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Armies are the backbone of the military organisation. They allow better command and communications structures, and a realm should strive to use the army system as best as possible, if it wants to be successful on the battlefield.
In a medieval world, every army is sponsored by a noble, usually a lord or government member. New armies can be created at any time, for a small sum of gold.
The army sponsor can choose the marshal and vice marshal of the army (and change them at any time), and he can dissolve the army if he so chooses. He is also the only one who can put money into the army war chest.
The marshal is in charge of the army, and has direct authority over it. He serves under the general of the realm. The marshal can choose offensive and defensive deployment formations (i.e. marshal settings) to use in battle, and maintains the standing orders.
The vice marshal (a.k.a. Second in Command or SiC) takes over for the marshal when the marshal is unavailable, either through wounding or imprisonment, or any other situation that renders the marshal unable to fulfill his duties.
One of the primary functions of an army is cohesion on the battlefield. To serve this purpose the marshal and vice marshal can choose both offensive and defensive battle formations for the army. Whenever the marshal or vice marshal is present with the army in a battle, the army will line up on the battlefield in the specified battle formation.
Every army has a war chest, (hopefully) filled with gold. The war chest allows the army to operate better, by sharing the financial burden of troop maintenance. As long as there is gold in the war chest, half of what army members pay for training and repairs will be paid out of the war chest.
In addition to the standing orders, every knight who is assigned to an army also has additional messaging options on the normal Messages page, to contact all or some members of his army.
Since the knights serve their liege lord, and army assignments are military service, the liege lord of each knight decides to which army they will be dispatched. Rulers, dukes and other lords can assign themselves to an army.