Chapter 599: The Gold Standard Reform of the Great Trend

  Chapter 586 – The Gold Standard Reform of the Great Trend

This world will always be a world where some people are pleased and some people are disillusioned.

The biggest losers of the London Peace Conference are undoubtedly the Ottoman Empire and the Kingdom of Poland, with the former losing cities and lands, people’s livelihoods exhausted and already half dead, and the latter even hitching its autonomy.

Leaving aside the details, in terms of overall strategy, Britain, France, Austria, Russia, and Prussia were all winners, and each of them realized their strategic objectives.

The Russians were particularly prominent, taking benefits from both ends, as if the unbeatable Russian Empire had returned.

But Alexander II, who was considered to be the biggest winner, was not happy now. The recovery of the lost territory had greatly boosted the morale of the army, which was a good thing.

Unfortunately, the Tsarist government could not afford it, and it was all caused by one word – “poor”. After the war, the reward is always inevitable, the pension must also give some, not a penny next time who still sell their lives?

The destructive power of war is huge, the tsarist government recovered the lost land, now also need to invest funds to restore people’s livelihoods, the short term is not to see the return.

All of this requires money, seemingly insignificant, but in fact without hundreds of millions of rubles is not enough.

Loan Alexander II has long not counted on, the international financial institutions have been afraid of them to play, who lent money to them that is a fool.

The Hermitage, St. Petersburg

Alexander II asked uncertainly, “Can the gold standard reform really help us get through the financial crisis?”

Among the powers, only Britain and Austria have completed the gold standard reform. Everyone knows that the gold standard is good for stabilizing the value of the currency and increasing the international competitiveness of the currency, but everyone is still waiting to see.

Not want to follow suit, the problem is not enough gold reserves how to do? Britain and Austria monopolized more than 75% of the world’s gold, so that other countries are very desperate.

The Russian Empire is considered good, because the market purchasing power is low, the Russians are not much demand for foreign industrial and commercial products. The foreign exchange generated by agricultural exports wiped out expenses and was still in excess.

However, this kind of good times only lasted until the Russo-Prussian War, because of the war because of the tsarist government’s financial deterioration, owed a large amount of foreign debt, in order to pay off the debt of gold and silver began to a large number of outflow.

Gold and silver outflow led to domestic deflation, the government finances further deterioration, in order to avoid the crisis intensified, the tsarist government was forced to declare bankruptcy debt.

After a few years of rest and recuperation, the Russian Empire took a breath of relief. Through diplomatic means, most of the debt was wiped out, and an agreement was reached with the British to use food to offset repayment, and the economy of the Russian Empire was gradually normalized.

However, financial problems remained the biggest problem for the Tsarist government. In order to change the financial difficulties, the Tsarist government issued paper rubles in 1871 with the help of Austria.

This was only a trial run, the first batch was issued in the amount of only 50 million rubles, the implementation of the gold and silver compound standard system, the tsarist government’s reserves were sufficient, and was quickly digested by the market.

The situation took a sharp turn for the worse with the deterioration of Russian-Austrian relations and the tendency of the Tsarist government’s financial community to work with the British.

Without the Austrian endorsement, the second issue of paper rubles was too large and ran cold in the capital market. In order to preserve the ratio, the Tsarist government had to call off the printing.

The British and Russians agreed that the ruble would join the pound-gold system, and next the tsarist government had to reform the gold standard.

The Russian empire is also the world’s major gold and silver producers, the domestic economy is not large, the import and export trade in general is also in a balanced state, theoretically the tsarist government to carry out the gold standard reform does not have any problem.

This was only theoretical, and after pairing it with the credibility of the Tsarist government, this changed. International capital simply did not recognize that unless it was pegged to an international currency, the Tsarist government alone could not accomplish gold standard reform.

This in turn involves the issue of currency settlement, whether it is pegged to the pound or the guilder, people are very welcome, the conditions are very simple can only use other people’s currency settlement.

Regardless of who they are leaning on, the Russian Empire will inevitably be sheared. Alexander II did not care about being sheared, he was more concerned about how much benefit the currency reform could bring, and whether it could get rid of the financial crisis.

Minister of Finance Kristanvar: “Your Majesty, theoretically after the completion of the currency value reform, we can get 52 million to 55 million gold rubles of mint tax every year.

This amount is still increasing as the economy grows. It will go a long way towards improving our financial situation.”

(Remarks: 1 new ruble = 0.774 grams of gold)

More than fifty million gold rubles, a figure that was already not small, more than one-tenth of the Tsarist government’s revenue.

To keep the mint tax growing, in addition to economic growth, it was necessary to ensure that there was enough gold.

Kristan Val is not worried about the problem of reserves, the Russian Empire’s annual gold production is still enough to do the reserves. Otherwise, he would not dare to gold standard reform.

To know the currency reform, the new issue of the gold ruble and the pound to be linked, the exchange rate is floating changes, there is not enough reserves can not stabilize the value of the currency.

After hesitating for a moment, Alexander II made a decision: “Then start! But when cooperating with the British, we must be vigilant, don’t be pitched by them.”

This step out, it means that Russia and Austria in the beginning of the financial severance, but also marks the end of the Russian-Austrian alliance is not far away.

There was no way around it; it was all a matter of interests. The Tsarist government disliked the Austrian bid as too low, and Franz felt that the Russians were too greedy and had invested too much to recoup the costs.

