(For previous parts in the series, see here)
So this development plan is slightly unusual, in that it’s covering a part of Westeros that I’ve actually written about the economics of in some detail – see here, here, here, here, and here– and the Westerlands is actually unlike most of the regions we’ve covered on this series. It’s actually more economically-developed than its peers (going by percent of the population not employed in food production), and has a huge amount of liquid capital it could dump into economic development.
So, if I’m the head of House Lannister, how do I play such a strong opening hand?
Finance and the Golden Bank
The first and most obvious step is to create a Golden Bank of Casterly Rock (much better security in the Rock than in Lannisport). My initial calculations suggest that the Lannisters might well have 2 billion gold in their vaults, given their yearly income and how many years they’d been piling up wealth. Even the lowest estimates say they’ve got a couple million. Through the magic of fractional reserve lending, this reserves could easily support a level of lending forty times the size of the Westerosi economy.
While the creation of this bank is basically at the root of everything else we’re going to do, it’s not a simple “I Win” button. The danger of dumping 18 billion gold into the Westerosi economy is that you’d generate a wave of hyper-inflation so bad that you’d make the Spanish Price Revolution look like a mere stock market hiccup. While in the long run providing the liquidity necessary for Westeros-and indeed even Planetos-wide economic development, the short-term implications would be the destruction of the Westerlands economy, as skyrocketing inflation would destroy the value of our reserves, cause our goods to be non-competitive, and cause the price of food to soar faster than wages, leading to massive socio-economic conflict.
So the key here is to carefully manage the Golden Bank’s lending: invest as much as possible in raising productivity (since you’re going to need the economy to grow at a good clip to ensure that supply doesn’t fall behind the added demand from your investments), and never invest more the economy will bear.
In order to ensure this latter goal is adhered to, one of the things the Golden Bank will have to be careful about is, once the goldsmiths of Lannisport realize how much money they can make from banking, is preventing financial bubbles and panics. Luckily, given the strong position of House Lannister vis-a-vis its subjects and the similarly strong position of the Golden Bank vis-a-vis, it would be pretty easy to establish strong regulations – reserve requirements, lending restrictions, oversight and regular auditing, etc. – to make sure that non-Lannister banks might spark a price revolution.
Industrial Policy
So now that I have all the liquid capital I need, it’s time to put it to work – and the first target for investment is the Westerland’s already relatively-advanced industrial base.
As I’ve mentioned before, the presence of silver and gold mean that there’s quite likely also a good bit of iron and copper in the hills and mountains of the Westerlands. And while gold and silver might be more prized metals than iron and copper, there’s a much bigger market (and more room for growth) in the production of domestic goods made of iron, copper, bronze, brass, and pewter. So one of our first targets for industrial expansion is the more intensive and larger-scale mining, smelting, and manufacturing of these metals.
Another step in making the Westerlands dominant in metalworking is large-scale industrial espionage. Given that I have all the gold in the world for bribes, it’s time to raid Qohor for their steelsmithing, Myr for its artificers, and Braavos for its standardized parts/assembly line technology. Once I’ve got that skill inside my borders, it’s time to make sure that skill is spread to my existing workforce and across the generations – first, by either creating and/or renewing/expanding guild charters, especially in regards to training and licensing smiths and artificers to ensure quality and the transmission of knowledge; second, by providing Lannister patronage for Institutes of Technology, the equivalent of the historical Royal Society, etc.
Third, at some point, I want to invest in the ability to get my goods to market faster (and thus cheaper), given the inconvenient fact that Lannisport is stuck on the wrong side of the continent. This requires substantially more investment than in the case of the Riverlands or the Reach, because you’re building canals with much more verticality (which requires lots of locks) and you’re building in the mountains. However, a canal that links Hornvale to the Red Fork (and to a lesser extent the Silverhill river to the Gold Road, given that Lannisport-to-Mander/Lannisport-to-Oldtown is a pretty short trip already) would cut the time from the Westerlands to King’s Landing from over three months to five days.
Trade and Investment
Now that the flow of Westerlands merchandise is faster than ever, it’s time to get the best deal possible for our goods. To do this, I plan to use the leverage of the Golden Bank’s financing to promote the creation of industry-wide marketing and purchasing cooperatives – with the idea being that you’d get better deals the closer you can get to a monopsony and monopoly position.
At the same time, one of the things that House Lannister and the Golden Bank can do is engage in the stockpiling of raw materials, foodstuffs and finished goods (a la Sweden) – in the industrial equivalent of the Reach’s sub-treasury system. When prices for Westerlands metalworks decline to the point where they threaten the profitability of Lannisport’s factories and workshops, have the Lannisters buy up the surplus to maintain incomes, and act as a floor on prices; when prices rise to the point where they threaten exportability, sell off the stockpile at a profit. Do the reverse for raw materials like ore and fuel, and of course food, to keep the Westerland’s trade balance firmly in the black. And it just so happens that the Westerlands have tons of empty mines which can be easily converted into storage for these goods.
All of this is designed to not only enhance the economic development of the Westerlands but also the central position of House Lannister. As the central source and regulator of credit, the organizer and financier of the cooperatives and stockpiles, House Lannister becomes the guarantor of prosperity for the Westerlands economy upon which the fortunes of every artisan and merchant (and ultimately the lords who live off their taxes) depend. Let any lesser House dare to challenge House Lannister and the resulting credit crunch will drive them to their knees even as their subjects riot in the streets (naturally, House Lannister offers generous financing for loyal subjects).
At the same time, the history of finance tells us that, at any given time, there’s a limited amount of good investments in any one place, and if too much money chases too few investments, you get dangerous speculative bubbles. So the next phase of Westerlands economic development is investment in the other regions – but on Lannister terms. A Mander-to-Blackwater canal would be good for both the Westerlands and the Reach – so let’s make sure that it’s financed with Lannister gold in return for a good number of shares and Lannisters on the board, and some trade concessions on Reach grain. An extension of the River Road to Maidenpool is good for House Mooton – but only as long as House Mooton understands that what’s good for House Lannister is good for House Mooton.
Rather than seeking domination through monopolization of political power, here House Lannister extends its influence throughout the continent by ensuring that House Lannister’s support is so crucial that no one would want to do without. And of course, now this means that prosperity in the rest of Westeros now means prosperity for the Westerlands. And it means jobs for lesser Lannisters, Lannys, Lannetts, and Lantells, who can keep their eyes open in the rest of the country.
Institution-Building
Now that we’re rich even richer, it’s time to show off how magnificent we are.
A mere 20-30 ships in the Lannisport navy when the mere Redwynes have 200 ships? The Lannisport Fleet should be at least 300 strong, enough to destroy the Ironborn for good if they ever attack again (incidentally, the Iron Islands could be a great target for expansion – lots of good metals in them islands).
Does Oldtown have the Citadel and the Starry Sept? Time to build a Golden Sept even bigger and more magnificent, and hire as many ambitious young maesters and halfmaesters as necessary to establish a University of Lannisport! And so on until Lannisport is the largest city in Westeros.
And while we’re at it, the Westerlands should have more cities than the rest of Westeros! Kayce, Hornvale, Sarsfield, the industrial centers near Pendric Hills, Nunn’s Deep, and Castamere, etc.
(the next entry in this series will be the North)
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