Make your own Gold Mine

[Petrus]

A while ago there was some discussion on this forum regarding loans to other nations. Who employs them? Are they worth it? Etc… Let me say upfront that developing a banking strategy is worth more than all the Inca and Aztec gold in the world-and without the inflation hit! Playing as a minor I first made loans to other countries as a supplemental revenue stream to finance the colonial dreams of my aspiring kingdom. I quickly scuttled that idea when I saw how much money I was pulling in off interest. Forget Asia, the real money is in banking.

Here is what I have learned so far:
The interest piles up monthly. Over the term of a 10 or 20 year loan, that translates to cash in your pocket.
Interest paid goes directly into your treasury. The bad news is that it does not contribute to research. The good news is that you can haul in obscene amounts of cash without any impact on inflation. Playing with this strategy for 2 GC's I have yet to have debtor nation default on a loan (and I've made hundreds of loans). I believe that beta testing revealed some quirks in the original system so the programmers reset the AI to only accept loans it could pay off.

How to pull it off:
Relations matter: In my experience a country will refuse even the best offers if your relations are below -11.
Only go for the big fish. Small nations with small treasuries will rarely accept your offers, and not at lucrative terms. As expected, Spain, France, England…have deep pockets and will accept higher interest rates.
Start small and negotiate: In the beginning, offer countries 10d loans at 1 percent. When they accept, offer your next loan at 2 percent. Keep negotiation until they reject, and then offer them as many loans as they can bear. It gets repetitive but the payoff is big and most things in EU are, repetitive.
Investments and rewards: You can follow your interest income and all of your loans in the ledger. Take as much money as you can possibly spare (read everything) and plow it into more loans. Slowly, countries will begin to accept higher interest rates at larger amounts. Once you get someone like Spain or England to agree to 50d loans at 7-8 percent, pile them on. Make them last 300 months and live off the interest. Use that interest to make more loans. It becomes a vicious and lucrative cycle. Playing as the Papal States with just three home provinces I was in the rare position of having too much money. By 1640 I had no less than 5,000d in the treasury and was pulling in over 2,000d a year off interest alone! "What am I going to do with all this money?"

In essence it allows you to live of the wars and hard work of other countries. Better yet, it allows you to enter into wars with more money than your opponent. You can force him to max out on loans and still have fresh armies to spare. Good luck.

[Turkish Emperor]

Great post, I've used it and it works great! I'm glad someone took the time to develop a good loan theory, because I never would have.

[WhiteHojo]

My God!!!

Finally, my poor Venecian empire can attain it's righfull position in the world - BANKER!!!

Thanks for the info - will try it soon.

Now, how to get those relations w/the biggies above -11? Mmmmmmmm...

[Gen. Suvorov]

Thanks for sharing this info. I'll try it as soon as I can.

[horragoth]

Thanks for that interesting post. I neglected loans almost completely becauce I managed to get only little interest and I was sure that I'm able to invest it more profitably in colonizing, industry, or warfare. But the point of getting inflation-free money ... well, I shall try!

[alvaro]

Originally posted by Petrus
Forget Asia, the real money is in banking.

I know that since I got my first credit card!

Seriously, I don't know but nobody wants my money, it doesn't matter who or how many times I try it.

[BiB]

Thought-provoking. Interesting. Don't think I'll use it though

[Allemand]

Everybody usually hates me after 1500. Don't understand it, I play by the rules.

But I think I'll try it in my next game, maybe real early in the game.

[Petrus]

I hope everyone will be able to put it to good use. Just remember, like everything in EU, it takes time. Start small think big.

[Carolus Rex]

Time to kick some serious money bags!

[LeeSkye]

Incredible strategy, especially for a nation that starts weak such as Portugal. Thanks. You must be a banker.

[Savant]

I placed loans before but it was so hit & miss that I largely abandoned it. I hadn't done it long or succesfully enough to figure on a strategy.

Thanks for the info. I'll be sure to print this off and put it in my EU binder!

[WhiteHojo]

Ok Mr. World Banker - tried out your little theory during a game last nite and I have some Qs...

Doin the loan thing, got Spain and Austria to accept several loans over a 3 year period. Then I noticed something that I need help in explaining.

On Jan 2 I made 3 loans of 31D at 10% interest to Spain for a 3 year period. Checked my books and the loan ledger showed these 3 loans (plus abunch more) w/3D under the "interest" column.

1st Q: Is that 3D interest income per month or per year? that is, do I draw 3D per month for a total of 36D a year or .25D a month for a total of 3D a year?

Then I checked my yearly expense sheet. It showed under "repaid loans" 262D...

2nd Q: What does that mean? I don't have any outstanding loans that I owe - I didn't have to repay any so why is it showin "repaid Loans"? Or am I misunderstanding the meaning? Also, any idea where that number comes from?

