Chapter 1224 The Weakness of the Empire (Second update, please subscribe)
Author: Xiaoyu’s Destiny
Chapter 1224 The Weakness of the Empire (Second update, please subscribe)
Your Majesty summons you!
After receiving the call from the palace, Hu Xueyan, the president of the Imperial Bank, rushed to Zhongdu by American Star.
The car sent by the palace was waiting for him on the platform.
"Something big must have happened!"
Hu Xueyan was thinking about this in his heart. He ignored the surprised looks of others and got into the car directly. When the car left, he looked slightly worried and thought about various problems in his heart.
What big deal will it be?
What major events are related to banks?
As soon as he entered the imperial study, Emperor Zhu asked.
"You came just in time. I have one thing to ask you. What is the recent silver price?"
"Silver prices have fallen again! The current ratio is 1:18.3. According to our estimates, by the end of the year, the gold-silver ratio may fall below 18.6 or even 19!"
When His Majesty mentioned the price of silver, Hu Xueyan immediately understood the reason - the price of silver!
Your Majesty is concerned about the price of silver!
Silver was the legal tender of the empire.
“What caused the price of silver to drop?”
Facing His Majesty's inquiry, Hu Xueyan replied.
"Your Majesty, since the United States abolished the gold and silver dual standard 12 years ago, the international silver price has continued to fall. Of course, the decline is within a controllable range, and the fall in silver prices is beneficial to the empire's exports. After all, the empire is an industrial exporter.
, appropriate devaluation will have a certain stimulating effect on the imperial economy..."
"So what if the decline continues? Like a further plunge."
“Further plunge?”
Hu Xueyan raised his eyebrows and replied.
"If the empire allows the price of silver to fall, it will not only cause heavy damage to the empire's financial industry, but also mean that the empire's monetary system will suffer failure, and the empire is likely to encounter an unprecedented crisis."
Hu Xueyan's brows knitted together. In fact, a few years ago, the Imperial Bank fully evaluated the various impacts brought about by the decline in silver prices.
"As far as the empire is concerned, if something like this happens, it will either have to cut off its arms and change the empire's gold and silver dual standard system to the gold standard, or it will vigorously purchase silver and restore the silver standard."
After pondering for a moment, Emperor Zhu asked rhetorically.
"So in your opinion, what should we do?"
"this……"
After thinking about it, Hu Xueyan said.
"Your Majesty, the Empire and its allies have the largest silver mines in the world. We and Mexico account for 70% of the world's silver production, and the Empire, Datang, Mexico and other South American countries all implement the silver standard. From here on
To a certain extent, we must choose the latter, because the silver standard is related to the financial and monetary security of the empire and its allies."
When Hu Xueyan mentioned "financial and monetary security," Emperor Zhu Da had already stood up. He walked to the window and cast his gaze to the royal garden outside the window, staring at the sky in the distance.
Emperor Zhu Da knew very well what this "financial and monetary security" meant.
Unlike the value of currency in the 21st century, which mainly relies on the people's confidence in the government and the market's confidence in the government, in the 19th century, many people believed that without precious metal coins as a reserve and as a strong support, the currency would be worthless. Because, paper money
The holder must be able to exchange the notes for metal at a bank or treasury.
Nowadays, banknotes all over the world are "gold and silver coins" that are redeemable on demand. Because South America is rich in silver, it not only supplied the world's silver in history, but also had silver pesos circulating locally. The legal currency of the Ming Empire was also silver coins.
Of course, because the dual standard of gold and silver was implemented, the Imperial Household Ministry also minted gold coins, but the market was dominated by silver dollars. Although the actual circulation was silver dollar certificates, they were still essentially silver dollars.
Once the price of silver plummeted, silver depreciated significantly. This also meant that the currency and social wealth of the Ming Dynasty depreciated significantly. In the world, the Ming Dynasty, Mexico and the Tang Dynasty all used silver as their main currency.
"Indeed, even if we don't count Mexico and the Tang Dynasty, just the empire...the wealth loss caused by the depreciation of silver to the empire is immeasurable. Every 10% drop in the silver price means that the empire's economy will retreat by 10%."
This retrogression does not seem to be an industrial retrogression, but the depreciation of silver triggers a decline in the valuation of local currency assets, leading to a decline in finance, insurance and other related fields, which in turn drags down the country's overall economy.
This is the most typical feature of "currency war". It seems that there is no smoke, but the more invisible the smoke, the more tragic it is.
Edward Elias Sassoon…
Emperor Zhu Da said with a cold smile.
"What will happen if India abolishes the silver standard and implements the gold standard?"
"What!"
Hu Xueyan lost his voice and said.
"Your Majesty, is this news accurate?"
"I'm asking what if!"
"Your Majesty, among the countries in the world that are now implementing the silver standard, apart from the Ming Dynasty, the Tang Dynasty and India are the largest silver standard countries. As for countries such as Mexico, Persia and South America, they are not worth mentioning at all. If India implements the gold standard, it will kick out silver.
In the field of currency. As we all know, the demand for silver as a currency is a huge demand. Therefore, this move will reduce the demand for silver at a cliff and will definitely lead to a sharp depreciation of silver."
Almost subconsciously, Hu Xueyan said.
"Your Majesty, although the silver circulating in the Indian market is not as good as that of the Empire and the Tang Dynasty, once India abolishes the silver standard, it will not only reduce the demand for silver, but also further affect market confidence. Confidence... Confidence is the most important thing
important."
His brows knitted together, and then Hu Xueyan continued.
"Once India, as the third largest region in the world that implements the silver standard, switches to the gold standard, it will inevitably severely damage the silver standard. Faced with the reality of the plummeting silver price, other countries are bound to follow suit. In the international market,
, the price of silver plummeted because it lost its qualification as an international reserve, and confidence in the silver standard will also be destroyed. Once confidence is destroyed, the price of silver will not fall, but plummet! The gold-silver ratio may even fall below 30
!”
Emperor Zhu shook his head and said in a very affirmative tone.
"It will fall even more sharply! In the long run, it may even fall below 70!"
The reason why Emperor Zhu Da made such a judgment was because the price of silver did fall to this point in history, 1:70!
And now it's 1-18. What does it mean to have fallen to that extreme?
"1 to 70, this, this is equivalent to shrinking the empire's economy..."
Shocked and thinking about it for a moment, Hu Xueyan hurriedly said.
"Your Majesty, with the discovery of many silver mines in the United States and the increasing supply of silver around the world, the devaluation of silver is inevitable. We must make early plans to avoid severe damage to the empire's economy. Maybe it is time to consider implementing the gold standard.
After all, the gold standard is the mainstream now..."