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The Evil Crimson Dragon
The Scheme for the Military State

The Scheme for the Military State

After completing the initial inspection following his return, Raphael flew to the grassy field within the old castle of the Morey royal family, where Erl's high-ranking officials had been waiting for a long time.

"Crimson Dragon is supreme!"

They all raised their arms in unison to show their submission to the descending Crimson Dragon.

Raphael scanned the humans and dwarves before him. Naisa and the dwarven elders looked exhausted and anxious.

The leading human Baron Moran seemed impulsive, as if he had a lot to say. The other leader, Evan, didn't look well and seemed listless and lacking energy. Alvis had dark circles under his eyes and had lost weight, perhaps from work stress or intimidation by Hil's methods.

"How has Erl been developing recently?" Raphael chose a comfortable position to lie down. With the uranium gold heating furnace at full power, the grassy field was comfortably warm like spring.

"I have a pile of things that need your final decision!" Moran, unable to bear the silence any longer, was the first to raise his hand urgently while scanning around with a warning gaze.

"Speak," said Raphael simply.

"First is the most urgent matter. I have been in contact with merchants from Natterian, Karuk, Morey and other countries over the past month, and urgently need your approval to represent Erl in trade with them," Moran flipped open the first page of his notebook.

Raphael's brow immediately furrowed. "Trade with humans?"

"Correct." He explained, "After re-evaluating during this period, I realize that while Erl has an advanced primary industry and Oakland Plain and Pillar Mountain can produce superior grain and minerals, our secondary industry is lacking. We have abundant resources but no way to process them into refined goods. It's like...in the previous war, when the imperial allied forces were defeated and captured due to a breached river dam disrupting supply lines and resource shortages."

"So I hope to first engage in trade with other countries, exchanging grains and minerals for foreign exchange, and then use that to purchase ready-made large-scale alchemical production equipment to strengthen manufacturing."

Raphael quickly voiced his doubts, "Will humans really trade with me sincerely? Don't forget I committed many evil deeds not long ago."

Moran smiled slightly, the wrinkles on his face tightening. "Rest assured, there are no eternal enemies. The relationships between nations are very complex. I used to work in Morey politics for a time and have never stopped researching international human relations. Even before joining you, I had begun predicting the current situation and there are legitimate ways to facilitate trade."

Crimson Dragon still wasn't sure whether to grant authority.

It was the rat dragon Hil, who had been silently standing by, who then handed Raphael a scroll.

"What's this?"

Raphael took it and read it, his heart suddenly startled.

It contained Hil's calculations of the resources needed for Crimson Dragon Guild, secret dragon body experiments, and territorial reconstruction. Especially the first two items required special allocations for secrecy, meaning the funds could not come directly from the national treasury or by recruiting people off the streets, although Raphael could do that. But it would be easily discovered by outsiders.

As for the territorial reconstruction, after witnessing human warfare capabilities, efforts would naturally need to lean in that direction. But those cutting-edge alchemical products and weapons could only be imported from human nations for now. Without money, who would provide them?

"Why didn't I ask that human prince for some weapons back then? But he was also caught in the turmoil and probably kept whatever weapons he had..."

Crimson Dragon slowly pondered, while Baron Moran looked at him expectantly.

"Alright, go ahead," Raphael finally agreed, allowing the latter to breathe a sigh of relief.

But then he immediately made a demand, "However, after the transactions are completed, I want to take 20% directly before the money goes into the treasury. Specifically, the goods will be left at the port, my kin will take a portion first, and then you can calculate the remainder."

"Twenty percent!" Moran was instantly dizzy.

"That's right, and the minerals from Pillar Mountain are my private property. You'll have to pay extra if you want them - I won't give them to you for free," Raphael said, baring his fangs.

"Let me calculate..." Baron Moran quickly took out a pen to rapidly work out the figures. "...To purchase minerals from Crimson Dragon, I'll need to spend..."

"What do you plan to use to pay?" he looked up and asked.

"Um...currency, I suppose," Raphael had wanted actual goods, but then realized Erl lacked resources, so money would be better for now.

"Currency...then based on the current international mineral prices, it should be..."

