Rebirth of the Spanish Empire

"Your Majesty, why don't you call Gilad and Tony here?" Chirac had just sent them away. After coming back, he looked at Alfonso who was reading a book with some confusion.

"Don't you think it would be better to be on the safe side in case of trouble?"

"However, if they meet, we can be more confident that they will take the lead and cooperate to support your plan."

"But do you know what my plan is?"

"This" Chirac was immediately speechless after hearing this. He really couldn't explain clearly, because after doing this, he now believed that His Majesty really summoned them to develop Menorca Island. However, now look at it. , and something seems wrong, because if that is the case, as His Majesty said, it would be better to call a few other people over. However, under the current circumstances, Your Majesty has summoned Geshe and Baker. This is a bit confusing.

"Okay, your task is to continue to manage the Spanish Intelligence Agency. As for the rest, if you don't need to be involved, don't interfere."

"Yes" do your duty and don't mind other people's business. Chirac still doesn't understand the meaning of this.

"Now, how did you check out what I asked you to do?"

"Everything has been found out, and now the recycling of rubles on the Russian market is almost completed."

"So what is our profit this time?" After a pause, Alfonso continued to look at the book in his hand without stopping because of this question.

When Chirac heard Alfonso's question, even he, who was usually very calm, felt that his heart was about to boil and bake at this moment, because that pillar, seeing the situation was shocking, said with some trembling: "A total of It’s 150 million rubles, and there are 56 million Russian gold coins worth.”

so much? Even Alfonso, who had already thought about making a lot of money this time, his left hand holding the book trembled, and he almost lost his grip on the book.

150 million rubles, and 56 million gold coins. The current exchange rate between the ruble and Spain is about 2:1. This is the ratio based on the gold coins, because almost all countries in the Western world are now on the gold standard, and The British ratio is 1 pound equal to 7.32 grams, the pesetas and the dollar are both 1.52 grams, and the ruble is about 0.77. In other words, 150 million rubles is equal to 75 million pesetas, plus the face value of the same gold coin of 56 million , which means that from the operation he arranged this time, he has earned 131 million pesetas in a few years. This figure had come out, and Alfonso was immediately pleasantly surprised and absolutely shocked at the same time, because this money is so damn profitable?

"Have the gold coins been shipped back?"

“In Madrid”

"That's good, I'll talk to Antonio later, and these gold coins will be melted back into the furnace, and then all of them will be turned into our Peseta, eh." Alfonso thought for a while, gave Antonio 56 million, and then took it out from him 1 million in the competition as a reward for the participants. For the remaining rubles, we arranged for our people to obtain gold coins in the market or in various countries such as Germany, the United Kingdom, the United States, Austria, etc. Do you understand, they are gold coins? "

"Yes" 1 million pesetas, Chirac felt excited in his heart, because after all the calculations, he finally got at least 20,000 pesetas. Moreover, thinking of the excitement of his subordinates, he felt that he was worthy of them. idea.

But Alfonso's idea was that with the ruble and Russian national debt, I still took advantage of this opportunity.

At the same time, I also deeply feel the common interests of currency opportunities and crises.

As early as the early 18th century, after Russia became a powerful country in Europe, in order to maintain its status as a powerful country, Russia adhered to the policy of foreign expansion and continued to fight for years. Frequent wars have led to huge military expenditures, which have placed a huge burden on Russia's finances and led to a serious domestic budget deficit, which cannot be alleviated by measures such as increasing taxes, increasing currency issuance, and borrowing foreign debt.

During the Turkish War of 1768, Russia encountered an unprecedented financial crisis. At this time, Russia had to find new ways to solve the currency problem. For this reason, the final result was that banknotes appeared in Russia. But, can it really be omnipotent?

No! The issuance of paper notes did not fundamentally solve Russia's currency problem. Russia's monetary system reform can be traced back to the 1860s. However, Russia, which has been at war for years and has increasing military expenditures, simply does not have the conditions to implement monetary system reform. Russia's monetary system has always been in chaos, and several finance ministers have tried to overhaul it. It was the same as the Ottoman Empire at that time, but the final reform was completed by Witte between 1897 and 1899.

