Let's begin with a simple map, with simple place names, and proceed from there.
This is the kingdom of Hothior, from Divine Right, scanned from my original copy bought used in 1982. We can use it to establish the trading system exactly as I designed it, on a small scale. For my system, I used real data gleaned from two primary sources: an ancient, 1952 encyclopedia, and a United Nations Statistical Yearbook. But we don’t have to get that technical in order to demonstrate how this works. We can hedge and fudge in whatever manner that’s needed.
To start, every kind of produced good in the world has a source. For our needs, from the map of Hothior, we can define eight sources: the four cities, Port Lork, Tadafat, Lapspell and Farnot; the two rivers, the Flood Water and the Ebbing; one forest, the Bad Axe; and the entire country itself, Hothior. There are other sources on the map, namely the Sea, the Shaker Mts., Mivior on the west, the Waterless Downs and so forth (along with the sea) ... but we can ignore all of those and concentrate on just these eight localities. Note that sources do not need to reflect a single geographical point or hex ... because it is not that which determines the value of a produced good.
The trading system starts with gold. Let us say, for simplicity’s sake, that there is only one source on the map that produces gold, and let’s say that that source is the Bad Axe forest. It doesn’t really matter where in the forest, but let’s say two hexes west of Port Lork, where the forest butts up against the Shaker Mts. There you go, we have 1 reference for gold in the kingdom of Hothior. Indeed, for the entire closed system we’re about to build.
Now, it is going to occur to you to think that the gold ought to be more valuable the further from this source that you get, but if you try to build a system on that perfectly realistic assumption, you’re going to drive yourself freaking nuts in very short order. So let’s say, rather, that gold is such a valuable, precious item that the crown has established a ‘gold standard,’ so that no matter where in the kingdom you are, all gold is the same value.
What you need next is a number which indicates the weight of gold that is produced by this one source. Any number will do, really – and your system will very much depend on whether this is a high number or a low number. For our example, we’re going to say that the mine in the Bax Axe forest produces 2,000 ounces of gold.
Very well. Let's say that for the moment, we'll assign 2,000 ounces of gold for each reference we add. Later, we can change the gold per reference, but we'll start with this.
A good first commodity after gold is grain. Let’s specify some references for grain. I think it very reasonable that the Ebbing and the Flood Water would both have grain farms along their valleys, and that Port Lork and Tadafat on the River are both surrounded by farms. Farnot looks like a fishing town, so let’s say there’s no significant grain there, but there might be some grain produced in the east end of the kingdom, around Lapspell. Of course, the Bad Axe forest is right out. Finally, we can say that Hothior, over all, produces grain.
Altogether, that’s six references: the two rivers, Port Lork, Tadafat and Lapspell, and all of Hothior. Six references at 2,000 ounces of gold per reference gives a total value for all the grain produced in the kingdom as 12,000 ounces of gold.
Now, the tendency will be to think that the total grain should be divided into the total gold, but I’m going to urge you not to undertake that idea. I’ve tried it, I wasted ten years on it, and the logic is faulty. All the gold in the world is not equal to all the grain in the world. It just isn’t. If you compare the value of all the gold mining companies against all the oil drilling companies, you’ll realize the truth of what I’m saying.
For those gentle readers who are saying to themselves, “Well that’s obvious,” I’m so glad. It wasn’t to me. I had to reason it out the hard way. But I’m there now, and hopefully we’re all agreed here and we can move on.
Like gold, we are going to need a weight for all the grain produced. I get these weights from source material, calculated to reflect the 17th century, but we can just make numbers up. Let’s say that Hothior produces 7800 tons of grain. That may not seem like much, but we’ll agree that Hothior is a small country, and technique is the watchword here, and not realism. We could easily say that Hothior produces 20 references, or 30 references, more in meeting with the population it has, but that is of no importance now.
So we’ve established that 6 references of grain = 7,800 tons, and therefore that 1 reference of grain = 1,300 tons. Thus,
2,000 ounces of gold = 1,300 tons of grain. That’s simple enough. If you add another reference of gold, you decrease the cost of grain, and if you add another reference of grain, you increase the cost of grain.
Hold on, what now?
Read that again, very carefully. More gold in the system deflates the price of everything else, as it deflates the value of gold. An increase in the supply of anything always deflates its value. It is sound reasoning, once you recognize that "references" do not equal value, but importance. They are merely a method for comparing value.
If another reference of gold is added, it does not change the amount of gold in the system. It is an interesting circumstance, one which I solve by already knowing the total amount of gold, everywhere. Thus, the number of gold references is divided by the pre-determined amount of gold, and this determines the value of all references throughout the entire system.