In the original time and space, the French people were cried by the pit, the tsarist government collapsed, owed a huge amount of debt all gone down the drain, the French consortium was hit hard.

With the previous experience, Franz naturally chose to be cautious. Austrian investment in the Russians is even more risky than the French, with the Russian style, who can not guarantee that the debt to a certain extent, the Russians will not be in order to renege on the debt and provoke a war between the two countries.

Of course, the Austrian financial sector is not as earthy as the British financial sector, is also an important factor. After all, Austria’s own demand for funds is also very large, there is no ability to give the Russians to get money to fill the hole.

If the tsarist government can not come out of the financial crisis as soon as possible, once the currency reform is completed, the ruble is tied to the pound, the British are still willing to lend money out is also an unknown.

The debt between Russia and Austria is already a dangerous figure, Franz can not dare to take hundreds of millions of guilders to accompany the Russians risk, once the loss in the Austrian economy will also be hit hard.

……

Want to carry out the gold standard reform is not only the Russians, there are more than they are more anxious is the French.

In recent years, silver production has been increasing, gold and silver exchange ratio is also constantly changing, which is a big problem for the compound standard currency, settlement is a big problem.

Affected by the ratio of gold and silver exchange, the value of the franc also changes from time to time, which can be pitched to cry engaged in international trade merchants.

The instability of the franc’s value undoubtedly weakened the overseas competitiveness of French goods. As international trade flourished, this change became more and more serious.

In 1854 before, France’s total foreign export trade is Austria’s 1.5 times more, to 1870 the two countries’ total foreign export trade has been very different, to the present directly by the Austrian reverse.

This certainly has the advantage of natural resources, for example: Austria’s agricultural products processing industry has developed, increased value-added products, led to the growth of exports. As well as the first to start the second industrial revolution, the welfare brought.

The instability of the franc currency is also an important factor, in order to avoid the risk of uncertainty brought about by changes in the value of the currency, under the same conditions, many capitalists would rather choose British and Austrian products.

In the last five years, the average annual growth rate of export trade between Britain and Austria has been no less than 3%, while that of France has been a miserable 0.8%, a figure that continues to fall.

Is the quality of French industrial and commercial products poor? The answer is no. With the exception of a few sectors, there is no era gap in industrial technology between Britain, France and Austria.

Now the market competition has not reached a white-hot stage, everyone maintains a relatively high profit, otherwise it would not be together in the growth.

However, France is gradually falling behind is also an indisputable fact, the French goods in the international market market share occupied by a smaller and smaller.

Of course, compared to the original time and space, France’s current situation is still much better, the domestic economy has not been hit hard.

In order to increase the competitiveness of export commodities, the reform of the franc currency has been gradually put on the agenda, led by the reform of the gold standard of the franc is Napoleon IV.

This is also regarded as the political legacy left by Napoleon III, as long as the completion of the reform of the gold standard of the franc, increase the international competitiveness of French goods, can be embraced by the capitalists.

As early as 1870, the French government began to prepare for the reform of the gold standard, constantly buying gold from the international market. There was no way around it, who made France’s gold production insufficient?

God did not favor France this time, in addition to the lack of coal in the French colonies, gold production was also very low.

Self does not have that will buy good, compared to the bitter czarist government, the French government is completely called the rich and powerful.

After a few years of preparation, the French have gathered 800 tons of gold, Napoleon IV still do not think enough.

This figure is a lot for most countries, but it is still far from the British and Austrians.

Moreover, with the current economic volume of the great French empire, take 800 tons of gold as reserves really not much. Napoleon IV’s heart bottom line is one thousand tons, if the reserve is low, some people speculate on the franc exchange rate will be in big trouble.

Paris, Versailles Palace

Napoleon IV incredulously asked: “What, the market actually can not receive gold?”

This is absolutely a big news, at least the price of gold will soar.

Allen, the Minister of Finance, explained bitterly, “Your Majesty, in recent years, there are some countries that have carried out the gold standard reform, and everyone is snapping up gold in the market.

Currently the world’s major gold production areas are in the hands of Britain and Austria, they intentionally control the amount of gold outflow, the amount of gold in circulation on the market is seriously insufficient.

In recent years, affected by the insufficient amount of gold in circulation, the price of gold has been rising, and the gold-silver exchange ratio has risen from 1:18.6 last year to 1:23.5 now.

Even at this price, it is difficult for us to buy enough gold. There are now only two to three hundred tons of gold flowing out of the international market each year, which is simply not enough for everyone to share.”

There’s no way around it; there are really a lot of countries that have recently gone on gold standard reform.

In 1873, the Nordic Confederation started the gold standard reform, followed by the German Federal Empire and the Kingdom of Prussia, which also announced the gold standard reform, and now there is an addition of the Russian Empire.

The Russian Empire aside, the domestic circulation of gold can basically meet the monetary reform needs, the remaining countries are not the main gold-producing countries.

Gold production can be not enough, but the issue of currency reserves must be enough, then only to the international market to buy.

In the European countries gold standard reform at the critical moment, just happened to run into the British and Austrian capital joint speculation gold, profiteering from it.

Should not say is just right, this is the inevitable result. Capital is profit-seeking, the door to the bamboo bar does not knock white not knock.

In this context, not only the French lack of gold, other countries that are reforming the gold standard, also facing the problem of gold shortage.

(End of chapter)