Volume 4 Maps and Explanations
——– The Third Crusade, the First Battle of the City of the Gate
The 43rd Demon King, Ruby Eyes, has seen many victories on the battlefield, but has naturally seen many defeats as well. Among these, the greatest defeat would be the First Siege of the City of the Gate during the Third Crusade. In the war between quality and quantity, quantity was the one which one this particular battle.
The Demon Race, or at least those members of the Demon Race which took to the battlefield each had martial ability far exceeding that of the average Human. In a battle of equal numbers between Demons and Humans, there would be no possibility for the Demons to be defeated.
In response, the strength of the Humans lay in their numbers. The Human Race, who each had many children, had a population far exceeding that of the Demon Race. The Southern Kingdoms alone had a population rivalling that of the entire Demon World. With the addition of the Central Continent, the Human World outnumbered the Demon World ten to one.
The Humans, with the Central Continent based about the Holy Empire committed almost their entire army to the establishment of the Third Crusades. For the paranoid kingdoms of the Continent to fight alongside each other and form a grand army like the Crusades relied on solid foundation of faith and the authority of the Holy Church. Ensuring the security of their countries while their entire armies were on the expedition demonstrated the success of the mutual supervision system which was built.
Bishops from the Holy Church as well as armistice-observing military officers from each of the other countries were sent to every country in order to observe and ensure that each country maintained the lowest numbers of soldiers necessary for training and the preservation of peace.
In response to this, the Central Continent kept its military strength at its lowest, directing the majority of its strength against the Demon Race to achieve victory.
The concept of operations was as follows:
Start of the BattleThe campaign began when the garrison in the City of the Gate sallied out to engage the Vanguard forces of the Holy Crusaders. The Vanguard itself was a far larger force than the Holy Crusaders, and being armed with powerful muskets, they were able to suppress the Demon Army.
Middle of the Battle
At this point, the Fiend cavalry levelled their spears and broke off from the main force to engage the Vanguard on its flanks in order to throw the vanguard into chaos. Within this chaos, the Human Army was unable to use its muskets, allowing the Demon Army to preserve as much of its strength as possible.
However, the commander of the Crusaders, the Ash Green King was able to read the intentions of the Demon Army. In response to the manoeuvre, he used an overwhelmingly large force to blunt the blow.
The Fiend cavalry employed illusionary magic in order to obscure their positions and make it difficult for the Human musketeers to aim at them. However, to begin with, Crusader muskeeters were never trained to fire with accuracy. The most they could accomplish was to fire in a general direction.
To solve this issue, the Crusaders employed massive numbers of muskets firing in a general direction. The musketeers focussed on firing in the direction of the cavalry, and naturally, most of them missed. However, aggregating all of this low accuracy fire meant that at least one shot would it. Even if only one in one hundred shots hit their targets, with ten thousand muskets, that meant that hundred casualties would be sustained per volley. With less than 1,000 cavalrymen, the Fiend cavalry found their forces gradually attritted volley by volley.
For this reason, the Demon Army’s strategy failed and the Vanguard was able to maintain order and stand up to the Demon Army. Moreover, with the addition of cannon fire from the Crusader Grand Army, the Demon Army was thrown into chaos. At this point, it appeared that the utter annihilation of the Demon Army was just a matter of time.
End of the BattleThe final twist to the battle was the sudden attack from the rear of the Crusader Army by the combined armies of the Tribes of Beasts and the Tribe of the Gate.
In order to avoid musketfire, they forced themselves into the opening between the Right Wing and the Grand Army of the Crusader Army. In order to avoid shooting their compatriots, the musketeers were unable to direct their fire at the combined army. Left with no choice, the Hundred Paladins rode to intercept the enemy.
By employing even this limited level of disorder among the Demon Army, the Demon King was able to regroup the shattered Demon Army and retreat towards the City of the Gate. However, losses were great, and the Khan of Beasts, the Silver Tiger Lord, was sacrificed in this battle.
From a fragment of historical records in a forgotten library
———– The New Star Fortifications
With the appearance of muskets and cannons on the battlefield, fortification construction theory experienced a radical change. The specific introduction of cannons able to deliver great volumes of high-impact artillery fire necessitated a fundamental shift in the concept of fortified defence.
