The franc and the gold standard
When the people in Bastille Square heard that there was a monetary regulator involved, and that banks and Chamber of Commerce were also involved, their concerns were greatly reduced, and they began to nod and discuss among themselves.
In reality, Joseph had absolute control over this regulatory meeting— the Royal House and Finance officials, needless to say, would speak according to his demands. He was also the largest shareholder of the French Reserve Bank. Even the French Chamber of Commerce, currently controlled by the Noble Class, still followed his lead.
Therefore, he basically dictates monetary policy. This isn't about creating a monopoly—his financial ideas are currently over 200 years ahead of the rest of the world. Rather than letting current economists experiment haphazardly, he prefers to implement the correct approach from the outset.
Of course, this regulatory body will need to be standardized in the future to form a scientific and effective monetary management system. After all, it will grow old one day and cannot rely on its "Grand Prophecy" to manage finance forever.
The journalists present were writing furiously, and the crowd was buzzing with discussion. Although they knew the government had announced an important economic policy, no one realized that this would be a landmark moment for the France economy.
The series of monetary policies announced by Joseph were the Gold Standard system, which was adopted by all the world's major powers from the mid-19th century onwards.
For ordinary people, it seems that the only difference is that they can use Paper Money when buying things; Livre still uses it as usual, and nothing seems to have changed.
However, from a national perspective, the underlying logic of currency and the economy has changed.
After that, all France currencies were based on gold.
The Livre could be used for trade not because of its Silver Coin properties, but because the French Government stipulated that one Livre could be exchanged for 0.3 grams of gold.
In other words, if the France Finance announced that the Livre could no longer be exchanged for gold, then people would have to sell their Silver Coin as silver for Franc in order for them to circulate.
This might seem commonplace to people in the 21st century who are accustomed to relatively stable currencies and mature exchange rate systems, but in the 18th century, it was a groundbreaking innovation that significantly improved the national economic environment!
It's important to understand that in this era, the concept of national legal tender was practically nonexistent. Whether it was the Livre, Florin, Ducat, or the North Africa Riyal, or the Ottoman Akçe, as long as you had real gold and silver, they could circulate freely in the France market. Even Pound Sterling Paper Money were accepted because they could be exchanged for Gold Coin at the Bank of England.
Therefore, one can imagine how chaotic it must have been when trade took place.
For example, someone said they'd pay for this batch of goods in Ducat, but when it came time to pay, we found out half of it was in Riyal, and some were mixed in with Ecu. Okay, let's not do anything else today and just slowly convert it.
The exchange rates between various currencies vary from place to place. For example, in the provinces along the Mediterranean Sea coast, 1 Riyal can be exchanged for 22 Livre, which can be used directly to buy things from North Africa. However, in Northern France, it may only be worth 20 Livre and 10 sous—purely based on its gold content.
As a result, the South merchants were extremely reluctant to sell their goods in the north. Even two towns that were not far apart did not like to do business with each other because they used different currencies. This seriously affected the country's commercial operations.
Don't underestimate this impact. Commerce relies on the flow of money and goods. If the flow is even slightly blocked, the trade volume will be halved or even halved again, let alone in a situation where there are blockages everywhere.
Furthermore, the Gold Standard standard can eliminate issues such as currency depreciation, undervalued currency, and the impact of fluctuations in the exchange rate between gold and silver on the value of currency.
Currently, in the entire world, apart from the United Kingdom, under the leadership of Sir Isaac Newton (yes, the one with the Apple logo), which implemented some Gold Standard models, all other countries still use precious metals for transactions.
It was Newton's action that made United Kingdom's business environment the best in the European Continent, and coupled with their excellent tax policies, paved the way for their British Empire the British Empire.
Now, Joseph is about to introduce the full version of the Gold Standard standard to France. The title of having the best business environment in the European Continent may soon change hands.
In addition, the Gold Standard standard gave governments more power to regulate financial markets, and the exchange rate was very stable. As a result, many countries continued to use the Gold Standard until the 1970s.
Joseph had been planning to implement the Gold Standard for a long time, and the choice of this particular time was also the result of careful consideration.
Firstly, France has recently gained access to a large number of overseas markets. According to reports from last week, Moreau and Ney's legions have completely taken control of Tripoli City and are continuing their eastward advance.
70% of Tripoli's population is concentrated in the Tripoli City and surrounding areas; the eastern part is relatively desolate. Moreau and his men shouldn't encounter any significant resistance. They should have already reached the Surt area in the east by now [Note 1].
With the addition of Tunisia and Annaba in Algiers, France now has a firm foothold in central North Africa. Although these areas are not large, they are all fertile lands rich in resources and have served as transit points for the Mediterranean Sea trade, resulting in a considerable volume of trade.
Furthermore, in the Wallonia of the Southern Netherlands, France investment has recently taken shape, with numerous coal mining and refining companies established. Moreover, as a wealthy Europe region, its economic strength is roughly equivalent to that of the entire Tunisia.
Meanwhile, thanks to Joseph's continuous efforts over the past year, France's industrial development has also achieved remarkable results.
Currently, Lyon has more than 200 Automatic Loom and nearly 3,000 spindles in operation, and the number is constantly increasing. With the supply of Wool from New Zealand and Cotton from Russia, the cost of Textile in Lyon has been reduced to about 120% of that in the United Kingdom.
It's worth noting that this figure was at least 150% a year ago. If we take into account France's fashion influence and its advantages in design, Lyon's Textile have already managed to steal a significant share of the Europe market from the United Kingdom.
Brewing Industry in Bordeaux and Champagne, steel and Steam Engine industries in Nancy, and Papermaking, luxury goods, and Mechanical Industry in Paris all saw significant development. Meanwhile, industries like Gas Lamp, Chemical, and furniture were waiting to be "launched."
There are now a large number of factories and immigrants eagerly awaiting funding.
Joseph could then take advantage of this opportunity to get the bank to issue large amounts of Paper Money as loans.
The factories would then use these Franc to purchase equipment and raw materials, or to pay workers' wages. The immigrants would also use them to buy necessities from the locals or to hire them.
In this way, it won't be long before the Franc's circulation rate reaches a very high level.
[Note 1] At the end of the 18th century, the relatively wealthy Benghazi region was still under the control of the Egypt Mamluk, so it did not belong to Tripoli. Tripoli's territory extended to Surt, west of Benghazi, and its area was not very large.