Moran took out a financial newspaper published by the empire from the inner pocket of his windbreaker coat.

"...Sell them for foreign exchange, then use that as start-up capital to establish a central bank issuing our own national currency. This will drive the people to increase productivity. Then we can invest the surplus, establish credit, issue government bonds and borrow from other countries. Through this cycle, Erl's infrastructure, living standards and military industries will all improve...Yes, no problem."

After finishing the calculations, he capped his gilded pen and nodded while wiping sweat from his brow with his sleeve. "No problem, we can proceed according to your demands."

Although Raphael's demands were substantial, Erl was politically stable and, with the largest mineral source on Mu continent, had immense potential. It just needed an opening, and the profits would far exceed the costs.

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"Next," Raphael casually instructed.

"The next matter is closely related to the previous one - we need to establish a national bank and re-issue currency to replace the currently circulating Morey currency," Moran explained.

"First, there is a political issue - we are an independent regime and need an independent monetary system. Second is a crisis issue - if we continue using a foreign currency, then the Morey Kingdom controls the narrative. If they make any moves, it could affect our economy."

"Oh, then change it. Yeah...I'll grant you mining rights to the mountains later for minting coins," Raphael agreed without hesitation.

"No," Moran said softly. "There's no need for minting coins anymore. I plan to issue the newest credit currency - paper."

He took out a palm-sized rectangular piece of paper from his pocket. A blood wyvern attendant understood and flew down to deliver it to Crimson Dragon.

Raphael had been resting his head sideways on his forearm with half-lidded eyes, but upon hearing this he almost jumped up.

"Paper! You can't mean to exchange that mineral wealth for paper!"

He clamped the thin paper slip. The fiery gold color with a dragon emblem bathed in flames looked decent, but could not conceal its unreliable nature.

"Don't be hasty!" Moran waved his hands. "This is a credit currency designed for convenient, simplified transactions while saving iron, copper, silver and gold for other uses. Moreover, ours will be a commodity-backed system - a gold note can be exchanged at the bank for an equivalent amount of gold, copper notes for copper, and so on."

"I see..." Raphael calmed down and carefully examined the small paper slip. In terms of practicality, this thing did seem viable.

"But how do you make this stuff?"

"Low-cost mass production papermaking and printing. A hundred years ago, we humans designed alchemical equipment to process wood and other raw materials into paper, later adding printing capabilities. The details became increasingly refined - by properly designing the internal arrays, we could create unique, intricate patterns."

"More importantly, the Natterian Imperial Design Institute recently published research on magical ciphers that can be encrypted within arrays to prevent outside tampering. In addition to enhanced security like locks for civilian use, there is also the ability to generate anti-counterfeit markers. Applying this to paper credit currency will greatly enhance its integrity. Like old currencies, apart from those who control gold mines, no one else can replicate or counterfeit it, while also increasing centralized authority."

Moran's explanation was quite thorough, allowing Raphael to quickly understand the principles behind this currency.

"You said it can be mass produced? So a bunch of inferior scrap could be exchanged for valuable goods? If printing is unrestricted, couldn't the whole world be bought?" Crimson Dragon immediately grasped the loophole, leaning down to stare at the human elder below, greed flashing in his dark golden dragon eyes.

This small piece of paper concealed a terrifying value. Sensitive to wealth, Raphael sensed the scent of plunder.

"That's impossible! Don't forget this has to be backed by metal currencies," Moran waved his hands, not wanting to give the dragon too high of expectations.

"It's just an efficient tool to promote the economy. Don't mistake it for actual money. We can only print as much new currency as we have gold and silver reserves backing it - that's an inviolable principle. Think about what would happen if we overissued and civilians all came to redeem the metal currencies. We wouldn't be able to pay out - that would be a national credit default!"

As Minister of Finance, Moran was still quite reliable, at least knowing those were red lines that could not be crossed without plunging this regime into turmoil.

"So it's an issue with that commodity-backed system, then...could it be decoupled..."

Raphael had already caught the scent and his mind wandered directly toward plundering profits.

