Chapter 176: The Terrifying Financial Black Hole
Calonne saw Necker's terrified expression and narrowed his eyes comfortably, as if savoring a warm mug of sugary hot chocolate on a frigid day, as he flipped through case files. "Hmm, next we will 'discuss' your agreement with Classen Bank six years ago, or with Vincent Trade Bank seven years ago..."
Necker suddenly slapped the armrest of his chair, glaring with bloodshot eyes as he roared, "Calonne, by what right do you interrogate me? Do you think I don't know what you've done? I'll expose you! Expose you! Even if I go to prison, I'll drag you down with me!"
Calonne watched Necker calmly. Once the man had finished his outburst, he pulled a document from his pocket and waved it, smiling faintly. "You don't need to expose me. I've already confessed everything to the Royal Family. Look, this is a pardon issued by His Majesty the King. My exile is over.
"Furthermore, after I return all the unreasonable gains, I will no longer be pursued."
Necker was stunned. "This... how is this possible..."
Calonne's smile widened. "Do you know the biggest mistake you've ever made in your life?
"You severely underestimated the power of the Royal Family. Oh, and you also privately published the Royal Family's expenses, pushing all financial problems onto them.
"Whereas I chose to remain steadfastly loyal to the Royal Family. So now, I'm the one interrogating you.
"Now, let's continue..."
"Lieutenant Colonel Lavielle reported that the person sent to administer the poison has been silenced permanently, so the trail won't lead back to him. And it certainly won't implicate you."
Donatien, the butler, whispered, glancing at the Duke of Orleans' slightly relaxed brows, then handed him a small paper scroll sealed with wax. "This just arrived from the Secret Police."
Ever since Necker's arrest, the Duke of Orleans' informant would send daily updates from the Bastille.
The Duke of Orleans unfolded the note. Seeing that it contained many more words than usual, he quickly scanned it, and his face instantly turned utterly grim.
More than a dozen banking magnates were already gathered in the hall, all implicated with Necker, and had come to discuss countermeasures. Seeing the Duke of Orleans' expression, they hastily crowded around him.
"Your Grace, has something happened?"
"What's the situation with Necker? Is there any news?"
The Duke of Orleans simply tossed the note to them and stared out the window without a word.
Count Isaac picked up the note and exclaimed in surprise, "Why is Calonne handling the interrogation? He's back from exile?"
He paused, then handed the note to Viscount Bélanger beside him.
The latter glanced at it, as if burned, and violently threw the note onto the table—it stated that the illicit loan operations between his bank and Necker could no longer be concealed. At that very moment, the police and Secret Police were likely on their way to his home and bank.
"My... my affairs have been exposed. What am I going to do..."
Although the others desperately wanted to read the contents of the note, no one dared to reach for it, as if it were a venomous scorpion ready to sting at any moment.
Bélanger was finished; who knew if they would be next?
Seeing the group utterly hushed and terrified, Count Isaac quickly raised his voice to boost their morale. "There's no need to fear! With so many of us, we'll surely find a solution!"
He turned to the Duke of Orleans, who was their pillar and backing. "Wouldn't you agree, Your Grace?"
Over a dozen pairs of eyes immediately turned in unison towards the Duke of Orleans.
The Duke's heart also tightened. He knew that if he retreated even a single step now, it would be tantamount to admitting utter defeat in his struggle against the Royal Family.
'No, there must be a way...'
Veins bulged on his forehead, and his palms were slick with sweat. He had exhausted all his strategies and was utterly helpless at that moment.
Suddenly, he recalled Isaac's earlier words and murmured, "So many of us... so many people."
His eyes suddenly lit up again. 'That's right, how could I forget our greatest advantage—our numbers!'
'What if the Royal Family has indeed found leverage against the major banks through Necker? As long as I have enough people, and make the situation big enough, the Royal Family will still have to compromise!'
The Duke of Orleans immediately turned and pointed at Bélanger. "You will publicly admit to all charges at once, then declare your bank bankrupt."
"No," Bélanger's face turned green. "What are you trying to do?"
"Set the forest ablaze, plunge the people into panic." A sinister look flashed across the Duke of Orleans' face. "Don't bother with debt or credit issues, don't deal with credit transfers. Just abandon the bankrupt mess for others to worry about! Oh, and not only declare bankruptcy, but also publicize the bank's accounts."
