Sword of Dawnbreaker

Chapter 726 - 725: Real Gold and Silver

Always being called ”ancestor, ancestor” by others, my mindset seems to have been drawn into a certain subtle elder mode.

But thinking from another angle... seeing the usually calm and elegant Aunt Heidi showing such a dazed expression seems to have its own kind of amusement.

Watching Aunt Heidi’s dumbfounded and at a loss expression, Gawain suddenly felt inexplicably better, and the pressure caused by seeing a large number of documents instantly dissipated by more than half. Before his dear granddaughter’s expression could further collapse, he waved his hand: ”It’s nothing, I was just speaking casually — what are these documents?”

Although Aunt Heidi didn’t know what happened, she felt like she had dodged a bullet, so she secretly breathed a sigh of relief and placed the files on the ancestor’s desk: ”These are the preliminary reports on the construction of the Imperial Academy and the new schools on the Plains of the Holy Spirits. Additionally, there are documents regarding the western region’s railway project — the Administrative Office has processed them according to procedures, but the key sections still require your personal review.”

Gawain thought for a moment and suddenly had a little impulse to inquire about Aunt Heidi’s lifetime matters again...

Two seconds later, he collected these slightly scattered thoughts, reached out for those thick documents, and casually asked, ”Have the Mages and scholars who moved from St. Soniel last week been settled well? What do you think of them?”

”They have all been settled properly,” Aunt Heidi nodded and said, ”As for my evaluation... from their personal knowledge and abilities, those who can serve the royal family or enter the Royal Scholar Association of the royal capital are the most outstanding masters. There’s no doubt about their abilities, but in order to integrate into Cecil Clan’s new order, each of them still has a long road ahead, and quite a few will face elimination.”

”...An inevitable process,” Gawain said, flipping through the papers in his hand, ”but we still have to transform and recruit them to the maximum extent possible — if they can be integrated, we must try to integrate them. We are still lacking intellectuals right now. But be cautious, the admission standards for all education departments must not be relaxed, and the standards for two reviews and two examinations must not change. Those who have passed the initial transformation but failed the two reviews and two examinations, the old-fashioned intellectuals, can be placed in research or as technical personnel in factories, but they must not enter schools, and that must not be forgotten.”

Aunt Heidi lowered her head: ”Understood.”

The Empire has been established, and the land governed by the Cecil Clan has transformed from a cramped and barren place into a vast territory. Unprecedentedly enormous resources and manpower flow on the desks of Aunt Heidi and various departments in the Administrative Office, but after the initial excitement, Aunt Heidi realized that the appearance of abundant resources still covered various shortages — the ancestor intended to build a brand-new country, not to take over a decaying kingdom and become a leisurely ruler. The legacies from the old Anzu that could be put to use again had to be transformed and selected.

The large number of intellectuals from the northern parts of the mountain range will solve the critical talent shortage in the development of Magic Guide Technology, but before that, these intellectuals must accept a shift in their mindset in addition to establishing a new knowledge system. The so-called two reviews and two examinations are Gawain’s rigid standards for the education department to absorb talent: major ethical flaw checks, personal information checks, academic ability assessments, and ideological transformation assessments. Only after passing all these tests are they allowed to enter the various new academies established by the Empire.

The strict examination and admission system is also one of the factors causing the serious shortage of teachers in the new schools. Still, the ancestor does not permit any relaxation of standards in this matter. Fortunately, the students from the first graduating class of the former Cecil General Academy and some of the destitute intellectuals who initially followed to construct the southern borders have grown over the years. The returning talent is gradually easing the teacher shortage in schools across the region. Though the gap is still large, it is no longer entirely hopeless.

Aunt Heidi understood why the ancestor placed such importance on this matter.

Because early on, when the system still had flaws and execution was incomplete, she had personally witnessed how a teacher of collateral aristocratic descent taught children to perform the bowing rituals in school — despite his collateral lineage, with no inheritance rights, no title, and no fief, his only connection with ”aristocratic society” was his thin bloodline, but just for this tenuous link, for the ”correct and only law” in his heart and for his family’s ”honor,” he dared to risk imprisonment to make children remember the rules of kneeling again.

