“In my new campaign, arcane magic has been outlawed. It’s still there, people are just too scared to use it. This has been the status quo for 1,000 years. How would you recommend handling the pacing of magic items, non magical rewards, and character wealth in general?”
Hi James, thanks for writing in; this is a common issue with experienced and beginner groups alike. Here are my thoughts on how to keep things balanced and interesting:
With magic outlawed you may want to consider how far technology advanced during the thousand year ban, and how many steampunk style devices and inventions might be in use or lay lost among ruins.
Rewarding players with treasures of partially functioning attempts at replicating magic-using technology. You can easily keep them mystified and busy trying to decipher, repair, and sell the inventions they do discover without dealing with anything even remotely magical.
With magic outlawed, knowledge of magical cultures and the history of magic itself also likely has been lost to the mists of time. Letting the adventures discover lost arcane texts or simple historic scrolls regarding magic item creation techniques, and how magic influenced the history at the time, can make compelling rewards valuable to scholars on the black market.
Other useful treasure rewards are ancient paintings, statues and other works of art long since lost among ruins. Finding these treasures is only part of the fun since players will need to devise a way of safely transporting them (without magic) and then finding a suitable collector to appraise the pieces, and lastly, someone interested in purchasing them.
The effort and cost involved in this process will slow the monetary income considerably, and make the money the group does receive at the end feel more valuable. (They might also make contacts and enemies along the way.)
Pacing Magic Rewards
Some characters might be able to use the historical tomes to piece together the real reasons magic was outlawed, and perhaps use them to learn the basics behind the crafting of simple magical artifacts or rediscovering rudimentary cantrips.
For example, handing the characters a magical ring that gives a small bonus to armor offers much less excitement as allowing them to rediscover the secrets behind creating such a ring themselves, and letting them experiment. The process of experimentation will also help consume some of their treasure money and time, making control of magical power progression easier.
In regards to actual magic items and weapons, detecting them as magical in the first place without some type of preexisting magical detection artifact or steampunk invention could prove impossible. This would make the inclusion of magical items a difficult treasure reward unless the the magical gear mystically glows or exhibits clear magical properties.
Assuming they have a way to properly identify some of the treasure rewards as magical, without an alchemist or other scholar to identify the specific properties of each item the group will be left with experimentation and the rare magical lore text to discern the use of each artifact found. This lets you once again control how fast the group grows in magical power
Regarding the speed of rewarding magical treasure goes, I would start slow and small. Let the characters reinvent magical equipment rather than discover existing magical artifacts. At higher levels, offer small caches of magical artifacts hidden away from the magical purge a thousand years ago. This lets the players feel responsible for their growth in magical ability, and the later rewards will seem more valuable if they have to fight through higher level traps and enemies to acquire them.