Chapter 180: Marat's Self-Doubt
Joseph was contemplating the best way to deal with these men when he heard Comte de Kaunitz chuckle foolishly:
"Your Royal Highness, besides us, there's also the Trade Credit Bank, Laville Bank, and others who wish to earn your forgiveness..."
Marquis de Ludo shot him a fierce glare, trying to stop him from speaking further. He muttered inwardly, 'I really shouldn't have brought this fellow along. If not for the Kaunitz family's immense influence within the Banking Guild, with this man's brains, he'd have probably bankrupted their family's enterprises ten times over by now!'
"Oh?" Joseph looked at Kaunitz. "How many banks do you represent this time?"
Kaunitz quickly pointed out the window. "There are seven, Your Royal Highness. They're waiting outside the Palace of Versailles."
Seven banks? All the banks involved in the Necker case were influential major institutions. Joseph glanced at the men, suddenly realizing this might be an opportunity to accelerate the establishment of a "central bank" for France.
Moreover, the French Reserve Bank would find it difficult to absorb so many banks right now. It might be acceptable to have them surrender some profits and accept regulation instead. If this could expedite the central bank's formation, it would be a huge gain.
Joseph immediately smiled, completely ignoring the rhythm of the men before him, and went straight to the point:
"You want to keep your banks?"
"If we could be so fortunate as to receive your grace..."
Joseph smiled faintly. "Can you represent those four banks waiting outside?"
Marquis de Ludo nodded repeatedly. "Yes, Your Royal Highness, they have fully entrusted me."
"Very well," Joseph nodded. "I have a few conditions."
Marquis de Ludo and the others immediately perked up their ears.
"First, you will reduce your government loans by 10%, renegotiate the loan agreements, and the interest rate must not exceed 3%."
The three banking magnates exchanged glances, their faces etched with discomfort.
The loan reduction seemed to be only ten percent, but each of them had lent tens of millions of livres to the French government, which amounted to millions in colossal sums.
Furthermore, a 3% interest rate was practically interest-free for this era. Bear in mind, even government bonds sold to citizens carried interest rates between 9% and 12%.
However, Necker's confession was now in the Bastille. If they refused, the four banks that had previously gone bankrupt served as a stark example.
The three struggled for two seconds, then all gritted their teeth and nodded. "We will comply with your command, Your Royal Highness."
"Good," Joseph continued. "Second, the French Reserve Bank will acquire a 30% stake in your banks. You have illegally profited from the national treasury for over a decade, so these shares will serve as a fine.
"Furthermore, I can promise that these shares will not be sold without the consent of the bank's board of directors."
Marquis de Ludo and the others agreed this time with little hesitation.
They had originally intended to use shares as leverage to secure the Crown Prince's leniency. While the Crown Prince requested a slightly higher percentage than they had prepared, they also received a promise that the shares would not be sold.
This meant the French Reserve Bank would only receive dividends. Their banks would not suffer losses from shares being dumped on the market. Such conditions were entirely acceptable.
Joseph was quite satisfied with their attitude and continued, emphasizing his words: "Third, and most importantly.
"Your banks must support the monetary policies announced by the French Reserve Bank.
"At the same time, you must leverage the influence of the Banking Guild to garner support for the French Reserve Bank from more banks."
Marquis de Ludo's expression shifted, and he cautiously inquired, "Your Royal Highness, what exactly do you mean by monetary policy?"
Joseph replied, "From now on, the French Reserve Bank will issue nationally unified banknotes, much like the Bank of England. Your banks must accept these banknotes for settlement and exchange."
Banknotes, so-called, were "certificates that could be redeemed for gold and silver coins" issued by various banks. Anyone holding these notes could exchange them for coins at the corresponding bank.
If a particular bank possessed substantial strength and earned widespread trust, people would, for convenience, accept banknotes as payment among themselves, rarely bothering to actually redeem them for gold and silver coins.
Thus, they effectively became circulating paper currency.
In fact, the pound sterling banknotes currently in circulation in England were, strictly speaking, merely the Bank of England's own banknotes. It was simply that the Bank of England's operations had grown so vast, overshadowing all other banks, that it had secured authorization from the British government as the issuer of the "sole legal banknote," gradually transforming into England's central bank.
Currently, the French Reserve Bank did not possess the overwhelming capital advantage of the Bank of England, so Joseph could only resort to administrative means to introduce the French Reserve Bank's banknotes.
