Petrucia laughed heartily. Thanks to her stepmother, she had to listen to a long lecture every time she met her new maternal grandfather, Baron Castiglione.
The old Baron's reminiscing about the past was always the same. "Do you even know how severe the tyranny of those nobles who flaunted their status was?!" But to think that a Count's maid would butt into a conversation with a Prince, not even a noble, she liked the atmosphere of this place. Petrucia readily opened her mouth
"An escort fleet is an expense that can only be incurred if you have money to bum. Ah, no, it is a cost that can only be paid if you are absolutely certain in advance how much profit you can make from that particular trade."
The name White Sea was given because it was said to have a hundred faces. The bastards of the Republic of Porto arrogantly called it an inland sea, but in reality, the capriciousness it wielded, while feigning gentleness, was as fierce as the sea routes known for their treacherous waters. And no matter how benevolent the sea may have been, launching a ship into the water was always an adventure.
This was because the outcome was unpredictable. The probability that a merchant ship entrusted to the White Sea would return laden with spices and become an overnight millionaire was about 60 percent. The remaining 40 percent was the probability that the sailing ship would sink to the bottom of the sea due to weather or rough seas, or be captured by pirates.
While a 40 percent failure rate is slightly lower than half when considered merely as a probability, it carried weight far beyond the number itself if the consequences of failure were death or enslavement by pagans. Intercontinental trade was not an undertaking that required just ordinary guts. This is why everyone dabbled only in coastal trade.
"In typical intercontinental trade, roughly a little less than half do not return to port."
Felicity looked at Petrucia with eyes full of fear at the mention that 'slightly less than half'would not be able to return to the harbor. Unlike Sancha, she did not join in the conversation, but she was screaming her fear with her whole body.
"Whether it's half or whatever, if sinking underwater happens to me, it's a definite 100% chance!"
Petrucia continued speaking
"In terms of expected value, it means that if you can't earn double the cost of the voyage with a single departure, it's better not to go. And on top of that, you're even adding an escort fleet?"
It meant that profitability was outstanding, or that the scale of the money being managed was so massive that even if the rate of return was low, the profit itself was enormous. The Republic of Porto was both. By overwhelming the enemy with sheer numbers and enforcing the law of the large numbers, it transformed the terror of death that had swept over the waters into something that was, once again, nothing but a mere mistake.
"First of all, their culture is different from ours."
There wasn't much that could make Petrucia sick, but two things were certain: the first was the cockroaches swarming the docks, and the second was the merchants of the Republic of Porto.
"Those bastards from the Republic are like a colony of worker ants."
Among the merchants of the Etruscan kingdom, a hero was born every generation. I mean a great man who broke through the impossible and succeeded in uncharted trade routes. The most recently born hero was Petrucia's father, Caruso Vitelli.
"We challenge the impossible. Those who survive become instant millionaires."
What Petrucia tried to imitate was also that same success story.
"But those bastards of the Republic operate with failure as a constant. As if sinking and death were inevitable."
The Republic dispatched large regular fleets four times a year. Several merchants and various guilds participated in the regular fleets sent out by the country. One merchant held influence comparable to that of CEO Caruso.
"Before setting sail, they pay in advance taxes, insurance premiums, and deposits to various organizations amounting to 40 percent, or even up to half, of the profits expected from a successful voyage."
Sancha blinked and asked.
"Then what if the ship sinks?"
The fact that they had paid the deposit in advance meant they had to secure investment funds before heading out to sea. Unless they were major merchants, it couldn't have all been cash. What would happen to the bereaved family if they went out to sea in debt and died? Petrucia gave Sancha an answer that sounded like a completely irrelevant response at first glance.
"The deposit paid in advance is the key."
"To?"
There were more than eight types of payments that a departing merchant had to make. Taxes were paid to the state, insurance premiums to the General Merchants' Association, and deposits and mutual aid funds were distributed equally among the regional guilds and industry-specific guilds, respectively. In return, the money to be paid to the bereaved families was also distributed equally among the state, the General Merchants' Association, and the various guilds based on what they received.
"If the ship sinks, the bereaved families are paid a consolation sum equivalent to about 80% of the money that would have been earned had the voyage been successful. The government takes responsibility."
This benefit was limited to regular merchant guilds, and the deposit required for small or young merchants participating in these guilds was small. The remaining amount was covered by the major merchants. It was a system maintained without complaint because the major merchants had the right to determine the destinations of the regular guilds. If a ship from the fleet that departed for a regular trade mission sent by the state sank, the head of the republic personally stepped forward to conduct a state funeral for the sailors. The mothers, wives, and children of the deceased were laid to rest in the finest places and received the mourning of the entire nation. There was no discrimination between the captain and the crew.
"The widows and orphans of the deceased are treated as the bereaved families of national heroes. Even if their father dies, they don't have to worry about making a living."
The regional guilds to which the merchant group belonged contributed a substantial amount of condolence money through collective contributions, separate from the consolation money. This was a long-standing tradition among sailors. The guilds of the trade to which the deceased belonged carefully looked after the widow's life. When the children grew up, they were taken in by their father's guild and put through apprenticeship training. Then, the grown children would become sailors going on regular trade voyages again and repeat the entire process described above.
"We are all fend for ourselves. If we succeed, it's a jackpot; if we fail, it's the end. In the end, no merchant stays in the market for long."