In response to this new weapon, a new fortification in the form of the Star Fort was developed. The Goryōkaku in Hakodate on the island of Hokkaido to the north of Japan is great example of such fortifications. (Scribe annotations: Hakodate, Hokkaido and Japan are not places which exist in the entire Continent. Goryokaku is also no fortification known to anybody in either the Demon or Human World. Since this was all written by the Crimson Scholar, perhaps she mixed up the names with some other place.)
Of course, even before this, similar weapons have continued to exist. The musket had its counterpart in the bow and crossbow, while the cannon had its counterpart in the catapult.
However, the catapult was substantially larger and less mobile. Moreover, compared to explosively discharging metal blocks at high velocities, catapults were substantially slower and hence had less destructive power. In this manner, the erection of walls served a distinct purpose.
However, with the introduction of cannons, the old curtain wall, a straight vertical wall, was simply unable to withstand any sort of protracted bombardment. This was proven true in many engagements.
As such, walls were built to withstand cannonfire without crumbling, by making them lower and thicker. At this point, rather than walls, the fortifications were designed primarily to absorb and deflect the impact of the cannons.
Such low-height walls were also useful against musket fire.
While bows were capable of direct fire (firing in a straight line towards the enemy), they were primarily designed for indirect fire (firing in an arc towards the enemy).
As a result, using indirect fire, archers were able to pick off enemies hiding within fortifications. Of course, in response to that, soldiers learnt to put shields above their heads to block arrows.
In contrast, muskets fired exclusively straight.
Older fortifications relied on pushing down siege ladders erected on walls to prevent enemy soldiers from climbing in, on dropping rubble and large stones and on pouring scalding water on enemies below.
However, the newer fortifications relied on standing on thin boards (which resulted in them being unable to move freely) and firing with muskets on enemies in safety while enemies were unable to fire back.
Constructing this sort of fortification required a higher level of engineering and architectural skill. The square forts which had been constructed up to now were gradually replaced by star forts. Compared to square forts, longer lines of walls needed to be constructed, which represented increased costs and time required. However, despite the cost, star forts offered many advantages.
The old style forts used to shortest distance of walls to cover the area, and if necessary, could be constructed to have several corners to increase the length. However, the walls were overwhelmingly straight, and would absorb the brunt of cannon fire, leading to them absorbing great damage with each shot.
The new fortifications were constructed with sloping walls, such that even while surrounded by cannon emplacements, they would suffer significantly less damage. In addition, as the different walls of the star fort faced each other, defensive fire from the defenders would form overlapping fields and hence result in the greatest damage on attackers attempting to siege the walls from the front.
In other words, attackers faced the troubling dilemma of deciding between a strategy which yielded minimum damage and a strategy which would result in maximum casualties for the attacker.
The very first Star Fortification constructed in history was the defences of the City of the Gate. This star fortification proved to be instrumental in the Second Battle of the City of the Gate, or the Siege of the City of the Gate, and was later greatly expanded. Without the star fort, the walls of the City of the Gate would have fallen almost immediately and would immediately have been occupied by large hordes of Holy Crusaders.
However, the chief architect and engineer of the star fortifications argued, “Even though the low-height fortifications were my idea; however, the star shape was created by simply reconstructing the old fortifications which previously existed in the City of the Gate. They were not my invention.”
To think that the City of the Gate, a city so ancient that no written records exist of its history, once had a genius capable of designing such defensive infrastructure. This is a mystery of history which persists even to this day.
From <A History of Forts and Ditches> by the Crimson Scholar
——— The Disciple Merchant’s Lecture on Cheese
Disciple Soldier: “It’s been a long time. I came to the city and I heard you were here so I came to see you.”
Disciple Merchant: “Oh, it’s really been a very long time. You must be very busy as the Minister for Defence.”
Disciple Soldier: “I really have. I’ve been surrounded by books all day. Had it not been for the training we received from our teacher, I think I would have burnt out by now.”
