Xinshun 1730

Chapter 896 Britain Falls into the Trap ([-])
What Liu Yu said was so "reasonable", but Fazaklei used his experience of living in China for many years to subconsciously pop up an idiom in his mind.

Contrary to each other.

Xindao, you said that the exchange of foreign trade for a pile of silver is the loss of national wealth.

On the one hand, they raised tens of millions of taels of shares with great fanfare to form a Western trading company.

How is this different from driving north when one is going south?

Your words are really unbelievable.

Of course, there is nothing in the UK worth buying with silver. Silver is indeed not an effective international currency for Dashun in this "unequal" national trade.

However, is it possible that there is something worth buying in the Netherlands?

I'm afraid that instead of thinking about exchanging your so-called "national wealth" for a pile of "useless" silver, you will intensify the smuggling efforts!
His emotions at this moment were clearly shown on his face.

People like Liu Yu have learned a lot about the ability to observe words and emotions, and what he said...he doesn't really believe it himself. This is a standard target for himself.

Distort mercantilism into heavy metalism.Then he criticizes his own mercantilism disguised as heavy metalism.

Seeing Fazaklei's color, Liu Yu was not in a hurry to convince him immediately, but said again: "Of course, the general approval of the people is the basis for the popularization of currency. However, I said that the court feels that some things must be change, and may even restore banknotes, of course we know that it is difficult to implement, but we have to do it.”

"You have the Bank of England, which has the right to issue banknotes. Japan has the Iwami Silver Mine. Spain has the Potosi Silver Mine. Austria has the Schwarz Silver Mine. France also has the banknotes promoted by John Law."

"But what does the Celestial Dynasty have? There are neither big silver mines nor big gold mines. The country cannot control the currency, and foreign trade has completely become the note-issuing bank of the Celestial Dynasty."

"Since the middle of the former dynasty, inflation and deflation have alternated. During the 30-year war, the import of silver dropped sharply, and a big problem immediately occurred. After the war, the price of rice began to jump again, and the ratio of silver conversion decreased steadily."

"If the current silver revenue of the Celestial Dynasty is converted into food, it seems that it is much more than that of the previous dynasty, but in fact the difference between the annual revenue of the previous dynasty and the previous dynasty is not much."

"However, prices have been basically stable in recent years. Do you know what that means?"

This is true and false, but it is not nonsense.

In fact, Dashun only has the theoretical right to issue banknotes.

At least, before the development of the Yunnan Copper Mine, even money like Tongzi and Tongbao depended on the face of Japan.There was no Japanese copper for a period of time, and casting money was a problem.

This is true of copper, not to mention gold and silver mines, which are even more scarce in China.Compared with the size of the economy, although there is a lot of gold and silver in the country, it is definitely not enough.

The monetization of silver in the Celestial Dynasty was purely caused by the development of international trade and the trade between East and West.If there is no trade between the East and the West, either banknotes match copper coins, or taxes in kind match silk as money.

Liu Yu said that foreign trade is Dashun's note-issuing bank, and theoretically it can't be wrong.

These problems are still easy to understand for Fazakle, who has experienced the 20-year economic crisis and the reform of the currency value gold standard by Lord Niu.

The question Liu Yu raised at the end made Fazaklei think that Liu Yu was purely "Stank tones, fun of foolish talk" from the beginning, but after thinking about it gradually, he felt that it seemed to be indeed "the great opinion of the prince".

The last question is actually a very simple economic question.

Under the premise that Dashun's huge silver surplus is an irrefutable fact, Dashun's prices remain basically stable. What does this prove?
To put it simply and roughly, it proves that the huge amount of traded silver entering Dashun every year is basically the same as the growth rate of Dashun's handicraft products.

Fazaklei understands what Liu Yu's subtext is.

If, one day, something goes wrong with foreign trade, a large amount of silver no longer flows into Dashun, and the growth rate of Dashun's handicraft industry remains unchanged, what problems will it bring?
Obviously, deflation.

