Trade, Operations, and Currency

[whartung]

On the one hand, we have prices for goods and services in the assorted versions of the game. We also have rates for cargo, mail, and passenger service. And then, of course, speculative trade.

On the other, we have (optionally) currency differences from system to system. What's worth 1Cr from one world is worth 1.5Cr at another.

I'm trying to make sense of the exchange rate table. And I'm curious how it applies to trade.

In one example, using a common currency, it says (at least in TNE, but I think these rules are reasonably universal) that to price an item you take the "book price" and multiply it by the rate on the exchange table for that particular systems TL and Starport.

The TNE example is a Map Box listing for 2500, at a D class, TL 9 system with a .55 exchange rate, thus the box costs 1375 at that location. In this case, the only place things cost "full price" is at a A class, TL 15 system.

The other mechanism is to convert currency. Taking 10,000 Cr from a A/15 system, and going to a D/9 system, converting it in to 18181 Cr in local currency, then pay 2500 Cr for the map box. If you convert the remainder back, it still costs 1375.

This implies that items, if available locally, versus imported, are cheaper at "crummier" systems.

But how does this apply to trade? Is passage and fuel "cheaper" in a lower system? Does High Passage only cost 5500 in a D/9 system? What about freight and mail rates? And then what about speculative freight?

Has anyone bothered to reconcile the exchange rates with the trade system(s) and starship operations?

 

[Timerover51]

I have been working on this as well, as I am trying to convert actual historic prices for things like aircraft, ships, weapons, and household items into equivalent Imperial Credits. Right now, I am looking at the following ideas.

Tech Level 4 and lower societies on Terra typically used a metallic-based currency, backed by either silver or gold if paper money was also in use. In Research Station Gamma, the Droyne coyns, weighing 2 ounces of gold each, had a bullion value of 200 Imperial Credits per ounce. Up to 1934, the US Dollar was valued at a bit over $20 per ounce, then up to 1971 at $35 per ounce. Silver was valued at about $1 per ounce. (Note: I understand that silver varied some from that, but I am rounding for game purposes.) So for Tech Level 4 to 5 societies, I am pegging a value in local currency to the ounce of gold or silver, and then converting to Imperial.

At the Space Port, under extraterritoriality, all prices are as in the books at standard Imperial currency. All Interstellar trade is carried out in Imperial currency, with conversions being carried out once the goods leave the space port. At that point, I am figuring the local non-metallic backed currency as worth less than an Imperial credit, with the difference being Tech Level 15 minus the local Tech Level times 0.05, and then that result subtracted from 1. This would make local credits for Tech Level 14 equal to 0.95 Imperial credits, while Tech Level 6 credits would be worth 0.55 Imperial Credits. Locally produced goods are valued in local credits, so at Tech Level 6, an item costing 2000 local credits would cost 1100 Imperial Credits. An imported Tech Level 15 item would cost 3636 local credits or 2000 Imperial Credits divided by 0.55.

Now, this is a tentative system, still undergoing a lot of work.

 

[Fritz_Brown]

I don't think (canonically) the cargo and passenger rates change, as those are set non-locally. They belong to the Imperium, so they are universal - as against buying stuff locally. (I know it is silly, but dem's da rules.)

I think your idea works logically, timerover, but I couldn't say beyond that.

 

[Vladika]

The TNE example is a Map Box listing for 2500, at a D class, TL 9 system with a .55 exchange rate, thus the box costs 1375 at that location. In this case, the only place things cost "full price" is at a A class, TL 15 system.

Not sure about TNE but with CT its just the opposite. TL15, A Starport, goods cost far more on a TL 9, D Starport, Planet; as they should. Also see the exchange rate in Trillion Credit Squadron.

 

[HG_B]

Has anyone bothered to reconcile the exchange rates with the trade system(s) and starship operations?

There is no way to really do that. The system as written is illogical & broken. Just do up a new one for your game based on your Econ 100 class text books.

 

[rancke]

There is no way to really do that. The system as written is illogical & broken. Just do up a new one for your game based on your Econ 100 class text books.

Actually, the trade system works fairly well for running a free trader campaign. There are a few oddities that require the referee to intervene if they crop up, but "The Merchant Game" is really fairly entertaining. It's not a role-playing game, but you can pile role-playing on top of it with a little effort.

