Monday, August 24, 2015

Loan Sharks and other “friends”

When I wrote Rhum, seemingly centuries ago, I said that most folks did not own their property in the city. They rented. One of the main reasons for this was that there were no banks. The reason for that is that it is illegal (at least in Rhum) to use funds that were given to you for safekeeping. If a bank cannot use the funds you deposit into a savings account, they cannot make loans and they will not pay you interest on your money. So instead of banks, Rhum has what we would deem a collection of safety deposit box businesses.

Does that mean you cannot get a loan? No. In fact there are pawn shops and organized crime figures who are loan sharks. But what do they charge? In Warrior Guilds of Rhum, one of the pawn shops (described as a friendly guy) charges 10% per month, but only lends for up to two months (and does not compound the interest). But he has your goods, and if you don’t pay him back, he is typically able to sell your goods for about double what he loaned to you. So he’s pretty safe, even at 10%.

Honest research from one of my favorite books on the economy of the Medieval Period says that depending on what was going on, lenders were normally looking for about 20%, maybe 10-15% if they were lending to a stable government. OK, but we’re now going to talk about loan sharks, not the national debt. Loan sharking is incredibly more risky than lending to a government. How much more risky? Well, I think a loan shark lending to a gambler would probably want either regular interest payments of 10% per week or perhaps 20% per month if the guy was dependable. Loan sharks aren’t about long term debts or compounding interest, they are about collecting the interest regularly or breaking your legs. So this is not, “Thanks for the 1,000 gold coins, see you in a couple of months” kind of issue! Every week you pay the interest (the vig), until you can finally pay off the principal, which the loan shark probably doesn’t want you to pay.

One last point on this line - I think that the courts of Fletnern would be slow to allow people to confiscate property. At least the courts run by the priests of Brakin would be; the courts of Jassper might be quicker if that is what the contract said. Land/property has a different meaning than just something you own. It is likely a responsibility given to you by a nobleman, and you cannot give that away. This would be another reason that mortgages should be rare. Today, the bank forecloses on your house - happens far too often. But if the courts were going to prevent the banks from foreclosing, then the bank would be foolish to lend you money with a house as collateral. Then again, the courts would likely overlook the fact that the loan shark broke your legs and give him all of your worldly possessions (that weren’t land) to repay the debt you foolishly got into.

So what? If you did not see multiple mission ideas (“sparks”) in this post then I am ashamed of you! First - there are a ton of safe deposit businesses in Rhum. Second, there are a ton of loan sharks who need leg breakers. Not only do they need leg breakers, but they likely need hunters who can go out and retrieve folks that they lent money to, people who are trying to get away. What if the security on a loan is too heavy for a normal loan shark to cart away? Would he be willing to hire a gang of adventurers to go collect it for him? Maybe it isn’t too heavy for them, but maybe it is, and part of the mission is figuring out how to return it to the boss without damaging it. (Yes - I love non-combat related portions of missions.)

Not enough, think about loan sharking further! What if the loan shark lends money to a church and the holy relics are the security? If the church is late on paying, then what? Are you ready to steal relics from a church? What if the church is relying on this fact and effectively cheated the loan shark? What if the security is land, but the vassal knows the “king” will never let the land be turned over to the loan shark? Again, someone is using these rules to try to cheat the loan shark. Yes, sometimes you send in a thief to steal as many valuables from this cheater as you can and he uses stealth and all that stuff. Then again, sometimes, you send the collectors to the front door and they bust it down with their Thor hammers of thunder in order to collect. These do not have to be missions just for the sneaky guys!

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