The Rise of Australasia

After the Russian representative proposed using gold to exchange for enough foreign currency, the negotiation on the loan could proceed normally.

Regardless, gold is still very attractive to a country, especially in the era when the gold standard is widely adopted around the world.

It can be said that the amount of gold a country possesses represents the amount of currency it can issue.

Having enough gold reserves not only affects the credibility of a country’s currency but also the specific value and value preservation power of its currency.

Australasia has accumulated quite a bit of gold in these 20 years, but it is destined not to be comparable to those established powerful countries.

Especially the old powers headed by the British and French, who have accumulated a large amount of wealth in their centuries of domination, including property and gold extracted from colonies and other countries.

At present, Australasia’s gold reserves are just breaking the 1,000-ton mark, and if converted into Australian dollars, it’s only about 272 million Australian dollars.

While this number is quite a bit less than the gold reserves of the British and French, 1000 tons of gold reserves in the world is not a small amount, at least it is also a strong level of gold reserves.

If Arthur’s guess is correct, Russia’s gold reserves should be at least a few thousand tons, even more but not less.

Currently, the gold that Russia sells or mortgages to the outside world is only a few hundred tons, which does not match its previous status as a top power.

Such a vast land and huge population, the Russian royal family should have accumulated more gold.

For this reason, Arthur was very interested in Nicholas II’s proposal to exchange gold and was also curious about how much gold Nicholas II could bring out for exchange.

"How much gold can you bring out?" Arthur asked curiously.

"If Your Majesty agrees, we can transport at least 200 tons of gold from Russia to the Baltic Sea, and all Your Majesty needs to do is send a fleet to receive it." Entering the main topic, the Russian ambassador did not dare to hide anything and directly said the number within Nicholas II’s acceptance range.

200 tons of gold is not a small amount. According to the current price of gold, it is roughly equivalent to 27.28 million pounds - almost half a year’s military expenses for Australasia.

Although the Russian army is larger, its navy is basically no longer operational, plus assistance from other countries, it should have no problem supporting half a year’s expenses with this fund.

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This is also in line with what Nicholas II expected, allowing the government to have enough funds to last the entire summer offensive.

As for the funds after the summer offensive, success in this campaign will determine that.

If successful, Tsarist Russia will repel Soviet Russia and regain control of most of Eastern Europe, solving any remaining funding problems.

If the campaign fails, Tsarist Russia will lose its advantage in Eastern Europe, and Nicholas II might even have to flee Saint Petersburgh, with his safety in Siberia uncertain - naturally, he wouldn’t have to worry about future funding consumption.

"Two hundred tons of gold? Quite a lot." Arthur nodded in satisfaction, pleased with the amount of gold being offered.

This amount of gold would increase Australasia’s gold reserves by 20% and make the Australian dollar more stable.

In comparison, those banknotes are nothing, after all, the value of banknotes is determined by gold, and having more gold is the key.

"According to the current exchange rate between pounds and gold, 200 tons of gold is equivalent to 13,642,000 pounds. Are you planning to mortgage the loan or directly exchange it for banknotes?" Arthur asked with a smile.

In Arthur’s eyes, the Russian ambassador had become a Wealthy Fool, slowly pulling out the gold from his pocket.

"Your Majesty, although the exchange between gold and pounds is indeed as such, how important gold is to a country’s monetary system should be clear to you as well. We hope to mortgage a loan of at least 20 million pounds. If we cannot repay it within ten years, the gold will be used as collateral to compensate you.

This is the Tsar’s condition." The ambassador of Tsarist Russia awkwardly smiled, not agreeing with Arthur’s calculations, but presenting his own opinion instead.

Arthur shook his head, directly refusing what Nicholas II had proposed through the Russian ambassador, and countered: "Although gold is very important to a country, its value is limited. 20 million pounds is nearly double the value of this gold. Given your country’s current situation, it is difficult to mortgage such an amount."

"If you really want to mortgage a loan, 200 tons of gold can at most be mortgaged for 15 million pounds, considering the relationship between the two royal families, Australasia does not want to lose Russia as an ally." Arthur continued.

The difference between 15 million pounds and the value of 200 tons of gold is less than 3 million Australian dollars, and Arthur could accept such a difference completely.

After all, considering the future depreciation of currency, exchanging 15 million pounds for 200 tons of gold reserves is a very cost-effective deal overall.

