Holy Roman Empire

Chapter 254: Chapter 3: Output British Pounds
Before proposing the gold standard reform, Franz had already considered the issue of gold reserves, and the best option was naturally to occupy the gold-producing areas and organize manpower for mining.

Unfortunately, most of the world’s principal gold-producing regions had no relation to the New Holy Roman Empire, with the majority of them in British hands.

In this era, easily mined gold deposits were mainly located in South Africa, Russia, Canada, Australia, the United States, Zimbabwe, Ghana, Brazil, Colombia, the Philippines, and Papua New Guinea among other regions.

There was no way around it: the European Continent was short on gold mines, and even those that existed had been largely developed, what remained lied deep underground, and surface gold mines no longer existed.

Franz was not an encyclopedia; he could not possibly remember every gold mine’s location, so naturally, he couldn’t find all the potential gold mines within the country.

In contrast to the low yield of gold, Austria’s silver production was much better, and under the gold-silver bimetallic standard, it was silver that upheld the value of Austrian currency.

After a difficult bargaining process, the New Holy Roman Empire reluctantly passed the gold standard reform. This was the result of Franz’s non-intervention, there were also those within the Austrian Government who cast dissenting votes.

In any case, the gold standard reform was an inevitability, and starting early could secure a portion of the gold. If delayed, when everyone started competing for gold, the price to pay would escalate.

While major gold mines were beyond control, there were still some smaller ones, including those in Austria’s colonial possessions, Guinea and Congo.

Leaving aside underground mines, surely open-pit gold mines formed by river alluvium could be mined?

Franz’s expectations were not high; an annual yield of a few tons to fill the domestic gold gap would suffice.

As for other gold-mining regions, it would be better to wait until the British were suppressing the Indian uprising to make any covert moves. For now, it was better to keep a low profile to avoid becoming a target.

When the time came and Austria’s ironclad ships were ready, pre-emptively deployed in the colonies, securing regional naval superiority, the struggle for colonial domination would be different.

Do not underestimate the British Navy as number one in the world, but they had many colonies to protect. Scattered across the globe, aside from strategic waterways, the rest depended on the investment of various nations.

Before the discovery of gold mines, these regions’ value was a whole different proposition from after such a find, hardly worth the fierce competition among countries.

Following Austria’s business model, just operate locally for a decade or so, send over a hundred thousand immigrants, and there would be no fear of competitors.

War requires cost as well, and unless it is a huge mine like in South Africa, a gold deposit with a reserve of just a few hundred or thousand tons wouldn’t cover the expenses of a partial war between two major countries.

Even with South Africa’s gold making up half of the world’s supply, the British’s most important colony was still India, and for a very simple reason: gold mining has its costs.

Even at the peak period, the profits the British made from South Africa were still less than a fifth of what they gained from India, the two simply were incomparable.

Naturally, Franz wouldn’t invert the principal and subordinate, obsessing over gold at all costs. After all, gold is just one manifestation of wealth; other industrial raw materials are also forms of wealth.

The crux of the matter was still to develop domestic industry. In history, Germany lacked gold reserves yet still developed; isn’t that so?

In the industrial era, the speed at which humans create wealth far surpasses that of a few gold mines; developing oneself is most crucial.

After two world wars, the British still held India, South Africa, Australia, Canada, and other regions in their hands, yet ultimately, they obediently ceded world supremacy, did they not?

Having confirmed the gold standard reform, Franz left the rest to the Cabinet to handle.

 

Franz still underestimated the impact of the gold standard reform; not to mention the domestic fervor it caused, it also created a sensation on the European Continent.

London

The sudden initiation of the gold standard reform by the New Holy Roman Empire immediately caught the attention of the British Government. From the perspective of the development of capitalist market economies, the gold standard system would be even more favorable to international trade.

For the British, as long as the New Holy Roman Empire joined their leading gold standard system, then their dominance via the British Pounds currency would take a significant step forward.

In this era, the British possessed the world’s largest reserve of gold, and with London as the global financial hub, once the countries adopted the gold standard system, the British-established Pounds-to-gold settlement system would become the mainstream.

Countries lacking gold reserves would be forced to buy Pounds to serve as reserve currency to stabilize the currency value. In international settlements, using Pounds was, naturally, indispensable.

Once Pounds became the world’s currency, the benefits brought along would be considerable, which would lay the foundation for British global hegemony.

Knowing is one thing, but this is an open strategy. Even if aware of the British plan, Franz still had to grit his teeth and accept it.

We surely cannot neglect domestic economic development just to avoid British hegemony? The frequent changes in the silver-to-gold ratio are obviously detrimental to the development of industry and commerce.

At 10 Downing Street, influenced by the defeat in the Near East war, the residence has changed hands once again. In the domestic power struggle, Cabinet George has been ousted, and now it is the turn of Lord Granville’s Whig Party.

