Let's use the Great Ming Treasury Notes and the French Franc as an example:
A Great Ming merchant has a product that sells for 100 Great Ming Treasury Notes, yielding a 20% profit. Assuming one Treasury Note exchanges for one Franc, this product needs to be sold for 100 Francs to achieve a 20% profit, which amounts to a profit of 20 Great Ming Treasury Notes.
If the exchange rate between Great Ming Treasury Notes and Francs drops to two to one, meaning two Treasury Notes exchange for one Franc, then this product only needs to be sold for 50 Francs. The 20% profit, which is 10 Francs, still equates to 20 Great Ming Treasury Notes.
It is important to note that while the selling price of the goods is halved, the total profit remains the same. A lower price can open up a larger market, leading to greater earnings.
This is the benefit of a lower exchange rate, and vice versa.
Of course, if only considering import and export issues, Great Ming would have no need to consider exchange rates.
For example, a question on Mouhu: A Venetian buys a ship full of spices from an Egyptian and then resells them to the French, English, and Austrians. How should he settle and price them?
In reality, at that time, Europe did not have a unified currency, nor the concept of credit money. Therefore, judging the value of the currency itself and settling the accounts was the only method.
For example, for a Venetian Ducat gold coin, a merchant would first observe the completeness of the coin, and then refer to which version of the coin it belonged to, thereby determining the value of this single Ducat gold coin and completing the settlement.
Therefore, in the current world, currencies are basically on a silver standard. Regardless of differences in face value and units, what is the same is the premise of physical metal currency forms such as gold coins and silver coins. Exchange rate issues are actually not important; the exchange rate issue mentioned earlier is not an exaggeration to call it a false proposition.
This point is completely the same for Great Ming Treasury Notes.
As long as Great Ming can guarantee that ten Great Ming Treasury Notes can be exchanged for one tael of silver, the trouble will only be for merchants, as they need to exchange back and forth, and nothing more.
However, Zhu Jinsong wants to use currency to control the economies of other countries and occasionally shear their wool.
If the Yankees can shear, so can our Great Ming.
This is why the value of Great Ming Treasury Notes and exchange rates are involved.
Furthermore, the play of using Treasury Notes to control the world economy and shear wool also involves the issue of Treasury Note issuance.
If too few Treasury Notes are issued, it will not be enough to support international settlement, and may even cause the value of Treasury Notes to be too high, leading to deflation.
If too many Treasury Notes are issued, it may damage its own value, leading to inflation.
Also, whether those barbarians are willing to accept Great Ming Treasury Notes as the settlement currency for international trade is also a very troublesome issue.
In short, there are many problems, and the saying that letting a carpenter be an economist will not affect the economy is purely Zhang Xiaohua's jest and should not be taken seriously.
Fortunately, although Great Ming does not have any decent economists, it has a large number of scholars like Zeng Cheng – they are extremely thick-skinned and black-hearted when dealing with barbarians, and would not hesitate to feed their conscience to dogs. Describing them as having pus in their heads and sores on their feet would still be praising their kindness.
As the saying goes, one gets stained by contact with vermilion and inked. After spending a long time with these scoundrels, Zhu Jinsong, the Emperor of Great Ming, has clearly become much more wicked.
Zhu Jinsong directly threw the problem to Zeng Cheng.
...
Pierre looked at Zeng Cheng, utterly bewildered, after examining a handful of Great Ming Treasury Notes and coins back and forth: "These small ones, they look like coins? And these papers, are they also currency?"
Zeng Cheng smiled and nodded, saying, "Look at the smallest and thinnest coin; its face value is one fen, equivalent to one wen of money in the past... The paper note with '1 Yuan' written on it is roughly equivalent to 2 Francs of your country, and the one with a face value of 100 Yuan is roughly equivalent to 200 Francs."
After roughly explaining the face values to Pierre, Zeng Cheng continued, "Great Ming is currently promoting new Treasury Notes, and merchants in the market prefer to use the new Treasury Notes rather than the original silver and copper coins."
"Therefore, even if these monies are my private gift to you, they are also a testament to the friendship between Great Ming and France, and between you and me."
Upon hearing about the friendship between Great Ming and France, and between Zeng Cheng and himself, Pierre was very moved. In his moved state, he posed a baffling question.
Pierre held up a Treasury Note and asked, "Sir Zeng, I know the Emperor of Great Ming is very powerful, but do you really need to print the words 'very capable' on the money? Is the Great Ming Imperial Bank very capable? Isn't that a bit, well, immodest?"
Zeng Cheng looked at Pierre, utterly confused by the words "Great Ming Imperial Bank" that he was pointing at, and said, "The last two words are pronounced 'Yinhang'!"
Pierre nodded, and then voluntarily lay down on the stretcher: "Alright, I misread the characters. However, Sir Zeng, I would like the French treasury to reserve a large batch of Great Ming Treasury Notes to be used for settlement of business between France and Great Ming. I wonder how I can get permission?"
Zeng Cheng was immediately amused – look at this, look at this! I merely prepared a crutch for him, and who would have thought he would voluntarily lie down on the stretcher!
Praising Pierre in his heart, Zeng Cheng shook his head in front of Pierre's expectant gaze and rejected Pierre's proposal: "Great Ming Treasury Notes have just been issued, and Great Ming has not yet fully put them into circulation. France does not need to rush to take them back for reserves."
