The Qing Dynasty is about to end

Chapter 752: Victory? What is the price?
Nathaniel Rothschild's carriage had already rolled over the gravel road outside the Prime Minister's Office in Tianjing. When the driver took out the special pass of the Prime Minister's Office adviser and showed it to the guard, the banker in the carriage was nervously flipping through the report he had spent several hours preparing on the train to Tianjing - he didn't dare to fool the "Angel Prophet King" of the Taiping Heavenly Kingdom!
Moreover, when Fu Shanxiang came to Shanghai to find him, she had already told him that there was a big deal for him to manage, and it was related to the United States - the United States was now in a civil war! How could he not do business well when a wealthy country, the second largest industrial country in the world and a major exporter of agricultural products, was in a civil war?
"Your Highness, King Wu, this is an analysis report on the monetary system of the Northern Federation of the United States that I prepared on the spur of the moment." Nathaniel spread the crocodile leather briefcase flat on the teak desk. After the brass snaps popped open, he took out a stack of handwritten English reports in pen from it.

Luo Yaoguo motioned Nathaniel to sit down while he picked up the analysis report and read it carefully. He noticed the data circled in red pencil on the third page: As of October 1862, the total amount of currency in circulation in the North had reached 10 million US dollars, of which greenback dollars accounted for 4.8%.

"First, these metal coins. These are coins minted by the U.S. Treasury before the outbreak of the Civil War. They are of high quality." Seeing that Luo Yaoguo had finished reading the report he submitted, Nathaniel took out three coins and pushed them across the mahogany table. "This $1 gold coin contains 1.505 grams of gold, the double eagle gold coin contains 30.092 grams of gold, and the silver coin is 24 grams of pure silver."

He put the three coins away and continued, "By 1860, before the outbreak of the American Civil War, the total amount of gold coins issued in the United States was $2.8 million at face value, and the total amount of silver coins minted was $4500 million at face value. But since the outbreak of the Civil War last year, the payment was suspended and the money has been collected by the public. The circulation in the market is less than 5%."

While listening to Nathaniel's introduction, Luo Yaoguo was calculating in his mind that $2.8 million plus $4500 million would total $3.25 million.

"How much is the total value of the U.S. Treasury's gold and silver reserves before the war?" Luo Yaoguo asked this question after discovering that the report submitted by Nathaniel did not specify the U.S.'s financial situation before the Civil War - the money should now be in the hands of the Davis government.

"The gold reserves are worth approximately 1.5 million, and the silver reserves are approximately 2000 million US dollars." Nathaniel immediately reported the data.

Luo Yaoguo did some calculations in his head: add another 1.7 million, and that would be 4.95 million U.S. dollars. One U.S. dollar is roughly equivalent to 1 taels of silver.

He picked up a double eagle gold coin and started playing with it, while thinking about what these data Nathaniel gave him meant. This meant that the United States had only a little more than 3 million taels of silver, only a dozen times the amount of silver in China. Before the Qing Dynasty squandered it, China's wealth was really thick!
No wonder the development of industrialization in this angel was so smooth - I'm rich, and it turns out I'm the rich dog owner!
As an emerging industrialized country, although the United States is known as the "chosen country", its financial and monetary foundation is still a bit weak!
"The second is these waste papers." The Jewish banker shook out a banknote with George Washington's head on it. The yellowed paper was covered with brown spots. "Maryland Chartered Bank Note, face value $5, actual purchasing power is only $1.8." He pulled out another note with a steam locomotive on it. "Pennsylvania Railroad Bank Note is even worse, depreciating 57% in three months."

"Which bank issued these banknotes?" Luo Yaoguo asked, holding the banknotes issued by the Pennsylvania Railroad Bank.

"These banknotes are all issued by chartered banks in various states of the United States," Nathaniel said with disdain. "Although the United States is a country with a good industry, it is a complete mess in finance!"

"How come?" Luo Yaoguo knew that in history, the monetary system of the United States was very chaotic before the Civil War. There was no central bank, no Federal Reserve, and each state could issue "dollars."

Nathaniel said: "Since the closure of the First Bank of the United States in 1791 and the Second Bank of the United States in 1816, the United States has lacked a unified monetary management agency, and each state has authorized its own bank to issue banknotes.

In 1837, the U.S. Congress passed a "Free Banking Act", which allowed any individual or institution that met the minimum capital requirements to open a bank and issue currency. This led to a surge in the number of banks. By 1860, there were as many as 1600 paper money banks in the United States! This "Free Banking Act" is simply a "Free Money Printing Act". It's just nonsense! "

Isn’t this just a virtual currency from the 19th century? Luo Yaoguo thought: Americans are really good at this!

"The most dangerous thing is these green papers." Nathaniel threw a whole stack of green-backed dollars on the table. This kind of dollar bills are printed with dark green ink, which is very similar to the later "green paper". Nathaniel despised this kind of currency. "They are not backed by gold and silver, and the U.S. Treasury cannot be required to redeem gold and silver. The printing volume increases by two million per week. Sooner or later, they will become waste paper."