What does deflation mean?
It means that if you can buy 10 catties of rice today and store it in the cellar, you can buy 12 catties of rice next year, and maybe 15 catties of rice the year after.Then why spend money?Then why invest?Does the rate of return on your investment outperform the appreciation of silver?

Those who are qualified to spend money, don't they all put their silver in the cellar and stop spending money?That's bound to cause big problems.

Fazakle has experienced inflation in Europe, and also experienced short-term deflation. In the economic crisis that has swept Europe for 20 years, all kinds of strange problems—including irrational frenzied investment and skyrocketing stocks that violate any economic principles— - It's all been done.

He seemed to be able to understand what Liu Yu meant by "I am an official and you are a businessman, so the way of thinking is different".

If there is a similar silver currency problem in Dashun, something big will happen to such a big country.

As for Dashun, it is true that it does not have the right to issue banknotes.

The little copper from the Yunnan Copper Mine is used to issue banknotes, which cannot keep up with the surge in economic growth in recent years.

Once the "Dashun Central Bank" of foreign trade stops issuing money, Dashun's economy will suffer.

"My lord duke, although what you said is reasonable, it's not about planning for a rainy day, but more like worrying about the sky. If the sky collapses, it will naturally perish. It's absolutely right to think so. But the reality is how can the sky collapse?"

"How can your country's overseas trade not earn silver?"

Liu Yu shook his head, sighed, and said, "There is no eternity in the world, especially trade advantages. I have been to Europa, inspected the silk factory in Lyon, seen the porcelain of Mason, and even studied the products of various European countries. Cotton textile industry development."

"I'm not optimistic about the future. Britain, in particular, possesses the finest cotton from the thirteen colonies, and has invented flying shuttle and blending technology... I don't know the technology for the time being, but I can always learn it. Once it catches up in the future, the Celestial Dynasty's Can massive exports continue?"

"You have to know that the exchange of civilizations will bring about a technological explosion. It is impossible to prevent the theft of porcelain technology, the outflow of tea seeds, and the unauthorized export of jacquard machines and other equipment forever."

"Manchester's cotton, linen and wool blends, if the quality reaches a certain level, do not need to be completely equal to Songjiang cloth in terms of price."

"Tariffs, freight, capital turnover, and the annual interest rate of China, all of these make Manchester's cotton, linen and wool blends only need 130% of the price of China's cotton cloth, which can completely make China's cotton cloth unsalable."

"That day, of course not now. But what about ten years later? Twenty years later? Thirty years later?"

"Besides, anyone who is sober and politically minded understands that this war in Europe is not yet over, and the next war is already brewing. Conflicts at sea, internal conflicts in Shinra, and colonial conflicts, all of which are in this war not solved."

"Once there is another major war no less than the Thirty Years' War, China's exports will drop sharply, and silver will deflate instantly, what will China do?"

"I'm an official, a member of the imperial court. In my eyes, silver can only be currency, not wealth. Do you think this is still groundless worry?"

"The imperial court, or the government, is concerned with standing, stability, and continuation. Instead of paying attention to the profit of cotton cloth today and the profit of spices tomorrow."

Fazaklei very much agrees with this, and he has gradually understood what Liu Yu meant by the difference between "officials and businessmen".

Although most of it was what Liu Yu wanted him to understand, at least there was a reasonable reason for this understanding.

Fazaklei also doesn't think he has a strong political mind, but he agrees with Liu Yu's statement that the next war is brewing, and that even a truce now is just a truce for countries to lick their wounds.

There is no doubt that the company will continue to compete with France in India.

It is no secret that the contradictions in North America, the Caribbean, and Africa are no less than those between the French Asiatic Company and the British East India Company.

Moreover, Liu Yu mentioned a very scary scenario in the eyes of the East India Company, that is, with the technological progress of various countries, the prices of commodities in various countries tend to be similar after deducting tariffs and freight charges.

For a British trading company, whether British goods are cheaper than Chinese goods or British goods are more expensive than Chinese goods is acceptable.