"My Great Ming Emperor said that if France recognizes Great Ming as its Far Eastern ally, then Great Ming will also recognize France as its ally in Europe. Therefore, we will consider letting France reserve some only after the Treasury Notes have passed the test of the Great Ming market."
"Of course, I can assure you, Pierre, that as long as Great Ming Treasury Notes pass the market test, France will be the first European country allowed to reserve Great Ming Treasury Notes."
"Just as the latest artillery developed by Great Ming was also sold to your France first?"
Hearing that it would take some time, Pierre couldn't help but feel disappointed and even wanted to ask how long this market test would take. When he heard Zeng Cheng mention firearms and artillery, Pierre couldn't help but feel happy again.
It must be admitted that Great Ming is Great Ming; its technological development has always been more powerful than Europe's. Relying on Great Ming's firearms and artillery, Louis XVI ruthlessly suppressed a group of national bourgeoisie and capitalists. The wealth seized not only reversed the deficit in the French treasury but also exempted the common people from some taxes, stabilizing the entire situation in France.
Zeng Cheng smiled and nodded, then changed the subject: "By the way, have you read the latest issues of the newspaper?"
Pierre nodded and replied, "I have read them all. I noticed that Great Ming has launched an attack on the Portuguese barbarians in Macau. After understanding the cause and effect, I think Great Ming should have driven away those Portuguese barbarians long ago. After all, there is an old saying in China: 'Fear awe but not kindness.' In the past, Great Ming allowed them to reside in Macau, but they wanted to occupy Macau. They are worse than beasts!"
Listening to a blue-eyed European barbarian call another group of blue-eyed European barbarians barbarians, and even utter words like "fear awe but not kindness" and "worse than beasts," Zeng Cheng, the Prime Minister of Great Ming, was bewildered and even felt that the entire world had become magical.
What is this?
After regaining his senses, Zeng Cheng couldn't help but feel a sense of gratification, praising, "Pierre, your Sinology has improved greatly."
Pierre was a little embarrassed by the praise and said, "Not at all, not at all. I still need to learn. As the saying goes, 'one lives and learns.' I will not give up learning."
Live and learn? If one keeps learning, can one not achieve immortality? Then why did the First Emperor seek the elixir of life? He could just hug books and read them every day!
After silently complaining, Zeng Cheng smiled and said, "Then remember to study hard. However, what I want to tell you is that the Portuguese barbarians occupying Macau have been completely annihilated. The news will likely be published in tomorrow's newspaper."
Pierre was stunned, then exclaimed, "God! This is too incredible! From the declaration of war by Great Ming on Portugal to you telling me this news, it's only been more than ten days, right? If we count the time for the news to be transmitted and the army to prepare, the actual time for attacking those Portuguese barbarians might only be two or three days?"
Zeng Cheng shook his head and said, "No, not two or three days, but less than a day. From the start of the attack at Chenshi... oh, from seven o'clock, to the complete annihilation of the Portuguese barbarians at three in the afternoon, the soldiers of the Sixth Army and the South China Sea Fleet had dinner in Macau."
Pierre was envious.
Although Portugal had declined, it possessed two thousand troops on land in Macau and a small fleet at sea, so its strength was still not to be underestimated. If the French army were to deal with the Portuguese army occupying Macau, it would likely take at least ten days to finish.
But in the case of Great Ming, they annihilated those barbarians in just over half a day.
Annihilated?
Pierre suddenly came to his senses and looked foolishly at Zeng Cheng, saying, "Annihilated? All the Portuguese barbarians?"
Zeng Cheng nodded and said, "Yes, Great Ming did not accept their surrender; they were all used to build mounds of skulls."
Speaking of this, Zeng Cheng couldn't help but show a hint of shame: "However, the problem lies in the complete annihilation. At that time, the Sixth Army thought the South China Sea Fleet would capture prisoners, and the South China Sea Fleet thought the Sixth Army would capture prisoners. Only after the battle ended did they realize that neither side had taken any prisoners."
"Therefore, Great Ming now needs someone to convey the news to Portugal on behalf of Great Ming and mediate the war at the appropriate time."
Pierre asked blankly, "Mediate?"
Zeng Cheng nodded and said, "Yes, mediation. You know, Pierre, Great Ming has no interest in Europe."
Of course, this is only temporary; future matters will be dealt with later.
Silently adding this sentence in his heart, Zeng Cheng continued, "However, Portugal's encroachment on Great Ming territory is an indisputable fact. Although the Portuguese entrenched in Macau have been completely annihilated, the country of Portugal must pay a price for this."
"For example, they should compensate Great Ming for its military expenses."
"Otherwise, His Majesty the Emperor of Great Ming would not mind launching an attack on the homeland of Portugal and completely annihilating the country."
After Pierre nodded, Zeng Cheng added meaningfully, "Recently, I have been studying military books and discovered a stratagem called 'profiteering from disaster.' You can ask your interpreter about the meaning of this stratagem when you return."
Pierre pondered, "Do I still need to go back and ask the interpreter? Do you think the few years I spent in Guangzhou were wasted?"
However, this stratagem seems very useful for France right now.