"Gentlemen in London, what do you think the North's chances of winning are?" Luo Yaoguo suddenly asked in English.

Nathaniel Rothschild frowned, "Although we hope that the southern plantation owners will win, the factories, railways and immigration in the north." He suddenly saw a book of "The Book of Prophets" on Luo Yaoguo's desk, and suddenly changed his words, "If Your Highness is willing to share some prophecies, London can give them to you."

He made a gesture of counting money!
Luo Yaoguo's "prophecy" is very valuable! However, it has become increasingly rare in the past two years. Even if someone is willing to pay a high price, they can only get one sentence: the secret cannot be leaked.

"Whether the North can win depends on how many generations of their future they are prepared to burn." Luo Yaoguo slammed the American "Double Eagle Gold Coin" in his hand on the desk, "The price of victory is to let the victor bear a debt that can never be repaid."

"Your Highness, the financial situation of the Northern Federation is already very dangerous." Nathaniel spoke cautiously, "The 'Greenback Dollars' they are issuing now are not backed by any gold or silver and are completely dependent on government credit. War expenses are still soaring, and the Northern federal government still needs to import saltpeter, sulfur, steel, copper, weapons, military steam engines, medicines, livestock, and even coal - because many miners in the North have been drafted into the army, causing coal production in the northern United States to decline. And these imported materials cannot be paid with greenback dollars, but must be paid with gold and silver, so in early 1863, they must issue new 'gold bonds' to raise gold and silver from the private sector or abroad." Luo Yaoguo raised his head, his mouth slightly raised: "Mr. Nathaniel, what do you think...how much can we raise their financing costs?"

The Jewish banker’s eyes lit up: “If done properly, 10%!”

"10%?" Luo Yaoguo chuckled, "It's not enough."

Nathaniel frowned slightly. "Your Highness, an annual interest rate of 10% is already far above the market level. If the Northern government accepts such an interest rate, the interest alone will drag down their finances after the war."

"Then add fuel to the fire." Luo Yaoguo tapped the table with his fingers. "I want to make Americans breathless for decades after the war. Nathaniel, the market knows that the North has stronger industrial strength and a larger population, but the longer the war drags on, the greater the risk, the more variables, and the higher the cost. If the market can be convinced that the North's victory is not a foregone conclusion, or that even if it can win, the war will be protracted, then bond interest rates will naturally soar."

"Yes, yes!" Nathaniel nodded. "Recently, due to Grant's disastrous defeat in Missouri and Kansas, the yields on Northern bonds traded on Wall Street have risen a lot. The yield on 10-year gold bonds has risen to 8%. However, after the news that the federal government was preparing to recruit Zhao Si came out, the market has stabilized."

"So Nicholas Zhao Si's movements are the key." Luo Yaoguo said slowly, "If he rejected Lincoln's offer of amnesty in early 1863 and continued to create chaos in the West, how would Wall Street react?"

Nathaniel immediately understood Luo Yaoguo's intention: "They will panic! Northern bond prices will plummet and interest rates will skyrocket!"

"So, we have to make sure Zhao Si never compromises before the 'gold bonds' are issued." Luo Yaoguo said coldly, "Let Wall Street believe that the North will not only fight in the South, but also suppress the rebellion in the West. The war may drag on for another three, five years, or even longer."

Nathaniel quickly wrote a few lines in his notebook: "We can spread the news throughout the European financial circles through London newspapers, emphasizing the financial difficulties of the North and Zhao Si's loyalty to the Southern Confederacy, and at the same time sell Northern bonds through the Vienna branch to create market panic."

"Okay! That's it!" Luo Yaoguo nodded with a smile, "It would be best if the Americans could spend decades paying off their debts after the war." His face gradually darkened, "The Pacific Ocean is too small to accommodate two industrial powers!"

"Your Highness, there is another way to further weaken America's industrial potential." Nathaniel lowered his voice.

"Say!"

"We can ask London to lower tariffs in exchange for helping the United States issue bonds after the Northern government of the United States gets into trouble."

Luo Yaoguo narrowed his eyes slightly, as if thinking about how to tell this to his "Sister Victoria".

"The average tariff in the northern United States is now 46%." Nathaniel continued, "If it drops to 20%, British industrial products will completely overwhelm the domestic manufacturing industry in the United States."

"Interesting." Luo Yaoguo smiled. "The British will definitely be happy about this."

"Yes, Your Highness." Nathaniel nodded. "It is said that the British Chancellor of the Exchequer has hinted more than once that if the North of the United States is willing to lower tariffs, London bankers will be more willing to subscribe to the North's bonds, and London will also consider recognizing the North, rather than the South, as the representative of the United States of America."

(End of this chapter)