Chapter 179: Marat's Self-Doubt
Joseph was contemplating the best way to handle the situation with the three bankers when Count Capefelter spoke up with a sheepish grin:
"Your Highness, it's not just us. The Trade Credit Bank, Lavelle Bank, and a few others also seek your forgiveness..."
Marquis Ludo shot him a sharp glare, mentally cursing himself for bringing this fool along. If it weren't for Capefelter's family's significant influence in the banking guild, his lack of intelligence would have driven their business into bankruptcy ten times over!
"Oh?" Joseph turned to Capefelter, "You're representing several banks here?"
Capefelter quickly pointed out the window. "Seven banks, Your Highness. They're waiting outside Versailles Palace right now."
Seven banks? These were all major institutions involved in the Necker case. Joseph glanced at the bankers and suddenly realized this might be an opportunity to advance the creation of a "Central Bank of France" ahead of schedule.
Given that the French Reserve Bank was struggling to absorb so many banks at once, it might be more practical to have these banks surrender some of their profits and accept government oversight. If this could expedite the establishment of a central bank, it would be a huge win.
Joseph smiled and cut to the chase: "Do you want to save your banks?"
Marquis Ludo and the others hesitated for a moment before nodding shyly, "If you would show us mercy..."
Joseph smiled faintly. "Can you represent the other four banks outside?"
Marquis Ludo nodded quickly. "Yes, Your Highness, they've given me full authority to act on their behalf."
"Good," Joseph nodded. "I have a few conditions."
The three bankers immediately leaned in, listening intently.
"First, you will reduce the government loans by 10%, and the loan agreements must be renegotiated with the interest rate capped at 3%."
The three bankers exchanged pained glances.
A 10% reduction in loans might not sound like much, but given that each of their banks had lent the French government tens of millions of livres, the total reduction would amount to several million livres. Moreover, a 3% interest rate was practically nothing in this era; even government bonds sold to the public offered interest rates of 9% to 12%.
However, with Necker's confession sitting in the Bastille, they knew they had no choice. The four banks that had already gone bankrupt were a stark warning.
After a brief struggle, the three men gritted their teeth and nodded. "We will comply with your request, Your Highness."
"Good," Joseph continued, "Second, the French Reserve Bank will acquire 30% of your bank's shares. Consider this a penalty for the illegal profits you've made from the treasury over the years.
"I can also promise that these shares will not be sold without the bank board's consent."
This time, the bankers agreed without much hesitation. They had already planned to use shares as a bargaining chip to gain leniency from the Crown Prince. Although Joseph's demand was slightly higher than they had anticipated, the promise not to sell the shares provided some reassurance. This meant the Reserve Bank would only take dividends and would not harm the banks by selling off their shares.
Joseph was satisfied with their response and then emphasized the most crucial condition: "Third, and most importantly, your banks must support the French Reserve Bank's monetary policy.
"You must also use the influence of the banking guild to encourage more banks to support the Reserve Bank."
Marquis Ludo's expression shifted, and he cautiously asked, "Your Highness, what do you mean by 'monetary policy'?"
Joseph replied, "The Reserve Bank will begin issuing a national uniform banknote, similar to the Bank of England. Your banks must accept these banknotes for transactions and exchanges."
The banknotes Joseph referred to were essentially "certificates redeemable for gold and silver" issued by banks. Anyone holding these notes could exchange them for coins at the issuing bank.
If a bank was strong and trusted by everyone, people would use its banknotes for convenience, rarely exchanging them for actual coins. The notes would become de facto currency.
Currently, the pound sterling in circulation in England was technically a banknote issued by the Bank of England. But as the Bank of England grew to dominate, it received the British government's authorization as the "sole legal banknote," evolving into Britain's central bank.
At this stage, the French Reserve Bank lacked the overwhelming capital advantage of the Bank of England. So, Joseph had to use administrative measures to introduce the Reserve Bank's banknotes. However, this process wouldn't be easy; the Reserve Bank's limited capital meant the public might not trust its banknotes.