Disciple Merchant: “I’m very much the same. I’m a bureaucrat and I’ve also got to deal with this mountain of materials.”
Disciple Soldier: “Is that something you should be saying?”
Disciple Merchant: “The new cheese bank has been on the top of my mind.”
Disciple Soldier: “What’s a cheese bank?”
Disciple Merchant: “Hmm, how should I explain this? Do you know how cheese is made?”
Disciple Soldier: “Not at all. I know it’s made from milk somehow.”
Disciple Merchant: “First, you add something called rennet* to milk. After that, by removing the whey* which floats to the top, you separate the solids.”
Disciple Soldier: “Ohh, I see.”
Disciple Merchant: “After that, you dispose of the whey. Well, actually you don’t throw it away, whey does have its uses, but let’s leave that aside for now.”
Disciple Soldier: “Mmhmm.”
Disciple Merchant: “Then, you gather up the solids left behind and when it fully solidifies, that’s fresh cheese.”
Disciple Soldier: “Ohh, and that’s how you get cheese like mascaporne and mozzarella. It’s most delicious when spread on bread.”
Disciple Merchant: “That’s right. But actually, the real cheese production starts now.”
Disciple Soldier: “Ohh, so fresh cheese and cheese are different things.”
Disciple Merchant: “Solidifying cheese is not an easy process. Alongside using yeast-aided fermentation, it needs to rest for a few months.”
Disciple Soldier: “It takes that much time?”
Disciple Merchant: “That’s right. And sometimes if the maturation fails, it becomes inedible.”
Disciple Soldier: “Well, I suppose that’s why cheese is so expensive.”
Disciple Merchant: “And hence the cheese bank.”
Disciple Soldier: “Are you going to tell me what that is?”
Disciple Merchant: “The idea is to buy cheese in its pre-solidified phase for 60% of its sale price and then keep it under ideal maturation conditions in a proper facility for a few months.”
Disciple Soldier: “Won’t that come at a loss to them?”
Disciple Merchant: “Of course, if you think of it as just waiting for a few months before it matures, then there is definitely a loss. However to the people who make the cheese, that’s not how it works.”
Disciple Soldier: “What do you mean?”
Disciple Merchant: “Firstly, they don’t have to worry about the failure or success of the maturation process. The chance of failure is hence zero.”
Disciple Soldier: “Failure would definitely be a huge loss.”
Disciple Merchant: “That’s right. But to these cheese producers, in return for slightly lower profits, they significantly lower their risk and stabilise their income. Our teacher calls this risk management.”
Disciple Soldier: “Once again, she uses some kind of obscure terminology. I can see how this is helpful, but it can’t be worth 40% of the price.”
Disciple Merchant: “No, the biggest advantage is immediately receiving payment. In this way, the money can very quickly be rechannelled into the second production phase to produce even more cheese. Our teacher calls this an improvement to the rate of turnover*.”
Disciple Soldier: “I see. Revenue gets back to them quicker so the next production cycle can begin earlier and in the end they make more profit in the same period of time.”
Disciple Merchant: “Exactly. It becomes a lot more busy, but to a cheese producer, this allows them to build savings quicker.”
Disciple Soldier: “But would the cheese bank be able to handle so much? During the period where the cheese is stored, the cheese bank makes a loss doesn’t it?”
Disciple Merchant: “That’s where the idea comes in. If you think about it, by keeping it for just a few months and checking on it every now and then, the cheese bank can make a 40% profit when the cheese is sold.”
Disciple Soldier: “But surely the production can still fail at this point.”
Disciple Merchant: “Precisely. However, the cheese bank is a place where huge amounts of cheese are stored. As a result, even an extreme failure would see maybe 10% of the cheese spoil. However, even then the overall profit would still be 30%. Of course, that is without paying for management fees and wages of the employees, so not all of it is profit.”
Disciple Soldier: “I see. The cheese producers and the cheese bank both make profit out of this.”
Disciple Merchant: “On top of that, since large profit margins are being made, the market becomes more competitive, more people will try to make cheese, and that means that the price of cheese will go down substantially.”
