Chapter 177: French Industrial Development Fund
"Oh? They certainly know how to exploit the government's weaknesses." A cold glint flashed in Joseph's eyes.
After becoming Assistant to the Minister of Finance, he had gained a clear understanding of France's financial situation. A significant portion of the money borrowed by the government, over two-tenths, came from wealthy nobles. If one included the money nobles deposited in banks and the government bonds they purchased, they were likely the largest group underwriting the government's debt.
In other words, if the nobles stopped providing funds to the government, national finances would quickly collapse. Historically, these individuals had even formed an "anti-tax alliance," blackmailing the monarchy by refusing to pay taxes and ultimately succeeding.
No wonder Archbishop Brienne had rushed to Paris in such a frenzy to find him; he truly feared the nobles would engage in a fight to the death with the government.
Brienne, looking anxious, said, "Your Highness, perhaps we should temporarily halt Necker's interrogation and have him pay a fine first..."
Joseph frowned. "What, have those nobles intimidated you?"
"No, not at all." Brienne said "not at all," but his expression was full of tension. "But you know, if they really do that, even if it's only a small fraction of them, the treasury will..."
Brienne started to say more, but Joseph gestured towards his carriage. "How about this, let's head to Versailles first and talk on the way."
The carriage slowly began to move. Inside the compartment, Joseph asked, "Archbishop Brienne, there have been bank bankruptcies before, have they ever caused such a major uproar?"
"But this time, the Bellanger Bank collapsed too quickly, and with a dozen more banks expected to fail afterward, everyone has been terrified."
Joseph nodded. "So, the nobles are reacting so strongly because the Bellanger Bank failed to settle its claims or announce a debt-to-debt offset plan, instead abandoning all its investors?"
"That's roughly it, Your Highness."
Joseph narrowed his eyes, pondering for a moment, then continued, "So, if someone were to acquire the Bellanger Bank now and promise the nobles to honor and repay their investments, they would immediately be satisfied and disperse?"
Brienne said with a grimace, "But no one is willing to acquire it now, because no one knows how large a fine the Bellanger Bank will face..."
He paused, as if realizing something. "You mean, waive its fine?"
Joseph immediately shook his head. If no punishment was meted out, wouldn't these implicated banks have freely plundered tens of millions, or even hundreds of millions, of livres from the government?
The current problem focused on how to repay the nobles' investments.
He reviewed all the financial operations of modern banks but found no ready-made solution. Brienne, utterly helpless, could only look at him with a worried expression.
Trees and buildings flashed past the window. Joseph recalled the various obstacles and destructive actions these high-ranking nobles had previously placed in his way, and anger flared within him.
He slammed his fist on the seat, gritting his teeth. "Let's just confiscate all their money!"
He then sighed, knowing it was merely an angry outburst...
Wait... he suddenly thought of something. While he couldn't confiscate the nobles' money, he could certainly delay paying them!
If they could wait five or seven years, France's financial problems would be alleviated, and the nation would be fully capable of paying those sums.
Therefore, some means were needed to make the nobles "voluntarily" leave their money.
Speaking of means, he immediately thought of "debt-to-equity swaps," but he felt it was inappropriate. The equity mechanism of this era was still very imperfect, and such a large amount would be difficult to manage.
Then he needed to adapt it, perhaps to "Debt-to-Fund Conversion"...
As the carriage exited the city of Paris, Joseph looked up at Brienne, a smile gracing his face. "If no one acquires them, then my French Reserve Bank will acquire them."
"Your bank?" Brienne exclaimed, shocked. "Your Highness, if you acquire the Bellanger Bank, you'll not only need acquisition funds but also a large sum to pay off the nobles' potential withdrawals.
"And even if you manage to raise the funds to acquire Bellanger Bank, there will be a dozen more banks going bankrupt afterward. You can't possibly acquire all of them, can you?"
Joseph chuckled, "Why not? I do intend to acquire all of them."
"But where will you get so much capital?"
Joseph shook his head. "It won't require much money at all.
"When these banks' claims are subtracted from their debts, they usually have an asset surplus of several million to tens of millions of livres. And because of this case, the government can impose fines on them equivalent to their asset value.
