Life of Being a Crown Prince in France

Chapter 722: Chapter 630: Monetary Bonus

Joseph was not surprised by Brian’s concerns. After all, the latter had never been exposed to the concept of financial colonization of the future, and his understanding of the application of paper currency was still at a very elementary level.

He looked at the Finance Minister, “Archbishop Brienne, actually, as long as these countries accept our banknote loans and agree that they can only be used for trade and not be exchanged for gold at the Bank of France Reserve, then this money will not affect our financial stability.”

Brian and Bailly exchanged glances, their expressions full of confusion.

Joseph had to patiently explain to them, “Simply put, the countries that accept the franc banknote loan are actually recognizing the value of these ‘pieces of paper’.

“Even if they immediately spend all this money to purchase our country’s goods—this is actually impossible, as transactions are delayed and at least a third will flow into their own production and sales channels.

“Let’s talk about the extreme case where this money indeed all returns to France through trade. Then the debtor nations that received the loans have to consider repayment. The methods of repayment are either with gold and silver coins or with franc banknotes.

“If it’s with gold and silver coins, then we effectively exchange paper money for precious metals, which is a significant profit. This could even lead to an appreciation of the currency.

“Of course, debtor nations will mostly choose to repay with banknotes. Then they must have a way to obtain banknotes, which can only be through selling goods to our country. In other words, francs will become their accepted circulating currency, and banknotes will continue to enter their markets.

“So, no matter what, our country will not receive a severe impact from paper currency. At most, there will be a short-term and small-scale inflow of banknotes, with a negligible effect on currency value. And in the long term, we will profit.”

The reason for this situation is entirely because the debtor countries themselves use gold and silver coins, so there is no issue of exchange rates for international trade.

If it were in later eras, after a country takes a loan, they would definitely first exchange the foreign banknotes for their own currency, using their own money domestically and foreign currency for international settlement.

But when dealing with countries that use gold and silver coins, if you perform exchange rate settlement with their gold and silver coins and my banknotes, then I definitely profit big. If no exchange is made, then my banknotes can only circulate in your market, essentially trading real items for my ‘pieces of paper’.

So once the other party accepts the banknote loan, France only needs to experience temporary financial fluctuations, and afterwards, it’s sure to be a win-win situation.

It’s just like the Marshall Plan of the United States after World War II, which allowed a large amount of US Dollars to flow into Europe without causing any financial risk in the United States, but instead rapidly expanded the influence of the US Dollar.

Of course, all this can stand on the premise that your France’s currency credit is trusted by these smaller nations, and that there is extensive trade between the two countries so that they can purchase the goods they need from France with banknotes.

However, the European Continent is currently on the eve of a currency revolution; with England and France leading, various countries are already planning to launch their own banknotes.

In fact, nations like Austria and Bavaria have started experimenting with banknotes in the past few years, but the speed of their financial reforms hasn’t been quick enough to become widespread. So the franc banknote benefit can only be reaped for these two years, and once all countries have their own banknotes, it will enter a normal exchange rate settlement mode.

Brian and the other ministers, all very intelligent people, quickly grasped the intricacies and showed knowing smiles on their faces.

Mirabeau immediately suggested, “Your Highness, then we should completely increase the amount of the loan.”

“Trade volume,” Joseph patted the trade documents on the table, “If the loan amount excessively surpasses the trade volume, these nations will certainly use the remaining funds to buy land in our country or engage in financial speculation, and then we end up with a losing deal.”

Mirabeau was taken aback and nodded repeatedly, “Indeed, I hadn’t considered comprehensively enough.”

Beside them, Brian added cautiously,

“Your Highness, this matter is likely being propelled by England, so they may attempt to persuade countries like Wurttemberg to reject our loan proposal.”

“You’re right,” Joseph nodded approvingly to him, “This requires the deterrent methods I spoke of earlier.

“We must make the Southern German States understand that re-signing the Rhine-Saone Treaty is absolutely impossible. Then naturally, they will accept our loan ‘compensation.'”

“You speak of deterrence?”

“We will discuss this in detail with General Bertier later,” said Joseph, “And later, you may need to take a trip to Baden to negotiate with Frederick… No, I will go myself.”

He was referring not to the late King of Prussia but to the Grand Duke of Baden—Charles Frederick von Zähringen.

One week later.

Baden.

The silver-grey “Gemstone 7L model” carriage slowly halted in the Karlsruhe Palace Square, and as Joseph alighted, strains of music began to play around them.

The Grand Duke of Baden, Charles Frederick, eagerly came forward to greet him, his face brimming with smiles.

As a small country neighboring France, Baden was considerably reliant on France, both economically and politically, and could be considered a minor follow

Thus, the visit of the Crown Prince of France was taken very seriously by the entire court of Baden, and the welcome ceremony was very grand.

After standard courtesies, Joseph and Frederick walked shoulder to shoulder beneath the raised swords of the guards, while hundreds of Baden Nobles made obsequious bows following their steps.

“Your Highness, the banquet is ready,” Frederick warmly gestured toward the palace, “My head chef once served at the Palace of Versailles, and his craftsmanship is very unique.”

“Thank you for your hospitality,” Joseph replied politely, “Actually, to promote the traditional friendship between France and Baden, I have a gift for you.”

Frederick immediately showed a look of surprise, “Ah, I’m so grateful. What kind of gift is it?”

Joseph entered the Baroque-style banquet hall, which was not large but finely decorated, and sat down next to Frederick, smiling, “Every year, a large volume of goods goes from France through Baden to the German states. If a wooden railway is built in your country, connecting Strasbourg and Stuttgart, reaching all the way to the Rhine River, it would greatly increase transport volume.

“Afterward, warehouses could be built along the railway line, making Baden a distribution hub for French export goods.

“Do you like this gift?”

Frederick suddenly felt his breathing hasten. Given that trade between France and the Southern German States had surged in the past two years, if Baden were to become a distribution hub, the warehouse rent alone would be a considerable source of income.