Chapter 1225: Nailed to the Golden Cross (Third update, please subscribe)

Hu Xueyan's suggestion was not wrong. Since the discovery of large amounts of gold in California and Australia, the world's gold reserves have suddenly increased. The sufficient supply has made it possible to use gold as a single currency to meet the needs of economic development in European countries.

And what is the corresponding one?

After entering the 1870s, huge silver mines were discovered in many places in the United States, and the amount of silver produced in the world increased sharply. The discovery of silver mines increased the supply of silver, but also increased the risk of depreciation. Therefore, for financial security, European countries switched from the gold and silver bimetallic standard to the gold standard. By 1880, major industrial countries had adopted the gold standard.

It is for this reason that the empire has also considered this aspect. After all, in the long run, the devaluation of silver is almost inevitable.

But... the Ming Dynasty has its own national conditions!

Emperor Zhu smiled coldly and asked back.

"Why, from the perspective of the Hu family, we have to nail the Ming Empire to the golden cross like they did?"

Crucified on the golden cross!

This is what American politicians said. After the United States abolished the "gold-silver dual gold system" and changed to the gold standard, the struggle between silver and gold currency status became extremely fierce and directly became an issue in presidential elections. The currency issue directly evolved into a political issue! William Jennings Bryan, a civilian presidential candidate who supported the restoration of silver coinage, said in his speech: "You cannot put a crown on the head of the laborer; you cannot nail mankind to the cross of gold." This is the "Golden Cross" speech that is well known to the world! ...

"Your Majesty, in the long run, the depreciation of silver is inevitable!"

Hu Xueyan said directly.

"For the long-term development of the empire's finance and economy, implementing the 'gold standard' is the only option to ensure currency security! After all, gold is more valuable!"

Why did the whole world finally change to the "gold standard"? Essentially, gold is more valuable and more stable.

“Gold is indeed more stable and more valuable!”

Emperor Zhu agreed and said.

"Hu Qingjia, but don't forget that the biggest difference between the Empire and other countries is that we are the world's largest silver producer!"

This is the reason why the Ministry of Revenue of the Empire has been arguing. In fact, before the annexation of Peru and Bolivia, the Ming Dynasty's copper company in Shanxi extracted a large amount of silver with advanced production technology. As early as the 1870s, the annual silver production of the Ming Dynasty had exceeded 300 tons. With the occupation of Peru and Bolivia, especially the Potosí Silver Mine in Bolivia, the Potosí Silver Capital was once the most famous silver mine in the world. In its heyday, its silver production accounted for half of the world's silver production. After it was annexed by the Empire's mining company, the annual silver production of the Ming Dynasty has exceeded 1,300 tons.

It can be said that the current Ming Dynasty, like Mexico, is the world's largest silver producer. In this case, promoting the gold standard is simply making a joke of one's own industry.

"If we abolish the silver standard, then silver will become a commodity, which will not only deal a blow to the silver industry, but will also severely damage the economic development of the empire, because..."

Staring at Hu Xueyan, Emperor Zhu spoke directly.

"Our gold production is limited! Don't forget that Britain and the United States are the world's largest gold suppliers, and our gold production in Alaska and the Northern Territory is only 50 tons. Can 50 tons of gold support the empire's monetary system?"

In fact, what is the biggest difference in economic policy between the people of this era and the people of this era? The great Emperor Zhu from the 21st century stands on the shoulders of historical giants. He knows that the "gold standard" has led to many economic crises in history, and an economic crisis has caused serious internal consumption of capital in various countries.

It is also for this reason that he is so sensitive to the "gold standard".

"If you study the European and American economies, you can see that after the British economic crisis in 1825, Britain basically experienced an economic crisis every ten years! In 1837, 1847, and then in 1857, the United States experienced crises, which evolved into a universal global crisis. The most far-reaching economic crisis in the 19th century was from 1873 to 1879, which lasted for 8 years. When will the next crisis break out? I think it will be around 1892!"

Why did Emperor Zhu make such a judgment? Because a crisis every ten years is the textbook content of the classic drawbacks of capitalist economy!

Moreover, he clearly remembered the economic crisis of 1893, and this was even another goal and plan of his, not only for him, but also for the entire empire.

Soon, the meeting with Hu Xueyan turned into an imperial financial conference attended by Qian Degong, Cheng Dingkang, Fang Zhanbo, as well as the Minister of Finance Lin Hongju and Xu Weizu of the Imperial Central Bank.

This financial meeting will ultimately determine the empire's future monetary policy, and more importantly, how the empire will win this "currency war"

“…Why do we have economic crises every 10 years or so? On the surface, it seems to be because of insufficient consumption. But the so-called “insufficient consumption” is actually just a lack of money. Why is there a lack of money?”

Emperor Zhu took out two coins, one gold and one silver, and asked.

"It's essentially a shortage of currency. Governor Xu, how much currency do we have in circulation?"

"Your Majesty, up to now, the currency in circulation in the empire is mainly silver dollars, of which the coins in circulation in the market are about 1.175 billion yuan. In addition, the central bank reserves 1,317.37 tons of gold and 11,553 tons of silver. Based on this, the central bank has issued 7.985 billion banknotes."

After answering Your Majesty's question, Xu Weizu, the President of the Imperial Central Bank, made another special addition.

"In order to stimulate the empire's economic development and ensure that there is enough currency in circulation in the market, the empire's money supply needs to increase by about 2% each year."

Appropriate increase in money supply is beneficial to the development of the national economy. This is a classic theory of Keynesian flexible monetary supply policy. In the past decade or so, the economic boom of the Ming Dynasty has proved this point.

Emperor Zhu nodded and asked.

“So, what is the basis for us to increase the currency?”

"The Empire's gold reserves are constantly increasing. Currently, the Empire's trade surplus is 195 million yuan. Because the Empire's gold coin supply is limited, and the market is dominated by silver coins and silver dollar certificates, companies need to exchange silver coins after trade settlement. Of course, the stable silver supply of the Empire Silver Mine is also the fundamental reason."

Nodding slightly, Emperor Zhu said.

"In other words, all currency issuance is based on precious metals?"

In fact, this is a well-known fact, but in the 19th century, many people believed that without precious metal coins as a reserve, as a strong support, the currency would be worthless. Because the holder of paper money must be able to exchange paper money for gold and silver precious metals at the bank or the Ministry of Finance. Therefore, when countries around the world issue paper money, they do not issue it recklessly, and they all reserve a large amount of gold and silver for payment and redemption.

"Your Majesty, if we don't have enough gold and silver in our treasury, the Ming Yuan will become waste paper tomorrow!"

Although Qian Degong is not a financial expert, he has read history books.

"The Yuan and Ming treasure notes are a lesson for us."

Nodding slightly, Emperor Zhu took the silver dollar in his hand and left only one gold coin.

“What would happen if we went to the gold standard?”

Holding the gold coins in his hand, Emperor Zhu looked at everyone and asked back.

"With the current economic scale of the empire and a population of hundreds of millions, if we switch to the gold standard, can the empire's current gold reserves support the value of the currency? Can the money supply meet market demand?"

After asking a series of questions, Emperor Zhu said.

“The gold standard seems to have stabilized the currency value, but in fact, if the “currency supply cannot meet the market demand”, what awaits us? The empire and its economy will be nailed to the golden cross!”

(End of this chapter)