Capítulo 26: Chapter 26: The Terrifying Debt
Chapter 26: The Terrifying Debt
The next day, Joseph started his first day as the Assistant Finance Minister by arriving early at the south wing of Versailles Palace, where the Finance Minister's office was located on the first floor.
As he hurried along, he couldn't help but recall how, in his previous life, he used to rush to clock in at work every morning.
But this also gave him a good excuse to skip the lengthy breakfast ceremony. Instead, he had a simple meal of bread, grilled fish, and vegetable soup, saving himself quite a bit of time.
As Emond opened the door to the Finance Minister's office for him, Joseph immediately saw Brienne, looking frustrated, pounding on his desk and angrily muttering in a low voice:
"These selfish fools! They speak of equality and justice, but all they care about is gold! Don't they realize that this could strangle the entire nation's finances?"
Joseph stepped forward, picking up the brass pen holder that had toppled over from the impact, and asked,
"Archbishop Brienne, who has made you so angry?"
The secretary nearby whispered,
"Your Highness, the High Court officially refused to register the tax reform bill yesterday afternoon."
Brienne sighed heavily and said with frustration, "Those greedy nobles are willing to ruin France over a mere land tax. Don't they know that when that day comes, they'll end up in hell just like everyone else!"
As a relatively honest clergyman, this was about the most venomous curse he could muster.
Turning to Joseph, Brienne apologized,
"Forgive me, Your Highness, for letting you hear such impolite words."
Joseph waved it off, signaling,
"It's nothing, Archbishop. I understand how you feel."
Then, picking up the thick stack of rejected tax bills on the desk, he noticed the "Registration Denied" stamp on it and asked,
"Archbishop Brienne, what do you plan to do next?"
Brienne closed his eyes, pinching the bridge of his nose in frustration, and replied,
"I'll have to make more compromises and seek support from the Church, trying to persuade those selfish and greedy people as much as possible."
Joseph shook his head inwardly. Many high-ranking clergymen were also nobles, so expecting them to follow church teachings to save the world was nothing short of a dream.
Seeing Joseph remain silent, Brienne sighed again,
"I know, it probably won't do much good. May God bless France."
Joseph frowned slightly. He knew he had to intervene in the tax reform matter. This incident might seem like just the nobles' refusal to pay more taxes, but in reality, it was a test of royal authority by the noble class.
Historically, Louis XVI had tried both soft and hard approaches to get the bill passed, but the nobles, using the courts and public opinion, had beaten him back at every turn. After that, the nobles confirmed Louis XVI's weakness and became even more aggressive in wresting power from the royal family, plunging the country into further chaos.
Joseph knew he had to nip this in the bud.
He needed to get the bill passed quickly and suppress the arrogance of the noble class, showing them that the monarchy would always be the "father" of the nobility!
While this seemed difficult, it wasn't impossible.
The nobles relied mainly on two things: the High Court's registration authority and their ability to manipulate public opinion, inciting the people against the royal family.
For the former, the French courts were notoriously corrupt, and none of the judges had clean records. There were plenty of angles to exploit.
For the latter, Joseph could counter the nobles' so-called public opinion strategies with the kind of internet-style media campaigns and tricks that would feel like an adult fighting a child.
After thinking for a moment, Joseph turned to Brienne, as if trying to comfort a helpless old man:
"Archbishop, things may not be as bad as you think. Perhaps in another three months, the bill will be passed."
"Let's hope you're right," Brienne nodded and, with a heavy heart, walked towards his private office on the west side. "I'll see if there's anything else in the tax code that can be compromised…"
Joseph returned to his office on the east side and asked his assistant to bring him some internal financial documents, which he began to review carefully.
The more he learned about France's financial situation, the more alarmed he became. He couldn't help but marvel at how the previous finance ministers had managed to prevent the country's finances from collapsing.
France's total debt stood at 2 billion livres, most of which were national bonds. Sixty percent of these were held by French citizens, with the remaining forty percent held by foreign entities.
The interest on these bonds ranged from 8% to 12%, meaning that the annual interest payments alone amounted to 200 million livres!
The entire nation's annual revenue was only 500 million, so 40% of that had to be spent just on paying interest, leaving no room for repaying the principal.
Historically, it wasn't until after the French Revolution, when the National Convention confiscated all of the Church's property, and Napoleon's wars brought in wealth, that this massive debt was finally managed.
But besides national bonds, there was an even more terrifying type of debt—short-term bank loans.
These were short-term loans taken by the government in times of cash flow issues, which were supposed to be repaid after selling national bonds, but with interest rates as high as 15% to 25%!
While this short-term debt totaled less than 120 million livres, the monthly interest payments alone exceeded 1.8 million.
And although these were called short-term loans, given France's current financial situation, the government was essentially borrowing new loans to pay off old ones, making them virtually indistinguishable from long-term debt.
As Joseph was worrying over the debt issue, his assistant knocked and entered, bowing as he said, "Your Highness, Laborde Bank has informed us that due to a sudden change in business, the loan negotiation needs to be postponed. A new date has not yet been set."
Joseph nodded absentmindedly, "Thank you, I understand."
It was only then that he remembered one of his key responsibilities as Assistant Finance Minister: negotiating short-term loans with banks, which essentially meant borrowing new loans to pay off old debts.
He picked up the important tasks list that his assistant had already prepared, and sure enough, there was a note for a loan negotiation with Laborde Bank scheduled for 2 PM that afternoon.
This loan was primarily intended to pay off a 6-million-livres, one-year bond that was due in a month.
According to the original plan, this money was to be borrowed from two banks and repaid with bond revenue in two months. The interest rates were 18% and 19%.
"In this era, running a bank is really profitable," Joseph couldn't help but comment. With interest rates like that, this was practically legalized loan sharking.
(End of Chapter)
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