xymnovel Chapter 94 "The Era of Free Banking"
Chapter 94 "The Era of Free Banking"
Chapter 94 "The Era of Free Banking"
Forsyth, disregarding any need for rest, began to carefully explain the situation of the Great Han to the current and next presidents.
As the two presidents listened carefully to the introduction, they gradually developed a sense of absurdity.
Van Buren, upon hearing this, offered a somewhat puzzled assessment and question: "I feel that the situation in the Great Han seems very contradictory, being both very conservative and very radical."
Jackson nodded in agreement, saying, "If Forsyth's observations are correct, then in our view, the Great Han is indeed very contradictory."
Forsyth himself directly expressed his agreement: "I myself feel that Han society is full of contradictions."
"At first glance, it seems very conservative. The emperor can directly control everything, and all subjects are the emperor's servants."
"All the land under heaven belongs to the emperor; everyone else only has the right to use it."
"And any form of private land transaction, including leasing, is prohibited."
"If land is found to be sublet by private individuals, it will be reclaimed directly, and those who need to use the land will be required to apply to the city hall."
"The scope of the internal free market is very small, limited to the large cities in various places."
"The peasants in the countryside and the workers in the factories are all vassals who serve the monarch."
"So even if Europeans were invited to build factories, there was simply no room for them to survive anywhere other than the two open trading cities."
"In other words, they are extremely conservative in their industrial and commercial management."
"But after a deeper understanding, it becomes clear that their social system is very radical."
"There were no barriers between social groups in the Han Dynasty, and all commoners had the opportunity to become nobles and officials."
"The key point is that none of the official positions are hereditary."
"All civil officials were commoners, while military officers were promoted from ordinary soldiers, rather than being directly appointed by nobles."
"Even nobles must undergo training at the lowest levels of the army before they can be promoted."
"If a nobleman's son does not have sufficient ability, he may even have to inherit a lower rank of title."
"Their social system is far more radical than that of the United States and France during the French Revolution."
"Completely the opposite of management in industry and commerce —"
In reality, the Han Dynasty is very radical now.
Because extremes meet, what Americans consider conservative can actually be radical from another perspective.
Replacing "all land belongs to the emperor, and everyone else only has the right to use it" with "land belongs to all the people" directly transforms it into public ownership.
It was impossible for the emperor to directly manage all the land; in reality, it was the imperial government agencies that managed it, a form that resembled state capitalism.
However, since the emperor is the symbol of the country, everything nominally belongs to the emperor.
As for prohibiting transactions, Liu Desheng believes that only by completely prohibiting transactions can the people who are allocated land be guaranteed to actually own the land in the long term.
The vast majority of ordinary people simply do not have the ability to retain high-value items that can be freely traded. Once land is allowed to be freely traded, most ordinary people will quickly lose their land.
Liu Desheng believed that the lessees were pure rent-seekers, and the rent they received was actually a tax, which was a power that only the imperial court could possess.
Therefore, Liu Desheng prohibited private individuals from leasing land on their own, and would directly revoke the land use rights if such behavior was discovered.
Jackson frowned as he listened: "This system seems utterly absurd; I don't know how it even functions—"
"Everyone is a vassal, just as every family is a soldier —"
"There are twenty million registered militiamen, which is several million more than the population of our United States."
Van Buren added, "The key is that the expeditions do not require direct payment of military pay; they are essentially knights serving the monarch on a regular basis."
"This war potential is almost limitless."
Jackson and Van Buren found the man increasingly terrifying.
Forsyth also knew that the big man was a monster.
The Han Dynasty's interference in the Americas must be contained as quickly as possible.
If left unchecked, and the Han Dynasty sends hundreds of thousands of people to the Americas, the United States will have no choice but to coexist with the Han Dynasty for a long time.
Forsyth looked at the two presidents and said, "The Great Han is several times more terrifying than the Rakshasa Kingdom. Nobody wants to be neighbors with such a monster."
"We really need to solve this problem as soon as possible —"
"Please arrange for a ship to Britain as soon as possible, Mr. President. I can depart at any time."
This was Jackson's plan, and Jackson naturally agreed without hesitation.
Forsyth briefly explained what he knew, then went home to rest and wait for the ship to be prepared.
The following morning, Forsyth went to the White House again, passing a bank on the way.
A large number of people were found gathered in front of the bank, queuing up to exchange their banknotes for gold and silver coins.
If Forsyth had seen this scene before going to the Great Han, he wouldn't have found it unusual.
Forsyth didn't immediately connect this to the economic crisis, but seeing this scene inexplicably made him feel uneasy.
Upon arriving at the White House, Forsyth told Jackson about this and asked a question: "Why are so many people exchanging gold and silver coins at the banks?"
Jackson immediately said, "In order to control land speculation in the Midwest, I issued an executive order last year requiring the federal government and states to accept only gold and silver coins for the sale of land."
"Those who don't have gold or silver coins shouldn't buy land. The fervor for land speculation is indeed starting to cool down, and land prices in the Midwest have begun to decline."