Initially, Joseph had planned to spend three to five years building market confidence in the Reserve Bank's banknotes. But with the backing of the banking guild and the acceptance of these seven major banks, the process could be shortened to just a few months.
Moreover, with banknotes—essentially paper currency—as a medium, the Reserve Bank and these seven banks would have a significant advantage in transaction efficiency and convenience over other banks.
Before long, other banks would have to accept the Reserve Bank's banknotes to remain competitive.
Once the majority of banks nationwide accepted the Reserve Bank's banknotes, a law could be passed, establishing these banknotes as France's only legal paper currency. Then, using the power of currency issuance, the Reserve Bank could regulate the entire banking system. If any bank resisted? Their cash flow would be squeezed the next day, and they'd be lucky to survive a few days.
Marquis Ludo and the others exchanged uneasy looks. Accepting another bank's banknotes meant that while one bank could print paper notes, their customers could take these notes to another bank to exchange for gold and silver. Although they could return the received banknotes to the Reserve Bank to exchange for gold and silver, there would inevitably be a time lag of a few days during which their bank would be holding hundreds of thousands, if not millions, of paper notes, essentially becoming a reservoir for these notes.
Not to mention that banks rarely settle accounts every few days; usually, it's at least a month. So, for that month, the bank would have a large amount of paper notes on hand.
Mr. Boisrandar nervously asked, "Your Highness, what if, and I mean if, the Reserve Bank's banknotes depreciate? Wouldn't we...?"
Joseph had anticipated this concern and immediately replied, "The Cabinet will soon issue a decree fixing the exchange rate between the Reserve Bank's banknotes and gold and silver, and this rate will remain stable. Of course, if you're still worried, the Reserve Bank can sign an agreement with you: if the banknotes depreciate significantly in a short period, the Reserve Bank will compensate you for the loss."
Joseph felt confident making this promise. After all, in this era of the gold and silver standard, currency values were stable unless a major economic crisis occurred. And if a crisis did cause severe devaluation of French banknotes, Joseph would simply honor the agreement by compensating the banks with more paper money. By that time, the banknotes would already be widely accepted, so printing more wouldn't be a problem. In an economic crisis, how much compensation could they demand? The printing presses would run 24/7 to meet the demand.
In the end, Marquis Ludo and the others reluctantly agreed to Joseph's terms—they knew they couldn't win against such powerful forces. They would just have to settle accounts more frequently, viewing that month's worth of transactions as a gift to the Reserve Bank.
Joseph stood up, smiling as he looked at the three bankers before him. Raising his arms, he declared, "Congratulations to you, and to the four banks waiting outside. From now on, you will no longer be implicated in the Necker case. You're safe."
He then nodded to Brienne, "Archbishop Brienne will represent the Reserve Bank and the French government in signing the agreements with you."
The three banking magnates quickly bowed, expressing their deep gratitude for the Crown Prince's mercy. Although they were bitter about the heavy losses, they were relieved that their banks were safe.
As Marquis Ludo and the others left, Joseph suddenly thought of a question: four banks had gone bankrupt and been acquired, and today seven more had "surrendered." But there were a total of thirteen banks involved in the Necker case. What were the other two doing?
At 4 p.m., Fouché arrived at Versailles Palace to answer his question.
"Your Highness, Perney, along with his wife and two sons, was captured by the Intelligence Office while fleeing to Rouen this morning. What do you suggest...?"
"Seize the bank immediately," Joseph sighed. These people were too impatient. If they had waited just half a day longer, they could have joined Marquis Ludo's "caravan."
But now that they had tried to escape, Joseph had no choice but to deal with them harshly. He only hoped that the Reserve Bank wouldn't be too short-staffed after taking over the Perney family bank.
Fouché nodded and continued, "Your Highness, two of Denaro Bank's largest shareholders returned to Switzerland just as the scandal broke. They haven't been seen since."
