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Chapter 176 The French Industrial Development Fund
🕑 Added 2025-01-04 18:00:52 +0000 UTCChapter 176 The French Industrial Development Fund
"Oh? So they know how to exploit the government's weaknesses," Joseph remarked, his eyes flashing coldly.
Since becoming the assistant to the Finance Minister, Joseph had gained a clear understanding of France's financial situation. A significant portion of the government's borrowed money came from wealthy nobles, accounting for over twenty percent. If you also consider the money nobles had invested in banks and government bonds, they were the largest creditors of government debt.
In other words, if the nobles stopped providing funds to the government, the state's finances would quickly collapse. Historically, these same nobles had formed a "tax resistance alliance," using tax refusal to pressure the royal family—and they succeeded.
No wonder Brienne had rushed to Paris to find him in such a panic. He genuinely feared the nobles would force a standoff with the government.
Brienne, his face lined with worry, said, "Your Highness, perhaps it would be best to pause Necker's trial and have him pay a fine instead…"
Joseph frowned. "Are you letting those nobles scare you?"
"No, not exactly," Brienne stammered, though his tense expression said otherwise. "But you know that if even a small number of them do as they threaten, the treasury will…"
Before he could finish, Joseph gestured toward his carriage. "Let's head to Versailles. We can talk on the way."
As the carriage moved forward, Joseph asked, "Archbishop Brienne, have there been similar cases of bank failures in the past that caused such upheaval?"
Brienne thought back and shook his head. "Your Highness, usually it's just one bank that gets into trouble, and since no criminal cases were involved, the bankruptcy process wasn't so fast. People had time to manage their investments. But this time, Béranger Bank collapsed too quickly. On top of that, more than a dozen other banks are expected to fail soon, so everyone is in a panic."
Joseph nodded. "So, the nobles' strong reaction is due to Béranger Bank not settling its debts or offering a plan to offset the debt with assets, leaving investors in the lurch?"
"That's right, Your Highness."
Joseph narrowed his eyes in thought. "So, if someone were to step in and buy Béranger Bank, promising the nobles that their investments would be honored and repaid, they'd be satisfied and disperse?"
Brienne frowned. "But right now, no one wants to buy the bank because no one knows how much it will be fined…"
He paused, as if a thought had struck him. "Are you suggesting we waive the fines?"
Joseph immediately shook his head. Not punishing these involved banks would be like letting them get away with embezzling millions, even billions, of livres from the government! The main issue was how to repay the nobles' investments.
He mentally reviewed modern financial strategies but found no ready-made solution. Brienne, having no idea what to do, could only look at him with a worried expression.
As the trees and buildings outside sped past, Joseph grew angrier at the thought of these nobles' previous actions—how they had hindered him and caused harm to the country. His frustration boiled over.
He pounded his fist on the seat and gritted his teeth. "Maybe I should just confiscate all their money!"
He sighed, knowing this was just a fantasy…
Wait… He suddenly had an idea. While he couldn't confiscate the nobles' money, he could delay paying them. If France's financial situation improved in five or seven years, the government would be fully capable of repaying them.
So, what was needed was a way to make the nobles "voluntarily" leave their money with the government.
As he considered various options, the concept of "debt-to-equity conversion" came to mind, but it didn't seem appropriate. The stock market mechanisms of this era were still underdeveloped, and dealing with such large amounts would be tricky.
A variation, though… perhaps a "debt-to-fund conversion"…
As the carriage left Paris, Joseph looked at Brienne, a smile forming on his lips. "If no one else will buy the bank, then my French Reserve Bank will."
"Your bank?" Brienne was shocked. "Your Highness, if you buy Béranger Bank, not only will you need to cover the purchase price, but you'll also need a large sum to repay the nobles' investments. And even if you somehow raise enough to buy Béranger Bank, there are over a dozen other banks that will go bankrupt. Surely you can't buy all of them?"
Joseph smiled. "Why not? I do intend to acquire them all."
"But where will you find the money for that?"
