Building a Modern Nation in a Fantasy World

After Richard grasped the concept of shares, Arthur leaned in and asked. "Duke Richard, do you understand how trade works, particularly when it comes to exchanging goods with other countries?"

Richard, still feeling a twinge of inferiority, replied, "Trade is generally the same, whether it is within our nation or with foreign lands. Merchants buy and sell potions, food, and various goods to turn a profit."

"Then can you explain how merchants resell the goods they acquire to customers?" Arthur pressed, eager to delve deeper.

"Well," Richard began, "merchants typically sell items that are rare in our country or offer them at a lower price if they're common. It seems like a win-win situation for everyone involved."

"Is it really a win-win situation, though?" Arthur challenged, allowing Richard a moment to ponder. Richard shook his head, signaling his uncertainty.

"Let's consider it this way," Arthur continued, his tone thoughtful. "Imagine a local alchemist selling a healing potion for one gold coin. Now, suppose a merchant imports a similar potion from abroad and sells it for just 90 silver coins. Most customers would naturally goes toward the cheaper option, wouldn't they?"

Richard frowned, still struggling to grasp Arthur's point. "Isn't it only natural for customers to buy the same potion at a lower price?"

Arthur chuckled softly, appreciating Richard's perspective. "You're right; it benefits the seller, the merchant, and the customer. But what about the local alchemist? He's forced to lower his price or match the merchant's to stay competitive. The local alchemist may not have many workers or the proper equipment, and his production costs might be around 80 silver coins for a bottle of potion. In contrast, foreign alchemists, benefiting from cheaper resources and labor, can produce their potions for just 70 silver coins. This puts our local alchemist at a severe disadvantage, potentially driving him out of business."

Richard's eyes widened as he began to understand the implications. "So, how does this relate to tariffs?"

Arthur nodded, pleased to see Richard connecting the dots. "That's where tariffs come into play. If we implement a tariff rate of 10% on imported goods, it would raise the price of the foreign potion. This would prevent merchants from undercutting our local prices, giving our alchemists a fighting chance to compete."

Richard considered this carefully. "But wouldn't that mean customers have to pay more?"

"Yes," Arthur admitted, "in the short term, customers might face higher prices. However, in the long run, supporting our local businesses will lead to a more robust economy. As our alchemists and farmers thrive, they can invest in better equipment and hire more workers, ultimately creating more job opportunities for our people. To add more Keldoria will also gain more Tax revenue."

Richard leaned back, the weight of Arthur's words settling in. He had never considered trade from this perspective, and once again, he found himself amazed by the king's insights.

"But that's not the only reason for tariffs," Arthur continued, his tone shifting to one of authority. "Imagine the Dukedom of Luke refuses to sign the new condition I offer or any agreement regarding tariff rates. As king, I have the power to classify any trade with them as bilateral trade—essentially treating it as trade between neighboring countries. Without a prior agreement, I can impose any rate I choose. I could set the import tariff at 10% or even discourage our local businesses from exporting by imposing a 20% tariff on exports."

After hearing that, Richard felt a wave of fear wash over him, eclipsing any sense of amazement he might have had. The realization struck him like a thunderclap: with these rules, Arthur could unleash untold suffering on the Dukedom of Luke, punishing it mercilessly without ever breaking a single agreement previously tied to relationship between the kingdom and Dukedom. The thought sent a shiver down his spine. Arthur's intellect was a weapon, sharp and unyielding, capable of devising strategies that had never crossed the minds of scholars or leaders throughout history. It was not just that his plans made sense; they were a calculated blueprint for dominance that could reshape the very fabric of Keldoria.

As Richard contemplated the implications, a sense of dread settled in the pit of his stomach. The more he thought about Arthur's vision, the more he felt trapped in a web of fear and admiration.

A soft knock interrupted their conversation, and a valet entered, announcing, "Your Majesty, here is the meal for your lunch." The valet's gaze fell on Richard, and he couldn't help but notice the shock and horror on the Duke's face. The valet's could not imagine what King Arthur had discussed with Richard to make Richard this shock.

"Thank you. You can place it there; I'll eat it later after I finish my discussion with Richard," Arthur instructed, gesturing to a side table. The valet complied and left the room, leaving the two men in a charged silence.

Arthur turned back to Richard, his expression serious. "While I have shared my plans regarding taxation, tariffs, etc. I must also emphasize that I cannot disclose details about the infrastructure and future developments. You are not someone I fully trust, especially as the head of the Dukedom of Luke, which complicates matters further."

Richard nodded, a hint of fear in his voice. "I understand, Your Highness. I won't pry into those details."

Before Richard could respond further, Arthur interjected, "Richard, the systems I've outlined are just the beginning. I will implement these changes slowly but surely to improve the situation in Keldoria. I can't rush this process; doing so could lead to disastrous consequences. I'm sharing this with you because I want you to be informed before you decide whether to agree to my conditions. However, this information must remain confidential. You cannot discuss it with anyone, not even your son or trusted advisors."

Yes, Your Highness. I will keep this confidential," Richard replied, his mind racing.

He understood that Arthur's plans could bring significant prosperity to the Dukedom of Luke, even if it meant giving 20% of what my land made. Richard realized that if he didn't agree to Arthur's new conditions, the Dukedom would suffer far more than he would gain from rejecting. Richard steeled himself, knowing that when they met again in the great hall, he would have no choice but to accept the condition, if he wanted to improve his land and also if he don't accept, his land might also be conquered by Elysia, still feeling the weight of inferiority.

"I don't want to eat my lunch cold," Arthur said, breaking the tension. "So, I suggest you take some time to think it over and respond to my conditions in the Great Hall."

"Yes, Your Highness," Richard said, standing up. He walked toward the door, his heart racing with a mix of fear, shock, and reluctant admiration.

…

Outside of the library, 

Outside the library, Olivia and the knight awaited Richard, their expressions a mix of curiosity and concern. "Father how was the discussion and have you made up your mind about the conditions?" Olivia asked, her voice steady but laced with anticipation.

Richard straightened, a newfound resolve in his demeanor. "Yes, I have decided to accept them. No one is to question my decision or discuss it further," he ordered, his tone leaving no room for dissent.

He turned to his knight, his gaze sharp. "When we return to the Dukedom, make sure that everyone knows that King Arthur has changed and when they meet with King Arthur Jr. again, they must treat him with the utmost respect. If anyone dares to act as they did before, I will not hesitate to impose severe punishment."

"Yes, my lord," the knight replied, the knight couldn't help but wonder what had transpired to shift the once-furious Duke Richard into a figure now marked by fear and respect for the king after he came out.

With his commands issued, Richard and his entourage made their way to the dining hall, where they would have lunch before preparing to meet Arthur again at one o'clock.