Chapter 264: First Step to Seize Power – Gold Standard Reform

  Chapter 256 The First Step to Seize Power – Gold Standard Reform

After 1855, the Austrian government had more economic meetings, besides dealing with non-performing assets, the more important thing was the currency reform.

Unlike the beginning of the succession, Austria’s gold and silver reserves are insufficient, the government’s economic focus is to stabilize the value of the currency.

In the Near East War, a large amount of gold and silver flowed into Austria through the trade with Russia, and the dilemma of insufficient gold and silver reserves had been improved, and the necessary conditions for the gold standard reform were already in place.

Currency reform involves too wide a range, not Franz can make a decision, the cabinet government has conducted a number of arguments, but still can not reach a consensus.

At present, most countries adopted the gold and silver reset system, or directly use gold and silver as currency, the gold standard countries are still very few.

Inside the government building, those who support the reform of the gold standard system are debating with those who advocate the gold and silver reset system, and this is the last debate in Austria.

That side of the argument can win, then in the next period of time, Austria will realize what the standard system.

What is better or worse is not really about the system itself. The most suitable is the best, and the best choice is to adopt different standard systems at different times.

In order to avoid being too far ahead of his time and becoming a martyr, Franz left the final decision to the elites of the age, and the judgment of these professionals was always much better than that of him, an amateur.

Franz instructed, “This meeting is only to discuss the monetary standard system, and it is forbidden to involve any unrelated topics, and personal attacks are prohibited.

Please think clearly before expressing your opinions, your opinions will determine the future destiny of the new Holy Roman Empire, and all aspects must be considered.

Prime Minister, you will preside over the meeting.”

It’s better to let the minions under you get on with the bickering!

If it was about convincing cabinet ministers, Franz wouldn’t have minded the occasional personal appearance. Now that this was a public occasion, it would be too ungraceful for the Emperor to come down and debate in person.

Xiangzhuang dances the sword with the intention of Pei Gong, this monetary reform will naturally not be so simple, otherwise Franz would not have proposed the gold standard reform so early.

The deeper intention of the monetary reform is to unify the currency of the new Holy Roman Empire and to collect the minting rights of each state.

The time to seize power has come, always cautious Franz, this will naturally pay attention to the face, face respect first to give enough.

Directly raw Austrian currency into imperial legal tender, obviously is not desirable. Franz wants a united empire, not a contradictory empire.

Now taking the opportunity of the reform of the principal system to issue a new currency to replace the original currency of each country is to take care of everyone’s feelings.

Anyway, no matter what the final result was, the right to mint money would be taken away by the central government.

Prime Minister Felix replied, “Yes, Your Majesty!”

After listening to the pause, he added, “The New Holy Roman Empire Currency Benchmark Conference, the final expanded meeting will now begin, and the delegates will speak in order.”

There were quite a few people attending the meeting, but not many were qualified to speak, besides the cabinet ministers, only the representatives of the various states were qualified to speak.

One each from Wurtemberg, Saxony, Frankfort, Hesse, Lombardy, and Bavaria, and four from the Austrian delegates.

This was on the principle of one delegate for every ten million people (rounding up the shortfall), and not less than one delegate for each state, appointed by the governments of the states.

This was a system devised by Franz himself, the main purpose of which was to avoid a crowd that would delay the session.

The final outcome of the conference was decided by a joint vote of the representatives of each state and the five cabinet ministers. Well, this was political showmanship, a total of fifteen people could vote, eleven of whom were appointed by Franz himself.

Frankfurt representative Hans spoke up, “Gentlemen, the gold standard system is not bad, the problem is that our domestic production of gold can not keep up with the growth rate of commodities.

According to the current growth rate of domestic industry and commerce, we need to increase at least ten or twenty tons of gold reserves every year, in order to be able to issue enough money to ensure the normal operation of the economy.

And the current annual gold production of the new Holy Roman Empire, only to meet a quarter, how to make up for the remaining gap?

Rely on foreign trade, from the international market acquisition of gold?

Near East war has ended, this kind of war wealth opportunity is gone, in international trade to get so big surplus, almost impossible.

In order to safeguard the domestic economy, it is in our best interest to continue with the present system of the reset standard.”

Converted to the present value of the Austrian currency, this would mean an annual trade surplus of fourteen million guilders, which is obviously only the ideal figure.

In reality, trying to convert it into gold to ship back to the mainland and use it as a reserve for issuing currency, this would be even more difficult.

The Bavarian representative, Jungler, objected, “Mr. Hans, you’re overthinking it. It’s not like there’s no solution to the lack of gold production.

Since the mixed gold and silver standard has been abolished, there is no need for us to reserve a large amount of silver, and we can completely take this silver to the international market to buy gold.

At present, many countries in the world are on the compound standard system, and there is hardly any obstacle to exchanging silver for gold.

Really can not, we can also enlarge the leverage ratio, as long as the government’s credibility can be guaranteed, international trade does not appear in the deficit, resulting in gold outflow, inflation will not occur.

Whether it is the gold standard or the reset standard, in the final analysis is to rely on the credibility of the government, if the government does not have enough credibility, unless the direct use of gold and silver as currency.

