Pre-Industrial Economic Rules

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Income
Income can be collected from resources, taxes, production centers and commerce.
governments in this era are not very good about putting aside cash reserves, so any income not spent is lost (spent on nice parties, new dresses for the Queen etc)

Resources:
These provide 1 point of Income each, and represent things like lumber, coal, metals, food production, and general commerce of a region. They are assigned by the referee and new ones can be discovered as time progresses (representing expanded production) or sometimes based off new discoveries.

Financial Centers represent large amounts of available money, and work just like Resources in terms of income and supporting PCs. Any country can take out up to 5 points in loans per year, up to 15 points total--this is not required to come from a Financial Center, since it assumes that countries can borrow from more unsophisticated lenders. However, a country with a financial center in it can take 10 points per year per FC, up to 30 per year per FC. Interest rates will be decided by credit. The FC generates 1 point per year regardless, to signify taxation on private loans.

Craft Centers:
Although most items are still made by craftsmen, there are some cities that have such a concentration of craftsmen as to be particularly valuable in themselves. A craft center does not necessarily mean that a production center will show up there later. There are other factors at work. But they are a prerequisite to getting one later.

Each craft center has a value of 1, above and beyond any resources there already. Some cities are even more valuable and their rating will be indicated.

Taxes:
Taxes are available at any time, but due to the difficulty of collecting taxes from a generally impoverished population this is not historically the main way that states generated income. They represents internal fees, tolls, taxes on how many chimneys and windows you have etc. They generate 1 point per 4 million people in peacetime (.25 per million). In wartime they generate 1 point per 2 million people (.5 per million) but are not generally popular--extend periods of wartime taxation could be used by the moderator to justify bad events making your life harder.

Commerce:
This represents international trade, etc, and is dependent your number of viable ports (not blockaded essentially). You get 1 Point per Port and these are determined by the referee. More can show up over time as you econ advances however. Entrepots generate 5 points of income per year.

You get .5 points per Commercial Fleet. You are limited to 3 commercial fleets per port. An entrepot gives you 10 extra slots.

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Math Note
In the interest of keeping us all sane, always round to the nearest .05 when calculating income, expenses, etc.

Build Supplements

Sometimes you need to supplement or amend your build because unexpected expenses pop up--generally due to war, but sometimes due to other exogenous factors such as natural disaster or revolt. In this event, there are a few rules. The addendum is merely an addition of expenditures (the raising of new troops, the repairing of damaged vessels) and/or income (the raising of war taxes, the taking out of loans)--any money spent as of the start of the year is untouchable. So yes, that means if you spent 6 points in maintenance on a fleet that was at the bottom of the sea by January 14th, you're still on the hook for that money. You can supplement your builds at any given turn, on the turn, but no more often than that (dealing with 1/4ths is as small as I'm willing to go, I'm not a math genius). If you take a loan out mid-year, for the sake of simplicity, the loan is treated as if it were taken out on January 1st of said year.

On the topic of loans...

Sovereign Loans
As mentioned above, anyone can take out up to 5 points p.a., and up to 15 points total, from their indigenous financial systems. Nations with FCs can take out up to 10 points p.a. and up to 30 points total. But what happens when a nation needs to take out more loans than its domestic financial system can take? Enter capitalism!


Loans from private lenders
Nations can borrow from other nations' financial systems, and in order to ensure that the system doesn't become too convoluted the logic is as such: all loans to another nation are guaranteed through the owner's government.  You have either 15/30 points of borrowing available to you, but with your permission you can allow another nation to utilize your borrowing pool, with the terms of repayment and interest set by their Credit rating (see here). However, this is not without risk to the lending nation--if the country borrowing the money defaults on the loan, not only will the borrowers credit rating be damaged, but you (the lender) are on the hook for it. Since the financiers are generally terrified of not being able to recoup any money, you are given an additional year in which to make good on the borrower's debt. If you cannot make good the debt, not only will your credit rating drop, but the value available to that FC will be diminished as well.