"Then the government can use the fine amount to buy shares in the French Reserve Bank, allowing the French Reserve Bank to complete the acquisition at zero cost."
A bank's claims refer to the loans it has extended, most of which are to the government. Its debts, on the other hand, are private deposits and noble investments. After offsetting these, plus the bank's cash and physical assets, what remains is the bank's net assets.
Brienne patiently said, "Your Highness, that's true on paper. But once you acquire those banks, if a noble demands to withdraw their investment, you will need to pay that money. However, the bank's assets—government loans—cannot be immediately recouped."
Joseph stated calmly, "As long as the nobles don't withdraw their investments, it will be fine."
Brienne sighed. "Your Highness, what if they don't cooperate with you? Especially after this whole upheaval, they will surely feel that keeping their money in banks isn't secure enough..."
Joseph smiled, waving a dismissive hand. "That won't be up to them."
Two hours later, the carriage stopped in the Marble Courtyard.
As Joseph stepped out, he heard someone shouting loudly from outside the Palace of Versailles' gates: "For the financial stability of France, the interrogation of Necker must be stopped!"
"Please, Your Majesty, grant your mercy and leniency!"
"If more banks go bankrupt, I'll never dare to buy government bonds again..."
"Yes, and government loans! We must guard our purses tightly!"
Joseph watched the agitated nobles and couldn't help but find it amusing. He turned to Brienne beside him. "Archbishop Brienne, they're practically blocking the gates. Let's go to the Petit Trianon first."
"Yes, Your Highness."
The two had not walked far when they saw a plump figure, with his wavy hair bouncing, scurrying over.
"Count Monnot?" Brienne paused.
The Interior Minister bowed to Joseph and Brienne in turn, then hesitated. "Your Highness, where are you going? Um, I have something I'd like to suggest to you."
Joseph smiled. "We're going to see Her Majesty the Queen. You might as well join us. Oh, what is it you wanted to say?"
Monnot hurriedly caught up, chuckling drily. "Your Highness, regarding Necker's case, it might be better to postpone it for a while."
"Oh? Why?"
"You see, many nobles will suffer huge losses because of this. You must stand up for them, mustn't you? This is an excellent opportunity to enhance the royal family's prestige."
Joseph glanced at him, remaining silent.
Monnot rambled on for a while, realizing he couldn't fool Joseph. He could only rub his plump hands and chuckle drily:
"Your Highness, actually, I also have some investments in Classen Bank.
"Of course, I've already requested to withdraw the money, but you know, the bank needs twenty days to raise the funds. If Necker's case could continue after those twenty days..."
"How much did you invest?"
"Well, it's over 700,000 livres."
Joseph rubbed his forehead, speaking coldly. "You know how significant Necker's affair is. At this moment, do you choose to support me, or do you choose your 700,000?"
Cold sweat beaded on Monnot's forehead. He said with difficulty, "Of, of course I support you. You know, I've always followed your commands. But the bank..."
"Good." Joseph gestured towards the Petit Trianon. "Come with me to persuade Her Majesty the Queen later."
"Ah? Persuade Her Majesty about what?"
"To have her officially establish the 'French Industrial Development Fund.'"
An hour later.
Queen Marie looked at the three men before her, finally turning to Brienne. "Are you certain this 'Industrial Development Fund' will stop those people outside from bothering me?"
Brienne quickly replied, "Yes, Your Majesty, I guarantee it."
Joseph added, "It will also significantly reduce the nation's debt."
The opinions of the two cabinet ministers, whom the Queen heavily relied on, were very convincing. She finally nodded. "Very well, let's proceed as you say. It doesn't require the government to spend any money anyway."
She then furrowed her brow slightly. "However, Archbishop Brienne's talk of 'funds' and 'claims' earlier was rather complex. I'm not sure if I'll remember it all clearly by tomorrow morning."
Joseph immediately interjected, "I can do it for you."
The Queen smiled and gently stroked his head. "My dear, your mind is always so sharp, I'm practically green with envy. Then you shall explain it tomorrow."
As the three emerged from the Petit Trianon, Joseph gestured to Brienne. "Archbishop Brienne, then I'll trouble you to announce it to the nobles as we discussed."
