Chapter 511: First, Gather Floating Capital
Indeed, once Charles's 12-million-franc loan was deposited, the High Court revoked its investigation injunction against the Charles-Boulton Bank.
To others, it merely seemed like a routine investigation that had lasted seven or eight days. Banks of that era frequently engaged in illicit practices, so being sued and investigated was quite common. Yet, no one realized that Charles had nearly lost half his fortune because of it.
Fould gestured for silence, then continued:
“From our current perspective, the government now possesses the conditions to abolish the tax farming system. However, we haven't suffered a complete defeat yet!”
He turned to the British banker standing beside him:
“Next, we will implement Mr. Goldsmid’s suggestion: using tax documents as leverage, we will strive to contract the Salt Tax, alcohol tax, tobacco tax, and market tax.”
The taxes he mentioned were essentially the most profitable types. While the market tax revenue wasn't high, it offered a convenient way to sell illicit goods under the guise of tax collection.
Hope nodded immediately in agreement. “You’re absolutely right. As long as we stand united, we can certainly make the government contract these taxes to us.”
“Therefore, we must now centralize as many tax documents as possible here at the General Assembly.”
“Certainly, Monsieur Hope.”
Under the encouragement of Fould and Hope, the crowd suddenly felt that there was still profit to be made in tax farming next year. Sweeping away their previous despondency, they began discussing how to allocate the limited tax farming quotas.
Unlike the confident magnates of the Tax Farmers’ General Assembly, thousands of other lower-tier Tax Farmers across France—especially those whose capital amounted to mere tens of thousands or even just a few thousand francs, relying on pooled funds to secure tax farming rights—were plunged into panic and anxiety.
Because the Tax Farmers’ General Assembly had repeatedly assured them that a deal would be struck with the government, allowing them to continue tax farming next year, they had kept their money tightly held, preparing to pay their tax farming fees once the agreement was finalized.
However, the news that Charles had suddenly publicly declared his support for Tax System Reform, and loaned all of his tax farming capital to the French government, caused a massive uproar.
The actions of this influential figure from the General Assembly clearly indicated that the government's decision to abolish the tax farming system was irreversible.
These smaller Tax Farmers generally lacked investment experience; they had simply grown accustomed to placing their money into tax farming fees and collecting annual returns.
Now, with the sudden announcement of Tax System Reform, they instantly became apprehensive—yet no one had informed them that the General Assembly planned to make a gamble with tax documents. This was something even most independent Tax Farmers at Lavoisier's level, those with hundreds of thousands of francs, were unaware of, as the more people who knew, the harder it would be to keep secret.
With the year-end fast approaching and no word from the General Assembly regarding the annual tax farming agreement amounts, the smaller Tax Farmers scrambled to find their own solutions.
In reality, their only remaining options were to buy National Debt bonds, deposit their money in a bank, or purchase land.
However, all of these yielded far lower returns than tax farming. Purchasing land, in particular, meant it would be difficult to find suitable plots quickly, and once acquired, they would have to manage it themselves, otherwise they might even lose money.
Silvie Fenaux was one such Tax Farmer.
His primary business was actually running a glass shop, and he could only invest 7,000 francs in tax farming fees each year.
At that moment, he was gathered with seven or eight partners—who had pooled their money to contract a quarter of the city's business taxes—at a café in the western part of the city, discussing their plans for the coming year.
“I think buying National Debt bonds is our only option,” one partner said. “I heard the Interest rate on National Debt bonds will drop again next year, so it's more cost-effective to buy before the end of the year.”
Someone immediately shook their head. “The Interest rate on National Debt bonds is too low. Unless we buy those for ten years or more, but what if we need the money urgently during that time...?”
Fenaux sighed. “If only we could invest in the Industrial Development Fund. I heard its returns could reach 13% this year.”
A partner beside him wore a distressed expression. “Unfortunately, the Industrial Development Fund no longer accepts small subscriptions. We can’t possibly pool 200,000 francs. If only we had bought in last year when subscriptions were open—back then, you could buy for just 1,000 francs.”
“Those bigwigs at the General Assembly have truly ruined us!” someone complained. “Just last month, old Arsen asked me to invest in his textile factory, but I refused, waiting for the tax farming agreement.”
Just as the group was at their wits’ end, the café door swung open. A middle-aged man with brown curly hair, waving a newspaper, strode toward them:
“Gentlemen, have you seen the government announcement?”
“Eric, you’re late,” Fenaux greeted him. “What announcement?”
Eric swept aside the Coffee Cups on the table and spread out the newspaper. “News from this morning: the government has established a ‘Tax System Transition Fund’ to compensate Tax Farmers for their losses.”
He pointed to the newspaper. “Only Tax Farmers are eligible to subscribe, and the amount cannot exceed their previous tax farming fees.”
Fenaux immediately asked the crucial question: “What about the Interest?”
“It’s the same as ten-year National Debt bonds. Furthermore, if the government’s tax revenue performs well next year, there will be dividends! Oh, and the fund can be redeemed in as little as six months.”
Upon hearing this, Fenaux and the others’ eyes lit up.
They hadn't expected the government to be so considerate! While the fund's returns were far from matching tax farming, it was the best investment opportunity they could find at the moment.
The refined gentleman beside them quickly stood up and urged, “We need to move fast! Look, it’s limited in amount—if we go too late, it might be sold out.”
Hearing this, the group quickly left their coffee money and, following the instructions in the newspaper, hurried towards the bank holding the fund.
Of course, this Tax System Transition Fund was Joseph’s method for attracting the Tax Farmers’ floating capital.
He knew well that the magnates of the Tax Farmers’ General Assembly only accounted for 40% of the total tax farming capital, and the remaining 60% of Tax Farmers would likely have nowhere to put their funds after the tax farming system was abolished.
The fund’s returns were slightly higher than common market investments but significantly lower than the Interest charged on loans to financial magnates.
As for phrases like “only for Tax Farmers” or “limited amounts,” these were merely tactics borrowed from scarcity marketing. The French government was in dire need of funds, so if anyone genuinely wished to subscribe to a large sum, “insiders” would naturally appear to help them through the back door.
And just as Joseph had anticipated, the Tax System Transition Fund sold 37 million francs worth of shares in just ten days after its launch.
This was merely the result of sales in Paris and its surrounding provinces; as word reached more distant provinces, that number was bound to increase rapidly.
...
While Tax System Reform was in full swing in Paris, the provincial assembly elections on Corsica also commenced.
Completely unlike previous elections where Paoli’s restoration faction held a dominant monopoly, this election saw four highly influential factions competing for seats.
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