Every time she went out of the castle, Princess Stephanie was shocked by how poor her country was. As her carriage lurched and bounced between hovels and splashed through open drains, she glimpsed poor people, sick people, people staggering under loads, people walking miles to find work.
Nevertheless, she was glad to be out of the castle. Her father, the King, needed funds to protect the country’s borders, and he didn’t want to squeeze more taxes from ordinary people. He was hoping his knights would contribute. (After all, it was their country, too). But she knew they wouldn’t, and the king knew they wouldn’t. They were a loathsome and selfish crew, who she knew – and the king suspected – had long since moved as much of their wealth as possible to some island off the coast, so they could pretend they had nothing to tax. That had all been arranged, the story went, by Lord Cameron’s father. But even he wasn’t the worst of them, in her opinion. The Princess particularly and deeply despised her suitors, Sir Andrew and Sir Jeremy, who extorted the poor people to pay for a pitiful level of medicine. They kept piling up their fortunes, the poor got deeper into debt, and kept suffering and dying too young.
This trip out was a visit to a childhood companion whose family had once worked for her father, the King, but whose mother had fallen ill and whose grandmother needed caring for all the time. When she arrived, the house was in uproar and her friend was nowhere to be found. The parents wept. Her friend had gone to be a servant at the castle of Sir Gideon, in payment for the towels her parents had been unable to pay for.
The journey back to the castle made the country look even poorer and more desperate. Her father meant well, she was sure: but he had no idea how to make his people healthier or wealthier. The money had run out, he had told her. His previous chancellor, Sir Tony, had spent it all on foreign wars before disappearing from the country, and was rumoured to be hiding out on the island where all the knights had hidden their treasures. The knights had refused to pay for improvements to the border security, predictably. They had claimed poverty.
Her father, the king, was in despair. The princess didn’t like to see him like this, so she suggested they put the country’s troubles aside by spending an evening together playing their favourite sports.
Princess Stephanie loved these evenings playing sports with her father, even though at everything they played she had to stop herself beating the King too frequently and too heavily. Their favourite was darts: the king was distracted with concentrating on the throwing and the arithmetic; the princess loved the way, when each game was finished, they wiped out all the scores and started again.
She had just missed a 152 finish to let the king sneak a double 1 at about the seventh attempt when, watching him writing 501, she found herself asking, “Where do the numbers come from?”
That was dangerous, as she immediately realised. Her father started on a long and tedious tale of astronomers and merchants, but she stopped him. “No, not where do they come from: where do they keep coming from? Every time we play – any time anyone plays – we can write the numbers up to start again. We never run out of numbers. We can’t run out of numbers, can we?”
The king looked at her quizzically, but he had enough patience to wait, in the sure knowledge his daughter was about to come up with something just as obvious. But what she said next made him sit down and stare, at her, open mouthed.
“What if… why couldn’t we…why do we keep paying each other and owing each other in things, in bits of metal, or grain, or sheep? Or people? Why don’t we just have a way of counting what we owe, like the numbers on a scoreboard?”
“ I don’t follow. Is it me to throw first?”
“Yes. No. Wait a moment. Think about it. The problem this country has is that everyone – even you – everyone except your horrible knights – everyone has to give away possessions to pay for things, and if they can’t pay they have to borrow, and when they get totally stuck they have to give up their children. Everyone’e sick, no-one’s educated, everyone’s poor. But what if we could invent something for them to pay with? What if we – sorry, you – could provide healthcare and education for everyone? And roads, and sewers, and lights, and…”
“5 and 1 and one. That’s 7. That’s 4…8…3. No, 4. Your turn”
“Father!” she took the darts from him. “Listen. There is a way to do this. You’re the King! You’re the country, in a sense. You can create a debt for the country and a way to count it! If you’ve got that debt, you can pay for things for your people. You could pay for their healthcare, and they could all live longer!!”
She had his full attention, now. If there was one thing the king wanted, it was to see his people free of disease and illness. “How would I create this debt?”
The princess thought for a moment. “Well, it’s not really debt, is it? Debt’s the wrong word. It’s, it’s investment. You – the king – create money to invest in your country, just like you create the 501s for the darts!!”
“But why would anyone accept this money I created?”
“You’re right.” She suddenly felt a terrible sense of disappointment. This wouldn’t work. “We’d need some way to make people accept it, make everyone in the country use it.”
“They’d need to trust it, which means they’d need to trust me and my successor.” He smiled at the princess. “And they’d need to know it was always going to be there. And … ”
He thought it through. The princess waited.
“…and the way to do that is, for me – the government – to always spend using this money. And for me to make everyone pay their taxes in this money. That’s it! The country collects taxes from everyone, and it only accepts payment of taxes in the money it creates. People would have to get the money to pay their taxes!! They’d have to accept it, because they have to have it to pay their taxes!”
There was a knock at the door.
(To be continued)