"W-why?"
Count Isaac's eyes darted around, and he immediately grasped the key point. "Bélanger Bank's books absolutely won't have enough funds to pay its depositors and the investing nobles. After bankruptcy is declared, they will undoubtedly scramble to get their money back!"
The Marquis de Ludo's eyes also lit up. "But most of the bank's money has been lent out, largely as government loans, and cannot be retrieved in a short time. People who can't get their money back will surely descend into madness."
The Duke of Orleans nodded triumphantly. "More than half of the great nobles in Versailles have invested money in your banks. If we tell them that the Royal Family will investigate even more banks, and that they will all go bankrupt like Bélanger Bank, then their money will be gone for good.
"What do you think those nobles will do?"
Isaac sneered, "They will certainly make the King and Queen lose sleep!"
"Exactly!"
Bélanger looked at the group's excitement and asked tremulously, "W-what about me then..."
The Duke of Orleans stepped forward, patted his shoulder, and reassured him, "Don't worry. After this blows over, I will arrange for your release from prison and provide you with a sum of money. Perhaps then you can even resume your former profession."
...
The very next morning, while Fouché's agents and the Secret Police were still auditing Bélanger Bank, Viscount Bélanger, along with a host of the bank's senior executives, publicly admitted to all the illicit dealings between the bank and Necker before countless journalists, and voluntarily surrendered a portion of their illegal gains—leaving not a single sou on the bank's books.
Bélanger Bank then declared bankruptcy. The bewildered police, after sealing the bank, arrested Bélanger and its executives.
The sudden news, spread by those with intentions, quickly circulated through Versailles. Instantly, nobles were filled with anxiety, asking each other nervously upon meeting, "Did you invest in that bank?"
Immediately afterward, the inside story of Bélanger Bank's bankruptcy broke—Necker had been involved in numerous illegal transactions with the bank, and now that Necker was arrested, these affairs had come to light.
Subsequently, "well-informed" individuals brought even more alarming news—Bélanger was far from the only bank that had dealt with Necker. As Necker's interrogation continued in the Bastille, there was no telling how many more banks would face trouble.
That evening, dozens of anxious great nobles gathered in the great hall of the Palais-Royal, anxiously looking to the Duke of Orleans, who was offering them advice.
"These banks are all involved in bribery and illegal transactions, and will face hefty fines," the Duke of Orleans said with a worried expression. "Therefore, no one will be willing to acquire these banks, because no one wants to shoulder those additional penalties."
One noble said with a bitter expression, "Then how am I supposed to get back the money I invested in the bank... I heard Classen Bank might be in trouble too."
"Indeed, please help us find a solution! They say over a dozen banks have been ruined by that fellow Necker."
"Good heavens, that's half my fortune!"
"If the bank goes bankrupt, all the money I've saved for over a decade will be gone..."
Seeing that he had sufficiently incited them, the Duke of Orleans feigned a difficult expression. "Actually, I've also invested a lot of money in those banks.
"As things stand, if Necker's interrogation continues, those dozen banks are sure to collapse one after another.
"Therefore, unless the interrogation is halted, no one can secure our money."
"Exactly!" someone immediately shouted in agreement. "Necker's interrogation must be stopped."
"We should advise the Royal Family to simply exile him!"
"But, apparently, the evidence is conclusive this time. The Royal Family likely won't agree..."
The Duke of Orleans immediately pointed at the speaker. "Viscount Prudhomme is correct. We must unite and put pressure on the Royal Family to halt Necker's interrogation."
"But how do we put pressure on the Royal Family? Even the High Court now listens to them."
The Duke of Orleans smiled. "Just listen to me; we'll do this..."
...
Paris.
In the Industrial Planning Bureau office in Paris, Joseph looked at the report in his hands, his face alight with poorly concealed joy.
Bélanger had actually confessed directly, and his bank had declared bankruptcy.
Joseph had originally thought he would put up a fight, perhaps using a confession or renegotiating loan agreements as bargaining chips to secure a reduced sentence or even a pardon.
Joseph had also been preparing to "gouge" the bank through this, but he never expected them to surrender so readily.