Disciple Soldier: “Oh that would be great. I do love cheese.”
Disciple Merchant: “On top of that, since all the cheese is in one place, it would be much more convenient to buy cheese as well.”
Disciple Soldier: “This seems like a better and better idea. Cheese is a very healthy thing. If the children of the Southern Kingdoms eat more cheese then the Army of Metal will definitely have stronger recruits.”
Disciple Merchant: “This is something I heard from our teacher, but that relationship is known as a positive externality*.”
Disciple Soldier: “That sounds sophisticated.”
Disciple Merchant: “It sure would be great if each country in the Southern Alliance was able to reap positive externalities from each other.”
————————————————————————————————————————————————————————————————-
Explanation
Translator Note: The author uses some very strange (and definitely not official) economic terminology to describe the economic phenomena explained here. As an Economics student, I took the liberty of putting everything into proper terminology.
Rennet: Rennet is a complex enzyme traditionally which has the effect of curdling milk. The best rennet is obtained from the gut of young calves, however rennet may also be obtained from plants like thistle and nettles.
Whey: Whey is a by-product of the cheese making process but it is also a healthy food rich in proteins and low in fat. It is often added to the drinking water of pigs to make them healthier and tastier.
Rate of Turnover: As a measure of investment productivity, it refers to the number of times an investment cycle is completed a year. If an investment reaps its benefits in 2 months, then it will reap 6 cycles a year for a 600% rate of turnover. If you compared a 1000¥ investment yielding 2000¥ after one year, with a 1000¥ investment yielding 1100¥ after one month, you would find that the latter investment results in 2200¥ after one year. Hence, multiple short-term turnovers is generally held to be more profitable than single long-term turnovers.
Positive Externality: A positive externality is a benefit enjoyed by a third-party as a result of an economic transaction which the third party does not bear the cost for. In this case, the Army of Metal benefits from having stronger soldiers despite having nothing to do with cheese production. Contrary to common sense, the presence of a positive externality suggests that the market is not producing at an optimum level and more of the given good should be consumed.
————————————————————————————————————————————————————————————————-
Volume 4 Maps and Explanations
——– The Third Crusade, the First Battle of the City of the Gate
The 43rd Demon King, Ruby Eyes, has seen many victories on the battlefield, but has naturally seen many defeats as well. Among these, the greatest defeat would be the First Siege of the City of the Gate during the Third Crusade. In the war between quality and quantity, quantity was the one which one this particular battle.
The Demon Race, or at least those members of the Demon Race which took to the battlefield each had martial ability far exceeding that of the average Human. In a battle of equal numbers between Demons and Humans, there would be no possibility for the Demons to be defeated.
In response, the strength of the Humans lay in their numbers. The Human Race, who each had many children, had a population far exceeding that of the Demon Race. The Southern Kingdoms alone had a population rivalling that of the entire Demon World. With the addition of the Central Continent, the Human World outnumbered the Demon World ten to one.
The Humans, with the Central Continent based about the Holy Empire committed almost their entire army to the establishment of the Third Crusades. For the paranoid kingdoms of the Continent to fight alongside each other and form a grand army like the Crusades relied on solid foundation of faith and the authority of the Holy Church. Ensuring the security of their countries while their entire armies were on the expedition demonstrated the success of the mutual supervision system which was built.
Bishops from the Holy Church as well as armistice-observing military officers from each of the other countries were sent to every country in order to observe and ensure that each country maintained the lowest numbers of soldiers necessary for training and the preservation of peace.
In response to this, the Central Continent kept its military strength at its lowest, directing the majority of its strength against the Demon Race to achieve victory.
The concept of operations was as follows:
Start of the BattleThe campaign began when the garrison in the City of the Gate sallied out to engage the Vanguard forces of the Holy Crusaders. The Vanguard itself was a far larger force than the Holy Crusaders, and being armed with powerful muskets, they were able to suppress the Demon Army.
Middle of the Battle
At this point, the Fiend cavalry levelled their spears and broke off from the main force to engage the Vanguard on its flanks in order to throw the vanguard into chaos. Within this chaos, the Human Army was unable to use its muskets, allowing the Demon Army to preserve as much of its strength as possible.
