Life of Being a Crown Prince in France-Chapter 521 - 432: Francs and the Gold Standard
When the people in Bastille Square heard about the establishment of a currency regulation department, which involved banks and the Chamber of Commerce, their concerns were greatly alleviated, and they began to nod and discuss among themselves.
In fact, Joseph had absolute control over this supervisory meeting—there was no need to mention the Royal Family and financial officials, who would express their views as he requested. He was also the largest shareholder of the Bank of France Reserve. Even the French Chamber of Commerce was currently controlled by the Capitalist Nobility, still looking to him for direction.
Thus, the monetary policy was essentially whatever he said it would be. This wasn’t about creating a monopoly—in fact, his financial concepts were more than 200 years ahead of the rest of the world, and it was better for him to establish them firmly rather than letting contemporary economists make random attempts.
Of course, this regulatory body would have to be standardized eventually, forming a scientific and effective currency management system. After all, he would age as well, and couldn’t always manage finances using his "Great Prophecy Technique."
The journalists present were fervently writing, and the crowd buzzed with discussion. They knew the government had announced a significant economic policy, but no one realized that it was a momentous occasion for the French economy.
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The series of monetary policies Joseph announced were the gold standard system that all the great powers of the world would adopt as the model to follow starting from the mid-19th century.
To the common people, it seemed as if the only difference was being able to use banknotes when shopping—livres were still in normal use, and nothing much seemed to change.
However, from the perspective of the entire country, the underlying logic of currency and the economy had shifted.
After this, all of France’s currency was established on the basis of a gold valuation.
Livres could be used for transactions, not because of their silver coin attributes, but because the French Government stipulated that 1 livre could be exchanged for 0.3 grams of gold.
In other words, if the French finance ministry announced that livres could no longer be exchanged for gold, people would need to sell their silver coins as silver to get francs for circulation.
For people accustomed to the relatively stable value of currency and mature exchange rate systems of the 21st century, this was mundane, but in the 18th century, it was enough to significantly improve the entire national economic environment! Discover exclusive tales on novelbuddy
You see, in this era, there was almost no concept of a national legal currency. Whether it was the livre, florin, ducat, or the rial of North Africa, the akçe of the Ottoman Empire, as long as you had genuine gold and silver, they could freely circulate in the French market. Even British Pound banknotes were accepted, since they could be exchanged for gold coins at the Bank of England.
So, you can imagine how chaotic it was when conducting trade at that time.
For example, someone says they will pay in ducats for a batch of goods, but when it’s time to pay up, you find that half of it is in rials, mixed with some aygu. Fine, don’t do anything else today; take your time to convert it.
The exchange rates between various currencies also differed between localities. For example, in the Mediterranean coastal provinces, 1 rial could be exchanged for 22 livres, as it could be directly used to buy things from North Africa. But in the north of France, it might only be worth 20 livres and 10 sous—purely valued on its gold content.
As a result, southern merchants were extremely reluctant to sell goods to the north. Even two towns not far from each other, each accustomed to using different currencies, were reluctant to trade with one another. This severely impacted the country’s commercial operations.
Do not underestimate such impact—commerce relies on the circulation of money and goods, and even a slight hiccup in circulation could directly halve the trade volume, not to mention a situation where everything was jammed up everywhere.
Furthermore, issues such as currency abrasion, underweight currency, and the fluctuating exchange rates between gold and silver coins, which affect the value of money, can all be eliminated by the gold standard system.
At present, across the entire world, except for England under Newton—yes, that’s the Sir Isaac Newton hit in the head by an apple—no other nation had adopted a gold standard system; all other countries were still using precious metals for transactions.
It was precisely Newton’s action that placed England’s commercial environment at the pinnacle of the European Continent, and together with their superior tax policies, paved the way for the formation of The British Empire.
And now, Joseph was about to introduce the complete version of the gold standard system to France. It might not take long before the crown for the best business environment in Europe gets a new master.
In addition, implementing the gold standard system allowed the government to have more control over the financial market, and the exchange rate was very stable. Thus, till the 1970s, several countries were still using the gold standard.
Joseph had been planning to implement the gold standard for a long time, and his choice of this particular moment was a well-considered one.
Firstly was France’s recent acquisition of a large number of overseas markets. According to the news that came back last week, Moro and Ney’s legions had already taken full control of Tripoli City and continued to advance east.
Seventy percent of Tripoli’s population was concentrated in Tripoli City and its surrounding areas, while the east was relatively barren. Moro and his men were unlikely to encounter any significant resistance. They should have probably reached the Surt area in the east by now [Note 1].
In addition to the Annaba region in Tunis and Algiers, France now had a solid foothold in the central part of North Africa. These places, though not large, were all lands rich in fertility and abundant resources, and furthermore, were trade transit hubs for the Mediterranean, handling a considerable volume of trade.
Meanwhile, in the Walloon Region of the Southern Netherlands, France’s investment had begun to take shape, with a significant amount of coal mining and refining companies being established. And being a wealthy part of Europe, this region’s economic capacity was roughly equivalent to the whole of Tunisia.
At the same time, driven by Joseph’s relentless push for over a year, France’s industrial development had also achieved remarkable results.
Currently, Lyon had started operating more than 200 automatic looms, nearly 3,000 spindles, and was continuously adding more. With wool from New Zealand and cotton from Russia, the cost of Lyon’s textiles had already been reduced to about 120% of the British’s.
Keep in mind, this figure was at least 150% a year ago. Taking into account France’s influence in fashion and their advantage in style design, Lyon’s textiles were already taking a large bite out of the British’s share in the European market.
Furthermore, industries such as Bordeaux and Champagne’s winemaking, Nancy’s steel and Steam Engine production, Paris’s papermaking, luxury goods, and machinery, and so on, all had made great strides. Gaseous lighting, chemicals, furniture, and other industries were also waiting to "go online."
A vast number of factories and immigrants were eagerly awaiting funding.
And Joseph could perfectly use this opportunity to allow the banks to issue a large amount of banknotes as loans.
Afterward, factories would use these francs to purchase equipment and raw materials, or to pay wages to workers. Immigrants would also spend it on buying necessities from locals or hiring local people.
In this way, in no time at all, the penetration rate of the franc would reach a very high level.
[Note 1] At the end of the 18th century, the wealthier Benghazi region was still under the control of the Mamluks from Egypt, so it was not part of Tripoli. The territory of Tripoli extended to the west of Benghazi as far as Surt, and the area wasn’t very large.