Thus, with 1 reference of gold against 6 references of grain, all the grain in the world would be worth 6 times the value of all the gold in the world. Which, if there is 2,000 gold ounces in the world, would be worth the 12,000 gold ounces we said earlier.
But if we increase the number of references of gold to 2, each gold reference would be equal to 1,000 gold ounces (because the total gold is static). Therefore, the grain in the system would then drop in value by half.
This is why it is good to sprinkle a fair number of gold references throughout, and to have an intial static number that is fairly generous ... so that if you choose to add a gold reference, it isn't a shocking change to the overall system.
Good. This gives you the basis for producing a single list upon which to base gross commodity prices on, which could apply to any part of your world. We’re ready for Step Two.
What I do at this point is to assign the references to a particular product into the centers that market that product. For the purpose of this template, let’s say that all four towns are markets.
Thus, we assign the river Ebbing and the grain fields around Tadafat to the city of Tadafat itself. We assign the grain around Lapspell to Lapspell. We assign the river Flood Water and the town of Port Lork to Port Lork, and we assign the whole kingdom to Port Lork as well, since it is the capital of Hothior.
Thus we have:
You can get as detailed as you want with assigning references or tenths of references to specific hexes and calculating out the exact amount of what hex is transported to what city, but none of that is really necessary. At any rate, what we have here is a distribution of grain produced in Hothior according to what center accounts for it.
What we do not have is a distribution according to how much it costs. That is another matter entirely.
Let us consider Farnot, which has no grain references. We can see from the map that it is 2 hexes from Port Lork, 3 hexes from Lapspell and 5 hexes from Tadafat.
Suppose we divide the total grain references above by those various distances, in order to get a comparison of geographic convenience to grain sources for the town of Farnot. Now, for reasons that will become evident later, we add 1 to each distance, so that Farnot is ‘3’ from Port Lork, ‘6’ from Tadafat and so on.
Thus, we can calculate that from Port Lork, 3/3 = 1.00; from Tadafat, 2/6 = 0.33; and from Lapspell, 1/4 = 0.25. We’ll keep our numbers at two significant digits (I typically use four for my system), and the total pricing references for Farnot can be established at 1.58.
We can do the same for the other cities as well. Port Lork is zero distance from itself, but we add 1 to make this distance ‘1’ (Aha!); it is ‘4’ from Tadafat and ‘5’ from Lapspell. Thus, Port Lork gives 3/1 = 3.00, Tadafat 2/4 = 0.50, and Lapspell is 1/5 = 0.20. Total: 3.70.
Calculating for all the cities gives us these results:
Tadafat manages to remain quite significant, since it draws more from Port Lork than the reverse. And Farnot is not so far behind Lapspell, since it is much more centrally located and has better access to the Port Lork market.
As an aside, for distance calculation I would tend to say the trip down the Ebbing and Flood Water to Port Lork was more easily accomplished than the reverse, and that both cities were closer together because of the water. The same would be true for Farnot and Lapspell, which are much closer by sea than they are by land. I’d also take note that the sea route from Farnot to Port Lork would not be so helpful, since the long peninsula necessitates a long journey by that means. I’m dispensing with all this because of trying to keep things simple ... but by rule of thumb, I calculate a distance over water at 1/3 the distance over land. I also have a calculation for moving down river as opposed to moving up river, but none of that is important right now.
Fair enough. The observant viewer will take note that the total of all the pricing references is more than 6. It equals 10.13, in fact. You may make use of this dichotomy by proposing that the movement of goods increases the overall value (it’s true! I read it in an economic textbook), but for my system the sum of pricing references is irrelevant – the market is fluid, and there can be more ‘value’ in it than there is actual commodity. Each individual city has the price of grain calculated for that city alone, so it doesn’t goof the system anyway. Try to hold onto the knowledge that the value of grain at this point is merely a base number, to be modified by additional calculations.
Things may appear to get a bit rickety at this point, but the purpose here is to calculate the pricing reference value against the total value of all gold vs. grain, and calculate it into gold pieces.
We already know that the value of grain in the world is 12,000 gold ounces; say we want to determine the base price, in gold pieces, for Farnot. We take the pricing references (1.58) and divide them into the total produced grain references (6) and multiply them against the total value of grain (12,000 gold ounces) – which is 1.58/6*12000 = 3,160.
And just for interest, we divide the local value of grain (3,160 gold ounces) into the total quantity of grain (7,800 tons).
