Terrifying Debts

The next day.

On his first day as Assistant Minister of Finance, Joseph went early to the first floor of the South Hall at Versailles Palace, where the Office of the Minister of Finance was located.

As he hurried along, he could not help recalling how, in his previous life, he had rushed every morning to clock in for work projects.

Using that as an excuse, however, he avoided the cumbersome ceremonial breakfast. He simply ate some bread, grilled fish steak, and vegetable soup, saving quite a bit of time.

When Eman pushed open the door to the Office of the Minister of Finance for him, he immediately saw Brienne slamming the table in indignation, berating someone in a low voice:

"These selfish wretches speak of equality and justice, but all they see are gold coins! Do they not know this will strangle the finances of the entire nation?"

Joseph stepped forward, righted the brass penholder that had been knocked over on the desk, and asked:

"Archbishop Brienne, who has angered you so?"

The Clerk beside them hurriedly said in a low voice:

"Your Highness, yesterday afternoon, the High Court formally refused to register the Tax Law."

Brienne sighed and said bitterly, "Those greedy nobles would destroy France over a mere Land Tax. Do they not know that when that day truly comes, they too will descend into hell!"

As a relatively upright Cleric, this was already the most vicious curse he could utter.

He turned to Joseph and said apologetically:

"Your Highness, forgive me for letting you hear such impolite words."

Joseph waved it off.

"It is nothing, Archbishop. I understand how you feel."

Then he picked up the thick stack of bill documents the High Court had returned. Seeing the seal stating that registration had been denied, he asked:

"Archbishop Brienne, what do you intend to do next?"

Brienne closed his eyes, lightly pinched the bridge of his nose, and said dejectedly:

"We can only make further concessions, then seek the Church's support and do our utmost to persuade those selfish, greedy people."

Joseph shook his head inwardly. Those high-ranking Clerics had another identity: nobles. Expecting them to follow doctrine and save the people was nothing more than a dream.

Seeing him remain silent, Brienne sighed again.

"Actually, I know this may be of no use. May God bless France."

Joseph frowned slightly. He had to intervene in the matter of the Tax Law.

This incident seemed to be nothing more than the nobles' unwillingness to pay more taxes, but in truth, it was the noble class testing royal authority.

Historically, Louis XVI had resorted to both soft and hard tactics over the bill, only to be beaten back step by step by the nobles, who relied on the courts and public opinion. From then on, the nobles confirmed that Louis XVI was weak and easily bullied. They became even more unscrupulous in wresting power from the royal family, and the nation fell into deeper chaos.

Therefore, Joseph had to nip this sign in the bud.

He had to get the bill enacted in the shortest possible time, crush the noble class's arrogant momentum, and let them know that royal authority would forever be the nobles' father!

This matter appeared difficult, but it was not truly so hard.

The nobles relied on nothing more than the High Court's right of registration and their ability to guide public opinion and incite the populace to oppose the royal family.

As for the former, France's courts were notoriously corrupt. Not a single person in the judicial system had a clean backside. As long as he seized upon their dirty deeds, there would be countless ways to get a grip on them.

As for the latter, using the twenty-first century's internet opinion bombardment and all the tricks of new media against the nobles' so-called public-opinion tactics would basically be an adult beating up elementary school children.

After thinking for a moment, Joseph looked at Brienne as though comforting a helpless old man.

"Archbishop, things may not necessarily be as bad as you think. Perhaps in another two or three months, the bill will be passed."

"I hope it will be as Your Highness says." Brienne nodded, then dragged his heavy steps toward his private office on the west side. "I shall look again and see whether there is anything else in the taxation clauses that can be conceded..."

Joseph returned to the office on the east side as well. He had his assistant bring him internal materials concerning finance and began reviewing them carefully.

The more he learned about France's financial situation, the more alarmed he became. It was no wonder the successive Ministers of Finance had struggled so hard; he had no idea how they had kept the nation's finances from collapsing.

France's total debt stood at 2 billion livres, most of it Government Bonds. More than seventy percent was held by French citizens, while over twenty percent was held by foreigners.

The interest on these Government Bonds ranged from eight to twelve percent. In other words, interest payments alone amounted to 200 million livres every year!

The nation's annual fiscal revenue was only 500 million, and forty percent had to be used for interest payments. As for repaying the principal, that was simply out of the question.

Historically, it was not until after the Great Revolution, when the National Convention confiscated all Church property and Napoleon won the spoils of war through his southern and northern campaigns, that this enormous hole was barely plugged.

And besides Government Bonds, there was an even more terrifying kind of debt: short-term bank debt.

These were short-term loans borrowed from banks in the name of the state when the treasury ran short of cash. They were usually repaid after Government Bonds were sold, but their interest rates reached as high as fifteen to twenty-five percent!

Though this short-term debt amounted to less than 120 million livres, the monthly interest paid to the banks exceeded 1.8 million.

Moreover, it was called short-term debt, but given France's current financial situation, the moment an old debt was repaid, a new one had to be borrowed. It was essentially no different from long-term debt.

Just as Joseph was worrying over the debt problem, his assistant knocked and entered. After bowing, he said, "Your Highness, Laborde Bank says that due to temporary business changes, the loan negotiations must be postponed. The specific date has not yet been determined."

Joseph nodded without paying much attention. "Thank you. I understand."

Only then did he recall that one of his primary duties as Assistant Minister of Finance was to discuss short-term loans with banks. Put bluntly, it was simply borrowing new debt to repay old debt.

He picked up the list of important matters his assistant had already prepared and, sure enough, saw a loan negotiation with Laborde Bank scheduled for two o'clock that afternoon.

This money was mainly intended to repay a 6 million livre, one-year Government Bond due in a month.

Under the original plan, the money would be borrowed separately from two banks, then repaid with Government Bond revenue two months later. The previous interest rates had been eighteen and nineteen percent.

"Running a bank in this era really is profitable," he could not help remarking. "At those rates, in the twenty-first century, it would be outright usury."