Chapter 877: Reverse Operation
Joseph traced the corner of the report with his finger, lost in deep thought.
He had initially assumed this incident was merely a speculative venture by certain ethnic capital giants—historically, they had done similar things to the British Pound, attacking Britain's gold reserves in the early 19th century to cause fluctuations and reap massive profits.
He hadn't expected it to be a financial war initiated by the British themselves.
If that was the case, his previous countermeasures might need some adjustment.
Standing to the side, Fouché suggested, "Your Highness, perhaps we could invoke wartime regulations and freeze those funds as 'hostile sabotage capital'."
Joseph considered this for a moment before shaking his head.
"No, the market doesn't care if the money belongs to the British or to Württemberg. People will only see that our country is refusing to exchange Francs for gold, and their trust in the Franc will plummet."
"Besides," he added, "a lot of that money belongs to French citizens. It would be extremely difficult for you to distinguish between them."
The Franc was currently in a period of rapid expansion, especially with its large-scale rollout across the Italian states.
How much money actually moved through inter-governmental transactions?
Take those German states, for instance; after more than a year, sixty to eighty percent of the Francs in their hands remained unspent.
To a large extent, this was because the German populace was accustomed to trading in currencies like the Florin or the Thaler.
The key was to break into private trade.
As the two were speaking, Eman led Archbishop Brienne and Laffitte into the room.
Once they had offered their greetings, Joseph immediately handed them the Intelligence Bureau's investigation report.
"This is the situation. Now, we need to make targeted adjustments."
Brienne nodded. The amount of capital Britain could mobilize was bound to be immense. If they followed the Crown Prince's previous instructions to go all-in on longing the Franc, the French treasury might not necessarily be able to outmuscle the British.
"Your Highness, we could try invoking wartime regulations..."
Joseph slapped his forehead. His senior ministers really did think alike.
After a moment's thought, he said, "Archbishop Brienne, from this moment on, we are going to join them in shorting the Franc."
"What?!"
Everyone in the room was aghast.
The British were currently trying to collapse French finances by shorting the Franc, and now His Highness was preparing to join the enemy?
Wait, that wasn't right. France belonged to him; he was the last person who would defect.
Laffitte said cautiously, "Your Highness, surely you meant to say 'longing'?"
"No, shorting the Franc," Joseph said firmly. "On the public level, the government will maintain its current stance, including lowering the gold exchange fees and announcing in the newspapers that the Bank of France has ample gold reserves."
"Then, through private channels, officials from the Bank of France and the treasury will 'accidentally' leak news that our gold reserves are extremely strained."
"Furthermore, we'll have influential nobles, such as Count Mirabeau or even the Count of Provence, send their subordinates to the Bank of France to exchange gold 'quietly,' ensuring they are 'inadvertently' spotted by certain people."
The operations he described were so bizarre that Brienne and the others actually calmed down, waiting for the Crown Prince to explain.
In any case, His Highness had pulled off countless seemingly absurd maneuvers that ultimately crushed his opponents; they had long since grown used to it.
Joseph continued:
"Right, we should also give the public some 'hints.' For example, invite citizens to tour the bank's vaults and let a flaw be 'accidentally' revealed."
"Once the market begins to firmly believe that 'there's a problem with the Franc,' then it will be time for us to strike."
He turned to Fouché. "The Intelligence Bureau must quickly establish contact with the British agents operating the short in Paris, or at least get in touch with their subordinates."
"The more dangerous the Franc seems, the more eager the British will be to crush us completely."
"And they will inevitably lack enough Franc 'ammunition.' According to your investigation, they only have less than 30 million in banknotes. There might be other channels, but the total won't exceed 40 million."
"At that point, they will try everything to raise more banknotes to attack our gold reserves."
Brienne's eyes lit up, and he chimed in, "The British will take the initiative to contact the traitors providing them with funds, and Monsieur Fouché will immediately arrest them!"
Joseph sighed and shook his head. "No, Monsieur Fouché will arrange for some people to pose as speculators or directors of small banks to provide the British with loans in Francs at extremely high interest rates."
At this, Brienne and the others could no longer keep their composure. "Your Highness, I'm afraid that won't do!"
"Your Highness, the British will surely take all those banknotes and exchange them for gold..."
"Our gold reserves definitely won't hold out..."
Joseph smiled. "Don't be nervous, everyone. The situation is only safe when it's under our control."
"First, the Intelligence Bureau must do everything possible to prevent domestic capital from following suit in exchanging gold. You can issue secret warnings or even use 'special measures' to temporarily prevent them from moving their funds."
"For instance, having the Tax Bureau conduct repeated audits," Brienne suggested.
"Exactly," Joseph nodded. "As for a bank run by the citizens, we can mitigate the impact by reducing the number of bank counters and slowing down staff efficiency."
"In short, we must concentrate the capital consumed by the shorting effort as much as possible on the British."
Brienne asked nervously, "Your Highness, what if our gold reserves really are exhausted?"
Joseph held up two fingers.
"First, have the North Italian states stand ready to exchange large amounts of gold and silver coins for Francs when we need them. The Italian states are very wealthy; combined, they can easily absorb forty or fifty million Francs."
"Second, the Paris Futures Exchange will announce that it will no longer accept gold coins for the purchase of sugar."
The men in the room immediately fell into deep thought. After a moment, Laffitte was the first to react, saying excitedly, "If I didn't know your age, I'd swear you were a financial expert with decades of experience!"
"The Italian states buying Francs will massively boost market confidence while replenishing our gold reserves."
"And if gold coins can't buy sugar, people will be forced to use Francs. This further strengthens the Franc's credit and increases market demand for it."
"With these successive moves to support the Franc, the trend of panic-selling for gold will quickly vanish. No matter how many banknotes the British have, it will be impossible for them to drain our gold reserves."
Brienne nodded in agreement. "Unless they can raise over 100 million Francs. But since the channels providing them with loans are under our control, we will never let them get that much..."
Laffitte continued, "As long as they fail to exhaust our gold, they'll be left with massive interest payments later!"
That interest would be upwards of twenty-five percent annually.
Fouché suddenly spoke up. "Your Highness, what if the Italian states are unwilling to help us?"
Comments