"Yes, Your Highness."
Brienne departed, and Joseph turned to Monnot. "To be honest, I didn't expect you to disrupt my plans for a bit of money."
Monnot's heart jolted, and he quickly said, "Your Highness, please forgive me, I wasn't trying to..."
Joseph raised a hand to stop him. "Don't worry, you won't lose a single livre of your money, and it will even grow. Especially your shares in the French Reserve Bank; the profits in the future will be enough for you to live a life of wealth and glory."
He left the stunned Interior Minister and hurried towards Louis XVI's workshop.
Compared to Queen Marie, the King was much easier to convince. Joseph only took a little over ten minutes to persuade him to attend the "Industrial Development Fund" briefing tomorrow.
In fact, more than half of those ten minutes were spent helping Louis XVI overcome his fear of facing dozens, if not hundreds, of people.
...
North Africa.
In a fortress-like prison on the east side of Mitidja, Algiers.
Charles listlessly piled dust on the ground into a small castle, occasionally turning to look at the palm-sized air vent behind him.
The sunlight filtering through it told him he had been confined in this wretched place for eight months.
His fellow crewmen, captured with him, had long since been ransomed or had become corpses.
Only he remained, unable to return home.
It wasn't because no one cared about him; quite the opposite. Because he was the first mate of the "Golden Wheat," after the captain died in the pirate attack that day, he became the most valuable person on the ship.
To be honest, he didn't like such "noble" status, as it meant the state council couldn't afford enough money to ransom him.
Shuffling footsteps echoed from the end of the gloomy corridor. Charles quickly flattened himself on the ground, peering through a crack in the wall at the adjacent cell. It was empty.
He suddenly grew anxious, kicking the cell bars hard, then lowering his voice to call out, "Ali! Ali, the guard is coming, did you hear that?"
Just as the owner of the shuffling footsteps emerged from the shadows, revealing his legs, a corner of the bed board in the next cell was pushed aside. Then, a burly middle-aged man with a full beard poked his head out.
The man moved incredibly quickly, zipping out of the hole beneath the bed board. In just a second, he covered the hole with debris and settled into a posture of leaning against the bed board.
The guard happened to reach Ali's cell door, casually glanced inside, and pushed a dry biscuit and a bowl of yellowish-green, unidentifiable soup through the small opening at the bottom of the cell door.
Then he handed Charles the same lunch and lazily moved on to the next cell.
Charles lay on the ground, looking at the cell next door. Seeing the bearded man already devouring the dry biscuit, he finally exhaled. "Hey! Can't you be a little more alert? I thought I'd never be able to chat with you again."
Ali, speaking with a strange accent in English, chuckled, "Don't worry, I always know where the guards are. I just wanted to work a little longer just now.
"Oh, but speaking of which, you'll have to find someone else to chat with from now on."
"Someone else?" Charles sat upright, surprised. "What happened to you? Are you going to be hanged?"
"Look at what you're saying?" Ali grumbled, chewing his biscuit and lowering his voice. "In three days at most, I'll be able to escape."
"Did someone agree to ransom you?" Charles felt a pang of sadness. "But congratulations anyway, even though there's no one else here who speaks English for me to talk to. I'll miss you."
Ali curled his lips. "No one's ransoming me. But my tunnel is almost complete."
"A tunnel? Haha," Charles laughed. "Do you really think you can escape this wretched place by digging a tunnel?
"This is Algiers' most heavily guarded prison!"
He then lay back down, bringing himself closer to the wall crack. "Do you know? Even the Pasha of Tunisia is imprisoned here. Oh, rumor has it he's in a cell upstairs somewhere. You think you can escape from here with just two months of digging? Haha."
Ali muttered disdainfully, "Clearly, you haven't lived in Mitidja."
"Yeah, I'm an American, first time here." Charles shrugged. "Invited by hospitable pirates, you see."
"So you don't know that the Pasha of Tunisia escaped over ten years ago. The guards in this prison are idiots, it's easy to get out."
"What? Escaped?" Charles's eyes widened. "How is that possible?"
"Everyone in Mitidja knows about it." Ali pointed upwards. "There's an impostor locked up there, used to fool the inspections by the royal guard."
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