Chapter 727 — Open the Door, Free Trade
Blade of Dawn · Page 1 of 4
"Let's hear your reasoning, Patrick," Gao Yang said, studying the Imperial Minister of Commerce and Finance before him with a grave and serious expression. "You know that introducing fiat currency is a rather radical measure, and an overly large stride in reform means the difficulty and the risk of that reform will climb in a straight line."
"Yes, Your Majesty," Patrick said, pressing at the collar of his short black formal coat. He drew a deep breath, then spoke slowly. "The foremost reason I put forward such a proposal is... Typhon."
"Typhon..." Gao Yang mused briefly. "Go on."
"Your Majesty, you once said that a war between us and Typhon is inevitable—and in my view, that war has in fact already begun. I imagine you think so as well. We have just sidestepped a war of steel and powder, but economically, our contest has only just started, and at this stage the essence of that contest... is a contest over gold settlement."
Gao Yang watched Patrick's eyes. He made no effort to conceal the approval in his own gaze, and gestured for the man to continue.
"Typhon's representative currency is pegged to gold; their banks issue paper notes redeemable in gold on demand. But when it comes to orders with Cecil, since the two sides have yet to establish a new currency interface, we still settle directly in gold. We purchase large quantities of textiles and other primary industrial goods from Typhon, while exporting magical components, trains, and railways. The latter orders are few in number but enormous in value, so on the whole, Typhon's gold is flowing toward Cecil at a slow, inconspicuous rate.
"Your Majesty, you know that Typhon's noble reform was far 'gentler' than ours. They preserved a great many old nobles, and those old nobles, beyond losing their privileges, kept hold of vast private fortunes.
"Put simply, Typhon retains a great many noble treasuries beyond the royal family's control. Much of the gold paid to us... is in fact pooled together by the countless nobles, great and small, of Typhon's interior through private investment, fundraising, and financing; less than half comes directly from the vaults of the Typhon Imperial Bank. So for a long time to come, the Typhonians will not discover that their gold is draining away. This involves not only an immense and long-term statistical undertaking, but also a great many nobles who, to circumvent the railway investment restrictions set by Royan Augustus, are exhausting every means to conceal those fragmentary yet vast flows of gold..."
Listening to Patrick, Gao Yang could not help thinking of what Daniel had reported to him:
Typhon's minor and middling nobles, all scheming to seize a share of profit from the railway system, were doing everything in their power to insinuate themselves into those projects; and to circumvent the series of obstacles Royan Augustus had erected, their most common tactic was to borrow from banks under family guarantees and joint guarantees, then "cooperate" with those banks—after all, half of Typhon's banking system was in the hands of the noble class—to transfer the debt claims to the Cecil Railway Investment Company. Thereafter, in the guise of repaying debt, they would draw on their family treasuries to pay off Cecil's claims in installments, acquiring shares through every manner of shell arrangement and carving out a share of the railway's operating profits...
This intricate and "brilliant" maneuvering had slipped right around their regulatory system.