Ming Dynasty: Ask Zhu Yuanzhang to abdicate at the beginning

Chapter 566 A Fair Price! An Agreement Reached!

Since Zhu Yunwen initiated the industrialization process of the Ming Dynasty, the steel production of the Ming Dynasty has increased dramatically. Coupled with the inexhaustible supply of iron ore, the steel production has increased a hundredfold in just a few years.

Technological advancements have resulted in quality far surpassing that of the past.

Correspondingly, steel prices have been declining.

In Zhu Di's view, he had been at sea for several years and believed that the Ming Dynasty should have made new progress and probably could produce better quality steel at a lower price.

Therefore, it's not unreasonable for me to raise the value of the Ming Dynasty Treasure Note in this way.

After listening to Zhu Di's explanation, Michael said, "Through your explanation, I have a general understanding of the purchasing power of the Ming Dynasty's paper money in the Ming Dynasty."

"Now I can give you a formal offer."

Michele smiled and said, "How about exchanging ten Ming Dynasty banknotes for one Ducat gold coin?"

"If you can agree, I will definitely persuade the parliament to sign a currency swap agreement with the Ming Dynasty."

Michele's eyes gleamed with shrewd calculation, but the perfectly timed smile on her lips concealed it all flawlessly.

In his initial plan, the exchange rate between the Ming Dynasty Treasure Note and the Ducat should have been one Treasure Note to one Ducat.

In Michele's view, this was a fair and reasonable price.

But as a cunning businessman, how could Michele possibly set a price that is "fair and reasonable"?

In particular, he was certain that Zhu Di was completely unaware of the economic situation in Europe when he first arrived there.

A good businessman should make full use of this information gap to maximize his own interests.

Michael needs to finalize an agreement with Zhu Di as quickly as possible before he can demonstrate his credibility as a businessman!
Therefore, Michele did not hesitate to increase its price tenfold.

Of course, he was well aware that this was just a tentative offer.

The prince from the Ming Dynasty before them would surely try to bargain. But even if the price were eventually halved, Venice would still reap a huge profit.

Zhu Di was slightly taken aback when he heard his offer.

Xu Miaoyun, standing beside her, could no longer suppress her shock and covered her mouth with her hand.

Ducatiers are genuine gold coins.

Even without considering the cost of casting, a Ducat coin contains about one-tenth the gold content of an ounce of gold.

In other words, ten Ducati coins are roughly equivalent to one tael of gold.

It is a genuine, unadulterated ounce of gold.

In the Ming Dynasty, it took one thousand coins to exchange for one tael of silver.

As for gold, in the early days of the Ming Dynasty established by Zhu Yuanzhang, the court stipulated that one tael of gold could be exchanged for four taels of silver.

However, ever since Zhu Yunwen's expedition to Japan brought back a massive amount of silver, the value of gold relative to silver has skyrocketed.

The Ming Dynasty court also quickly abolished the official fixed exchange rate between gold and silver.

Since then, the price of gold has been rising steadily.

By the time Zhu Di left the Ming Dynasty, one tael of gold could be exchanged for twenty taels of silver.

In other words, a Ducat coin, based solely on its gold content, is equivalent to two taels of silver, or two thousand coins of Ming Dynasty paper money.

This is calculated based on the exchange rate when Zhu Di left.

Based on the price trends at that time, one tael of gold might now be worth thirty, forty, or even more taels of silver.

Now, Michele is offering to exchange ten coins for one Ducat.

This is equivalent to increasing the value of the Ming Dynasty's precious paper money by a full two hundred times.

If this deal goes through, then the Ming Dynasty banknotes that Zhu Di brought will truly be a mountain of gold.

Michele's offer far exceeded Zhu Di's expectations.

He quickly suppressed his inner elation, put on a calm smile, and slowly said, "One ducat for ten coins?"

"Well, this price is barely reasonable."

"Although the Ming Dynasty will suffer a slight loss, as a country with a thousand-year history of etiquette, the Ming Dynasty has always adhered to the principle of treating guests with generosity and modesty. This is the proper etiquette we should observe."

"I agree to your proposal."

"However, the trade between the Ming Dynasty and Europe is enormous, so the amount of gold coins we need to exchange will also be very large."

