, we built canals from the city to the coal and iron mines, and ran barges drawn by giant horses along a major river that links our city to others. Strangely enough, the city is becoming quite prosperous.
 

Von Ether

Adventurer
I always have one player who either wants to be the haggler or wants a side game of "Entrepreneurs and Spreadsheets." I can never tell if it's because they don't get enough board games in their hobby diet or they hope my poor math skills will give their PC a windfall.
 

Fenris-77

Small God of the Dozens
Supporter
I don't know that I'd find trading itself to be an interesting thing to be doing in game, but I've never really given it much thought. As far as going where the money is it's a great idea. The Roman Empire made enough just of taxes on the silk road goods to pay for their entire border garrison in Europe, so if you're running a realistic economy, there's a lotta coin involved.
 

DMMike

Guide of Modos
When the trading is between different nations, usually both are better off for it. In other words by some alchemy nations trade and both increase their wealth.
Tell that to the widget-makers whose market just got flooded with cheaper, foreign widgets. And tell the environment. Then tell it to the foreign country that decided to invest too much in wealth-creating widget-making, when your bigger country decides to start importing from another, cheaper, widget-making country.

For science-fiction worlds, many people believe there would be very little interstellar trading because the cost of transportation much exceeds the cost of highly advanced means of production. For example, if you need a particular metal you’d be able to set up factories that could convert one metal, or even just rocks, into another, and every solar system is likely to have lots of large bodies that can be mined for ordinary materials. (Think of 3-D printers even today.) Why trade in that situation?
Sci-fi, yeah, that makes sense. Sci-fantasy, though, the answer to "why trade" is that it makes for a good story. There's gotta be interstellar mining at least, or you can't have a good Alien-ripoff.

Trade may not always be exciting, but under the right circumstances it can be profitable for everyone involved. My question to readers is, how often have you seen player characters get involved in trade, especially long-distance trade?
I've seen very little in-game trade. I 100% support Sinbad-style trade backdrops - or any other use of trade used to set up a story. There's a solid 0% chance that I'll want to know which nation benefits, and/or do any math related to it.
 

R_Chance

Adventurer
Never thought of it before but my players never trade in D&D but we almost always trade in Traveller :)
I adopted a version of Traveller's trade system for my D&D game. Paul Elliot did a better job in Traveller LBB format, called Mercator, of trade in the ancient world using Traveller rules and produced it (for free) as a PDF back in 2010. It should still be available. Expeditious Retreat Press did a book called The Silk Road on that trade route and trade in a fantasy world. Depending on the level of detail desired there are two good options.
 

R_Chance

Adventurer
Tell that to the widget-makers whose market just got flooded with cheaper, foreign widgets. And tell the environment. Then tell it to the foreign country that decided to invest too much in wealth-creating widget-making, when your bigger country decides to start importing from another, cheaper, widget-making country.
Trade can do bad things to specific industries. So can changes in trade patterns. The point is that it benefits the over all economy in nations. Trade creates wealth. It creates jobs. More than it costs. Politicians have spent years pointing out the "costs" of trade without pointing out the benefits of it. Americans, for example, have little to no clue who pays for saving those jobs or how much it costs. "Them", is the answer of course. Nobody forces anyone to trade. It's voluntary. If it was a negative it would not happen (unless someone has a gun to your head, but that's not trade, it's armed robbery :) ). When actions are taken to "protect" an industry / "preserve jobs" everyone else pays for that. Everyone. It generally costs far more in higher costs than the jobs it "saves" in an industry that will, typically, remain marginal. This is pretty much basic economics. There are, by the way, strategic reasons to protect industries that really aren't strictly (or just) about economics per se.

Sci-fi, yeah, that makes sense. Sci-fantasy, though, the answer to "why trade" is that it makes for a good story. There's gotta be interstellar mining at least, or you can't have a good Alien-ripoff.
It depends on the cost or producing a resource locally versus producing it elsewhere and then trading for / transporting it (well, really it's the "opportunity cost" in economic terms, not just the cash cost). If it is possible to produce anything, but hideously expensive to do so trade is still likely. It depends on the cost of interstellar travel. It is, relatively, cheap in the Traveller setting for example to transport goods between systems. That allows interstellar travel and trade to flourish. After that its all up to the opportunity costs as to who produces what and what it's traded for.

