Ch.36Currency Reform (2)

“I’ll think about it, so withdraw for now.”

“Yes, Your Majesty.”

Luka, having put all the coins back into the pouch, offers a simple bow at my dismissal before withdrawing.

What Luka suggested—melting down all the gold and silver coins currently in circulation to extract the raw materials and then minting them into Burgon’s currency—is not a decision I can make impulsively on the spot.

‘…There would be benefits.’

The idea is that the state—that is, I—would purchase all circulating coins, melt them down completely, and then create new coins to sell back to the market.

This would reduce administrative burden, allow for inflation control, and as a bonus, help develop our metallurgical industry.

However… there’s too much preparation required.

If this process were to happen in just one location, it wouldn’t meet domestic demand, so minting facilities would need to be built throughout the country.

Additionally, there’s no guarantee against corruption at these mints, meaning I’d have to assign separate personnel to prevent such misconduct.

‘Above all, this method would inevitably lead to creating coins of lower value.’

The concept of using circulating coins as material for new ones is good, but the quantity is far too small.

As Luka mentioned, Burgon borders multiple countries, resulting in various types of coins circulating domestically. To replace them all, we’d have to mint a large number of coins.

If we were to maintain proper purity levels while converting foreign coins to Burgon’s currency, eventually our coins would outnumber foreign ones in circulation, but it would take far too long.

Most importantly, with such limited materials, if we insist on maintaining high purity for each coin, the quantity would be so small that they’d no longer function as currency but rather as commemorative coins sold in souvenir shops.

We need to mint many coins, but we have limited materials.

This means the only option left is to reduce the amount of material—gold and silver—in each coin, ultimately resulting in coins of lower value.

In such cases, other countries…

“Ines.”

“Y-Yes… my lord.”

After what happened last night, Ines, who had been staring at me absentmindedly with a flushed face unlike her usual self, stammers in response to my sudden call.

“How does Lorel handle this situation? Lorel is in a similar position to Burgon, isn’t it?”

The Duchy of Lorel, like Burgon, is situated at a crossroads between the Holy Empire, the Caroling Kingdom, and routes to coastal regions, so various coins circulate within its borders.

Lorel must face similar problems, so Ines should know something about it.

“Ah, well… in Lorel, there are currency exchange offices.”

“Exchange offices?”

“Yes, it’s mandated by law that foreign coins must be exchanged for Holy Empire coins at these offices. Otherwise, transactions are prohibited.”

Exchange offices…

The Holy Empire has vassals who mint coins of identical purity, and being so large in scale, imperial coins are abundant in circulation. That’s why they can prohibit foreign coin circulation and force exchanges without major issues.

But that won’t work for Burgon. Being more than five times larger than the Duchy of Lorel means we’d need at least five times as many exchange offices, and initially, we wouldn’t have enough coins to supply these offices with stable quantities.

“Haaa… what a headache.”

“Um… Master.”

“What is it?”

As I sigh, Chloe carefully addresses me.

“Is it really necessary to mint coins?”

“Huh?”

Chloe tilts her head and carefully continues.

Seeing my puzzled expression, she explains further.

“Since the problem is that circulating coins have varying purities and there are too many types… wouldn’t it be enough to just standardize on one?”

Having been taught many things by me since childhood, Chloe can clearly see and judge more than ordinary people.

She’s now questioning the very act of minting coins.

“You mean designating one type of coin as the official currency?”

“Yes.”

Hmm… that’s not a bad idea either.

For example, if we designated imperial coins as the official currency, most of the problems mentioned earlier would be solved.

With the Empire right next door, we could continuously receive a stable supply, and the value would remain stable too.

However…

“Wouldn’t that give foreign countries too much influence over Burgon?”

That’s the issue.

Countries with different currencies can use various defensive mechanisms to block foreign capital from entering their domestic markets, but countries using the same currency can’t do this. There’s a reason the European Union is sometimes called the German Empire.

Moreover, if a major incident occurs in a country using the same currency, we would have to face the shockwave without any buffers.

“Yes, that’s true… but couldn’t it work the other way around too?”

“The other way around?”

“Yes, since it makes buying and selling goods easier. Conversely, we could exert influence on them.”