From that day, she knew some decayed elements would never completely dissipate due to a bombardment at Broken Stone Ridge and a signing ceremony. They certainly wouldn’t purify themselves, and the residues that couldn’t be cleaned would lurk in various corners, seizing any chances like mud in crevices to desperately surge forth.

Perhaps even with the strict admittance system, some of that sludge would still seep in — that is almost certain, given that the newly established Administrative Office system is still severely lacking control over the Empire’s remote areas, relying temporarily on the two Grand Governors and their vassal systems for governance — but perfection is non-existent in this world, as the ancestor once remarked, this will be a long-lasting enterprise, possibly requiring not just one or two generations...

Aunt Heidi was momentarily lost in thought, while Gawain quickly skimmed through the end of the documents, then put them on his right side: ”I’ve gone through them roughly, there’s no problem — I’ll look at them more seriously tomorrow morning and get back to you then. Is Patrick at the Administrative Office now?”

Aunt Heidi snapped out of her contemplation, nodding: ”Yes, he just returned from Viscount Carol yesterday and has been back at the Administrative Office since this morning.”

”Have him come see me — I wish to hear about the currency pilot situation.”

”Yes, ancestor.”

...

In front of Gawain were several notes of varying denominations of temporary currency (Substitute Currency), as well as several types of coins minted by the Cecil Royal Mint.

The coins consist of standard copper coins, silver coins, and Gold Coins. The paper currency includes notes worth one Fennam and five Fennams called ”silver notes,” and notes worth one Gold Pound and five Gold Pounds called ”gold notes” — Fennam is a term meaning ”flattened silver foil,” and the so-called Gold Pound here, unlike the similarly named currency once existing on planet Earth, is equivalent to the smallest-sized thin Gold Coin that circulated during the Anzu Era, almost representing the upper limit of currency accessible to past civilians.

The paper notes were printed beautifully, with textured patterns exuding a magical flow of colors in the sunlight.

Merely from the denomination and name meaning of these paper notes, one could tell this was solely a preliminary attempt to reform precious metal currency into paper currency.

”After about six months of trial, the pilot regions have successfully replaced over seventy percent of the precious metal circulation with temporary currency, maintaining the normal operation of commerce and local financial settlements,” Patrick reported meticulously, wiping his forehead, which had gradually broadened over these two years. ”People who initially did not understand or trust the paper currency found it could indeed be used to purchase goods, and they are now gradually accustomed to its presence. From the perspective of simply promoting paper currency and forming a habit, the pilot has been a success.

”However, the pilot’s shortcomings are also evident. As you can see, fundamentally we still haven’t gotten rid of the essence of gold and silver settlement. The currency circulating in the pilot areas is still, in essence, circulating gold and silver. Precisely because of this, the simultaneous existence of ’gold notes’ and ’silver notes’ essentially means the face value exchange between paper currency will still be affected by precious metal prices, leading to Gresham’s law occurrences, where bad currency drives out good. Nevertheless, we recently succeeded in severing the linkage between silver notes and silver coins, allowing them to be exchanged only for gold notes but not directly for silver coins, effectively turning them into a ’subordinate unit’ of gold notes, solving the problem brought by the bimetallic system...”

Gawain frowned as he looked at the various currencies on the table, flipping through the detailed report brought by Patrick, and couldn’t help but mutter softly: ”A real mess...”

Patrick immediately wiped the cold sweat off his forehead: ”...Your Majesty, I’m terribly sorry...”

”No, I’m not blaming you,” Gawain quickly waved his hand, ”You’ve done very well, conducting all the tests and sampling as I requested. These chaos are merely the inevitable situations that occur when implementing new things... It’s a natural law, not your fault.”

Only then did Patrick breathe a sigh of relief: ”Yes, Your Majesty.”

”The Empire’s reserves of gold and silver do not show a significant bias, whether issuing currency based on a silver or gold standard is feasible, but whether to continue using precious metals as the basic standard for issuing currency is the biggest question,” Gawain said thoughtfully, ”Patrick, you must have realized the hidden dangers of tying gold or silver directly to paper money.”