Example: Ireland has an FC and thus a 30 point debt limit. Because 10 points p.a. can be taken from that debt pool each year, the Irish permit the Ottomans to take out 10 points in loans from their FC. Ireland thus has 20 points of borrowing left in its financial system, but 0 from that given year is available to it or anyone else. Even if Ireland wants those points itself, it has been tapped out.

The Ottomans have to pay back the debt to Ireland with interest over the time set by their credit rating (C, which means an interest of 15% over 10 years, so 1.15 over 10 years, 2.3 over 5 years, etc). The Irish government has technically served as the guarantor for this loan, and thus if the Ottomans are unable to make their payments, not only does the Ottoman credit rating takes a hit (from C to D), the Irish government is on the hook at the Ottoman rate. If Ireland is unable to make the payment for the Ottomans by the end of the following year, the Irish then take a credit hit as well (from B to C), and the FC's mid-term value drops by the value of the default for a period of 10 years. Thus, if the default is worth 5 points, the FC is now capped at 25 points of lending for 10 years, and the FC only generates .85 p.a (I will round down to the nearest multiple of .05, I'm trying to punish you profligates).

Direct loans

Nations can also just directly loan money, from one government to another, if they are running a surplus. The borrowing nation is still bound by their credit rating to repay, but this minimizes the risk of another nation's default causing disaster in your financial industry. This does come at a steeper cost to you--you have to have the cash on hand to loan it to another government--and exposes you to more immediate risk, but keeps you safe from threats to your credit score and the health of your financial system.

Example: Ireland might not want to take the risk to its credit score by facilitating a loan by the Sublime Porte--it is sitting on a treasure trove of tobacco money, and has the ability to lend the money directly to the crafty Vizier in Constantinople. The Ottoman Empire still has 10 years to pay back 11.5 for the 10 point loan. Halfway through, the Ottoman Empire is invaded by a band of rampaging Malays who have commandeered a Dutch treasure fleet, who burn down Baghdad. The Ottomans still have 5 points outstanding on the loan when they inform the Irish that they will not be paying it back. The Ottoman credit rating drops to D, but the Irish is unaffected--though the finance minister is duly sacked for investing in such a risky move as a loan to Saracens.

Note on repayments:
I'm not going to compound interest, but if you don't make a payment one year, it rolls over to the next, including interest. If you reach the end of your loan with any outstanding balance, you default.

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Interest Rates

After an analysis of the last war, the financial houses of Europe have realized that they were lending out money far, far too cheaply. As such there has been a revolution in the way that interest for future (effective 1704) loans are calculated. Any loan taken out prior to this change is under the old rules.

Old Way: interest was added to the value of a loan and then divided by 10. So, a 10 point loan with a 10% interest loan paid over ten years resulted in payments of 1.1 per year to pay it off-1 point in principle and .1 point in interest. This is not how loans work in real life.

New Way: the interest is calculated by the base of the original loan. Thus, a 10 point loan with a 10% interest rate paid over 10 years is now 2 points--1 point in principal and 1 point in interest. As this would make loans almost prohibitively expensive at the old interest rates, I have adjusted them.

If you're paying back a loan early, interest is only paid for that year in which you're paying it back--it's not as if you have to take all the interest you would have paid over the course of a loan (10 points) when you pay back the principal. Thus, if you took out a 10 point loan in 1705, and pay it all back in 1706, you only pay 11 points, not 20. If you pay it all back in 1710, with 5 points outstanding in principal, you only pay 6, not 10.  

I have also created a more readily-accessible thread for discerning your credit rating, found here.

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Rule Change, effective 1721

The bond markets of Europe have become even more flush with cash. The wars of the early 1700s have created, with a few exceptions, very lucrative ways for European banks to make money--and anyone and everyone is getting in on the action. Though this hasn't had a downward price effect on the interest rates, it has expanded the pool of money available to be borrowed substantially.

Loan caps are now doubled: A country without an FC can now borrow up to 30 points, at a max of 10 points per year, and each FC now adds another 30 points of capacity, again accessible in max of 10 points per year (that is, a country with 1 FC can borrow 60 points total, 20 points a year).

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