The Russian monetary system has gradually stabilized after some reforms. However, they were war-loving and once again fell into a state of almost paralysis in the face of war. By the beginning of the 20th century, Russia had experienced repeated wars and revolutions, all of which posed huge challenges to Russia's monetary system.

Especially during the Russo-Japanese War from February 1904 to September 1905 and the period of the 1905 Revolution, its impact was even more obvious.

On February 3, 1904, after the outbreak of the Russo-Japanese War, whether to terminate the free exchange of the ruble with gold became a very critical issue. However, Kokovtsov, then Minister of Finance at the time, believed that the paper ruble should not be abandoned. The currency circulation system is based on the principle of free exchange with gold, because only in this case can Russia stabilize its finances and maintain the credibility of the Russian ruble in the world currency market. At the same time, it can also reverse the consequences of the Russo-Japanese War as soon as possible. adverse effects on the country. During the period of war and violence from 1904 to 1906, the first starting point of Kokovtsov's monetary and fiscal policies was to maintain the normal order in Russia's currency circulation field and the stability of the country's finances.

However, from the first day of the war, Russia's economic life was in chaos. The impact of the war was already felt in all the economic structures of the country. No one could predict that the war situation that seemed to be favorable to Russia would change. The Japanese sneak attack would cause such great trauma to Russia. It's nothing like what I got, and what's terrible is that the cost of the war exceeds the original calculation.

As a result, every military defeat of the Russian army during the war was keenly reflected in the loss of national credit, the price of the ruble and the decline in the price of Russian securities on foreign exchanges.

At this time, under the leadership of the autocratic Nicholas II, the main method chosen by the government to finance the war was to raise national debt, mainly foreign debt. Russia's first financial measure because of the war was to borrow foreign debt. Borrowing foreign debt can not only finance the war, but also increase Russia's gold reserves. Russia borrowed foreign debt from both French bankers and Germany. However, the conditions for these debts are very harsh. For example, although the face value of the foreign debt borrowed by Russia is 843 million rubles, the actual amount in hand is only 677 million rubles. Although the interest rates on these debts are not very favorable for Russia, it is still number one.

From 1904 to 1906, the total amount of domestic and foreign public debt and short-term treasury bonds sold due to war needs exceeded 2.2 billion rubles, seriously deteriorating the situation in the capital market. The National Bank consumed a large amount of funds from the state treasury, and the current book funds of the state treasury decreased from the original 343 million rubles to 174 million rubles. Needless to say, these were absorbed by Alfonso.

At this time, the price of Russian 4% government bonds on the London Stock Exchange had reached 101 before the war. However, the first military defeat in Hepu, because of the country's credit problems, had shaken investors' confidence, causing it to fall to 87. On the Berlin Stock Exchange, the ruble fell from 216 marks to 214 marks per 100 rubles.

After the end of the Russo-Japanese War under Theodore Roosevelt's mediation, Russia's finances faced another severe challenge, which was the Russian uprising that broke out on January 9, 1905. If Russia's finances were not in great financial difficulty in 1904, the first year of the Russo-Japanese War, then the outbreak of the 1905 Revolution had a serious impact on Russia's gold-based currency circulation system.

The gold and ruble reserves in 1903 were 7.94 gold coins (the same below as billion) and 5.64, respectively. However, by 1906, the figures were only 8.76 gold and 1.193 billion rubles. As can be clearly seen, during the Russo-Japanese War, Russia's currency issuance was based on sufficient gold reserves, but the outbreak of the Russian Revolution changed this balanced currency issuance pattern. Although Russia's gold reserves did not increase significantly, its currency issuance increased sharply in 1906, and it maintained a high currency issuance during the war.