"I'd like to ask, what's the maximum amount you're willing to exchange?"

"Also, what is the validity period of this currency swap agreement?"

You just agreed like that?

Michele could hardly believe her ears, and a surge of immense joy welled up inside her.

He originally thought that the other party would definitely engage in fierce bargaining, and that it would be ideal if they could eventually exchange five coins for one ducat.

To everyone's surprise, this prince from the Ming Dynasty was so generous and open-minded that he agreed without even haggling over the price.

Michele was extremely excited.

He seemed to have already seen the future where Venice and the Ming Empire would establish a close relationship, and Venice's glory would surely reach new heights.

And as the governor who brought all of this together, he will surely be remembered in history.

His family will also benefit from this for generations, enjoying wealth and honor.

Perhaps his descendants will continue to serve as Doges of Venice.

Michael tried his best to control his excitement and make his tone sound calm and sincere: "I hope to establish a long-term cooperative relationship with the Ming Dynasty."

He paused, then said, "If possible, I hope this currency swap agreement can last longer, preferably more than twenty years, fifty years, or even longer."

With a smile, Michele calmly explained, "In business, the most important thing is to be 'steady'."

"Only when both parties sign a long-term agreement can all merchants feel at ease exchanging and holding each other's currencies."

“Three to five years is too short a timeframe. Businessmen will worry that the agreement will not provide sufficient protection.”

"As for the scale of the exchange..." Michele pondered for a moment, quickly weighing the options in her mind.

The annual mintage of the Ducat gold coin is around one million.

Due to limitations in gold mine reserves and mint capacity, this issuance has remained quite stable for centuries with almost no fluctuations.

Even with an annual issuance of one million gold coins, Venice, a city-state with a population of only a few hundred thousand, still seemed far too large. The Ducat gold coin's ability to maintain its value lay primarily in its actual gold content and the widespread acceptance it enjoyed by merchants across Europe and beyond.

This resulted in a large number of Ducards continuously spilling out of circulation and entering a wider commercial circle, thus effectively maintaining the balance of currency value.

A currency swap with the Ming Dynasty would undoubtedly be an excellent way to further promote the outflow of Dukat, so the larger the swap, the better.

Of course, he also had to carefully consider Venice's own minting capabilities.

After careful consideration, Michele held up one finger.

"One hundred thousand Dukat?" Zhu Di blurted out, a hint of understanding flashing across his brow.

Considering that this was the first time the Ming Dynasty had dealt with Europeans, their offer of an exchange of 100,000 gold coins was quite reasonable.

Everything should be done step by step. Having an initial scale of 100,000 gold coins is already a good start.

“This number is a bit low,” Zhu Di nodded slightly, about to say something, but Michele waved her hand hastily.

“No!” Michele denied categorically. “One hundred thousand is far too few! How can the cooperation between Venice and the Ming Dynasty be limited to such a mere scale?”

"Could it be a million gold coins?" The thought flashed through Zhu Di's mind, but he didn't say it aloud. Instead, he laughed heartily and said with admiration, "I also think that the Governor-General will not be satisfied with such a small amount in the agreement."

“Of course.” Michele’s face beamed with a confident smile. “My proposal is to first sign a currency swap agreement for ten million Dukat gold coins, with a term of twenty years.”

"Subsequently, depending on the specific circumstances, the scale will be further expanded and the validity period of the agreement will be extended."

Ten million gold coins?
Zhu Di's smile froze on his face, and he was instantly stunned.

He never dreamed that the other party would propose such an unbelievably large scale as soon as they opened their mouth.

Michele still wore a smile, her eyes gleaming with a shrewd, calculating light.

In fact, he had already planned it all out clearly in his mind.

Ten million Ducati gold coins—that certainly sounds like an astronomical figure.

If we consider a twenty-year period, this is almost equivalent to using half of the gold coins minted by Venice over the next twenty years for currency exchange with the Ming Dynasty.

This scale is undoubtedly too large, even exceeding Venice's capacity to handle.

However, if you look at it from a different perspective, things are completely different.

Venice, a dazzling pearl on the Mediterranean coast, is a city with extremely prosperous trade activities.

