Chapter 26: Chapter 26 Terrible Debt
The next day.
On his first day as assistant to the Finance Minister, Joseph arrived early at the south wing of the Palace of Versailles, where the Finance Minister’s office was located on the first floor.
As he hurried along, he couldn’t help but think of the time he used to rush to clock in every morning in his previous life.
However, he also used this as an excuse to skip the ceremoniously elaborate breakfast, opting instead for some simple bread, grilled fish steak, and vegetable soup, saving quite a bit of time.
Once Eman had helped him open the door to the Finance Minister’s office, he immediately saw Brian slamming the table angrily with a stern expression, loudly rebuking in a deep voice,
“These selfish wretches, they speak of equality and justice, but their eyes only see gold coins! Don’t they realize that this will strangle the finances of the entire nation?”
Joseph stepped forward to upright the brass pen holder that had been knocked over on the table and asked,
“Archbishop Brian, who are you angry with?”
The clerk at the side hurriedly said in a low voice,
“Your Highness, the High Court officially refused to register the tax law yesterday afternoon.”
Brian sighed deeply and said in resentment, “Those greedy nobles, just for a little land tax, are willing to ruin France. Don’t they know that when that day comes, they will go to hell just the same!”
As a rather upright priest, this was the most vicious curse he could muster.
He turned to Joseph, apologetically saying,
“Your Highness, I apologize for these impolite words you had to hear.”
Joseph waved his hand to dismiss the concern,
“It’s nothing, Archbishop. I can understand your feelings.”
He then picked up the thick stack of bill texts that had been returned by the High Court, seeing the stamp “not registered” on the top,
“Archbishop Brian, what do you plan to do next?”
Brian closed his eyes, pinching the bridge of his nose, dejectedly saying,
“We can only make more compromises, then seek the support of the Church and try to persuade those selfish and greedy individuals.”
Joseph silently shook his head; those high clergy also had the identity of nobles, and to expect them to follow doctrines to save the people was simply dreaming.
Seeing he was silent, Brian sighed again,
“I know it may not help. May God bless France.”
Joseph frowned slightly, knowing he must intervene in the matter of the tax laws.
This incident seemed to be just about the nobles not willing to pay more taxes, but in reality, it was a test of the noble class against royal authority.
Historically, Louis XVI had been hard and soft on the matter of the laws, but was defeated by the nobles relying on the courts and public opinion tactics. Since then, the nobles confirmed Louis’s weakness and bullied him even more unabashedly, struggling for power from the Royal Family, and the nation became increasingly chaotic.
Therefore, Joseph had to nip this in the bud.
To implement the bill in the least time possible, suppress the arrogance of the noble class, and let them know that royal authority will always be the father of the nobility!
The matter seemed difficult, but it was not.
What the nobles relied on was nothing more than the registration rights of the High Court and manipulating public opinion to incite the people against the Royal Family.
For the former, the corruption of France’s courts was notorious, not a single person in the court system was clean, and there were many handles to exploit once their shady activities were known.
As for the latter, using 21st-century internet public opinion bombardments and various new media tricks against these nobles’ so-called public opinion tactics was basically like an adult fighting a primary school student.
After pondering for a moment, Joseph looked at Brian, as if comforting a helpless old man,
“Archbishop, things may not be as bad as you think; perhaps in another two or three months, the bill might pass.”
“I hope it is as Your Highness says,” Brian nodded, walking towards his own office in the west with heavy steps, “I will see what else can be compromised within the tax provisions…”
Joseph also returned to the office on the east side and asked his assistant to bring the internal financial documents, and began to scrutinize them closely.
The more he understood the financial situation of France, the more alarmed he became, and he felt sorry for the Finance Ministers who had come before, not knowing how they had managed to prevent the nation’s finances from collapsing.
France had a total debt of 2 billion livres, most of which were government bonds. Sixty percent were held by French nationals, and forty percent by foreigners.
The interest on these government bonds ranged from 8% to 12%, which meant that just on interest alone, they had to pay 200 million livres a year!
The nation’s annual fiscal revenue was only 500 million; 40% of that had to go towards interest payments, and repaying the principal was out of the question.
Historically, it was not until after the Great Revolution that the National Convention confiscated all the properties of the Church, and together with the war benefits that Napoleon had won through battles in the north and south, they barely managed to fill this massive deficit.
Besides government bonds, there was an even more terrifying debt – the short-term bank debt.
This was the short-term loan borrowed in the name of the state from banks when finances were tight, usually to be repaid after selling government bonds, but interest rates as high as 15%-25%!
This short-term debt was less than 120 million livres, but the interest paid to the banks every month exceeded 1.8 million.
And though it was called short-term debt, with France’s current financial condition, it’s basically a cycle of borrowing new debts as soon as the old ones were repaid, hardly different from long-term debt.
As Joseph was worrying about the debt issue, his assistant knocked and entered, saluting him and saying, “Your Highness, Labod Bank says that due to temporary business changes, the loan negotiation needs to be postponed, and the specific date is not yet determined.”
Joseph nodded without much concern, “Thank you, I know.”
He then remembered that one of his main responsibilities as assistant to the Finance Minister was to negotiate short-term loan matters with banks, basically borrowing new debts to repay old ones.
He picked up the list of important matters that the assistant had already prepared, and sure enough, there was a loan negotiation with Labod Bank scheduled for 2 pm.
And this money was mainly for repaying a 6 million livres one-year government bond due in a month.
According to the original plan, this money would be borrowed from two banks, repaid after two months using the revenue from government bonds. The previous interest rates were 18% and 19%.
“Running a bank in this era sure is a lucrative business,” he couldn’t help remarking. In the 21st century, these interest rates would be considered usury.