"15 million pounds? Your Majesty, I need to discuss this matter with my homeland, and I’m afraid I can’t give you an answer in a short time," the Russian ambassador said with some difficulty.

This was 5 million pounds less than Nicholas II’s expectation. It was clear that the Russian ambassador could not make a decision on his own and would need to consult with the domestic government and Nicholas II.

"Of course, Australasia is always open to mortgage loans from your country. In any case, Australasia will always be an ally of Russia. Please convey my greetings to His Majesty Nicholas II," Arthur said with an indisputable nod and smile.

Although the Russian ambassador didn’t agree on the spot, according to the current situation in Russia, as Arthur knew it, Nicholas II’s agreement was inevitable.

Russia could still obtain loans from the British and French, but they were more unscrupulous than Arthur. Whether 200 tons of gold could obtain an equivalent loan was an issue, let alone a mortgage loan exceeding the value.

Moreover, a significant portion of Russia’s military trade was conducted with Australasia, which was the reason why Russia contacted Australasia in the first place.

In Europe, Russia was mainly involved in food trade and the trade of other materials. After all, Europe was closer to Russia, and the transportation of materials was relatively convenient.

As expected, just on the second day, the Russian ambassador visited Arthur again and agreed to the mortgage loan of 15 million pounds proposed by him.

Of course, since the loan was made in Australasia, the actual loan amount was equivalent to 30 million Australian dollars, equal to 15 million pounds.

However, this had almost no influence on the loans and subsequent purchases. After all, Australasia had always had a close relationship with the British Empire. The issuance of Australian dollars was directly linked to the pound sterling, and the exchange rate of 2:1 between the two was almost fixed.

Moreover, Australasia had virtually no losses during World War I and even gained a good amount of gold reserves from Russia, making the Australian dollar even stronger.

At present, the only currencies in the world that had not experienced massive depreciation were the pound sterling and Australian dollar. Both currencies had relatively fixed conversion rates, so the currency used for the loan, whether pounds or Australian dollars, had no impact on the loan itself.

The chaotic situation in Russia itself meant that it was nearly impossible for any significant events to remain hidden.

In just a few days, the news that Russia had mortgaged 200 tons of gold for a loan of 30 million Australian dollars spread throughout Europe. Everyone was greedy for the Tsar’s gold reserves and tried every means to squeeze Nicholas II’s gold reserves through various channels.

However, after all, Nicholas II was not a fool and would naturally not use gold for every transaction.

Especially after obtaining the mortgage loan of 30 million Australian dollars, Nicholas II had plenty of funds, and there was almost no problem in holding out for half a year. Thus, he would not actively use gold to mortgage goods.

In the Russian government, Nicholas II was quite satisfied with this mortgage loan. After all, the current situation was different from the past, and not being blackmailed was already good news.

With the formal arrival of these funds, Nicholas II could not wait, called the Prime Minister again, and asked eagerly: "Prime Minister, with these 30 million Australian dollars, can the government stably withstand the entire summer offensive?"

"In theory, there should be no problem, Your Majesty. The purchasing power of the Australian dollar can still be maintained in Europe as long as there is no significant depreciation, so it should be able to get through the summer offensive without any issues," the Prime Minister pondered for a while before giving a more appropriate response.

Nicholas II had shown his means when clearing away some aristocrats and capitalists.

This also led to the Prime Minister not daring to give a more definitive guarantee, as Nicholas II would certainly settle accounts after the autumn.

"Well, in that case, the government should quickly prepare the materials needed for the summer offensive. I don’t want the front lines to face a shortage of various materials during the launch of the offensive, as it may affect the final outcome of the war," Nicholas II instructed with satisfaction.

During World War I, Australasia conducted extensive trade with European countries, bringing the Australian dollar to Europe and gaining recognition and limited circulation among European nations.

Compared to the constantly depreciating Mark and Franc, the pound sterling and Australian dollar were relatively strong, and even if they would depreciate, the extent would not be too significant.

Nicholas II firmly believed in this point, which is why he trusted the government’s response that it could stably last through the entire summer offensive.

There was only a little more than a month left before the summer offensive was launched, and this period was Russia’s most precious time for material preparation.

At least the supply of materials needed to keep up with the rate of consumption. Otherwise, the assistance from Western countries would not have arrived, and the materials would already have been exhausted, making it impossible to last through the war.

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