I believe that the version in Intersterllar Wars has corrected some of the major flaws in the original version, but I can't say for sure as I've never actually gamed it, just read it.

The one thing you shouldn't do, really, is to use the trade system for world-building purposes without great care. Just assume that regular merchant shipping works in a way that actually allows them to make a modest profit and ignore the silliest implications of the system.

Above all , don't be afraid to deviate from the basic rules if it fits the plot. If a company factor tries to get the PCs to carry a consignment for less than Cr1000 per dT, let the players negotiate whatever price they can get. If the PCs find a billionaire stuck on a backwater world where the next ship is expected in three months, desperate to get back to his homeworld in time for a stockholder's meeting, and want to charge him an arm and a leg for passage, role-play the negotiations. Don't be afraid to have another free trader arrive at the same time as the PCs and let them compete for what passengers and freight there is to be had. If the plot requires the ship to have no empty passenger staterooms and the tables only give you enough passengers to fill half, just add the other half.


Hans

 

[HG_B]

Actually, the trade system works fairly well for running a free trader campaign.
Hans

That's not what I'm referring to.

 

[Dragoner]

Has anyone bothered to reconcile the exchange rates with the trade system(s) and starship operations?

Considering the Imperium is in many ways a customs union, it would probably make the most sense in that other currencies are on a floating peg vs. the CrImp, similar to how currencies are valued against the dollar. From there you could throw some macroeconomic theory at it to make it sound good, but really it is anyone's guess.

 

[Carlobrand]

Has anyone bothered to reconcile the exchange rates with the trade system(s) and starship operations?

There is no way to really do that. The system as written is illogical & broken. Just do up a new one for your game based on your Econ 100 class text books.

The system as written conflicts with itself. From what Whartung is saying (I don't have TNE), TNE appears to be applying the TCS standard, which is roughly 5% jumps per tech level, consistent with what Timerover's doing. Striker, Merchant Prince, and MegaTraveller apply a 10% jump per tech level - in the other direction.

Let me give you an example. Let's say I'm an entrepreneur. I set up a map box factory on this TL 9, Starport D world - let's call it Mexico - and produce map boxes for the equivalent of 1375 Imperial credits, then export it to the TL 15 world, let's call it Germany, where I can sell it at 2500 Imperial credits. With shipping at Cr 1000 per dTon, my shipping costs per unit are negligible. The higher-tech map box companies on Germany can't match my profit margin. So, if you apply only the exchange rate, then for those things that can be made at lower tech worlds, jobs are flowing to the lower tech worlds.

On the other hand, Merchant Prince tells us, "A high source TL and a low market TL are advantageous; source TL 15 and market TL 1 produces an increase of 140% in base price. Source TL 6 and market TL 15 produces a decrease of -90% in base price ..." Under Merchant Prince, goods are supposed to flow in the other direction: you should be able to buy a Imp Cr 2500 map box on Germany and sell it for much more than Imp Cr 2500 on Mexico - Cr 4000 by Merchant Prince/MegaTrav rules. Factor in the exchange rate, and on Mexico the German map boxes are triple the price of local Mexican map boxes: they're high-end luxury models that must be offering something the local manufacturers can't match - which by extension means the Mexican boxes are viewed on Germany as cheap knock-offs selling for Imp Cr 1000. In other words, if I apply both the exchange rate and the Merchant Prince rules, I can't sell Mexican map boxes at a profit on Germany - people there won't pay what it costs me to make them; meanwhile, the German exporter's a niche marketer on Mexico, selling a few units to the wealthy who are willing to pay triple price for some bells and whistles while the bulk of the market buys local.

There's no reconciling that unless you like a really complicated economy. First time the player goes shopping for a map box and you tell him it costs Cr 2500, he'll tell you, "I'm going to Wal-Mart to shop for a cheaper import," and then you're breaking out a calculator trying to figure out how low the price can go before it drops below manufacture costs. Realistic, but kinda breaks the flow of the adventure.

...But how does this apply to trade? Is passage and fuel "cheaper" in a lower system? Does High Passage only cost 5500 in a D/9 system? ...