I've seen very little in-game trade. I 100% support Sinbad-style trade backdrops - or any other use of trade used to set up a story. There's a solid 0% chance that I'll want to know which nation benefits, and/or do any math related to it.
Entirely true, you don't need to know. Especially the specifics. And most especially the math :) But, it never hurts to have a rough idea about it for those trade based adventure possibilities. It also effects encounter possibilities and transportation possibilities. And it's fun... well I think it is. It's part of world building for me :D
 

Jd Smith1

Adventurer
If I recall correctly, they used to say something to the effect that rivers where what connected pieces of land, and forests were what kept them apart.
We don't quite see it the same way today.
Whoever they were, they were wrong. Much of the history of the New World is based on finding ways across rivers.

I've run trade in campaigns, but the problem is that players (and rules) often see amazing markdowns and profits from haggling or very short hauls, whereas in reality, earning a 5-8% profit margin is a pretty epic win.
 

the_redbeard

Explorer
Whoever they were, they were wrong. Much of the history of the New World is based on finding ways across rivers.
Sounds like you're thinking of a westward expansion over an area where the rivers generally (generally, mind you) ran north-south.

Once a nation is settled, rivers are great. Moving your cargo doesn't take animals, feed, and happens 24-7 to get you to your destination (as explained in the OP). Trade in the US interior went out the Great Lakes or down the Mississippi. Until railroads, rivers were the arteries of commerce. Barges are still a big deal for commerce.

I've run trade in campaigns, but the problem is that players (and rules) often see amazing markdowns and profits from haggling or very short hauls, whereas in reality, earning a 5-8% profit margin is a pretty epic win.
Yeah, trade adventures would be all about the route that nobody else can take, the product that no one else can find, the risks that no one else will brave. Once everyone can do it, then competition sets in and the margins lower and the adventurer moves on. Maybe have a villain keeping a monopoly on the only route and avoiding or taking on the monopolist is the task.
 

Ulfgeir

Adventurer
And if you don't have rivers where you want them, you can build canals, to help travel. We have here in Sweden a canal built in the 1800's called Göta kanal. Goes east to west straight through the country (and also uses the existing large lakes we have).

Or for example tons of canals in the UK.
 

Hussar

Legend
I'll admit I'm a HUGE 4X nerd, so, this kind of thing appeals to me greatly.

Unfortunately, I find that my enthusiasm for this sort of thing is not shared by players. So, yeah, the whole "Sinbad" backdrop approach I think is far more likely to work. Particularly among D&D players.
 

dragoner

Dying in Chargen
Recently the players went through a customs orbital rendezvous, with the with the system patrol taking an eye to the advanced combat rifles and pharmaceuticals the players were running to the surface. Lower tech, lower pop, frontier type worlds are more in the purview of the player's trading: doing some arbitrage, some smuggling, things like that. Enough so that it isn't about the money so much as part of the story.
 

Von Ether

Adventurer
Whoever they were, they were wrong. Much of the history of the New World is based on finding ways across rivers.
That is a conflation of four things:
  • The westward movement of settlers (not trade) of the mid-1800s. (which was really only in earnest for about 50 years.*) Most of those people settled next to water.
  • The long history of exploration (again, not trade) of the New World for centuries before that (starting in the New World in the 1500s and in North America around the 1600s) and was more about discovering a new river (and a potential places for trading outposts that you build next to rivers and bodies of water) and then crossing it to find the next river.
  • Something else most fantasy worlds don't have - railroads (which is all about trade) but also a technology that is post faux-Middle Ages. And rail line construction is not a fan of mountains or rivers (unless that river destination is part of a port city.)
  • The symbiotic relationship railroads had with 19th Century settlement that pushed both out west. * (hence the earnest part. ** )
Before railroads went transcontinental in the 1860s, all of the cities that were big for their time were port cities, either by river or sea. Chicago (Grand Lakes and Lawrence River), New York (The Hudson), St. Louis (Missouri River), New Orleans (Mississippi), Kansas City (Missouri River), Minneapolis–Saint Paul (Mississippi, Minnesota and St. Croix Rivers). And while barges and riverboats are not the trade superstars they once were, they are still in use today.

After the transcontinental railroads and other fortunes, some of those cities got even bigger while others are now smaller, never mind that many other towns and cities that exist solely because of the railroad.

The earliest rail lines were even built to follow the rivers and for a time trade went the way of riverboats going north/south with the rail shortening time on the east/west leg of the journey.

You could even probably say that the railroads eventually became the new rivers for a land that went counter to the natural flow of rivers. (and also it was impossible to dig a transcontinental canal.)

Makes you wonder if Manifest Destiny had struck it out North or South, how thing would have been.

It's amazing how history textbooks can take even the exciting things (exploration and travel), at the cost of cutting out the "dull" stuff (trade) and still make so boring.

** The state of Oklahoma is barely 113 years old, which means during the 1980s there were people living that were older than the state. Whereas I'm just imparting how much more recent things can be than you think.
 
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