However, the commander of the Crusaders, the Ash Green King was able to read the intentions of the Demon Army. In response to the manoeuvre, he used an overwhelmingly large force to blunt the blow.
The Fiend cavalry employed illusionary magic in order to obscure their positions and make it difficult for the Human musketeers to aim at them. However, to begin with, Crusader muskeeters were never trained to fire with accuracy. The most they could accomplish was to fire in a general direction.
To solve this issue, the Crusaders employed massive numbers of muskets firing in a general direction. The musketeers focussed on firing in the direction of the cavalry, and naturally, most of them missed. However, aggregating all of this low accuracy fire meant that at least one shot would it. Even if only one in one hundred shots hit their targets, with ten thousand muskets, that meant that hundred casualties would be sustained per volley. With less than 1,000 cavalrymen, the Fiend cavalry found their forces gradually attritted volley by volley.
For this reason, the Demon Army’s strategy failed and the Vanguard was able to maintain order and stand up to the Demon Army. Moreover, with the addition of cannon fire from the Crusader Grand Army, the Demon Army was thrown into chaos. At this point, it appeared that the utter annihilation of the Demon Army was just a matter of time.
End of the BattleThe final twist to the battle was the sudden attack from the rear of the Crusader Army by the combined armies of the Tribes of Beasts and the Tribe of the Gate.
In order to avoid musketfire, they forced themselves into the opening between the Right Wing and the Grand Army of the Crusader Army. In order to avoid shooting their compatriots, the musketeers were unable to direct their fire at the combined army. Left with no choice, the Hundred Paladins rode to intercept the enemy.
By employing even this limited level of disorder among the Demon Army, the Demon King was able to regroup the shattered Demon Army and retreat towards the City of the Gate. However, losses were great, and the Khan of Beasts, the Silver Tiger Lord, was sacrificed in this battle.
From a fragment of historical records in a forgotten library
———– The New Star Fortifications
With the appearance of muskets and cannons on the battlefield, fortification construction theory experienced a radical change. The specific introduction of cannons able to deliver great volumes of high-impact artillery fire necessitated a fundamental shift in the concept of fortified defence.
In response to this new weapon, a new fortification in the form of the Star Fort was developed. The Goryōkaku in Hakodate on the island of Hokkaido to the north of Japan is great example of such fortifications. (Scribe annotations: Hakodate, Hokkaido and Japan are not places which exist in the entire Continent. Goryokaku is also no fortification known to anybody in either the Demon or Human World. Since this was all written by the Crimson Scholar, perhaps she mixed up the names with some other place.)
Of course, even before this, similar weapons have continued to exist. The musket had its counterpart in the bow and crossbow, while the cannon had its counterpart in the catapult.
However, the catapult was substantially larger and less mobile. Moreover, compared to explosively discharging metal blocks at high velocities, catapults were substantially slower and hence had less destructive power. In this manner, the erection of walls served a distinct purpose.
However, with the introduction of cannons, the old curtain wall, a straight vertical wall, was simply unable to withstand any sort of protracted bombardment. This was proven true in many engagements.
As such, walls were built to withstand cannonfire without crumbling, by making them lower and thicker. At this point, rather than walls, the fortifications were designed primarily to absorb and deflect the impact of the cannons.
Such low-height walls were also useful against musket fire.
While bows were capable of direct fire (firing in a straight line towards the enemy), they were primarily designed for indirect fire (firing in an arc towards the enemy).
As a result, using indirect fire, archers were able to pick off enemies hiding within fortifications. Of course, in response to that, soldiers learnt to put shields above their heads to block arrows.
In contrast, muskets fired exclusively straight.
Older fortifications relied on pushing down siege ladders erected on walls to prevent enemy soldiers from climbing in, on dropping rubble and large stones and on pouring scalding water on enemies below.
However, the newer fortifications relied on standing on thin boards (which resulted in them being unable to move freely) and firing with muskets on enemies in safety while enemies were unable to fire back.