Joseph shook his head. "I won't need much. After subtracting liabilities from these banks' assets, they usually have a surplus of a few million to several tens of millions of livres. Because of the current scandal, the government can fine them an amount equal to their assets. Then, the government can use that fine to buy shares in the Reserve Bank, allowing the bank to acquire the other banks at no cost."
A bank's assets largely consisted of the loans it had made, most of which were to the government. Its liabilities included deposits and investments from the public and the nobles. After offsetting the two, the remaining assets—cash, real estate, etc.—would represent the bank's net worth.
Brienne patiently explained, "Your Highness, that's true on paper. But after you acquire these banks, if any nobles want to withdraw their investments, you'll have to pay them. Meanwhile, the bank's assets, mostly government loans, can't be recalled immediately."
Joseph replied calmly, "The key is to make sure the nobles don't withdraw their investments."
Brienne sighed. "But what if they don't cooperate? After this upheaval, they'll likely feel that leaving their money in banks is unsafe…"
Joseph smiled and waved a hand dismissively. "They won't have a choice."
Two hours later, the carriage stopped in the marble courtyard.
As Joseph stepped out, he heard voices shouting from outside the gates of Versailles, "For the stability of France's finances, the trial of Necker must be stopped!"
"Please, Your Majesty, show your mercy and compassion!"
"If more banks fail, I'll never buy government bonds again…"
"Yes, and no more government loans! We must protect our wealth!"
Joseph found the nobles' fervor somewhat amusing. He turned to Brienne and said, "Archbishop Brienne, they've practically blocked the gate. We should head to the Petit Trianon instead."
"Very well, Your Highness."
They hadn't gone far when a plump figure, with a head full of wavy hair, came hurrying toward them.
"Count Maurepas?" Brienne paused.
The Minister of the Interior bowed to Joseph and Brienne in turn before hesitating. "Your Highness, where are you headed? I have a suggestion to make."
Joseph smiled. "We're on our way to see the Queen. You can join us. What's on your mind?"
Maurepas hurried to catch up, offering a sheepish grin. "Your Highness, regarding Necker's case, perhaps it would be wise to put it on hold for a while."
"Oh? And why is that?"
"Well, you see, many nobles stand to suffer huge losses because of this. You should help them out, shouldn't you? It's a perfect chance to boost the royal family's reputation."
Joseph glanced at him but remained silent.
After rambling on a bit, Maurepas realized he wasn't fooling anyone. Rubbing his hands nervously, he confessed, "The truth is, Your Highness, I have some investments in Klarsen Bank. I've asked to withdraw my funds, but the bank needs 20 days to gather the money. If we could just delay Necker's case for 20 days…"
"How much did you invest?"
"About 700,000 livres."
Joseph rubbed his forehead and said coldly, "You know how serious Necker's case is. At this point, you have to choose between supporting me and protecting your 700,000 livres."
Sweat broke out on Maurepas's forehead as he stammered, "Of-of course I support you. I've always followed your lead. But about the bank…"
"Good." Joseph nodded toward the Petit Trianon. "Then come with me to help convince the Queen."
"Huh? Convince Her Majesty of what?"
"To establish the 'French Industrial Development Fund' under her authority."
An hour later.
Queen Marie looked at the three men in front of her and finally turned to Brienne. "Are you certain this 'Industrial Development Fund' will stop those people outside from bothering me?"
Brienne quickly reassured her, "Yes, Your Majesty, I guarantee it."
Joseph added, "And it will significantly reduce the nation's debt."
The Queen, swayed by the advice of the two ministers she relied on most, eventually nodded. "Very well, do as you suggest. After all, it won't cost the government anything."
She frowned slightly. "But the terms Archbishop Brienne mentioned—'fund,' 'debts'—are a bit complicated. I'm not sure I'll remember everything by morning."
Joseph promptly offered, "I can handle the explanation for you."
The Queen smiled warmly and patted his head. "Dear Joseph, your mind is always so sharp. I'm almost jealous! Then you will handle the announcement tomorrow."
