Straight outta Oakhurst
Banking and Finance
Banking in this world is an esoteric affair, controlled by tight-lipped, rich members of the patriciate. Bankers rely mostly upon bills of exchange, and many merchants simply rely upon IOU’s and their reputation. Banks are not banks in a modern sense; they are simply rich families or a small group of rich people who lend money in one location and have the borrower deposit money in another. For example, a merchant borrows money to buy goods in city A that he transports to distant city B. After selling his goods at B, he pays his loan to B’s local branch. This branch provides him a notarized copy so he can prove he paid his loan. Borrowers are heavily scrutinized, a process relying on the banker’s personal knowledge (or on the personal knowledge of his friends) of the prospective borrower. People who are not solidly rooted in their community have no hope of receiving loans. Even respectable merchants are charged a substantial surcharge (interest). Such systems rely heavily upon location of branch offices. Generally there are only a few bankers in any society, and they have branches in only a few important trade cities.
Merchant houses send couriers ahead of their long merchandise trains, and these couriers perform most of the bargaining for the goods. They sell the goods, sight-unseen, and instead of exchanging coin, exchange credit instruments. Most goods are purchased in this manner, by paper reckoning, so that by the time the merchandise arrives, a significant portion is already sold. At the end of the fair, there are several days of accounting. All the books are balanced, and all affairs settled. Settling affairs requires a notary who records the transaction and the specifics of the transaction. This well paid third party figures civic taxes on the transaction and can be called upon to testify to any fiscal wrongdoing.
Most societies do not have complex financial interactions. Even though there are fewer middlemen than in later societies, in this world, societies explore many different types of financing at great fairs, where large transactions occur. Great fairs are held in rotation through a continent, and they are the in-world equivalent of international trade. Fairs are held a few months apart in different locations, due to transportation issues. Great fairs only occur where trade spheres overlap. Merchants from one sphere travel as far as they can to sell goods, which are purchased by another group of merchants, who have traveled as far as they can to buy the goods. Great fairs occur where merchants from multiple lands are unwilling to travel further to buy and sell goods. Generally merchants do not travel more than 60 days to transport goods.