Chapter 433: The Franc and the Gold Standard
When the crowds in Bastille Square heard that a currency regulatory body would be established, with the involvement of banks and chambers of commerce, their concerns instantly diminished by more than half, and they began to nod and discuss.
In reality, Joseph had absolute control over this regulatory committee. The royal family and financial officials, naturally, would voice their support according to his directives. He was also the largest shareholder of the Bank of France. Even the French Chamber of Commerce was currently controlled by the Capitalist Nobility, who still looked to him for leadership.
Therefore, currency policy was essentially whatever he decreed. This wasn't to establish a monopoly; rather, his financial concepts were over two centuries ahead of their time. Instead of letting contemporary economists experiment haphazardly, he preferred to implement a perfect system right away.
Of course, in the future, this regulatory body would need to be standardized, forming a scientific and effective monetary management system. After all, he too would grow old one day, and could not rely forever on his unparalleled foresight for financial management.
The journalists present scribbled furiously, and the crowd buzzed with discussion. While they knew the government had announced an important economic policy, none realized that this would be an epoch-making moment for the French economy.
The series of monetary policies Joseph unveiled was precisely the Gold Standard system, which began to be revered as gospel by all powerful nations worldwide from the mid-19th century onwards.
To the average citizen, it seemed merely that paper money could now be used for purchases, and the old Livre would continue to be used as usual; nothing appeared different.
However, from a national perspective, the fundamental logic of currency and economy had shifted.
From this point onward, all French currency was based on gold valuation.
In other words, if the French Treasury declared that the Livre could no longer be exchanged for gold, people would have to sell their silver coins as raw silver to acquire Francs for circulation.
For people in the 21st century, accustomed to relatively stable currency values and mature exchange rate systems, this was commonplace. But in the 18th century, it was a groundbreaking innovation capable of vastly improving the national economic environment!
It's important to remember that in this era, the concept of national legal tender barely existed. Whether it was the Livre, Florin, Ducat, or the North African riyal, or the Ottoman akçe—as long as you held actual gold or silver, it could circulate freely in the French market. Even British Pound Sterling banknotes were accepted by some, because they could be exchanged for gold coins at the Bank of England.
So, one can imagine how chaotic trade must have been at the time.
For instance, someone might agree to pay for a batch of goods with Ducats, but upon payment, half the amount would be in riyals, mixed with some écus. Well, then, the whole day would be spent on nothing else but slowly calculating the conversions.
Different regions also had varying exchange rates for different currencies. For example, in provinces along the Mediterranean coast, one riyal might be worth 22 Livres, as it could be directly used to buy goods from North Africa. However, in northern France, it might only be worth 20 Livres and 10 sous—purely based on its gold content.
This made southern merchants extremely reluctant to sell their goods in the north. Even two nearby towns, due to habitually using different currencies, disliked trading with each other. This severely hindered the nation's commercial operations.
Do not underestimate such an impact. Commerce relies on the circulation of goods and money. Even a slight obstruction in circulation can halve trade volume, let alone a situation where blockages exist everywhere.
Furthermore, issues like currency wear, underweight coins, and the impact of fluctuating gold-silver exchange prices on currency value could all be eliminated by the Gold Standard system.
Currently, globally, aside from England which had implemented some form of the gold standard under the leadership of Newton—yes, the Sir Isaac Newton famously struck by an apple—all other nations still conducted transactions using precious metals.
It was this move by Newton that made England's commercial environment unparalleled in Europe. Coupled with their excellent tax policies, it paved the way for their rise as a global empire.
And now, Joseph was introducing a comprehensive Gold Standard system to France. The crown for Europe's most advantageous business environment might soon change hands.
Moreover, implementing the Gold Standard also granted the government greater ability to regulate financial markets, while maintaining highly stable exchange rates. Consequently, many countries continued to use the gold standard well into the 1970s.
Joseph had been planning the implementation of the Gold Standard for a long time, and his choice of this particular timing was a result of careful consideration.
Firstly, France had recently acquired a large number of overseas markets. According to reports received last week, Moreau and Ney's legions had fully secured the city of Tripoli and were continuing their eastward advance.
Seventy percent of Tripoli's population was concentrated in and around the city of Tripoli, with the eastern parts being more desolate. Moreau and his forces were unlikely to encounter any significant resistance. By now, they should have reached the Sirte region in the east.
Adding Tunisia and the Annaba region of Algiers, France now possessed a solid foothold in central North Africa. Although these areas were not vast, they were all fertile, rich in resources, and served as vital transit points for Mediterranean trade, boasting considerable trade volumes.
In addition, in Wallonia, Southern Netherlands, French investment had recently begun to take shape, with numerous coal mining and refining companies established. As a prosperous European region, its economic capacity was roughly equivalent to that of all of Tunisia.
Simultaneously, through Joseph's continuous efforts over the past year or so, France's industrial development had achieved remarkable results.
Currently, Lyon had activated over 200 automatic looms and nearly 3,000 spindles, with numbers constantly increasing. With the supply of New Zealand wool and Russian cotton, the cost of Lyon's textiles had dropped to about 120% of the British equivalent.
It's worth noting that this figure was at least 150% a year ago. If France's influence in fashion and advantages in design were also considered, Lyon's textiles could now carve out a significant share from the British in the European market.
Furthermore, industries such as winemaking in Bordeaux and Champagne, steel and steam engine manufacturing in the Nancy region, and paper, luxury goods, and machinery industries in Paris had all seen substantial growth. Gas lamps, chemicals, and furniture industries were also poised to "go live."
Currently, a large number of factories and immigrants eagerly awaited funding.
Joseph could precisely utilize this opportunity to have banks issue large amounts of paper money as loans.
Subsequently, factories would use these Francs to purchase equipment and raw materials, or to pay workers' wages. Immigrants would also use them to buy necessities from locals or to hire local residents.
In this way, it wouldn't take long for the Franc's popularity to reach a very high level.
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