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The merchant is good in the first 2 islands, and provides a guaranteed small income...but once your income is established hes not a necessity. Once you get pikes to fish, he becomes pretty much superfluous. I start forgetting to even send him home.
On that note, pikes are a boon to have during the winter...and there are also berry bushes you can send your farmers to collect from, guaranteed good gold if they dont get snagged by the Greed.
Dying causes some odd "hundred" days to pass and all your islands to decay, which means you need to bounce around between them repairing all the shit thats decayed.
Also if the little bastards steal your gems, yes you can alt f4 the game, but you also get them back when you nuke the cave.
In my experience the greed never got stronger when I wiped out the dock side, all that did was give me tons of room to expand withhout worrying about tower placement.
You are correct about the beggar camps and the merchant camp, though getting rid of either one is a strategic choice. A lot of times the camps will spawn right next to your keep location...I wasnt aware you could build around them without eliminating them. Ill have to try that.