The War Court and Lap Pillow, Austria's Mandate of Heaven

Chapter 1502 Gold Standard (Part )
The reason for this situation is, on the one hand, the impact of the British economic crisis, which has cast a shadow over the entire English-speaking world.

On the other hand, the scale of global trade continued to expand, and the demand for currency continued to increase, to which the Austrian Empire and its allies made a considerable contribution.

Ultimately, it is a question of economic development and currency. The existing financial system can no longer support an economy of this scale.

Countries are seeking to fill the gap with paper money, and many have tried, only to end up in complete failure.

First of all, anti-counterfeiting technology is a big problem. As long as the cost of making counterfeit currency is lower than the face value of the banknote, counterfeiters will make a profit.

In this era, it is not only private groups that commit fraud, sometimes even the state itself gets involved to make money.

On the other hand, the financial laws at that time were not perfect. Banks that issued banknotes were giving others a financial weapon to run on them, and this method was legal.

Businesses that conduct legal bank runs will also publish news in newspapers about a certain bank going bankrupt due to over-issuance of banknotes.

Therefore, most well-run banks are unwilling to wade into this muddy water. Then why have there been so many bank runs caused by over-issuance in history?
The answer, of course, is that human greed is insatiable, so many banks will choose to over-issue.

Historically, the Austrian Empire's ambitious currency reform in 1848 ultimately ended abruptly due to the excessive issuance of banknotes.

In addition, paper money at that time was extremely inconvenient to use, and its liquidity was almost beyond description. Some currencies could not even circulate between different regions of the same country.

This also gave rise to exchange business in the black market, not to mention cross-border trade, where currency losses seriously hindered the expansion of profits.

Franz now formed his own circle, regularly adding currency as needed and using expected banknotes to limit the rate of loss of precious metals.

But as the scale of trade continued to expand, the Austrian Empire did business with more and more partners, and not everyone recognized the Austrian Empire's expected banknotes.

So Franz formed the European Monetary Union, but the dual gold and silver standard could not be maintained.

The disadvantages of the gold and silver dual standard have been introduced in detail before, so I will not elaborate on them. In short, there are losses on both rising and falling prices, and it is very easy for other countries to arbitrage.

This is also one of the reasons why the British had to lend money to the Austrian Empire, even though the Austrian Empire had kept the interest rate very low at the time, which seemed to have forced the British into a desperate situation.

But in fact, the British have made at least a net profit of 10 points over the years by using the gold and silver dual standard to cash in on the Austrian Empire.

Not only the British will use this mechanism to cash out, almost all European countries are participating in this feast.

This was a disaster for those countries that abided by the rules. The European Monetary Union established by Franz fell into turmoil just one year later.

You should know that in history, the Latin Monetary Union formed by the French was officially established in 1865 and disintegrated in 1927, lasting for 62 years before it completely collapsed.

At this time, on the one hand, the rapid pace of gold mining and the large influx of silver from the Far East and Japan led to large fluctuations in the prices of precious metals in the entire European market.

On the other hand, the British got involved. Unlike this time, Britain historically supported the Latin Monetary Union, after all, they also had the need to expand trade.

But at this time, the Austrian Empire seized too much market, which made it difficult for Britain's economic crisis to be alleviated. So the British took a different approach and started playing financial games.

Some people always like to say that finance is a game for smart people and an exploitation of stupid money by smart money.

But in fact, more often than not, size is the fundamental factor that determines everything in the financial market. It is a game of big fish eating small fish, and a process in which the rich become richer by making money from the poor.

Those poor people who dream of exploiting the rich will most likely end up back where they started. The Austrian Empire now holds the most chips in the Europa Monetary Union, but it also bears the most sacrifices.

Franz was not prepared to continue to compromise like this. After all, the later the reform was carried out, the greater the resistance would be, and the greater the sacrifices would be made by the Austrian Empire.

As soon as Franz's idea was put forward, a quarrel broke out within the Austrian Empire.

“Your Majesty, our system has just been established. If we change the base currency at this time, I am afraid that other member states will oppose it.

The British and French will certainly take the opportunity to compete for the dominance of the monetary union, which will put our country in a very unfavorable situation.

Especially since our influence is comparable to that of Britain and France, those small countries that are already wavering may turn to Britain and France."

Foreign Secretary Lord Habescu expressed great concern, followed by Interior Secretary Giovanni Battis.

"Your Majesty, we cannot abandon silver. Putting aside Germany and the small countries on the Apennine Peninsula, we are one of the largest silver holders in the world.

In addition, our allies Spain and Mexico are also major silver producers.

We trade with the South and the Shogunate mainly in silver. If we abandon silver, we and our allies will suffer heavy losses."

Most other major officials of the Austrian Empire also opposed the adoption of the gold standard, with various reasons. Few officials supported the use of the gold standard, Baron Bruck said.

“Gold is much more stable than silver. Even if so many super gold mines are discovered in the world, the total amount of gold is still far less than that of silver.

Moreover, our country is not only one of the world's largest holders of silver, but also the world's largest holder of gold.

In recent years we have discovered gold mines in California, Transylvania, Namibia, Nicaragua, and many colonies.

my country's future gold production is huge. From a long-term perspective, adopting the gold standard is an inevitable choice for my country."

The Chancellor of the Exchequer, Lord Brooke, produced a series of detailed reports and reference data, as well as sources.

In short, the Austrian Empire's gold reserves accounted for a much higher proportion of the world's total than its silver reserves, and its annual gold production accounted for several times that of its silver production.

Opposition ministers were very angry at the data party like Baron Brooke. However, they were all experienced and they immediately began to question the authenticity of the data.

"Your Majesty, the Ministry of Finance's data cannot be trusted! How can other countries publish their true financial figures?"

"Data is dead! People are alive! How can he guarantee that other countries will not discover super gold mines and cause the gold price to plummet?"

"It's all gambling, we might as well maintain the status quo!"

"Your Majesty, these figures are just one-sided statements from the Ministry of Finance and have no persuasiveness at all. Unless..."

Prime Minister Prince Schwarzenberg felt that the implementation of the gold standard was necessary.

“Your Majesty, these losses are not important at all. We must adopt the gold standard so that those small countries can make their positions clear.

If Britain and France object, we can use this opportunity to exclude or marginalize them.”