By 148PC, around the time of Emperor Konrad's 50th birthday, the Holy Sigmarite Empire was once again flourishing, with the trade agreement with Mellvellon bringing in fine wares from the high elf realm. The town of Niederdam was expanding thanks to the trade along the Easting Road, but all was not well in the Empire. Grand Theogenist Rikard deeply distrusted the other kingdoms and races of Palurin, and his sermons became increasingly racist and xenophobic. By the middle of the 140s the Grand Theogenist was openly supporting extreme Sigmarite cults who conducted anti elf pogroms in Niederdam and Sigmarheim while Konrad did nothing to stop them.
Konrad had become detached and aloof by this time having lost his youngest son Boris to sweating sickness in 143. Then in 148PC the anti elf sentiment took a turn for the worse as nearly one hundred elves were taken prisoner in Sigmarheim. Still the Emperor did nothing, refusing to act against the official church of the realm, though privately he was furious with Rikard. Mellvellon responded with an ultimatum.The elves would be released or the army of the dragon lords would free them by force. Sigmarheim would be burned to the ground.
The battle of the Easting Road took place just east of Niederdam in 148PC. The Dragon Lords of Mellvellon were met by the Theogenist's ten thousand strong Ecclesiastical army, since Konrad refused to raise an army. In the Emperor's eyes the high elves were in the right. The gods certainly favoured the lords of Mellvellon in the battle, and the thousands of fanatical sigmarites were utterly destroyed, with the Theogenist Rikard himself slain. The elves then moved quickly west, and Konrad took swift action. A priest named Julius became the new Theogenist and the elf prisoners were released immediately. Konrad declared Sigmarheim and open city and apologised on behalf of the realm of men.
After a four day meeting with the dragon lords, Konrad managed to convinve the high elves that the church, not the state, was responsible for the state of affairs, and within three years trading had resumed with the lords of Mellvellon, though many on both sides now harboured bitterness and contempt for each other.
The new Theogenist, Julius, was eager to make amends for the debacle of the Easting Road, and instead launched a crusade against Chaos, who had once again begun raiding the tribes of Pellenar. Julius raised a new army in 154PC and sent aid to the chieftans of the Pellenar tribes. In 155PC the army of Sigmar, though somewhat smaller than had been hoped, none-the-less defeated the chaos army raiding the northern plains and secured peace for Pellenar. The Holy Sigmarite Empire accepted the eternal friendship of the tribesment of the region, promising aid in the future against the dreaded northern raiders.
Emperor Konrad was by now ageing, and had become even more isolated from the real world following the unfortunate death of the heir to the throne Heinrich, aged 22, in a horrific riding accident. Now Konrad spent most of his time with Frederick, his one surviving son. The council of the Empire now ruled the land, and in 159PC, having heard of renewed attacks on Empire caravans in Arnar, sent an army east with the traders to protect them.
Upon arriving at the gates of Mellvellon however, the army of the Empire was attacked suddenly and mercilessly by an elven warhost. After a long and protracted battle where the Empire army proved stubborn even in the face of a mighty star dragon, the Sigmarites were defeated and the trade caravan seized by the elves.
Whether or not the attack was ordered by all the lords of Mellvellon or led by a rogue embittered high elf lord is still a matter of conjecture. Either way it was the last straw for the Empire-Mellvellon alliance. Plans for a greater alliance against chaos and the Dominion were scrapped and while the two nations did not enter into a protracted war, the distrust between them ensured that the years of free trading between them were at an end. The fortunes of Niederdam, now a mighty city nosedived, and it soon became a denizen of the poorest most misfortunate citizens of the Empire.