However, this process would certainly not be smooth. After all, the French Reserve Bank had limited capital, and ordinary citizens would likely lack trust in its banknotes. This was the biggest obstacle to the French Reserve Bank becoming France's central bank.
Joseph had previously planned to take three to five years to gradually cultivate market trust in the French Reserve Bank's banknotes. But with the Banking Guild's endorsement and these seven major banks accepting the French Reserve Bank's banknotes, this process could be shortened to mere months.
Simultaneously, with banknotes—that is, paper currency—as the medium of circulation, the French Reserve Bank and these seven banks would have an overwhelming advantage in circulation efficiency and convenience over other banks.
Before long, other banks, in order to maintain their competitiveness, would have no choice but to accept the French Reserve Bank's banknotes.
Once the vast majority of banks nationwide accepted the French Reserve Bank's banknotes, a decree could then be issued to designate these banknotes as France's sole legal paper currency.
Following this, the advantage of currency issuance rights would be used to regulate other banks.
Who would dare defy regulation? Their cash flow would be tightened tomorrow, and then they'd see how many days they could last!
Marquis de Ludo and the two others exchanged glances again. Accepting another bank's banknotes meant that others would give printed paper to their customers, and those customers could then bring that paper to their own banks to exchange for gold and silver coins.
Although their own banks could also take the received banknotes to the French Reserve Bank to exchange for gold and silver coins, even a few days' time difference would lead to millions, or even tens of millions, in paper currency accumulating in their hands, effectively turning them into paper currency reservoirs.
Not to mention, inter-bank settlements couldn't possibly happen every few days; typically, the fastest would be once a month. This meant a whole month's worth of paper currency would be held by their own banks.
Monsieur Boisrondel braced himself and said:
"Your Royal Highness, what if, and I mean what if, the French Reserve Bank's banknotes were to depreciate, wouldn't we then..."
Joseph had anticipated their concern and immediately replied:
"The cabinet will soon issue a decree stipulating the exchange rate between the French Reserve Bank's banknotes and gold and silver, and it will remain constant. Of course, if you're still uneasy, the French Reserve Bank can also sign an agreement with you, promising compensation for your losses should the banknotes significantly depreciate in a short period."
He had sufficient confidence to make such a promise. After all, this era operated on the gold and silver standard, with paper currency pegged to precious metals, making its value very stable—unless a major economic crisis occurred.
Moreover, if a crisis truly did occur, leading to a severe depreciation of French paper currency, it wouldn't matter. They would simply compensate the banks as per the agreement. However, by then, paper currency would be accepted by everyone, and the compensation given to the banks would still be in paper currency. 'Since it's already an economic crisis, just tell me how much compensation you need; I'll run the printing presses 24 hours a day and print it for you.'
Ultimately, Marquis de Ludo and the others reluctantly accepted Joseph's conditions. 'The arm can't twist the thigh,' they thought. At most, they would just settle frequently each month, effectively donating that month's bank flow to the French Reserve Bank.
Joseph rose to his feet, smiled at the three men before him, and raised his arms. "Congratulations to you, and to the four banks waiting outside.
"From this moment forward, you will no longer be implicated in the Necker case. You are safe."
He then gestured towards Brienne. "Subsequently, Archbishop Brienne will sign the agreement with you all, representing the French Reserve Bank and the French government."
The three banking magnates quickly bowed, expressing profuse gratitude for the Crown Prince's magnanimity. Though their hearts were filled with bitter resentment over the unknown sum of money they had lost on this trip, they also felt a sense of relief. After all, their banks were finally secure.
After Marquis de Ludo and the others departed, Joseph suddenly recalled a question. Four banks had previously gone bankrupt and been acquired, and today, seven more had "surrendered." With thirteen banks involved in the Necker case, what were the remaining two doing?
At 4 PM, Fouché hurried to the Palace of Versailles and answered his query.
"Your Royal Highness, Perny, his wife, and their two sons were apprehended by the Police Intelligence Bureau this morning while attempting to flee to Rouen. What do you suggest..."
"Immediately seal the bank."
Joseph sighed softly. 'These people were far too impatient. If they had waited just half a day, they could have hitched a ride on Marquis de Ludo's "coattails."'
But now that they had fled, they could only be dealt with severely. He hoped that after taking over the Perny family's bank, the French Reserve Bank wouldn't face a severe shortage of personnel.