Denaro Bank was a Swiss bank based in the canton of Schwyz, even though most of its business was in France. This meant its profits had likely been sent to Switzerland, so even if the bank's assets in France were confiscated, there probably wouldn't be much money left.
Joseph frowned. "It seems we'll have to resort to diplomatic measures."
...
Three days later, a modest yet prestigious award ceremony was held in the Hercules Hall of Versailles Palace.
It was considered prestigious because Her Majesty the Queen presided over it herself. However, aside from the honored officials of the Public Investigation Office, the only attendees were high-ranking police officials, the Crown Prince, and Baron de Brétuil, the Minister of Justice—a total of fewer than thirty people, hardly a lively event.
After a serenade played, Queen Marie, dressed in a lavish light purple gown, ascended the platform on the west side of the hall. Smiling at Marat and his team, she spoke loudly:
"Gentlemen of the Public Investigation Office, through your outstanding work and courageous spirit, you have saved France from significant losses and brought a long-evading embezzler to justice!
"On behalf of the royal family, I extend to you our highest respect!"
Marat had uncovered Necker's massive embezzlement, and through Joseph's subsequent actions, over 100 million livres had been "earned" for the French Treasury, significantly advancing the creation of the French central bank. The credit he deserved was immense.
During the operation, Evans from the Investigation Office had been killed, and Marat himself was injured. Joseph decided they deserved a proper commendation.
A palace official brought forward wreaths. Queen Marie personally placed one on Marat, who was still using a cane. Police Commissioner Nainson presented wreaths to the others.
In the applause that followed, the Queen announced that due to the Public Investigation Office's outstanding contributions, it would be elevated to the status of the Public Investigation Bureau, directly under the Cabinet's jurisdiction.
Thus, France's "anti-corruption bureau" finally shed its "mask" of being part of the police system and gained formal recognition as an independent body.
The Crown Prince remained as Director of the Investigation Bureau, with Marat appointed as Head of Operations. Démoulins was assigned as Head of the Archives. The Bureau was divided into four departments, with the Operations Department set to expand to seven task forces totaling over 200 people.
For such a large French bureaucracy, this was barely a drop in the ocean, but it was the most advanced oversight institution in Europe. While other countries still relied on royal inspectors to monitor officials, France had taken the lead in establishing independent oversight.
This was also why many officials had chosen not to attend the award ceremony—no one could be sure their own hands were completely clean. Necker had once held immense power in France and was as wealthy as a king, yet he had fallen swiftly. If the Investigation Bureau turned its attention to them, they would be finished.
Next, Queen Marie publicly awarded Marat a bonus of 500 livres. Other members of the Investigation Office who had worked on the Necker case received bonuses equivalent to one month's salary. The family of Evans, who had died in the line of duty, received a pension of 4,000 livres, and the Queen personally sponsored his son's education.
After the ceremony, the Queen invited everyone to a banquet.
As they exited Hercules Hall, Baron de Brétuil was the first to congratulate Marat: "You're an exceptional investigator, solving a case that had been dormant for so many years."
Marat glanced at the Baron's lavish attire, frowning slightly, unsure of how to respond. Before he could speak, Nainson approached with a broad smile: "Her Majesty thinks very highly of you. I wouldn't be surprised if you were granted a noble title soon."
Foullion and Fouché also joined in with praise.
As Marat looked around at these men, his expression grew increasingly troubled.
A noble title?
He almost laughed at the thought. Was he now to become one of these corrupt aristocrats?
He looked up at the ornate and artistic carvings on the ceiling of Versailles Palace.
Why am I here?
What am I doing?
It's absurd that all I've done has earned the praise of these nobles!
Have I betrayed the people of France?
Suddenly, he stopped in his tracks, claiming that his wound was hurting and that he couldn't attend the banquet. Leaning on his cane, he turned and walked out of Versailles Palace.
(End of Chapter)
Friends, if you want to read chapters in advance, subscribe to my patreon.
You can also buy the book if you are only interested in reading the novel.