As the three left the Petit Trianon, Joseph turned to Brienne. "Archbishop Brienne, please announce the news to the nobles as we discussed."
"Yes, Your Highness."
After Brienne departed, Joseph looked at Maurepas. "To be honest, I didn't expect you to interfere with my plans just for some money."
Maurepas was startled and quickly said, "Your Highness, please forgive me! I didn't mean to…"
Joseph raised a hand to cut him off. "Don't worry. You won't lose any of your money; in fact, you'll likely make more. Especially the shares you hold in the Reserve Bank—future profits will ensure you live a life of luxury."
He left the dumbfounded Minister of the Interior behind and headed quickly toward Louis XVI's workshop.
Compared to Queen Marie, convincing the King was much easier. It took Joseph just over ten minutes to persuade him to attend the "Industrial Development Fund" announcement the next day.
In fact, most of those ten minutes were spent helping Louis overcome his fear of speaking before dozens or even hundreds of people.
…
North Africa.
In a fortress-like prison east of Algiers in the Mitidja region.
Charles was idly shaping the dirt on the ground into a small castle, occasionally glancing back at the small vent in the wall behind him.
The sunlight streaming through the vent told him he'd been locked in this hellhole for eight months.
The other crew members captured with him had already been ransomed or had become corpses.
Only he remained, unable to go home.
It wasn't because no one cared about him—in fact, it was the opposite. As the first mate of the Golden Wheat, he was the most valuable prisoner after the captain had died in the pirate attack.
To be honest, he didn't care much for this "high status" because it meant the colonial government couldn't afford his ransom.
He heard shuffling footsteps from the dark end of the corridor. Charles quickly dropped to the ground, peering through a crack in the wall toward the nearby cell. It was empty.
His heart raced as he nervously kicked the cell bars and called out in a low voice, "Ali! Ali, the guard's coming—did you hear me?"
Just as the footsteps emerged from the shadows, revealing a pair of legs, the bed in the next cell shifted slightly, and a burly man with a thick beard peeked out.
The man moved quickly, sliding out of the hole under the bed in a second and skillfully covering the entrance with debris before settling into a sitting position on the bed.
The guard arrived at Ali's cell door, casually glancing inside before shoving a piece of hard bread and a bowl of yellow-green soup through the slot at the bottom of the door.
Then he moved on, delivering the same meal to Charles before lazily heading to the next cell.
Charles lay back down, watching the bearded man in the next cell wolf down the bread before relaxing. "Hey! Can't you be more careful? I thought I'd never get to chat with you again."
Ali, speaking in heavily accented English, chuckled. "Don't worry; I always know where the guard is. I just wanted to get a bit more work done."
"Oh, but I should mention that you'll have to find someone else to talk to soon."
"Someone else?" Charles sat up, surprised. "Why? Are you getting executed?"
"Watch your mouth," Ali grumbled, still chewing on his bread. "No, I mean that in three days, I'll be gone."
"Someone's finally paying your ransom?" Charles felt a pang of sadness. "But still, congratulations. Although, besides you, there's no one here who speaks English. I'll miss you."
Ali smirked. "No one's paying my ransom. But the tunnel I'm digging will be finished soon."
"A tunnel? Ha," Charles laughed. "You really think you can escape from this hellhole by digging a tunnel? This is the most heavily guarded prison in Algiers!"
He lowered himself to get closer to the wall crack. "Did you know the Bey of Tunis is locked up here? They say he's in one of the cells upstairs. Do you really think your two-month-old tunnel will get you out of here? Ha!"
Ali muttered disdainfully, "You've obviously never lived in Mitidja."
"That's right. I'm an American and this is my first time here," Charles shrugged. "Brought here as a guest of the lovely pirate lords."
"So you don't know that the Bey of Tunis escaped over ten years ago. The guards here are fools; it's easy to get out."
"What? He escaped?" Charles's eyes widened. "How is that possible?"
"Everyone in Mitidja knows about it," Ali pointed upward. "The person they have upstairs is an imposter, just a decoy for when the Janissaries come to check."
(End of Chapter)
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