The Crown Prince of France - Chapter 179

Chapter 179: The French Central Bank

In the interrogation room on the third floor of the Bastille...

Viscount Calonne contentedly sorted through Necker’s confession, glancing at him from the corner of his eye. “Mr. Necker, thank you for cooperating with my investigation. My task here is complete. What happens next will be between you and the representatives of the royal family.”

As he spoke, the door opened, and several secret police entered, escorting a nobleman wearing silver-rimmed glasses and a lavish blue coat.

“Ah, here comes Count Hermann.”

Calonne stood and exchanged greetings with Count Ambroise de Hermann, vacating the chief interrogator’s seat. However, the count did not take the chair. Instead, he received a document from his assistant and placed it before Necker.

“Mr. Necker, based on the evidence submitted by the interrogation committee, the total amount of your embezzlement is 8,927,000 livres.”

He glanced at Calonne, who nodded to confirm the accuracy of the figure.

Count Hermann continued, “Her Majesty the Queen, in line with her prior commitment, has decided to show leniency. You are fined only 2 million livres. Therefore, the total owed is...”

“11,927,000 livres,” Viscount Calonne interjected with a smile.

“Ah, yes. Thank you, Viscount Calonne.”

Turning back to Necker, Count Hermann said, “Now you must return the misappropriated funds and pay the fine to be released. Furthermore, Her Majesty has graciously permitted you to choose your place of exile—either Lorraine or Foix.”

He tapped the document on the table. “Here is the pardon signed by Her Majesty.”

For Necker’s case, exile within France itself was an exceptional clemency.

Having lost all will to resist, Necker took pen and paper, scribbling down an address and a string of numbers.

He handed the note to Count Hermann and slumped in his chair. “Go here. There’s a safe containing banknotes and instructions on how to withdraw them. That’s the code. I’m not sure if it’s enough to cover 12 million, but there should be over 10 million... That’s really all I have.”

The royal representative accepted the paper and nodded. “Thank you for your cooperation. However, you’ll need to remain here until the funds are transferred. I must also inform you that any shortfall will have to be compensated with your properties and estates.”

“Do as you please...” Necker muttered despondently.

Count Hermann departed, leaving Calonne dissatisfied. He clicked his tongue, disappointed that Necker’s punishment amounted to mere exile. He had expected the man to spend several years in prison.

Little did Calonne know, Joseph had no intention of letting Necker off so lightly.

Necker’s predecessor as Minister of Finance was Jacques Turgot, a highly capable economist whose fiscal reforms laid the foundation for capitalism in France. His tenure was hailed as the "Golden Age" of 18th-century French economics.

However, Necker had quickly reversed Turgot’s policies, relying instead on massive loans to sustain government finances, ultimately plunging France into a debt crisis.

For such a "parasite," Joseph would not allow exile to suffice. The tradition of leniency toward the upper classes would not apply here. Of course, any retribution would wait until Necker had fully repaid his debt, as Joseph was determined to preserve the royal family's reputation for keeping its word.

...

At the Palais-Royal...

The Duke of Orléans, his face darkened with anger, slammed down a newspaper. Nearly every Parisian publication that day carried a public notice about the French Industrial Development Fund.

Beyond basic details about the fund, the notice highlighted the composition of its governing body—the Fund Committee.

The committee consisted of ten seats: six elected by the largest investors, one designated by the Minister of Finance, one by the French Reserve Bank, and two by the royal family.

The committee was empowered to make all decisions regarding the fund, with neither the royal family nor the government allowed to interfere. What the duke did not know was that Joseph had built in a “back door.” The French government, the Crown Prince, and the royal family were the largest investors, effectively guaranteeing control over at least four of the six elected seats. Combined with the royal family’s two seats and one from the Reserve Bank, this ensured Joseph’s absolute control over the fund.

The Duke of Orléans threw the newspaper aside in frustration.

He had anticipated the wave of panic caused by the orchestrated bank failures and the government’s inability to compensate noble investors. His plan had been to unite the nobles in pressuring the crown to halt the Necker case.