The unfortunately named Prime Minister Palmerston perished in the last political turmoil, and, compounded by the defeat in the Near East war—as he was the instigator of this war—it was naturally impossible for him to make a comeback.

As a political party representing the interests of finance and commerce, the Whig Party was also the eager pioneer of the gold standard system. Future European countries’ gold standard reforms were largely attributable to their influence.

Prime Minister Granville said with some surprise, “The always conservative Austrians have actually taken the lead in initiating gold standard reforms.

I won’t deny that Austria joining the gold standard system is beneficial for Great Britain, but such an abrupt change is still somewhat hard to accept. Do you think the Vienna Government’s reform can succeed this time?”

Foreign Minister John Russell replied, “Prime Minister, the Vienna Government’s gold standard reform is more about power struggles, as the Central Government seeks to strengthen control over the sub-state governments.

The New Holy Roman Empire is essentially inheriting the legal system of the Holy Roman Empire, and naturally, it is inevitable that it faces constraints, with the sub-state governments having significant autonomy.

Up until now, the Vienna Government has only managed to secure unified foreign policy rights and wartime military command. The current reforms of the gold standard system are their attempt to reclaim minting rights.

Although there’s some haste in the timing, Austria has made a fortune in the Near East war, so the Vienna Government should have sufficient funds to carry out currency reform.

Unless something unexpected occurs, the New Holy Roman Empire’s incorporation into the gold standard system should be unproblematic.”

After a moment of contemplation, Prime Minister Granville asked, “Aside from the necessary funds, gold standard reform also requires a considerable gold reserve. Presumably, the Vienna Government will soon begin purchasing gold on the international market.

However, with the volatile nature of the international market, and gold being a scarce resource, it should be time for prices to rise. The Austrians are likely to find it difficult to acquire an adequate gold reserve.

But considering Anglo-Austrian relations, how about we offer the Austrians a loan to assist them in achieving gold standard reform?”

Without doubt, Prime Minister Granville was planning to stir the pot. As the market maker on the international gold market, the British controlled the exchange rates between gold and silver.

If the British manipulate the price of gold, it will be hard for the Austrians to purchase enough gold.

If they fail to obtain sufficient gold, Vienna Government will have no choice but to accept a British loan and then establish a “British Pound – Gold” monetary system.

This will substantially enhance the international status of the British Pound and lay the foundation for settling international trade in British Pounds.

Anglo-Austrian friendship is nothing but a joke. It’s a profound friendship when it aligns with British interests; yet even profound friendships can turn into enmity once interests diverge.

Historically, the Anglo-Austrian relationship has always been one of de facto alliance, with Great Britain supporting Austria against Russia as a policy for nearly a century.

From the early 20th century onward, to contain the Germans, the British turned around and compromised with the Russians, abandoning this traditional ally.

After a prolonged silence, Finance Minister George-Grey responded, “The Prime Minister’s proposal is sound. Getting the New Holy Roman Empire into our currency system will make subsequent matters much easier.”

Clearly, whether Austria accepts the loan or not is a minor issue; the most critical aspect is getting the Vienna Government to acknowledge the “British Pound – Gold” system and enlist it in their lead currency settlement system for international trade.

In pursuit of the vast benefits brought by the British Pound as an international currency, the British began to export massive amounts of British Pounds from the mid to late 19th century, using various means to force governments worldwide to recognize Pound hegemony.

The historical world hegemony of the Great Britain Empire was actually built on the hegemony of the British Pound, with the British extracting vast profits through the subtle method of issuing their currency.

In later years, as the Great Britain Empire’s Colonial Empire collapsed, the fall of its currency hegemony was the first to occur. To vie for currency hegemony, the Americans too resorted to aggressively exporting the US Dollar.

From investing in Europe after World War I, giving the Germans a blood transfusion to help them recover their vitality, to the European aid programs after World War II, it was all about competing for currency hegemony.

The British gave up their vast colonies for the Americans, but held onto their currency hegemony with a firm grip, illustrating the significant interests at stake.

Prime Minister Granville, with concern, asked, “Sir Russell, how likely do you think it is that the Vienna Government will accept our goodwill?”

After a brief moment of reflection, John Russell answered with a chuckle, “It all depends on how appealing our offer is!

Although the New Holy Roman Empire has a large economic scale, it is at a disadvantage in terms of gold reserves, and thus lacks the qualifications to compete on the path to international currency hegemony.

Now, apart from the French who could potentially threaten us in this aspect, no other European country possesses this capability. Of course, if the Russians complete their internal reforms, they too would be a threat.”

After some hesitation, Prime Minister Granville made a decision, “Then we must act quickly, pulling more countries to our side before our competitors catch on.”