3rd and final Q (I think) - Under my income sheet, it lists interest income as something like 387D or so for the last year - where does that money go? That is, is it paid out in a yearly lump sum (don't think so) or is it divided over the course of a year? Is it used to figure your monthly budget?

excuse the Qs but I'm needed to know and you seem to be the Banker Type Guy to talk to

[Don Malloy]

NOTICE!!

You need to be playing Switzerland in order to get the big bonus
Converting to Judeaism(?) should be possible.. and give you a huge $-bonus


Can't argue with success

[Petrus]

Hi WhiteHojo. Good questions. Here is what I see happening with loans.

"1st Q: Do I draw 3D per month for a total of 36D a year or .25D a month for a total of 3D a year?"
--While the interest accumulates monthly, 3D is the total interest you will accumulate per year. That money goes directly into your treasury. For example a 10-year loan (120 months) earns you 3D per year for a grand total of 30D when the loan finally comes due. Make ten such loans and you have 300D. But that is small potatoes. Cozy up to Spain and become her main supplier of loans. Lots of them. See it as a business relationship. The more you make, the more Spain will accept. Countries seem to build up a "tolerance" to higher interest loans like some people build up a tolerance to their wives. By the end of the 1500's Spain should be swimming in gold money. That's when you go for her throat. I piled her with no less than 20 generous loans for 80D at 10 percent. That's 160D per year. Take that money and do it again, and again... China is a good target as well.

"2nd Q: What does that mean, 'repaid loans'?"
--AFAIK if you don't owe any loans yourself, repaid loans means loans other nations have made good on. You will also see in the income breakdown that the computer counts repaid loans and interest as the same thing.

"3rd Q: Under my income sheet, it lists interest income as something like 387D or so for the last year - where does that money go?
--All interest and repaid loans goes directly into your treasury. Watch the events box. You will see, for example, 80D added to your treasury immediately after Spain pays an outstanding 80D loan. That 80D is yours to spend or reinvest. It will not contribute to research. However, it will not influence your inflation. In fact, such a strategy allows you to direct your entire budget to research. This will give you a crucial advantage over other nations and keep inflation no almost nothing.

**Some other suspicions I have regarding loans**
--Countries with outstanding loans have not declared war on me while they owed money, but once Portugal immediately did so after they paid up. Is a loan something like a royal marriage? Don't know.
--Countries at war will generally not take out large loans at high interest rates. But will do so once the war is over and they have recovered.
--You will bleed countries dry after a while. In the wealth graph you can see a close relationship between massive spikes in your treasury and sudden declines of other nations when their tab comes due. That's why I like Spain. All that gold keeps her credit AAA.

Some people may feel guilty about making so much money. Don't. The Medici family and countless Italian city-states acquired amazing wealth during this time period lending money in just the same fashion. Risk and profit fueled the colonial expansion which EU tries so well to model. Also, I am still getting the hang of it so please post any insights you may learn.

[laurent]

Originally posted by Don Malloy
NOTICE!!

You need to be playing Switzerland in order to get the big bonus
Converting to Judeaism(?) should be possible.. and give you a huge $-bonus

Hmmm...not sure the second part of your post was called for.

[Helios]

Originally posted by laurent




Hmmm...not sure the second part of your post was called for.

If we can make jokes about other religions, we must be able to laugh about judaism as well. Religions are religions - and all jokes about judaism doesn't convey some secret wish about concentration camps etc. I know the reason Jews were money-lenders were that "we" (the Christians) prohibited them from having most other occupations, and I absolutely don't have more objections to judaism than other religions. Make a joke about catholics, protestants, muslims or whatever and I'll probably laugh at that as well.

We make jokes about the rest of our stereotypes so there's really no difference, IMO.

[Gen. Suvorov]

I found that countries will not accept your loans if you are at war. Maybe this was the bug after which Paradox decided not to dvelope the whole loan system.

[Carolus Rex]

Will this process work with Venice???
Dunno why it woudldnt but I am just asking.

[ErrantOne]

Thanks for posting this. After playing around with this a bit there you can see the relationhip between size of loan and interest rate too.

Example, playing an IGC game as Muhgal Empire (MOG). After buying my way into spanish friendship (+170). the MOG could give loans for 50d @ 10% int. or 200d @ 3%, etc.... The only problem with loans is the damned length of month spinner goes way to slow for 10year+ loans. Very tedious for doing alot of loans. On the otherhand, as a small minor who would do just a few loans at a time, this is a great way to invest cash early.

Something Paradox should do it place limits (somehow) on the loan system. right now it seems like as long as you give small loan, you can keep giving them 100s of them if you have the time.


Thanks again for looking into this. It is a nice tool

ErrantOne