Bélanger Bank went bankrupt without even addressing its debts or credits, and no other bank was willing to take it over. All its debts became bad debts, meaning the French government could completely forgo repaying the loans it had taken from it.
After all, the contract had been signed with Bélanger Bank, and with no bankruptcy or liquidation laws currently in place, if one party to the contract "died," the contract could be terminated.
That was a loan of a staggering 35.2 million Livres!
Just like that, it was written off.
This ease felt far more satisfying than Joseph painstakingly earning over 35 million Livres to repay the loan himself.
It was the exhilaration of finding money on the street.
He counted on his fingers. Calonne had once said there were 13 banks involved in illegal transactions with Necker. Even if all of them had the same loan amount as Bélanger Bank, once they were all dealt with, the government's debt could directly be reduced by 500 million Livres!
Faster than stealing money!
Furthermore, Bélanger Bank was only a relatively small institution. Major banks like Classen Bank might have loans totaling hundreds of millions of Livres each!
Although France's debt crisis wouldn't be fully resolved by this, overall, it would become much more manageable, and the dawn of a complete solution to the debt problem would emerge.
After savoring the relief brought by the debt situation for a moment, Joseph put down the documents, yet he vaguely felt something was amiss.
'Was something wrong?'
He saw the brilliant sunshine outside his window and decided to take a stroll in the courtyard while pondering the issue.
However, just as Joseph reached the entrance of the Planning Bureau, he faintly heard a woman's sobs emanating from a corner office, and another voice trying to comfort her.
"Luckily you withdrew money last month to buy those two dresses, or you would have lost even more."
The woman choked out, "But I still had a full 80 Livres in the bank... How could it just suddenly collapse?"
"I heard it was those damned banks, making deals with corrupt officials for a bit of ill-gotten gains, and they got found out."
"What am I to do? That was the money I saved to repair my house..."
"Oh, what can be done? My neighbor lost even more than you, I think it was 100 Livres."
Joseph froze at the words, instantly realizing what was wrong.
'The bank's money isn't all its own; much of it comes from depositors and investors!'
If a bank goes bankrupt, the government is indeed freed from repaying its loans, but the ones who ultimately bear the loss are the people.
While it was true that French public trust in banks had plummeted to an all-time low ever since John Law's Mississippi Company incident led to the Royal Bank's massive defaults, resulting in a very low savings rate...
For example, his French Reserve Bank had only managed to attract less than 200,000 Livres in deposits over four months, yet even this amount of money could cause enormous problems for ordinary people's livelihoods.
And the money nobles had invested in the banks amounted to far greater sums.
Some banks even held more than half their assets from wealthy nobles, then helped them lend that money to the government to earn interest.
While they wouldn't struggle to live due to investment losses, the money they put in was all legitimate, clean money.
Government debt had indeed instantly dropped by four or five hundred million Livres, but France's sudden emergence of such a massive financial black hole was bound to cause social unrest.
Joseph couldn't help but frown at the thought.
'It seems this massive debt must slowly "evaporate," not simply die off all at once.'
'But how to manage it?'
Just as he was pondering how to minimize the impact of the bank failures, he saw two carriages pull into the Planning Bureau's courtyard.
The carriage door opened, and Brienne's attendant was the first to alight, setting down the steps.
Before the attendant could open the door, Brienne impatiently pushed it open himself and stepped out. He happened to meet Joseph's gaze and anxiously hurried forward to bow, then declared, "Your Royal Highness, I fear something grave is about to happen!"
Joseph frowned, tentatively asking, "Could it be related to the bank bankruptcies?"
Brienne nodded. "You've heard as well? Yes, Bélanger Bank's collapse was too sudden, causing many nobles immense losses. It's said some have lost millions of Livres because of it."
He took a deep breath. "And more nobles, fearing that other banks might suddenly collapse, have gathered at the Petit Trianon, petitioning Her Majesty the Queen to issue an edict to halt Necker's interrogation."
Joseph sneered, "I had originally intended to help them mitigate their losses, but if they intend to blackmail His Majesty over this, then they shouldn't blame me for being ruthless!"
Brienne wiped sweat from his brow, saying urgently, "Your Royal Highness, this matter could become exceedingly troublesome.
"I've heard word that the nobles intend to form an alliance, declaring that if Necker's interrogation isn't stopped, they will not lend the government a single sou in the future!"
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