Huh…

Is Chloe suggesting we [insert a straw into other countries and gradually consume them from within]?

Hmm… if we successfully infiltrate another country’s economy, we could even turn the coins used in that country into Burgon’s coins.

The risk is considerable, but if successful, the profits would be incomparably greater than melting coins and minting new ones.

…I should probe a bit to see how far Chloe has thought this through.

“Chloe, wouldn’t this approach be quickly blocked if foreign countries tamper with their coins?”

“Hmm… that’s possible, but difficult. Once gold and silver coins are in circulation, they’re beyond the state’s control.”

…Chloe is right.

Money in banks or before minting can be easily controlled by the state, but once in circulation, the state’s ability to manipulate it becomes limited.

Moreover, we’re using physical money like gold and silver coins here, not modern paper currency, which makes it even more true.

“…But what if Burgon gets consumed by foreign countries? We’d have to designate either the Kingdom’s or Empire’s coins as official, and both countries are wealthier than Burgon.”

“We have fertile farmland, can fully utilize coastal regions and ports through the Bar region, and can gain significant profits just from intermediary trade between the Kingdom and Empire, so we should be fine. Those two countries would still be wealthier, but we could certainly hold our ground. Besides…”

Chloe trails off, then looks at me with a slight blush.

“…you are Burgon’s master.”

“Chloe…”

Her last statement could be seen as irresponsible, but I couldn’t fault her for it.

How could I scold someone who shows me such boundless trust?

“…Alright.”

We’ve been using foreign money all along, so not much would change.

Even if things don’t go as planned, we can always reverse course when needed.

“Call Luka back.”

“Yes, Master.”

……….

“The Holy Empire’s coins… you say?”

“That’s right.”

Luka blinks and tilts his head in confusion.

Yes, until just moments ago we were discussing minting coins, so this sudden change must seem bizarre.

“From now on, all coins used in Burgon will be unified under the Holy Empire’s currency, and this applies to both private transactions and tax payments.”

The reason I chose the Holy Empire’s coins over the Caroling Kingdom’s is simple.

While the Holy Empire’s vassals mint many coins, all are legally required to maintain the same purity, making them stable. The Caroling Kingdom, on the other hand, has a history of minting debased currency. Adopting such unstable coins as our official currency would make us the fools.

The Holy Empire, with its vast territory, population, and vassals, truly lives up to its name, making it harder to infiltrate… but for that very reason, the benefits of tapping into it would be far greater than with the Kingdom.

“Isn’t it good that your workload is reduced?”

“Yes, compared to creating new coins, the administrative work is almost negligible. Wait—”

Luka, who was answering my question, suddenly widens his eyes as if realizing something.

“Could it be… that you ultimately plan to infiltrate the Holy Empire’s economy?”

Despite his advanced age, Luka speaks with the vigor of a young man.

A slight smile forms at the corners of his mouth, and his eyes are filled with excitement.

“You’re quick-witted, Luka.”

“Oh, oh my… this is excellent, excellent indeed. This kind of risk is what makes things interesting.”

Luka, seemingly forgetting he’s in my presence, instantly enters his own world and begins talking to himself.

Of course, within a second, Luka realizes his state and quickly composes himself.

“A-Ahem…! Your Majesty, what shall we do with foreign coins other than those from the Empire?”

Luka clears his throat and swiftly changes the subject to business matters. It’s an obvious diversion, but I’ll let it slide.

“Tell people to exchange them for Holy Empire coins on their own… or we could purchase them with goods and then melt them down.”

“You mean…”

Even if the profit is small, completely abandoning coin minting isn’t a good choice, so we’ll have to mint some.

“Yes, we’ll create Burgon coins with the same purity as the Empire’s.”

The Venetian ducat.

A gold coin that served as the key currency in medieval Europe.

It was so widely used across Europe that various European countries minted gold coins that were exact copies of the Venetian ducat. From Spain in the west to Denmark in the north and the Ottoman Empire in the east.

I’ll do the same.

Like the European countries that minted ducats, I’ll create coins with exactly the same purity as the Empire’s coins, making them perfectly interchangeable.