Chapter 820: A New Backyard
Joseph offered a thin smile. "In truth, given our capacity for immense influence over Northern Italy, military occupation is actually the most inefficient tool at our disposal."
Even before Napoleon had concluded the siege of Alessandria, Joseph had already synthesized the geopolitical strategies of the twenty-first-century West. Now, meeting the expectant yet skeptical gazes of Talleyrand and Segur, he began to explain his vision in detail.
"We shall approach this from two fronts: economics and propaganda.
"Let us begin with the economic aspect.
"If we wish to solidify our control over Milan, for instance, we might start by offering them a substantial loan..."
The two heads of the financial system felt their eyelids twitch in unison.
Since time immemorial, conquerors had squeezed every possible sou from occupied territories. This was the first time they had ever heard of a conqueror extending credit to the conquered.
"Your Highness," Segur ventured cautiously, "do you mean forcing them to accept loans at usurious interest rates?"
If the interest exceeded thirty-five percent and was backed by physical collateral, it would indeed be a lucrative venture.
"Three percent?" Segur gasped. "But that's impossible! The Bank of France pays more than that just to attract deposits. Lending at such a low rate would mean we lose money on every franc we send out!"
Joseph chuckled. "I actually considered making them interest-free, but such a gesture would only arouse suspicion. Thus, I settled on three percent."
"But..."
Joseph gestured for him to remain calm and explained, "We will use these low rates to entice the North Italian city-states into actively requesting loans. We will frame it as a 'special favor' from France, encouraging them to align themselves more closely with us.
"Furthermore, these loans will be provided entirely in paper currency, ensuring they place no significant strain on our actual treasury.
"The recipient nations will be restricted to using these funds to purchase goods exclusively from France or the Caribbean. In effect, this will transform them into guaranteed markets for our exports."
Joseph paused, his voice taking on a weightier tone.
"Simultaneously, these loans will be subject to specific prerequisites.
"First, the borrowing nation must permit the circulation of the franc within its borders—or, at the very least, allow it to be freely exchanged for local currency at their banks.
"Second, these funds may only be invested in designated industries, and those enterprises must maintain a specific percentage of French ownership.
"Finally, the allocation and use of these loans must be subject to French oversight."
Both Talleyrand and Segur were sharp-witted men. They quickly grasped the underlying logic, and the skepticism in their eyes gradually shifted toward profound admiration.
By issuing these loans, France would secure a vast market almost instantly—and a market under French regulation, no less.
With such low interest rates, the North Italian states would surely scramble for the capital. France could even tack on additional political concessions without much fear of rejection.
As for the conditions the Crown Prince mentioned, aside from the requirement regarding paper currency, most were standard practices for loans in this era.
Of course, such a scheme could only function within the reach of French military power; otherwise, a debtor might simply choose to default.
Joseph continued, "Beyond the loans, we shall also assist the North Italian states in developing their own industries."
By now, Talleyrand and Segur were starting to feel a bit dazed. They merely exchanged a look and waited for him to elaborate.
"Milan, for example, already possesses silk and steel-working industries. We can provide them with advanced textile and smelting technologies—perhaps even sell them steam engines." Joseph immediately added, "Provided, of course, that this is limited to raw silk production and primary metal processing.
"These semi-finished goods will then be shipped to France for high-end processing—turning them into fine fashions or precision ironware—which we will then sell back to them.
"To qualify for our industrial and technological support, they must first adopt our Patent Law and recognize the evaluations of our credit rating agencies regarding their industries and financial standing."
In reality, once France achieved financial dominance through these loans, things like patent laws became almost secondary.
Should any issues arise, France could simply adjudicate using its own legal standards. If they dared to object, a few financial maneuvers would be enough to cow them. If all else failed, the French army was always standing by.
When dealing with such minor states that were clearly in the wrong, even if France chose to penalize them, neighboring countries were unlikely to object. In fact, they might even join France in its public condemnation.
Talleyrand and Segur felt they understood the gist of it, even if the deeper nuances eluded them, and they nodded rhythmically.
It would have been difficult for Joseph to delve any deeper into the subject at this moment. Truly explaining the concept would likely require a course lasting several months.
What he was describing was, in essence, the "vertical division of labor" system of the future.
By utilizing finance, patents, and credit ratings, he could lock these subordinate nations into the low-end segments of the industrial chain.
Yet, this was far better than leaving them as mere sources of raw materials. After all, even low-end industry generated a modest profit.
Only with those profits could these nations increase their purchasing power, thereby fulfilling their role as a market for French goods more effectively.
Furthermore, their industrial development would be designed to complement France's. Should they ever attempt to break away from France’s upstream supply chain, they would face immediate economic collapse.
In this way, these nations would be tethered to France more securely than ever.
Moreover, through Joseph’s deliberate orchestration, the industrial development of these Italian states would be heavily skewed toward specific sectors while forcing them to abandon others entirely.
This was the true purpose behind his earlier condition that "loans may only be used to invest in designated industries."
Even if such a "lopsided" industrial model flourished, the nation as a whole would never be able to significantly bolster its overall national strength. It was much like a certain "Great Universe Nation" of the future—seemingly powerful in a few specific industries, yet possessing a national economy so fragile that it could never escape its dependence on the superpower across the ocean.
Since the very foundations of these Italian industries would require French shares from the start, France could exert its influence at a moment's notice.
Ultimately, the region would become nothing more than France’s "back garden."
Joseph waited for Segur to finish his shorthand notes before continuing.
"Economic measures ensure that the interests of the Italian states remain aligned with our own," Joseph said. "However, if we want them to follow France's lead willingly, propaganda is of paramount importance.
"In fact, if the propaganda is handled skillfully enough, the common people will become indignant if you don't allow them to serve French interests."
Talleyrand felt his mind reaching its limit. "Your Highness," he stammered almost reflexively, "how could propaganda possibly exert such a massive influence?"
Joseph signaled for Eman to bring him a fresh cup of tea. "The foundation for all of this," he explained, "is that the Italian states must abolish their strict news censorship mechanisms.
"Or, at the very least, they must lift all restrictions on our press."
Talleyrand looked concerned. "Your Highness, that might be simple enough to achieve with states like Genoa or Lucca, but I fear we will meet significant resistance in places like Parma or Sardinia."
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