Forsyth said with some concern, "But banknotes (paper money) are all promised to be redeemed for gold and silver."
"People who want to buy land, if they don't have gold or silver coins, will definitely go to the bank to exchange them."
Jackson laughed and said, "The banks can't redeem that much gold and silver, which is perfect for limiting those banks that over-issue banknotes."
"Compared to this, what is more troublesome is Britain's efforts to prevent the outflow of gold and silver while simultaneously forcing banks to raise interest rates."
"This led to a decrease in the amount of gold and silver entering the United States."
"So after you go to Britain, you can try to persuade them to change this situation."
Last year, Jackson abolished the central bank of the United States, allowing anyone to register and open a bank with a $100,000 investment, thus ushering in the era of free banking in the United States.
The most outrageous rule at this time was that all banks could issue paper money in the form of bank-guaranteed exchange certificates.
At its peak, Citibank had over 5,000 different types of bank notes in China.
The vast majority of banks are over-issuing paper money, rather than issuing paper money according to the amount of gold and silver they hold.
Because other banks are over-issuing bonds, I'd lose money if I didn't.
Jackson and others, living in the financially free United States, naturally felt that the Han market was too conservative.
However, extreme conservatism leads to another form of radicalism.
Although Forsyth did not immediately realize the direct link between these events and the economic crisis, he sensed that there was something wrong with the situation.
But before the problems became apparent, Forsyth and Jackson had no intention of "solving" them, and could only turn back to deal with the specific problems at hand.
After carefully studying the demands put forward by the two presidents, Forsyth boarded a large passenger ship bound for Britain after three days of preparation and organization.
Shortly after Forsyth left, large numbers of people began to appear in front of banks throughout Britain to exchange gold and silver coins.
Jackson's considerations were not comprehensive; those who wanted to exchange gold and silver for other assets were not just people who wanted to invest in buying land.
When ordinary people see land speculators exchanging gold and silver on a large scale, they also worry about whether their paper money can still be exchanged for enough gold and silver, and they will go to exchange gold and silver together.
This creates a vicious cycle.
More and more people are exchanging gold and silver, the scale of the exchange is getting larger and larger, and the frequency of bank runs is getting higher and higher.
Soon, even small banks couldn't withstand the pressure.
New York banks were the first to try to control the exchange of gold and silver, but this only caused a bigger run on the banks.
At this time, the paper money was all "promised redemption vouchers," and its actual value was guaranteed by the gold and silver promised for redemption. Once the bank refused to redeem the gold and silver, the paper money would immediately begin to depreciate.
However, at that time there was no internet, no telephone, and even the telegraph was not widespread, so the speed of information dissemination among the people was very slow, and it took a long time for the run to develop into a full-blown crisis.
By this time, Forsyth had already arrived in Britain, arriving shortly after the British mission to China.
Forsyth first met with the US ambassador to Britain to inquire about the progress of his previous work and the current market situation in Britain.
The ambassador to Britain briefly explained: "The British Prime Minister and members of parliament are equally angry about the Han's seizure of the Oregon and Columbia regions in northwestern America."
"But they only verbally support the United States and show no inclination to take any real action."
"It's probably because they started investing in Dahan two years ago and don't want to affect their relationship."
"Unless there are problems with the investment in Dahan, it would be difficult for them to make the decision to participate."
Forsyth immediately pressed, "That depends on the current market situation in Britain, whether there has been turmoil or even a recession—"
The ambassador to Britain stated matter-of-factly, "There are currently no major problems with the British market."
"The banks raised the base interest rate simply to control the outflow of gold and silver."
"This led to a decrease in investment in other areas, and a reduction in the amount of cotton purchased from the United States."
"Apart from that, nothing noteworthy has happened."
Forsyth, recalling what he had seen on the United States mainland, became doubtful again: "Did the Emperor of the Great Han really deceive everyone? Were my worries just an illusion?"
He said that crises were breaking out in both Britain and the United States at the same time, but there was no real crisis on either side at present.
"If that's the case, then we'll have a chance to persuade Britain after the British mission returns."
This economic crisis was triggered by land speculation and excessive issuance of bank bonds in the United States.
The crisis actually began last year, but it only started to manifest itself in Citibank's domestic market in March of this year.
Britons will have to wait several more months to experience the direct impact of the crisis firsthand.
Therefore, in the perception of Forsyth and others, a crisis has not yet materialized.
Even if it appears later, it will be later than Liu Yulong said.
According to Liu Yulong, the crisis broke out last year.
In fact, the fuse had already been lit: Jackson's order that land could only be purchased with gold and silver coins.
The markets in the United States and Britain are now sitting on a powder keg.
Once all the fuses are burned out, most investors in both countries will be blown to bits.
This marked the beginning of the Great Depression, which lasted for several years.
Until the Great Depression of the 1830s before World War II, when Americans and Britons mentioned the "Great Depression," they generally meant the Great Depression of 1837.
It was only after World War II that it was renamed the "First Great Depression".
In an effort to recover from the Great Depression, Britain and the United States made a variety of attempts.
The Opium Wars can be considered as indirectly caused by the Great Depression.