I'm the Dauphin in France

Chapter 631 Currency Bonus
Joseph was not surprised that Brian had such concerns. After all, Brian had never been exposed to the financial colonial concept of later generations, and even the application of paper money was still at the initial stage.

He looked at the finance minister and said, "Archbishop Briand, as long as these countries accept our paper money loans and agree that they can only be used for trade and cannot be exchanged for gold at the French Reserve Bank, then this money will not affect our financial stability."

Brian, Bailly and others looked at each other, their expressions full of confusion.

Joseph had to patiently explain to them: "To put it simply, countries that accept franc banknote loans actually recognize the value of these 'pieces of paper'.

“Even if they immediately use all the money to buy Chinese goods, which is actually impossible, transactions are delayed, and at least one-third of the money will flow into their own production and sales channels during the transaction process.

"Now let's just talk about the extreme case, where all the money really returns to France through trade. Then the next debtor country that received the loan will have to consider the repayment issue. The repayment method is nothing more than repayment with gold and silver coins, or repayment with franc banknotes.

"If it is gold or silver coins, we are exchanging paper money for precious metals, which is a significant profit. This may even lead to an increase in the value of paper money.

"Of course, most of the debtor countries will choose to repay with paper money. Then they must have the means to obtain paper money, which can only be achieved by selling goods to our country. In other words, the franc will become the currency they accept in circulation, and paper money will continue to enter their market.

"So no matter what happens, our country will not be seriously hit by paper money. At most, it will be a short-term and small-scale inflow of paper money, and the impact on the currency value can be ignored. In the long run, we will benefit."

The reason for this situation is that the debtor countries themselves use gold and silver coins, so there is no exchange rate issue in cross-border trade.

If it were in the future, after a country took out a loan, it would first exchange the foreign banknotes for its own banknotes, use its own money for circulation internally, and use foreign currency for external settlements.

If you use gold and silver coins to settle the exchange rate with my paper money, I will definitely make a lot of money. If you don't exchange, then you can only use my paper money to circulate in your own market, which is equivalent to exchanging physical objects for my "paper".

Therefore, once the other party accepts the paper money loan, France will only need to experience a brief financial fluctuation, and will make a profit afterwards.

Just like the Marshall Plan of the United States after the end of World War II, which allowed a large amount of US dollars to flow into Europe through loans, it did not cause any financial risks in the United States, but instead rapidly expanded the influence of the US dollar.

Of course, the premise for all this to be true is that the French currency credit can be trusted by these small countries, and at the same time there is a large amount of trade between the two countries, and others can use paper money to buy the goods they need from France.

However, the European continent is currently on the eve of a monetary revolution. With Britain and France taking the lead, various countries have begun planning to launch their own banknotes.

In fact, Austria, Bavaria and other countries have been experimenting with banknotes since a few years ago, but their financial reforms have not been fast enough and have not been fully implemented. Therefore, the benefits of the franc paper currency can only be enjoyed in the next two years. Once all countries have paper currency, they will enter a normal exchange rate settlement mode.

Ministers such as Brian were all very smart people. They quickly figured out the twists and turns here and smiled knowingly on their faces.

Mirabeau immediately suggested: "Your Highness, then we should definitely increase the amount of the loan."

"Trade volume." Joseph patted the trade documents on the table. "If the loan amount exceeds the trade volume by too much, these countries will definitely use the remaining funds to buy land in our country or engage in financial speculation. Then we will lose more than we gain."

Mirabeau was shocked and nodded repeatedly: "Indeed, I didn't consider it comprehensively enough."

Brian on the side said carefully:
"Your Highness, this matter is most likely driven by the United Kingdom, so they may try to ask Wurttemberg and other countries to reject our loan plan." "You are right." Joseph nodded approvingly, "This requires the deterrent method I mentioned before.

"The southern German states must be made to understand that the re-signing of the Rhine-Seine Treaty is out of the question. Then they will naturally accept the loan 'compensation'."

"What do you mean by deterrence?"

"We will discuss this matter in detail with General Berthier later," Joseph said. "After that, you may need to go to Baden to discuss it with His Majesty Frederick... Forget it, I'll go myself."

The Frederick he was referring to was not the deceased King of Prussia, but the Grand Duke of Baden, Karl Friedrich von Zähringen.

A week later.

Baden.

The silver-gray "Jewel 7L" carriage slowly stopped at the Karlsruhe Palace Square. As soon as Joseph got off the carriage, melodious music sounded all around.

Archduke Karl Frederick came over cordially, his face full of smiles.

As a small country adjacent to France, Baden is to a considerable extent dependent on France both economically and politically, and can be regarded as France's little follower.

Therefore, everyone in Baden attached great importance to the visit of the French Crown Prince and the welcoming ceremony was quite grand.

After the routine courtesies, Joseph and Frederick walked side by side under the guards' raised swords, and hundreds of Baden nobles around them followed their steps and saluted one by one.

"Your Highness, the banquet is ready." Frederick gestured enthusiastically towards the palace. "My head chef once served at the Palace of Versailles. His cooking skills are very unique."

"Thank you for your hospitality," Joseph responded politely. "In fact, in order to promote the traditional friendship between France and Brazil, I have a gift for you."

Frederick immediately showed a look of surprise: "Ah, thank you so much. What kind of gift is it?"

Joseph walked into the small but exquisitely decorated Baroque-style banquet hall, sat down next to Frederick, and said with a smile: "Every year, a large amount of goods are shipped from France to the German countries via Baden. If you lay a wooden track in your country, connecting Strasbourg and Stuttgart and directly to the Rhine River, the transportation volume will be greatly increased.

“Later, warehouses could be built along the track, making Baden a distribution center for French exports.

"Do you like this gift?"

Frederick's breathing became a little rapid. You know, the trade volume between France and the southern German countries has grown rapidly in the past two years. If Baden can become a commodity distribution center, the warehouse rent alone will be a huge income.

(End of this chapter)