For this next bit, I botched it up entirely the first time that I wrote it. I'll try and get it right this time.
To get the price, we start with the base world price, which is the value in gold of the world's grain (12000 gold ounces) divided by the total weight of the world's grain (7800 tons), which gives ounces/ton, or 1.5385 oz./ton. This is then multiplied by the number of gold coins per ounce. In my world, that’s 8.715 (3.56 grams/coin), but you can make your gold coin any size you want. Let’s say there are six gold coins per gold ounce, and for good measure lets remember there are 200 c.p. per g.p. in old AD&D. Thus, if we want the value in copper coins, we have 1.5385*6*200 = a base price of 1,846.15 c.p. per ton.
This is actually a bit high. I apply (because it proved necessary to control my pricing) a completely ad hoc base line that says a center whose pricing references equals 5% of the world’s total references should produce an average price; Farnot, in our little system, has 26.3% of Hothior’s total. Thus we take that percentage and divide it by 5%, and then we divide that sum by the base price given above – which is 1846.15/(0.263/0.05) = a price ‘adjusted for travel’ of 350.54 c.p. per ton.
Thus we produce a different price for every city, that price not being based on a random system, but upon flat calculations that change based upon the city's physical position in the world.
Well, if you can catch your breath, we can move on to Step Three.
This last price is, in fact, the price I would use for the farmer to sell his hauled, unprepared grain to the town market. This would be grain that, while the chaff was largely removed, would yet have to be cleaned. This is typically done by the miller, who then might sell the prepared grain whole, or use the prepared grain to make flour.
I’m insane, so I take the time to calculate out all three prices: uncleaned grain, prepared grain and flour. I could work out a price for meal and groats also, but let’s not go there right now.
Now, as it happens, my world has sets of references for hundreds of different goods and services, and one of those groups of references is for ‘foodstuffs;’ like grain throughout the example above, foodstuffs too would derive from sources at specific cities, and be gathered together at markets, and be subject to the same system to create a unique pricing reference for each place of sale. Unlike grain, however, foodstuffs are a service, and work differently from raw material goods like grain (or ores, stone, fruits, fish and so on).
To save us the enormous hassle of working out just what the foodstuffs references there are throughout the kingdom of Hothior in this post (like I want to do this for another five hundred words), let’s just assume that chance means the foodstuffs pricing references = 3.00. There tends to be a lot of foodstuff references in my world.
In calculating the price required to clean grain and make it prepared, we take the adjusted price above - which is the price of uncleaned grain (350.54 c.p./ton) - and divide it by the foodstuffs pricing references (3.00); then add it again to the uncleaned price. Thus, 350.54/3.00+350.54 = 467.38. The difference is the miller’s mark-up for cleaning the grain (‘prepared’ grain).
If the pricing references for foodstuffs is higher, there are more millers and the mark-up is reduced. If there the pricing references are lower, there are less millers and the mark-up is increased. Couldn’t be easier.
Once you know the price of prepared grain, you adjust it again for turning it into flour, once again based on the number of ‘flour’ references, as opposed to ‘foodstuffs.’ The price is then increased again if you’re buying cakes made from the flour by a cakemaker. Cakemakers, too, have their own pricing reference. In all, counting it up for posterity, I find I have 857 different types of pricing references for my system ... each one calculated exactly in the manner above, although I use excel to make most of the calculations automatic.
At this point, I have worked it down that I’m able to calculate the number of references for each individual market center, by dividing it by that center’s distance from every other center, cutting and then dividing it by all the sources everywhere in the world, and then pasting that set of numbers into the first page of an excel spreadsheet that is my pricing template. This then automatically calculates all the prices for the more than 1,200 objects I make available for my players. With cutting and pasting, I can do this in, as I say, less than 60 seconds, saving the new equipment list to a flashdrive which my players can then use.
All of this can be attested by Carl at Three Hams Inn, as he was in my study about a year ago, when I showed him the tables in question and walked him through how they worked.
As you can see from the above, it really isn’t that complicated a system. The complication comes in how many different specific options you wish to add to your world. For example, I have 15 different types of wine, and 12 types of distilled liquor, and that’s without adding Spain, Africa or the New World to my system. Spain undoubtedly has more kinds of wine – hey, I don’t have sherry yet!
Add to this the possible combinations of references, such as wine soaked cakes, which would again increase the price of the cakes in the example above (the price of the wine and the flour are added together, in the right proportions, before they are modified by the cakemaker), and you have an endless potential for automatically generating the prices of things, all within a single, unified system.
Fun, eh? Have I got you thinking now?