Constructing this sort of fortification required a higher level of engineering and architectural skill. The square forts which had been constructed up to now were gradually replaced by star forts. Compared to square forts, longer lines of walls needed to be constructed, which represented increased costs and time required. However, despite the cost, star forts offered many advantages.
The old style forts used to shortest distance of walls to cover the area, and if necessary, could be constructed to have several corners to increase the length. However, the walls were overwhelmingly straight, and would absorb the brunt of cannon fire, leading to them absorbing great damage with each shot.
The new fortifications were constructed with sloping walls, such that even while surrounded by cannon emplacements, they would suffer significantly less damage. In addition, as the different walls of the star fort faced each other, defensive fire from the defenders would form overlapping fields and hence result in the greatest damage on attackers attempting to siege the walls from the front.
In other words, attackers faced the troubling dilemma of deciding between a strategy which yielded minimum damage and a strategy which would result in maximum casualties for the attacker.
The very first Star Fortification constructed in history was the defences of the City of the Gate. This star fortification proved to be instrumental in the Second Battle of the City of the Gate, or the Siege of the City of the Gate, and was later greatly expanded. Without the star fort, the walls of the City of the Gate would have fallen almost immediately and would immediately have been occupied by large hordes of Holy Crusaders.
However, the chief architect and engineer of the star fortifications argued, “Even though the low-height fortifications were my idea; however, the star shape was created by simply reconstructing the old fortifications which previously existed in the City of the Gate. They were not my invention.”
To think that the City of the Gate, a city so ancient that no written records exist of its history, once had a genius capable of designing such defensive infrastructure. This is a mystery of history which persists even to this day.
From <A History of Forts and Ditches> by the Crimson Scholar
——— The Disciple Merchant’s Lecture on Cheese
Disciple Soldier: “It’s been a long time. I came to the city and I heard you were here so I came to see you.”
Disciple Merchant: “Oh, it’s really been a very long time. You must be very busy as the Minister for Defence.”
Disciple Soldier: “I really have. I’ve been surrounded by books all day. Had it not been for the training we received from our teacher, I think I would have burnt out by now.”
Disciple Merchant: “I’m very much the same. I’m a bureaucrat and I’ve also got to deal with this mountain of materials.”
Disciple Soldier: “Is that something you should be saying?”
Disciple Merchant: “The new cheese bank has been on the top of my mind.”
Disciple Soldier: “What’s a cheese bank?”
Disciple Merchant: “Hmm, how should I explain this? Do you know how cheese is made?”
Disciple Soldier: “Not at all. I know it’s made from milk somehow.”
Disciple Merchant: “First, you add something called rennet* to milk. After that, by removing the whey* which floats to the top, you separate the solids.”
Disciple Soldier: “Ohh, I see.”
Disciple Merchant: “After that, you dispose of the whey. Well, actually you don’t throw it away, whey does have its uses, but let’s leave that aside for now.”
Disciple Soldier: “Mmhmm.”
Disciple Merchant: “Then, you gather up the solids left behind and when it fully solidifies, that’s fresh cheese.”
Disciple Soldier: “Ohh, and that’s how you get cheese like mascaporne and mozzarella. It’s most delicious when spread on bread.”
Disciple Merchant: “That’s right. But actually, the real cheese production starts now.”
Disciple Soldier: “Ohh, so fresh cheese and cheese are different things.”
Disciple Merchant: “Solidifying cheese is not an easy process. Alongside using yeast-aided fermentation, it needs to rest for a few months.”
Disciple Soldier: “It takes that much time?”
Disciple Merchant: “That’s right. And sometimes if the maturation fails, it becomes inedible.”
Disciple Soldier: “Well, I suppose that’s why cheese is so expensive.”
Disciple Merchant: “And hence the cheese bank.”
Disciple Soldier: “Are you going to tell me what that is?”
Disciple Merchant: “The idea is to buy cheese in its pre-solidified phase for 60% of its sale price and then keep it under ideal maturation conditions in a proper facility for a few months.”
Disciple Soldier: “Won’t that come at a loss to them?”
Disciple Merchant: “Of course, if you think of it as just waiting for a few months before it matures, then there is definitely a loss. However to the people who make the cheese, that’s not how it works.”