Besides, the reset standard system isn’t all that rosy. On the face of it, with more silver as a reserve, we can issue more money.

But in reality, we are all well aware that the gold-silver ratio changes all the time. The discovery of a new gold or silver mine is enough to change the gold-silver ratio in the market, thus creating strong fluctuations in the currency market.

Under the reset standard system, the currency market fluctuates from time to time, and changes in the value of the currency that may occur at any time have a serious impact on the development of domestic commercial trade.”

The two men almost stated the advantages and disadvantages of the two standard systems, and if there were enough gold reserves, naturally the gold standard would prevail.

On the contrary, it will have to make do with the gold and silver resumption standard. Credit standard ko don’t even need to consider, this era is not feasible at all.

International trade settlement, good gold and silver settlement method is not used, who will recognize “credit” ah?

Can’t use the simple silver standard, right? Everyone knows that the world’s silver production is increasing year by year, the gold and silver exchange ratio is declining.

If the silver standard system is adopted, the currency market is stabilized, but it is stabilized in a state of long-term depreciation.

Now this rate is not very fast, by the end of the 19th century, more and more silver mines were discovered, by then the currency is not blood collapse?

Saxon representative Frank opened his mouth and asked, “Before you all discuss this issue, should we not figure out how much gold and silver reserves the government has in its hands now?”

“The central government of the New Holy Roman Empire plus the local governments, the total amount of gold reserves is 382.6 tons, and the total amount of silver reserves is 8,728.9 tons.” Finance Minister Karl replied

This number was a bit out of the crowd’s expectation, many people didn’t realize that the New Holy Roman Empire actually had this much gold reserves already.

There was nothing surprising about this, ever since Franz had succeeded to the throne, the Austrian government had subconsciously started to increase its gold reserves.

Specifically speaking is the foreign settlement time, as far as possible to reduce the gold expenditure, change by silver payment. Anyway, under the gold and silver reset system, the attitude of governments to gold and silver is the same.

In the Near East War, the Russians contributed a lot of gold and silver to Austria, which increased the gold and silver reserves of the Austrian government.

In the new Holy Roman Empire’s gold and silver reserves, the Austrian government occupied ninety percent of the share, naturally increased the domestic gold reserves.

These gold seems to be a lot, in fact, after the gold standard reform, but also only enough for the first period of use, with the continuous development of the economy, this reserve needs to continue to increase.

The total amount of gold in this era is limited, before the implementation of the gold standard reform, most of the gold are in the form of luxury goods in the private sector to save.

Hear this good news, advocate for gold standard reform Austrian representative Ürgen opened his mouth and said: “Our gold reserves are already quite a lot, if the gold standard reform now, but also in the folk acquisition of gold.

At present, most of the countries are the implementation of the gold and silver standard system, we advance the gold standard reform, but also can take the opportunity to use silver to exchange a number of gold back.

Once all countries have begun to reform the monetary standard, the loss of the monetary status of silver, the price is bound to plummet, and finally estimated that even one-third of the value of the current can not be maintained.

From the perspective of long-term development, it is vital to stabilize the value of the currency, the British were the first to take the first step, if we don’t keep up, we will have to suffer later.”

The gold standard system was originally proposed by the British, as early as 1823 the British began to engage in the gold standard, they have enough overseas colonies, the gold extracted from the colonies is enough to support them to implement the gold standard.

This is most of the countries in Europe can not do, although we know the benefits of the gold standard, in the absence of sufficient gold reserves, do not dare to venture to follow.

Gold and silver resumption of the standard system is a substitute for the case of insufficient gold reserves, if the new Holy Roman Empire into the gold standard era, then the same can not be bypassed this topic.

Frankfurt representative Hans shook his head and said: “monetary reform is a matter of great importance, a step out and then want to take back, the price paid is not half a star.

Even now we are in the international market sweep, can get the amount of gold is also limited, can exchange a hundred or eighty tons back, it is very not easy.

The gold standard system is established, the early stage we can support. But in ten years, twenty years, or even longer, when we realize that the gold reserves are insufficient, what should we do?”

Listening to Hans’s explanation, Franz finally understood why they would resolutely oppose the gold standard reform, in the final analysis, it is still insufficient gold reserves.

The new Holy Roman Empire was developing at a fast pace, and since the economy was developing, the amount of money needed to circulate in the market naturally increased.

In this era to increase the circulation of money can not just print tickets on the line, but also must have enough reserves, or to have enough gold and silver to put there, so that the people are assured of the credibility of the government.

The idea of obtaining gold from the colonies became lingering as soon as it appeared in Franz’s mind.

It was the most effective and dependable method, and South Africa had the most gold mines, but unfortunately the British had occupied the coast, and unless they could get around inland, they could only look on from a distance.

This unreliable approach, Franz think about it and dismissed. Africa’s inland area can not be good, it is a real barbaric land.

Even if you open up the transportation, the final development of the gold mine, but also by the European countries to fight. Austria is not the British Empire, can not afford to cut off from the sea everyone to join the spoils.

Franz does not want to do for others, spend a large cost invested in a large capital, and finally everyone came together to divide, or perhaps the Austrian cost can not be recovered.

Thinking again about other regions ……

(End of chapter)