Merchants are now limited to the item list found in the NEWS department of the Minecraft forums. In there are also the prices. If items are spawned, Prior James will expect to see the cash for the items placed into one of his bank chests. Daily the server notes will be checked to make sure items aren't being spawned that are not on the list.
I do not think I placed wool on the list, that item can be spawned, and costs 5 slime for 64, but sells back to a merchant for 4 slime.
Merchants also may not sell any items once violence has started until peace is made. This is done to simulate the strain on the economy that the war will have. Also, merchants and players alike may not use /time set XXXXX once violence has started until the war is over. Please submit any ideas or concerns of this matter to the forums.