Even by simple calculation, the number of people capable of going on a second trade mission was absolutely smaller than the number of those who had gone on the first. After all, 40 percent of the adventurous novice merchants were likely buried alive in saltwater. Of the remaining 60 percent, those capable of going on a third mission were selected with a probability of another 60 percent. The price of failure was death. Experienced merchants naturally faded away, and newcomers were likely to change their minds, deciding to just farm the land passed down through generations rather than go out and face the harsh realities. It was a structure where it was difficult for great merchants to emerge.
"Those bastards of the Republic are a swarm of ants. They charge in, whether they live or die."
A system where the profits from a successful fleet become insurance money for the bereaved families of a failed fleet. This was the power of structure.
"You can't beat culture."
Petrucia licked her lips as she recalled the Republic's perfectly organized large fleet.
"Of course, there are direct benefits to being affiliated with the Republic. The Republic dispatches warships attached to its regular fleets. Most pirates can be dealt with at this level. This significantly reduces the risks to trade."
It was a free escort service funded by the state. Of course, it was taxes paid in advance by the individuals themselves, actually, mostly by the merchants.
"Actually, the small fry won't even come near if they see a warship flag in the distance."
The risk of being captured or killed by pirates was just over 20%. This meant that Republic merchants only had to worry about sinking. Even then, if they followed a regular trading company, the Republic's most seasoned navigator would board the flagship and select the major routes. The navigators of individual ships did not need to plan the big picture; they only had to deal with specific situations like rough seas. Sancha muttered.
"Just thinking about it simply, we could add to the profit by the amount we didn't lose to pirates."
The probability that a Republic merchant will return to the port alive is 80 percent, and the probability that a non-Republic merchant will return to the port alive is 60 percent.
"That is correct!"
Petrucia praised Sancha highly. In fact, Sancha was only half right. From the perspective of a major merchant, it was actually a loss if one simply calculated the cost of protecting the warships. This was because small trading companies, including emerging merchants, were freeloading on the protection fees they had paid to the Lord. However, the real profit lay elsewhere
"But the advantages of traveling on a regular merchant caravan accompanied by a warship are far greater than that!"
The real deal was monopoly trade.
"Envoys from the Republic have been dispatched to all kinds of pagan cities."
If pirates accounted for 20% of the total, 40% of the danger, the remaining 20% was due to risks arising from the sea, the weather, and the local situation at the trading destinations. Most merchants resigned themselves to the fact that they had no choice but to leave the rest to fate. However, the Republic persistently did everything within human capability. As a result, it established bases in a significant number of pagan regions inaccessible to merchants from other nations
"For example, peacock tails and jade feathers are exclusive commodities of the Republic of Porto. They are said to be available in port cities on the Sea of Carapontos, located deeper inside the Moorish Empire than the Sea of Giresin; however, the pagan Sultan who controls the land route between them guaranteed exclusive passage rights to the Republic of Porto, though I do not know what he received in return."
"Peacock feathers and jade hair?"
"These are peacock tail feathers and kingfisher feathers. They are trimmed and used to make fans or hair ornaments."
Felicity imagined what the peacock beauty and jade hair she had never seen might look like. At some point, Ariadne had given up her hobby of collecting luxury goods, so it was difficult to find the latest fashionable jewelry in the Prince's palace.
"We are searching for a direct sea route to the Carapontos Sea, but no explorer has succeeded."
Alfonso let out a sigh without realizing it. Finding new sea routes was the business of merchants, but negotiating with a pagan sultan was a task the state had to handle on its own behalf. The Etruscan Kingdom had completely washed its hands of this matter. However, it was difficult to blame Leo III for this, as it was a difficult option for the Etruscan Kingdom to choose.
Not only was manpower a factor, but there was also the issue of their relationship with the Papacy. The King of the Etruscan Kingdom was in a different position from the Lord of the Republic, who merely crossed the line of avoiding excommunication, let alone producing a Pope of his own country.
"The delegation from the Republic of Porto does more work than you might think."
They were a rudimentary form of permanent embassy. It was an attempt that other nations on the Central Continent had not yet made. While their primary duty was to report local developments to their homeland, they also handled negotiations directly when Republic merchant ships were occasionally detained by local pagan monarchs.
"They are all men who worked as merchants or soldiers in their youth."
"I have heard that they are of great help to the merchants because they are well-versed in practical matters."
Petrucia glanced at Prince Alfonso without realizing it and added.
"You must be jealous, right?"
The Prince of a nation that defined itself as a land-based power folded onto the continent unlike a country surrounded by sea on three sides, felt dizzy at the jumble of voices coming from the scene. His head throbbed. Headache, headache, headache. It was not that he hadn't taken care of it. It was that he couldn't Alfonso could not step forward during his father's reign.
"Those bastards from the Republic go trading there regularly. Even the pagan merchants give discounts to their regular customers, damn it."
Sancha and Felicite exchanged glances and giggled at the unexpected human side of the Moors, whom they had assumed would be horned monsters.
"It was simply not an environment where merchants from outside the Republic could get involved."
Petrucia said, perhaps thinking that he was making too many excuses.
"It is not that we did not participate in trade at all in the Giresin Sea, further east across the White Sea."
The secret she learned was also acquired thanks to her trip to Giresin.
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