My thought is that Imperial credits represent the internationally - um, interstellarly? - accepted medium of exchange that everyone pegs their own currency to, at least within the Imperium. With regard to interstellar trade and traffic, the prices in Imperial credits for fuel, tickets, and so forth, are the standard. This means that while a High passage is always 10,000 Imperial credits, the poor shmuck from that TL 9/Class-D starport world had to earn 18,182 local credits (assuming 5% inervals, not 10%) in order to come up with the price of a passage - he put in a lot more work to buy his ticket than the guy from Mora did.

 

[rancke]

As I understand it, at higher techs a manufacturer can make stuff of the same quality cheaper. So when you try to sell your TL13 map boxes on Germany, the exchange rate advantage is partly or completely offset by the cheaper production costs. And then the people on Germany may want something more sophisticated than TL13 map boses, something with all the bells and whistles that TL15 enables.


Hans

 

[Carlobrand]

As I understand it, at higher techs a manufacturer can make stuff of the same quality cheaper ...

Which is why the merchant rules have that bit where higher tech trading to lower tech can make more profit: the same stuff made by lower tech industry supposedly costs more for them to make, ergo you can ship in, match the local price, and come away with a bigger profit margin. There's a certain logic to that.

Unfortunately, there's also a certain logic to the exchange rate bit, where Mexico can capitalize on its lower exchange rate and cheaper labor to give its products a competitive advantage in foreign markets.

Both are reasonable ways to view things, and in fact it's perfectly reasonable for both to be operating simultaneously - but it makes for a complicated way to run a game when you're the GM and your players are, very reasonably, trying to make their credits stretch as far as possible. You are at that point modeling an interstellar economy, which is fine for those of us who like doing such things but tends to distract from the business of chasing bad guys and puzzling through enigmas. Verisimilitude demands you spend the extra time and do the extra work; drama demands you take the easy route and get back to the business of adventuring as quickly as possible. What to do, what to do?

 

[whartung]

The system as written conflicts with itself. From what Whartung is saying (I don't have TNE), TNE appears to be applying the TCS standard, which is roughly 5% jumps per tech level, consistent with what Timerover's doing. Striker, Merchant Prince, and MegaTraveller apply a 10% jump per tech level - in the other direction.

Where is this mentioned in MT? I looked around, but couldn't find a reference anywhere. At least not a table, I was just skimming text in the trade section.

Edit: Never mind, I found this part. TNE does the same thing, and this factor is unrelated to the exchange rate section.

Regarding prices for passage and fuel, being standardized at CrImp, that's fine and works. But it becomes a little bit more of a question and issue when it comes to parts for a TL10-12 Free Trader on a TL15 world, or simply ship pricing in general (is an equivalent TL10 FT "cheaper" on a TL15 shipyard?).

 

[Ishmael]

Try reading the sidebar in T4's Pocket Empires concerning the meaning of 'credit' and the calculation of exchange rates based on tech, infrastructure and resources extracted. It is quite a bit better than the old TCS-like systems and the exchange rates fluctuate with demand annually ( per annum turns ).

btw, Infrastructure can just as well be considered to be the local manufacturing tech level as opposed to the 'commonly available' tech levels.

 

[Carlobrand]

Where is this mentioned in MT? I looked around, but couldn't find a reference anywhere. At least not a table, I was just skimming text in the trade section.

MegaTraveller Referee Manual, page 53, table TRADE AND COMMERCE 4, column Cargo Price, under Tech Level Effects:
"Subtract destination world Tech Level from sourceworld Tech Level and multiply by 10 percent. This value may be a positive or a negative number Multiply this value times the adjusted price."

Net effect is that it's more profitable to move cargo from a higher tech source to a lower tech destination, less profitable to move cargo from low to high.

As near as I can tell, MegaTraveller trade is Merchant Prince trade. There might be a couple of tweaks hidden in there; I haven't played much with it.

Regarding prices for passage and fuel, being standardized at CrImp, that's fine and works. But it becomes a little bit more of a question and issue when it comes to parts for a TL10-12 Free Trader on a TL15 world, or simply ship pricing in general (is an equivalent TL10 FT "cheaper" on a TL15 shipyard?).

It's a good question. Answer: I don't know.