Disciple Soldier: “What do you mean?”
Disciple Merchant: “Firstly, they don’t have to worry about the failure or success of the maturation process. The chance of failure is hence zero.”
Disciple Soldier: “Failure would definitely be a huge loss.”
Disciple Merchant: “That’s right. But to these cheese producers, in return for slightly lower profits, they significantly lower their risk and stabilise their income. Our teacher calls this risk management.”
Disciple Soldier: “Once again, she uses some kind of obscure terminology. I can see how this is helpful, but it can’t be worth 40% of the price.”
Disciple Merchant: “No, the biggest advantage is immediately receiving payment. In this way, the money can very quickly be rechannelled into the second production phase to produce even more cheese. Our teacher calls this an improvement to the rate of turnover*.”
Disciple Soldier: “I see. Revenue gets back to them quicker so the next production cycle can begin earlier and in the end they make more profit in the same period of time.”
Disciple Merchant: “Exactly. It becomes a lot more busy, but to a cheese producer, this allows them to build savings quicker.”
Disciple Soldier: “But would the cheese bank be able to handle so much? During the period where the cheese is stored, the cheese bank makes a loss doesn’t it?”
Disciple Merchant: “That’s where the idea comes in. If you think about it, by keeping it for just a few months and checking on it every now and then, the cheese bank can make a 40% profit when the cheese is sold.”
Disciple Soldier: “But surely the production can still fail at this point.”
Disciple Merchant: “Precisely. However, the cheese bank is a place where huge amounts of cheese are stored. As a result, even an extreme failure would see maybe 10% of the cheese spoil. However, even then the overall profit would still be 30%. Of course, that is without paying for management fees and wages of the employees, so not all of it is profit.”
Disciple Soldier: “I see. The cheese producers and the cheese bank both make profit out of this.”
Disciple Merchant: “On top of that, since large profit margins are being made, the market becomes more competitive, more people will try to make cheese, and that means that the price of cheese will go down substantially.”
Disciple Soldier: “Oh that would be great. I do love cheese.”
Disciple Merchant: “On top of that, since all the cheese is in one place, it would be much more convenient to buy cheese as well.”
Disciple Soldier: “This seems like a better and better idea. Cheese is a very healthy thing. If the children of the Southern Kingdoms eat more cheese then the Army of Metal will definitely have stronger recruits.”
Disciple Merchant: “This is something I heard from our teacher, but that relationship is known as a positive externality*.”
Disciple Soldier: “That sounds sophisticated.”
Disciple Merchant: “It sure would be great if each country in the Southern Alliance was able to reap positive externalities from each other.”
————————————————————————————————————————————————————————————————-
Explanation
Translator Note: The author uses some very strange (and definitely not official) economic terminology to describe the economic phenomena explained here. As an Economics student, I took the liberty of putting everything into proper terminology.
Rennet: Rennet is a complex enzyme traditionally which has the effect of curdling milk. The best rennet is obtained from the gut of young calves, however rennet may also be obtained from plants like thistle and nettles.
Whey: Whey is a by-product of the cheese making process but it is also a healthy food rich in proteins and low in fat. It is often added to the drinking water of pigs to make them healthier and tastier.
Rate of Turnover: As a measure of investment productivity, it refers to the number of times an investment cycle is completed a year. If an investment reaps its benefits in 2 months, then it will reap 6 cycles a year for a 600% rate of turnover. If you compared a 1000¥ investment yielding 2000¥ after one year, with a 1000¥ investment yielding 1100¥ after one month, you would find that the latter investment results in 2200¥ after one year. Hence, multiple short-term turnovers is generally held to be more profitable than single long-term turnovers.
Positive Externality: A positive externality is a benefit enjoyed by a third-party as a result of an economic transaction which the third party does not bear the cost for. In this case, the Army of Metal benefits from having stronger soldiers despite having nothing to do with cheese production. Contrary to common sense, the presence of a positive externality suggests that the market is not producing at an optimum level and more of the given good should be consumed.
————————————————————————————————————————————————————————————————-