Fouché nodded and continued:
"Your Royal Highness, the two largest shareholders of Denaro Bank happened to be returning to Switzerland when the incident occurred. They must have heard the news from Paris and haven't reappeared since."
While Denaro Bank's main operations were in France, it was a Swiss bank, headquartered in the canton of Schwyz, Switzerland.
This meant that the bank's profits had likely already been transferred to Switzerland, and even if its assets in France were seized, there probably wouldn't be much money.
Joseph frowned. "It seems diplomatic means will be necessary."
...
Three days later, a grand but somewhat subdued commendation ceremony was held in the Hercules Salon of the Palace of Versailles.
It was grand because Her Majesty the Queen herself presided over it.
Apart from the honored officials of the Office of Fair Investigation, those present were mainly high-ranking police officials, as well as the Crown Prince and Minister of Justice Baron Breteuil, numbering fewer than 30 people in total—certainly not a lively crowd.
After a period of melodious music, Queen Marie, resplendent in a luxurious light purple gown, ascended the dais on the west side of the hall, smiled at Marat and the others, and declared loudly:
"Gentlemen of the Office of Fair Investigation, with your exceptional work and courageous, fearless spirit, you have saved France immense losses and brought to justice corrupt individuals who had evaded trial for years!
"Here, on behalf of the Royal Family, I extend my highest esteem to you!"
This time, Marat, with his assistants, had uncovered Necker's staggering corruption case. Through Joseph's series of maneuvers, they had "earned" over a hundred million livres for the French treasury, while also significantly advancing the establishment of France's central bank. This was no small feat.
During their previous operations, Evans of the investigation office had been killed, and Marat himself had sustained a knife wound. Thus, Joseph decided to honor them properly.
A court official presented flower wreaths. Queen Marie personally placed one upon Marat, who still leaned on a crutch. Commissioner of Police Nesanson then presented flowers to the others.
Then, to the applause of those present, the Queen announced that, due to the exceptional contributions of the Office of Fair Investigation, it would be elevated to the Bureau of Impartial Investigation, directly under the cabinet's jurisdiction.
With this, France's "anti-corruption agency" finally shed its police system "mask" and gained official standing to operate openly.
The Crown Prince remained the Director-General of the Investigation Bureau. Marat became the overall head of the Operations Department, and Desmoulins was appointed head of the Archives Department. The entire Investigation Bureau comprised four departments, with the largest, the Operations Department, planned to expand to seven action teams, totaling over 200 people.
In truth, this was hardly sufficient for France's colossal bureaucratic system, yet it was the most advanced institution for civil administration oversight in all of Europe. While other nations still relied on royal authority to supervise officials, France had taken the lead in establishing independent departmental oversight.
This was also why the officials were reluctant to attend the commendation ceremony—no one could guarantee their hands were entirely clean. Necker, who had once wielded immense power over France and was rich enough to rival a nation, hadn't he fallen just like that? If they were to catch the attention of the Investigation Bureau, everything would be over for them.
Next, Queen Marie publicly presented Marat with a 500-livre bonus. Others from the investigation department who had participated in the Necker case also received a month's salary as a reward. As for Evans, who had sacrificed his life, his pension amounted to a generous 4,000 livres, along with the Royal Family sponsoring all of his son's schooling expenses.
Once the commendation ceremony concluded, the Queen invited everyone present to a banquet.
As they exited the Hercules Salon, Baron Breteuil was the first to congratulate Marat:
"You are truly an outstanding investigator; you have thoroughly clarified a case that has gone unsolved for so many years."
Marat looked at the luxurious formal wear on him, subtly frowning. Before he could decide how to respond, Besanson leaned in, his face alight with a smile, and said:
"Her Majesty the Queen speaks highly of you. I imagine it won't be long before you are granted a noble title."
Friant and Fouché also approached, showering him with praise.
Marat looked around at the people beside him, his expression growing increasingly troubled.
'A noble title?'
He found it somewhat amusing, thinking, 'Am I also to become like these dirty nobles?'
He then looked up at the exquisite and artistic carvings on the roof of the Palace of Versailles.
'Why am I here?'
'What am I doing?'
'It's ironic; everything I've done has earned me the praise of nobles!'
'Have I betrayed the people of France?!'
He suddenly stopped, claiming his wound pained him and he couldn't attend the banquet, then turned and walked out of the Palace of Versailles, leaning on his crutch.
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