"Lord Crimson Dragon! You cannot do that! It would drag us into a vortex of madness!" Moran warned loudly upon seeing the dragon descend into the abyss of greed.

"Ah? Okay, okay! We can issue it, following your plan," Raphael snapped back to reality, unconcerned by Moran's disrespectful attitude.

"That's all I have to say."

Moran retreated, looking helplessly at the distracted Crimson Dragon. As a classical economist, he had an innate aversion and dread toward any finance detached from actual industry. The commodity-backed system was the seal on Pandora's box that could not be easily opened.

Alvis and Evan simultaneously took a step forward.

They made eye contact, and Alvis noticed the young man's eyes looked blank and his steps were hollow and devoid of strength.

"Is this the indulgence after extreme stress?" He shook his head and stepped back to let Evan speak first.

"Greetings, Lord Crimson Dragon," Evan was about to begin when suddenly a blood wyvern flew in loudly announcing:

"Doniel Vattier has arrived!"

"Hm? He's here?"

"I thought Doniel had gone mad."

"Wasn't he seriously ill? He transferred all his assets and power to Lord Evan."

The human nobles immediately began whispering among themselves. Moran turned around in surprise to see Shena, dressed in a blue alchemical robe and wearing a complex, precise research headgear, Slowly walking over while clutching his stomach.

"Father..." Evan opened his mouth but couldn't get the words out, unsure why his father was dressed like that.

He reached out a hand to take Shena's arm, but the latter shrugged it off roughly.

Everyone's eyes were wide, staring at this unexpected guest. Raphael, knowing the inside story, immediately became pensive.

The dragon's claw slowly descended, and Shena stepped onto it. Raphael then raised him up to his ear to listen to his whispers.

"That's how it is...ugh!"

After finishing, Shena couldn't help but retch, immediately taking out a vial of living medicine from his pocket and downing it.

"Evan Vattier!" Raphael said sternly after nodding slowly.

"Your orders?" Evan bowed in question.

"Leave here immediately and return home. Do not go out before tomorrow morning! Blood wyvern!"

Raphael's tone was firm and brooked no argument, an decisiveness he had never shown before. The blood wyvern immediately flew down, grabbed Evan by the shoulders and flew away from the scene.

The others were dumbfounded, completely unable to fathom what was happening.

"The situation is, Doniel told me there is an important family matter requiring the eldest son's presence at home. There was no time to explain, so I had to act forcefully," Raphael explained with a pleasant expression. With no way to probe the truth, the others could only accept this explanation with a nod.

"Also, Doniel's body is unwell, so he will recover at Pillar Mountain for now." Raphael gave another order, and another blood wyvern took the expressionless Shena away.

"Alright! Who's next?"

Alvis took a deep breath and stepped forward.

"Crimson Dragon is supreme!" He stood up straight and gave a standard salute, his every movement mechanical and regimented, reflecting his military career.

"Since you have taken back my educational authority, I will not discuss that. First is military affairs," he began. "Lord Hil has convinced all the Heretic Wing mercenaries to stay and join Erl's regular army. They are currently our garrison force, but we need additional troops in southern Oakland Plain. Our current economy cannot support an expansion of forces, so I hope you can deploy dragon kin there."

Raphael nodded. "No problem."

"As for the military structure, I plan to temporarily divide it into a War Department responsible for military logistics, and a General Staff Department handling intelligence, mapping and coordination. There will also be an Armaments Department dedicated to designing and modifying weapons. We do not yet need to establish the main force - for now we will focus on building the framework, gathering intelligence, cultivating talent, updating weapons and contemplating future strategies."

With Erl still rebuilding from ruin, it made sense not to expand forces filled with soldiers unproductive for over twenty years. The victory spoils from the Erl War provided sufficient deterrence.

Seeing Raphael continue nodding, Alvis took a deep breath before raising the final point. "A nation with ambitions for progress and expansion must grow, not just in territory but desires as well. For Erl to survive long into the future, we must break through the constraints of land and population. As I am also responsible for propaganda, I should organize a department from now on dedicated to understanding the culture, landscape and interest groups of Strife Plain. We must continuously promulgate ideology to lay the foundations for governing that land after its eventual conquest."