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

Chapter 1606 Paper Money in Venice (Part 2)

However, most Austrians don't really care about such things. After all, the royal family has been living a life of luxury for hundreds of years, and it doesn't seem like a bad thing to occasionally get a share of it.

Anyway, life is still manageable, and the money levied is from the men, so they can't be bothered to think about such things.

However, such arguments still occasionally surface. The Austrian Empire's intelligence agencies were ubiquitous, making it easy to trace the source of these arguments and precisely target the person behind them.

As night fell, the noise gradually subsided. Some returned laden with the joy of victory, some left empty-handed and filled with regret, while others had just run into trouble and were receiving electroconvulsive therapy in the secret police's office.

The Austrian Empire's state machinery operated with such precision and magic, yet it was not without a touch of humanity.

Inside the bar, a grain merchant from Lombardy was fiddling with a newly issued banknote.

This is a brand new 20 florin banknote issued by the Austrian Empire. The paper is smooth and delicate, printed with intricate patterns and royal emblems. He carefully felt the texture of the edge with his fingers, which is said to be one of its anti-counterfeiting features.

However, when it comes to anti-counterfeiting, the most crucial element is still that inconspicuous anti-counterfeiting line.

Early banknotes had simpler designs and usually relied on complex patterns, signatures, or watermarks to distinguish between genuine and counterfeit banknotes. However, these methods were often vulnerable to skilled counterfeiters.

The frequent occurrence of counterfeit banknotes has seriously affected the credibility of currency.

Therefore, many countries are unwilling to use paper money and are unable to promote it on a large scale.

The more vigorously the government promotes paper money, the higher the income for counterfeiters. The higher the profits, the more counterfeiters there will be, and the more counterfeit money there will be, the more difficult it will be to promote the currency.

This cycle repeats itself endlessly, causing immense suffering to countless countries.

However, the emergence of anti-counterfeiting lines has broken this cycle. The concept of anti-counterfeiting lines is simple, but it requires extremely high technical craftsmanship.

The physical embedding alone would deter 99% of counterfeiters. After all, most counterfeiters rely on offset printing or hand engraving techniques. It's one thing for them to imitate patterns, signatures, or watermarks, but it's really too much to ask them to use cutting-edge physics techniques.

The so-called physical embedding cannot be achieved by simply hammering it in; it requires highly precise and powerful machinery, the cost of which far exceeds the limits that counterfeiters can afford.

In addition, the anti-counterfeiting thread itself uses a special alloy, which can currently only be manufactured by the Austrian Empire.

In short, once the threshold for counterfeiting was raised to an unprecedented level, almost no one dared to attempt it anymore, especially since the Austrian Empire also cracked down hard on counterfeit currency.

Nobody wants to do things that are high-cost, high-risk, and have slow returns.

"Can this thing really be used as money? Who knows if the bank will default on the loan?"

The grain merchant muttered to himself, while a drinker at the next table laughed and said something in return.

"You old fool, have you never used paper money before? You must have used banknotes, right? Have you ever seen a bank default on its debts?"

The expected banknotes had indeed been in circulation in the Austrian Empire for many years, and their credibility had always been guaranteed. Although exchanging them was troublesome and subject to many restrictions, he had to admit that the expected banknotes made many transactions much easier.

"I can only expect large transactions with these banknotes, which are going to replace the currency we have. I always feel uneasy about it."

These are the thoughts of grain merchants: having money in your pocket feels completely different from having a few flimsy scraps of paper.

"Pretentious! These are deals worth several thousand florins each. Do you really want to carry dozens of kilograms of silver around everywhere? Aren't you tired?"

The grain merchant didn't answer directly, but instead asked, "But what if those bankers suddenly announce one day that this paper is worthless?"

"Do you think the Imperial Central Bank is some kind of Jewish grocery store on your doorstep? Those Jews and bankers don't have the final say."

"But what if the Austrian Empire were to collapse?"

Although the grain merchant's voice was very soft, everyone around him shrank back. Even the usually outgoing drinker became more sober, slammed a 15 Grossen (0.5 Florin) bill on the table, and called over a waiter.

"The rest is your tip, keep the change."

Then he said to the grain merchant, "Unless you stop doing business within the Empire right now, you can't avoid using paper money."

After saying that, he and his friends quickly left the tavern.

In reality, the vast majority of merchants accepted paper money, either voluntarily or involuntarily. As for the truly ordinary people at the bottom of society, the monetary reform had little impact on them.

Franz did not abolish those small-denomination metal currencies, which was also due to national circumstances; the smallest denomination of paper money was 0.5 florins.

Ordinary people rarely used florins directly, but after the abolition of florins, it was unlikely that merchants would carry dozens of kilograms of metal currency to make transactions.

Even if they were willing, the other party might not be willing to accept it. Counting a large number of small-denomination metal coins is also very difficult. Even if they were deposited in a bank, they would be charged a counting fee, which is usually calculated based on time.

As for the other countries in Germany and Italy, they were no strangers to the Austrian Empire's behavior, having witnessed similar practices before.

At the grassroots level in other countries alone, people found it more convenient. Many people strongly supported this reform in the Austrian Empire.
But at the government level, it's a completely different story. Many countries understand that this is blatant economic invasion, and it's an invasion that extends directly to the monetary level.

If this continued, the economic lifeline of these countries would essentially be in the hands of the Austrian Empire. However, due to the overwhelming power of the Austrian Empire, these countries had no choice.

However, Franz had already come up with a solution for them, since many of them were relatives, and things couldn't be done too harshly.

Franz thought that reforming to a gold exchange standard would be good, since those smaller countries didn't have much gold anyway. He suggested directly pegging the currency to the Austrian Empire's currency, so that they could issue their own currency even without reserves.

Countries that adopt a gold exchange standard only stipulate the legal gold content of their currency, and prohibit the minting and circulation of gold coins.

The country uses paper currency, which cannot be exchanged for gold but can only be exchanged for foreign currency, which can then be exchanged for gold abroad.

The country maintains a fixed exchange rate with the currency of a country that operates on a gold bullion standard or gold standard, and holds foreign exchange assets as reserves to be sold at any time.

When smaller countries could choose not to issue their own currencies and instead use the currency of the Austrian Empire.

This was indeed somewhat like drinking poison to quench thirst, but many countries still chose to accept Franz's proposal.

The key issue remains the same: the economy is expanding rapidly, and metal currencies are struggling to keep pace with economic development.

This situation was most evident in the Austrian Empire, but other countries closely associated with it were also affected.

Moreover, these countries did not have Franz's additional sources of wealth, and coupled with mismanagement, many of their governments were heavily indebted.

Now that there's a way to clear their debts, will they give it up?

Obviously not.