What he hadn’t expected was the government’s swift creation of the “Industrial Development Fund,” which had immediately absorbed the nobles’ investments in banking and calmed their fears.

Initially, the duke had hoped to stir distrust by drawing comparisons to the infamous Mississippi Company. However, upon reading the fund’s public notice, he realized this approach was futile.

The fund’s transparent governance model, with an independent committee and investor rights to audit and withdraw funds, left no vulnerabilities to exploit. Joseph had simply copied the proven models of future financial systems.

The Duke of Orléans knew that without the nobles’ collective power, the implicated banks would be systematically dismantled. Losing control over these key banks would irreparably weaken his influence within the banking guild.

To make matters worse, the duke himself had millions of livres tied up in the failing banks.

With a heavy sigh, he muttered to himself, “Am I also to turn to that Industrial Development Fund?”

A knock interrupted his thoughts. His butler, Donadien, entered and bowed. “My lord, the guests have all arrived.”

The duke nodded wearily and made his way to the second-floor hall.

The two-story doors swung open, revealing a disheartening sight. Aside from ten representatives from the banking guild, only seven or eight nobles had shown up, scattered across the vast hall.

Not long ago, when the duke had rallied nobles to oppose the government’s handling of the Necker case, the room had been packed.

The Duke of Orléans stared at the dwindling crowd, his heart sinking. “The unity is gone...”

As he approached, the nobles gathered to greet him respectfully. He opened his mouth to speak, but Marquis Ludo interrupted with a look of panic. “Your Grace, I’ve heard from a friend that Necker’s interrogation is over. He must have confessed everything.”

He glanced nervously at the others. “What are we to do now?”

The duke remained silent. If he had a solution, he wouldn’t have waited until now.

Seeing no response, Marquis Ludo hesitantly suggested, “Perhaps we should negotiate terms with the royal family?”

Before the duke could reply, the butler entered with urgent news. “My lord, reports just came in that a large contingent of police is heading to the City Trade Bank.”

The owner of the bank, De Lachapelle, turned pale and bolted from the room without a word.

...

On the streets of Paris, everyone was talking about the recent wave of bank closures.

“The City Trade Bank is being investigated today. Do you think it’ll go bankrupt?”

“Of course it will. The managers have all been arrested! I saw them hauled into a police carriage this afternoon.”

“They say many more banks are involved. When will it end?”

“God help us! My 60 livres in savings are gone!”

“What? Haven’t you read the newspapers?”

“Newspapers?”

“They said all the failed banks have been acquired by the French Reserve Bank. You can withdraw your savings there.”

“Really? You’re not joking?”

“The paper says you just need to file a request. You’ll get your money within two weeks, or you can transfer it to the Reserve Bank.”

“Thank goodness! I’ll apply right away!”

...

At Versailles...

Joseph reviewed the latest acquisition reports. The French Reserve Bank had completed takeovers of four failed banks and was now sorting through their accounts and assets.

Its branches in Paris had more than doubled, though many hadn’t even changed their signs yet.

Joseph frowned at the report’s mention of a severe management shortage, especially at the executive level. Most of the implicated banks’ managers had been arrested, leaving the Reserve Bank scrambling for replacements.

He had deliberately slowed the pace of the takeovers, knowing that dismantling all thirteen implicated banks at once would plunge France’s financial market into chaos.

“It’s clear the foundation is still too weak,” Joseph muttered. Consolidating the financial system would take at least six more months.

However, time was on his side. No one dared compete with the Reserve Bank for the failed banks’ assets. Despite its modest funds, the Reserve Bank’s shareholder roster—featuring the King, Queen, and Crown Prince—was enough to deter any rival.

...

The report detailed the Reserve Bank's current ownership structure. After the takeovers and an injection of funds from Joseph himself, the shares were as follows:

• The French government owned 40%.

• The Crown Prince, Joseph, held 41%.

• The King and Queen each retained 4%.