The East India Company could accept the cotton cloth from Manchester, which was cheaper and better than the cotton cloth from Songjiang Prefecture. The weavers in Songjiang Prefecture were beaten to starve to death at home.

It can also accept that the cotton cloth of Songjiang Prefecture is better than that of Manchester, and the weavers in Manchester are beaten one by one to the North American plantations as indentured slaves.

The only thing that cannot be accepted is the cotton cloth from Songjiang Prefecture and the cotton cloth from Manchester. The prices are about [-]% of each other.

In an era when international trade funds are frequently cycled by the annual monsoon, according to the interest rate in the UK, about [-]% of them are actually not profitable.

Is this possible?

Although Fazaklei was very alert to every word of Liu Yu in his heart, he was worried that Liu Yu was defrauding him again, engaging in all kinds of deception.

However, what Liu Yu said was the correct truth.

There are no lies, no tricks, if you think along this line of thought, you can indeed come to the same conclusion as Liu Yu - as long as you have a normal mind.

Liu Yu was creating anxiety.

He was just creating anxiety, not anxious himself.

But use a kind of reason that the anxiety is inevitable, and pass the anxiety to others.

From the perspective of the company's shareholders, Fazaklei easily accepted this anxiety and had to consider the company's future.

Before Dashun went to Nanyang, the East India companies of various countries would not have too much anxiety.They can fight against each other and cheat each other.

But no one has ever imagined that a huge company with assets of hundreds of millions of dollars, lasting for more than a hundred years, and influencing the Amsterdam Stock Exchange in the financial market... could go bankrupt, close down, and lose everything overnight.

At least, before Dashun went to Nanyang, people would think that the Dutch East India Company might be in debt, that it might not be able to pay enough dividends in a certain year, that there might be financial problems of one kind or another, and there might be infighting among the board of directors.

But no one has ever thought that the giant company that once stomped and trembled in European trade has become a part of history in just half a year.

Until this moment, many businessmen in Europe suddenly realized:
It turned out that the feeling of stability brought to people by the Dutch East India Company was only because the giant dragon not far away had been asleep before.

When the dragon is sleeping, and it doesn’t wake up after poking it twice with a knife, but just twists its body, when people analyze the problem, they will subconsciously think that this thing is dead, and it is a background board.

It's like when everyone thinks about a problem, they don't think that if the sun goes out, I can't do this thing.In the normality that the sun never goes out, and every tomorrow will rise as usual for thousands of years, the existence of the sun becomes a kind of background board.

The same is true of the previous celestial dynasties.

Confidence in the various markets of various East India companies also stems from the premise that China is just a background board.Otherwise, no one would have confidence in the Dutch East India Company: such a large profit is next to a large country with a population of hundreds of millions. How can there be financial confidence under normal circumstances?How will enough stock be raised?How can someone buy bonds after issuing them?

Twenty years ago, the giant dragon suddenly woke up.As a result, the Swedish East India Company had to accommodate half of the Chinese shares, and the Dutch East India Company collapsed overnight.

This anxiety started from Sino-Swiss cooperation and reached its peak when the Dutch East India Company collapsed overnight.Behind the anxiety is that we can no longer regard the slumber of the heavens as the normal state of the sun rising as usual.

This is like assuming that Europeans have discovered a huge gold and silver mine around Dashun, comparable to Potosí.At this time, the mine owner said he had made a fortune and wanted to raise shares in Europe.If China is awake, and European thinking recognizes that China is awake, then if this mine can raise a silver coin, it can be confidently said that this silver coin is absolutely trustworthy.

The market confidence and investment confidence of the European investment community in the Dutch, British and other East India companies can only prove a sad fact.

From the day they came to Southeast Asia, and the moment when the spices got a maximum of 1400% profit and still received a lot of investment, the whole of Europe subconsciously believed that the Chinese Dynasty was dead and asleep, and used this as Normal and considered impossible to wake up.

(End of this chapter)