French Empire: But Napoleon IV

Chapter 6 continues the famine; what is the relationship between the famine of the Second Empire and

France's financial system has always been criticized because the French are ruthless not only in making money off foreigners, but also in making money off their own people.

The problem of usury in the French financial system has a long history. Although the Second Empire government vigorously supported the financial industry and established several banks, such as the Crédit Motels de la Crédit and the Crédit Soleil, the problem persisted.

However, these banks essentially operate on a high-interest loan model, which can provide companies with working capital in the short term, but in the long run, it plunges French companies into a debt quagmire.

Large enterprises, especially industrial enterprises that require large amounts of capital investment, were ultimately overwhelmed by high interest rates and unable to obtain more capital through production to expand their scale, which led to a further stagnation in the French industrialization process.

This is one of the reasons why France, under the leadership of Napoleon III, experienced a period of rapid development before quickly stagnating.

The key issue was that his own father, Napoleon III, was unaware of this problem, or rather, by the time he realized it, the economy had already become distorted, and the government itself was already heavily indebted.

France can only barely push forward its industrialization process by relying on loans. As for further deep reforms, the financiers who have been fattened up by the government would never want to see that.

"Olivier, I'd like to know the government's debt situation, and whether it's possible to continue requesting loans from the banks?"

After sending Fold away, Eugène Napoleon, not satisfied with 1000 million francs, summoned Prime Minister Olivier for the second time. Before the prime minister could even settle in, Eugène Napoleon couldn't help but ask a question.

To everyone's surprise, the Crown Prince, who had just become the Governor of Paris, asked about his own debt situation before asking about anything else.

After a slight pause, Olivier quickly demonstrated his professional competence as a representative of the free capitalist class. He briefly recalled the relevant memories and began to answer Eugène Napoleon's question.

"Your Highness, our national debt has reached 123 billion francs, of which long-term fixed debt accounts for 80%, and short-term debt accounts for 20% due to the war. The annual interest payment alone is more than 4.5 million francs."

France's total fiscal revenue has barely reached the threshold of 20 billion francs, and the interest on its debt alone accounts for nearly 25% of the government's revenue.

Based on this loan ratio, it means that even if the government doesn't spend anything else, it would take six years to repay the loan using only public funds.

"Prime Minister, what are the respective holdings of domestic and foreign creditors?"

"Domestic holdings of francs amount to 92 billion francs, while foreign holdings amount to only 31 billion francs."

"Please provide details about the domestic debt ratio."

Having already decided to use bankers to resolve the debt, Eugène Napoleon gestured for Olivier to explain in detail.

Although the Prime Minister still doesn't know what kind of trouble the Crown Prince is up to, he still dutifully gave a detailed account of the domestic bond issuance.

He said a lot, but Eugène Napoleon only remembered that of the 92 billion francs, domestic bankers held a full 57 billion francs.

Even excluding those banks that are difficult to liquidate their debts, the remaining banks that are on the side of the Republic hold bonds worth approximately 20 billion francs.

"Olivier, I hope your government can sign the Imperial Decree, granting Paris permission to issue municipal bonds."

Borrowing money without the name of the French Imperial government would have been far too extravagant, and Eugène Napoleon didn't feel he had the face to do so.

Throughout his life, Eugène Napoleon was burdened with municipal debt.

As Governor of Paris, Eugène Napoleon wielded immense power, including, but not limited to, suppressing violent incidents, ordering judges to punish lawbreakers, convening provincial councils, regulating the behavior of ordinary officials, mayors, municipal judicial officials, and military officers, and overseeing the collection of provisions for the army.

It can be said that the governor's power extends to all areas of administration, judiciary, finance, and military affairs, with military power being the greatest, much like how the 13th Army in Paris had to obey him.

In terms of finance and administration, Eugène was particularly interested in this area. Ordinary French cities did not have the right to issue local bonds; only a few large cities could borrow with the permission of the imperial government.

Projects like Haussmann's Paris renovation were financed by city bonds, and to this day, Paris still has 2.1 million francs in outstanding city bonds.

"Your Highness, I think I cannot agree to your request."

"Olivier, today my mother and I were blocked while crossing the Seine... I need money to improve people's lives. Olivier, you wouldn't want me to follow in my father's footsteps and engage in such crude driving and suppression, would you?"

There was no anger. Knowing that France was burdened with debt and that they themselves didn't know what to do with the borrowed money, it was normal for Olivier to refuse.

Eugène Napoleon, who was prepared, looked directly into the prime minister's eyes and first told Olivier what had happened that day, followed by a closing remark that was half threatening and half pleading.

The effect was excellent; after Eugène Napoleon finished speaking, Olivier fell silent. This prime minister was a representative of the moderates, not only moderate towards the monarchy but also towards the boiling public opinion.

Olivier has long criticized Napoleon III for his frequent suppression of the people and even assassinations.

Now, when Eugène Napoleon used this to threaten Olivier, Olivier could only admit that he was completely swayed. So be it, he might be burdened with debt; after all, he had won against Prussia and would be able to collect a reparations.

Having great confidence in the war effort, Prime Minister Olivier, after some deliberation, concluded that France's debt system could hold up for a while and decided to grant Eugène Napoleon's request.

"Very well, Your Highness, I can sign the imperial decree, but how much municipal bond do you intend to issue?"

"Is the Prime Minister satisfied with issuing 1.5 million francs in municipal bonds, primarily to domestic bankers?"

"Perhaps less is better."

"Then let's go for 1.2 million francs."

Olivier nodded, seemingly agreeing to the amount and target, feeling that 1.2 million was not a big problem given Paris's financial situation and with some government support.

From the beginning, Olivier never asked Eugène Napoleon where the money would be used.

Because municipal bonds are generally used for public works projects, Olivier, influenced by habitual thinking, assumed that His Highness wanted to improve the lives of Parisians.

Unlike Olivier, who considered many factors, Eugène Napoleon didn't think so much. He had no intention of repaying the municipal bonds issued to specific groups of buyers from the very beginning.

What does the debt of the Second Reich have to do with his Third Reich? At most, for the sake of domestic economy and trade, both foreign and domestic creditors, Eugène Napoleon would agree to repay, which is why he asked such detailed questions.

Now, Eugène Napoleon is only interested in issuing municipal bonds as quickly as possible. Once his father suffers his first defeat, whether the bonds will sell is a big question mark.

The sooner the municipal bonds are sold off and the sooner the money is in hand, the better. They can be used to win over the public and to fire bullets at creditors.