• The Prince of Condé and the Duke of Artois controlled 3% collectively.

• Other shareholders, including Count Morneau and Count Robert, held smaller stakes.

These takeovers had propelled the Reserve Bank’s nominal assets to an astonishing 1.9 billion livres. However, much of this amount consisted of loans to the government, while the bank’s debts had been transferred to the Industrial Development Fund.

The fund's structure provided a critical buffer. Its agreement prohibited withdrawals for five years, ensuring that the Reserve Bank would not face immediate liquidity crises. In the meantime, the fund would support industrial investments, stimulating growth and generating profits that could be reinvested or used to repay debts.

Joseph’s vision was to break the cycle of capital flowing into banking profits alone. By redirecting funds toward industry, he aimed to establish a self-sustaining loop: industrial profits would bolster the treasury, which in turn would support further industrial development.

Of course, Joseph knew that implementing this vision would encounter challenges. Operational difficulties, bureaucratic resistance, and external opposition were inevitable. Nonetheless, he believed the effort was worth the risk.

For now, his focus was on stabilizing the financial sector. After the acquisitions, the Reserve Bank would renegotiate loans with the government, reducing exorbitant interest rates that had exceeded 15%. His goal was to lower them to a level that allowed the treasury to balance its books while ensuring sustainable growth.

With the eventual consolidation of the implicated banks, Joseph planned to transform the Reserve Bank into France’s central bank. While this would face administrative hurdles and resistance from private banking interests, the potential rewards were immense. If successful, the Crown Prince would gain unrivaled control over France’s financial system.

Joseph signed off on the latest operational plans and pondered his next move. Just as he was considering which bank to target next, a soft knock came at the door.

“Your Highness,” Eymond announced, “Archbishop Brienne has arrived, accompanied by three bankers.”

Joseph raised an eyebrow. “Bankers?”

Curious, he stood and instructed, “Take them to the reception hall.”

...

In the reception hall, Archbishop Brienne introduced the visitors. “Your Highness, allow me to present Marquis Ludo, Count Kappfeil, and Monsieur Boislandal. They are prominent members of the banking guild.”

Joseph recognized their names instantly. These were the owners of several banks implicated in the Necker case and leading figures within the banking guild.

Once seated, Marquis Ludo, clearly nervous, began to speak. “Your Highness, we must first express our deepest regret for our past mistakes. No—our crimes. We have come to realize the gravity of our errors.”

The marquis hesitated, then continued, “We cannot hope for your forgiveness. We only wish to atone for our transgressions.”

Count Kappfeil chimed in, “Your Highness, from this moment forward, we are your most loyal servants. Whatever you command, we will obey without hesitation.”

Joseph regarded them coolly, suppressing a smile. These men, once defiant and entrenched in their power, were now groveling before him. The spectacle was both satisfying and revealing—a testament to the crown's growing dominance over France's financial elites.

“Gentlemen,” Joseph said with measured authority, “it pleases me to see such contrition. However, actions speak louder than words. Let us discuss how you intend to prove your sincerity.”

The three bankers exchanged uneasy glances. Marquis Ludo ventured cautiously, “Your Highness, we are prepared to relinquish control of our banks and assist the Reserve Bank in its operations. Furthermore, we offer our personal estates as guarantees of our loyalty.”

Joseph leaned back, his expression inscrutable. This was a promising start, but he knew better than to accept their pledges at face value. Trust, he thought, must be earned—and leveraged.

“Very well,” he said after a pause. “We will proceed, step by step. You may begin by providing a full accounting of your banks’ finances. Afterward, we will determine the best course of action.”

The bankers nodded fervently, their relief palpable.

As they departed, Joseph turned to Archbishop Brienne. “Your Grace, ensure that their promises are fulfilled to the letter. And keep a close watch on them.”

Brienne smiled wryly. “As always, Your Highness, you leave nothing to chance.”

Joseph allowed himself a rare chuckle. “In matters of power, Your Grace, one mustn’t.”

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