Although it has not yet established a modern banking system like the Ming Dynasty, numerous financial institutions have already emerged within the city-state, specializing in resolving the exchange issues between different currencies and providing financial support for merchants.

Compared to the professional banking system that Zhu Yunwen meticulously built in the Ming Dynasty, these institutions still appeared immature, but for a medieval feudal city-state, their financial industry was already quite advanced.

Despite the existence of these institutions, Venetian nobles would only deposit a small portion of their wealth into them, using it for business investments or lending for profit.

The vast majority of gold coins, after being minted and issued, were then stored away in the private coffers of these nobles.

This is a key reason why Venice can maintain a stable value despite adding one million gold coins every year.

In addition to circulating gold coins abroad through foreign trade, the hoarding of gold coins by nobles and their withdrawal from the market also played a crucial role in preventing a significant increase in the actual amount of currency in circulation.

The homes of those renowned noble families were filled with mountains of gold coins.

For example, Michele himself had more than one million Ducati gold coins hoarded in his private vault. He himself was not quite sure of the exact number, but there were a lot of them.

The situation was largely the same for other nobles.

These gold coins locked in private vaults can be put back into circulation as readily available capital when exchanging currency with the Ming Dynasty.

This is the source of his confidence in proposing a 10 million gold coin exchange quota.

Zhu Di couldn't help but gasp.

Ten million Ducati gold coins are equivalent to at least twenty million taels of silver. What does that mean?
Before Zhu Yunwen implemented his New Policies, carried out sweeping reforms in the Ming Dynasty, and initiated the transformation of the financial system and the Industrial Revolution, the total annual fiscal revenue of the Ming Dynasty was roughly this amount.

It's not that the income was purely in silver, but rather the total value of grain, cloth, and other goods converted into silver.

After years of development, the Ming Dynasty is no longer what it used to be. Twenty million taels of silver is no longer an astonishing figure for the Ming Empire today.

However, for Zhu Di, who had been exiled to Europe, it was undoubtedly still an astonishing astronomical figure.

Back in the day, when Zhu Yuanzhang was in power, as the prince of Beiping, his annual salary was only 50,000 taels of silver.

This was already the most generous treatment Zhu Yuanzhang had given to the Zhu family members.

Normally, 10,000 taels of silver per year was the salary of most princes in most dynasties.

Twenty million taels of silver was a fortune that Zhu Di had never dared to imagine in his life.

Even with his calm and collected nature, he was deeply shocked by such a huge sum of money.

Seeing that Zhu Di was deep in thought and did not give an immediate response, Michele felt a little uneasy.

Unable to fathom the thoughts of this Ming prince, and fearing that his conditions were too bold and would arouse his suspicion, he quickly said, "This is just my preliminary suggestion. If you have any concerns, please feel free to speak them."

Zhu Di came to his senses and laughed, "Ten million Dukat coins are equivalent to ten million Ming Dynasty banknotes, which is one hundred thousand strings of cash."

"This exchange rate should be able to temporarily meet the trade needs between the Ming Dynasty and Europe."

"The Governor's suggestion is very reasonable."

"As for whether we need to further expand the scale in the future, we can wait until later and discuss it based on the actual situation."

Zhu Di wore a nonchalant expression, seemingly still not entirely satisfied with the scale, and merely accepting it reluctantly.

In fact, he was already overjoyed.

When they departed from the Ming Dynasty, the sum of money bestowed by Xu Miaojin totaled 200,000 strings of Ming Dynasty banknotes, equivalent to 200 million coins.

At the exchange rate of ten coins to one Ducat gold coin, exactly half of them could be exchanged.

However, this was merely an exchange with the Venetian authorities.

The greatest function of official currency swaps was not the actual amount of money exchanged, but rather its role as a guarantee of commercial credibility, solemnly declaring to all merchants that the Ming Dynasty Treasure Notes were backed by Venetian Ducat gold coins.

The amount of this "endorsement" is ten million Ducati.

In this way, any merchant who trades with the Ming Dynasty and receives Ming Dynasty banknotes will have no worries.

Because they knew that the Ming Dynasty banknotes they held could be exchanged for Venetian Ducat gold coins at any time, according to official agreements.

……

(End of this chapter)