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There are several versions of this anecdote. In some the two monks were from a Catholic monastery in Wallachia or wandering Catholic monks from a foreign land. In either case Catholic monks would be viewed as representatives of a foreign power by Dracula. In other versions of the story the monks were from a Romanian Eastern Orthodox establishment (thus, from the indigenous Church). Dracula's motivation also varies considerably among the different versions of the story.
All versions of the story agree that two monks visited Dracula in his palace at Târgoviste. Curious to see the reaction of the churchmen, Dracula showed them rows of impaled corpses in the courtyard. When asked their opinions of his actions by the prince, one of the monks responded, "You are appointed by God to punish evil-doers." The other monk had the moral courage to condemn the cruel prince. In the version of the story most common in the German pamphlets, Dracula rewarded the sycophantic monk and impaled the honest monk. In the version found in Muscovite pamphlets and in Romanian verbal tradition Dracula rewarded the honest monk for his integrity and courage and impaled the sycophant for his dishonesty.
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A merchant from a foreign land once visited Dracula's capital of Târgoviste. Aware of the reputation for honesty in Dracula's land, he left a treasure-laden cart unguarded in the street over night. Returning to his wagon in the morning, the merchant was shocked to find 160 golden ducats missing. When the merchant complained of his loss to the prince, Dracula assured him that his money would be returned and invited him to remain in the palace that night.
Dracula then issued a proclamation to the city - find the thief and return the money or the city will be destroyed. During the night he ordered that 160 ducats plus one extra be taken from his own treasury and placed in the merchant's cart. On returning to his cart in the morning and counting his money the merchant discovered the extra ducat. The merchant returned to Dracula and reported that his money had indeed been returned plus an extra ducat. Meanwhile the thief had been captured and turned over to the prince's guards along with the stolen money. Dracula ordered the thief impaled and informed the merchant that if he had not reported the extra ducat he would have been impaled alongside the thief.
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To ensure a long and lasting relation between the Turks and Vlad, two ambassadors visited Vlad's castle and were granted an audience. When Vlad asked them to remove their Phrygian caps, both ambassadors refused stating that it was their fathers' tradition and they couldn't break it. Vlad was angered and ordered their caps fixed to their heads so they could never again break such an excellent tradition.
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One time, a group of kids was caught stealing apples. They were reported to Vlad himself who, obsessed with honesty, ordered them buried alive with holes for air and some water so they could "eat each other and live longer". He ordered that the last survivor be set free and given some gold.
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Vlad was so confident about his Kingdom's honesty that he placed a golden cup in the center of a public plaza. Thousands used the plaza daily and the cup remained there throughout Vlad's reign. The punishment for a thieve was impalement.