The Finishing Blow

Faced with the joint assault of British and Austrian capital, the French Government did not raise its hands in surrender. Napoleon IV showed that he was willing to shoulder responsibility.

First, he called on domestic enterprises to pull back their overseas investments, build up foreign exchange reserves, and buy Francs on the international market.

He then issued an administrative order strictly forbidding domestic banks from lending Francs to international speculators, personally summoning several domestic conglomerates for talks over the matter.

No one knew what exactly was discussed, but after being summoned by the Emperor, figures in the French financial world became much more disciplined.

Quite a few even symbolically contributed funds to join the resistance.

But by then, it was already too late. The attacking side had amassed vast quantities of Francs. Even if the domestic conglomerates were kept under watch, it would not help.

Overall, the Paris Government's performance in responding to the crisis was commendable, and its measures were timely enough.

Unfortunately, the root cause of this crisis was France's severe shortage of foreign exchange and gold reserves. Unless that problem could be resolved, there would be no escaping the crisis.

In theory, France had enormous overseas investments. If it could withdraw even one-fifth of them, it could weather this ordeal.

However, this was the nineteenth century, not the twenty-first. Pulling funds back from overseas was simply not something that could be accomplished in a day or two.

Time waited for no one. Before the overseas funds could return, the French Government's foreign exchange reserves were already close to bottoming out.

The Paris Government panicked. If this continued, it would only be a matter of days before it had to use its gold reserves to fill the hole.

France's gold reserves had not been sufficient to begin with.