Under High Guard rules, your TL10 Free Trader already costs more than a TL 15 model: you need a bigger power plant to achieve the same power output, and power plants are charged by tonnage, not by output, ergo the lower tech ship costs more. And, those prices are already in Imperial credits. From there, I see several ways to look at it:

1. Under the exchange rate rule per canon, the Imperial credit is pegged to the TL15 world. If we're going to say that exchange rate means things cost LESS on lower tech worlds (as when we declared the map box on the TL9 world cost Cr2500 in local simoleons, therefore Cr1375 Imperial), then you're paying less for parts - and maybe for the ship. All other things being equal, the TL10 world's local credit is 75% the value of an Imperial credit. If we maintain the convention that the TL10 world's prices are identical but in local currency, then you pay 25% less for parts, and maybe for ship if you want to rule it that way.

That would tend to offset that unfortunate price increase that makes low tech High Guard merchants unprofitable. However, it conflicts badly with the Merchant Prince/MegaTrav merchanting model: if the low-tech world can make and sell the part locally at a 25% discount, how are you managing to ship the identical part in to them from a high tech world and sell it at a 50% markup? The exchange rate rules and merchanting rules torpedo each other unless you assume the items are NOT identical: the higher-tech world is offering value for that 50% markup, perhaps by offering better quality or ancillary features that local manufacturers can't match. But, that's not what canon says; making them coexist requires some departure from canon.

Also, it's counterintuitive. Real-world, jobs tend to flow to the place where labor costs are cheaper - but they take the productive higher tech manufacturing techniques with them. Manufacturer gets the best of both worlds that way. Where industry is forced to rely on older, less productive equipment, industry is at a competitive disadvantage; the Warsaw Pact economies failed eventually in part because they could not match the productivity of their western counterparts.

The more I look at it, the less I like the idea of low exchange rates creating lower prices. On the other hand, if I ever find myself as player in a universe with that exchange rate rule, I may try to pull together enough money to build a TL15 maquiladora on some low tech world.

2/canon. Under the merchant rules, the lower tech world's industry isn't as cost-efficient as the higher tech world. All other things being equal, an identical part shipped from offworld can sell for, in the case of a TL10 destination world, 50% more than the TL15 source world where they were made, suggesting that locally made parts cost at least that much. Under that model, your parts cost 50% more when you buy them local-made on a TL10 world.

Try to tie that in with shipbuilding and your TL10 ship not only costs more than a TL15 model to begin with, it costs 50% more on top of that if it's being made at a TL10 world. I don't think we want that.

2/variant. Alternately, you can look at it as TL10 being the base tech and therefore base price, and the TL15 world can make and sell them at 2/3 of that price (therefore earning a hefty profit when they ship and sell the things on the TL10 world at TL10 prices). Under that model, your TL10 item costs X, but it would cost 2/3 X if you could get it at the TL15 world.

That gets real complicated really fast. By that logic, Merchant Prince is upside down: that Cr2500 map box of a few posts back should cost LESS at the TL15 world instead of costing MORE when it's shipped from the TL15 world to a lower tech world. Means instead of having a fixed menu of prices, you have to recalculate from base tech level to the local tech level every time the player goes shopping. Means you've shifted from Merchant Prince to a modified house-rules merchant system - not a bad system, there are definite advantages in doing it that way, but very obviously not by-the-book Traveller.

Potentially nice for ships: your ship's power plant costs 2/3 as much if you can build the TL9-10 plant using TL15 manufacture techniques. However, why should I buy a TL9 power plant at a 33% discount on a TL15 world when I can buy the smaller and equally powerful TL15 power plant at a 66% discount? Nobody's going to go to a high-tech shipyard to save money on lower tech designs when the higher tech designs will save even more money. And, your typical Free Trader has a TL7 maneuver drive, a TL9 jump drive, maybe a TL7 laser and missile launcher, a TL5 computer - plays havoc with trying to figure out how much the thing costs. It does eliminate the problem of the ship costing even more than usual when it's made at a lower-tech shipyard, but by extension the higher tech ships are even cheaper. High Guard is not a system that adequately explains or supports the existence of lower-tech shipyards.

The problem in a nutshell is that High Guard was not written with Merchant Prince in mind (I don't think that existed at the time) and Merchant Prince didn't particularly care what High Guard had to say about starport construction costs. The safest bet is to keep Merchant Prince (and the exchange rules) as far away from High Guard and ship construction as humanly possible.