Since the growth rate of Russia's gold reserves was less than the growth rate of currency issuance, Russia experienced a tense exchange situation between gold and credit rubles in December 1905. Foreign capitalists who had lent money to Russia and Russian capitalists living abroad all transferred their capital (in the form of gold) abroad in the form of debt payments. However, the biggest threat to Russia's finance and currency circulation was the violent run on gold by credit rubles through major savings banks across the country. During this period, the Russian State Bank paid a total of approximately 149 million rubles to the outside world through major savings banks. of gold. These financial institutions began to withstand long-term siege from retail investors. In front of these financial institutions, there would be a scene every day, which is to exchange credit rubles for gold.

In fact, the Russian government effectively prevented the issuance of banknotes in Russia before 1905, but in the last four months of 1905, the trend of issuing banknotes quickly picked up. It can be seen from Table 2 that during the Russo-Japanese War, the amount of currency circulating in Russia increased from 1.486 billion rubles to 1.691 billion rubles, an increase of 13%; during the 1960s, the amount of currency circulating in Russia increased compared with the war period. 2.5 times. Adding the two together, that is, between the Russo-Japanese War and the 1905 Revolution, the amount of currency circulating in Russia increased by 692 million rubles, an increase of 46%. At the end of 1905, a series of political strikes and armed uprisings in Russia plunged the country's economy and finances into an abyss of chaos. During this period, the Russian gold standard monetary system, which had once been glorious, was almost ruined.

In October 1905, due to the convening of the State Bank staff meeting, the normal work of the State Bank, the hub of the Russian financial system, was paralyzed.

The failure of the Japanese-Russian War and the long-term social turmoil brought about by the revolution destroyed the prestige of the Russian government. Coupled with the propaganda and instigation of left-wing parties, it undoubtedly made things worse for the Russian government. At this time, the Ministry of Finance raised a very critical issue for Russia's fiscal and monetary system, that is: Should the free exchange business of credit rubles and gold be continued? All members of Russia's highest financial institution (Finance Committee) opposed this , they believe that if the free exchange of rubles and gold is terminated, it will completely destroy the trust of Western countries in Russia's finances, thereby ultimately interrupting all kinds of domestic and foreign credit to Russia. Although Russian officials say that the exchange of rubles for gold has continued, in fact this is no longer possible. In fact, Russia had already terminated the convertibility of the ruble into gold at this time. In early December 1905, the Russian government had banned the flow of gold from Petersburg to other provinces.

In this case, since the Russian State Bank no longer had the authority to issue banknotes, the Russian government had to take the last resort, which was to issue a decree on December 16, 1905 authorizing the Russian Ministry of Finance to issue banknotes without gold guarantee. Credit ruble. The Russian government is trying to stabilize its turbulent domestic political situation at all costs, and it is also eager to get help from its European allies. The political and financial bankruptcy of the tsarist government caused panic among the Western European bourgeoisie, especially in France, which formed a diplomatic alliance with the tsarist government and invested billions of capital in Russian industry and transportation. . The French bourgeoisie decided to support the tsar government and Russian capitalism. French banks lent the tsar government a loan of 2.25 billion francs to relieve the chaotic Russian finance and help the tsar government suppress the revolution.

In early January 1906, Russia terminated the exchange of paper currency for gold. From 1906 to 1908, Kokovtsov was reorganizing the domestic currency circulation system. During this period, the gold holdings of the Russian State Bank increased by 300 million rubles, and the currency issuance decreased by 420 million rubles. The number of credit rubles in Russia decreased by 120 million rubles from 1906 to 1909, and the gold coins withdrawn by depositors during the crisis returned to the savings bank of the Russian State Bank due to the end of social unrest. In 1909, the gold reserves of the Russian State Bank It has exceeded the circulating credit rubles by 133 million rubles. By the end of 1906, the number of banknotes in circulation in Russia was almost equal to the amount of gold reserves in the State Bank. A large number of banknotes issued during the Russo-Japanese War and the 1905 Revolution had been gradually recovered by banks, and by the end of 1909, the bank's recovery of banknotes had been basically completed.

The way Alfonso made money during his several-year operation was to bet on national debt and buy and sell rubles. It was that simple. (To be continued.