”...Yes, Your Majesty, and after hearing your theory about currency traps, I am certain that the hidden danger is real and extremely perilous,” Patrick immediately nodded, ”From a long-term perspective, and also from a practical perspective, I believe the ’Credit Currency’ you mentioned is a better option.”

”...Credit Currency...” Gawain’s brow furrowed again, ”Patrick, you should know, the foundation required to issue credit currency is much higher than that of substitute currency—because essentially, we are defining paper with no intrinsic value as ’money’, and the greatest premise for people to use this ’paper’ to purchase goods and settle transactions is that they trust the Empire can redeem all the value represented by the ’paper money’. This ’trust’ must be as reliable as gold and silver.”

Patrick met Gawain’s gaze, his slightly portly body sitting very steady, he nodded, and gave a brief yet powerful response: ”Yes, I understand.”

Long before coming here, he had thought about a lot.

If Cecil wants to enter a higher social phase, it must complete the monetary reform as soon as possible, and even without considering the distant future, just from the current situation, the chaotic monetary system left over from the Old Anzu era has already reached its limit—

The behavior of various nobles privately minting coins during the feudal era, coupled with the frequent political turmoil of the kingdoms leading to frequent re-minting of currency, has made the old monetary system a chaotic mess; on the Plains of the Holy Spirits and in some parts of the West, the officially circulating currencies include silver coins, Long Silver Coins, Short Silver Coins, Golden Shields, Royal Patterned Gold Coins, Round Copper Coins, Small Round Copper Coins, and dozens of other metal coins with varying qualities and chaotic exchange relationships.

The complex currencies and exchange rates not only baffled merchants but made it difficult for ordinary people to conduct larger-scale buying and selling, even spawning a specialized profession of ”exchangers”, and these exchangers with local aristocratic backgrounds became a kind of disguised ”extra tax collectors”, exploiting the already scarce money of civilians and small merchants.

The chaotic currencies also hindered commercial exchanges across the nation; due to the inconvenience of exchange and the huge settlement risks, trade between regions often could only be monopolized by specific groups, even in the most chaotic areas, where bad currency was saturated, commercial activities have already reached a near standstill...

Even with the advent of trains and new economic policies, as long as this mud-like ”currency garbage heap” exists, Cecil’s reconstruction and development will inevitably struggle.

Therefore, when reclaiming the nobles’ powers, one of the most important actions Gawain took was to abolish all aristocratic minting rights, unifying them under the Empire Mint (formerly the Cecil Mint), classifying the locally circulated private currencies as illegal, and having the Administrative Office gradually reclaim, re-mint, and exchange them within a certain cycle.

Since the old coins were all precious metal currencies, as long as their purity met the standards, their value would not decrease due to reclaiming and re-minting (not accounting for wear), thus this step in currency unification was relatively smoothly implemented.

And under the premise of currency unification, promoting paper money is also a necessary step.

In the age of magical industry, the speed and abundance of goods growing far exceed what anyone imagined in the past. Limited unit value, inconvenient transport, and complex settlement of precious metal currencies will soon fall behind the times; the neighboring Typhon Empire has already begun implementing new currency, and Cecil must immediately enter the next stage of currency reform.

This is a sweeping reform, and Patrick believes that since such sweeping action is already in progress, it is necessary to complete the reform in one go.

Nothing in the world is perfect, and credit currency has its inherent flaws, but at least from a long-term viewpoint, it can avoid the greatest hidden danger of substitute currency, and the prerequisites for issuing credit currency he has also considered—requiring a highly centralized, single authoritative central government, the people’s trust in the national system, the powerful execution capability of the Supreme Administration Office, and effective measures and warning systems for controlling unlimited currency issuance, but no matter how great these difficulties, Cecil must issue credit currency.

He has his considerations, and he believes the King before him will also support him after hearing those considerations.

Gawain maintained his furrowed brow.

He naturally understood the pros and cons of credit currency, and knew the fatal flaw of substitute currency, however, he also knew—a step too large can tear something fundamental.

The worry of directly issuing credit currency and causing various chaos is the biggest reason for his hesitation to make a decision.

He looked at Patrick before him.

This Kant Scholar with exceptional talent in economics was not someone who spoke recklessly.

”Tell me your reasons, Patrick.”