Make France Great Again-Chapter 183: Economic Policy Disagreements

"Honorable Your Majesty!"

The President of the Bank of France, Count Algou, said with a serious expression to Jerome Bonaparte, offering a deferential greeting before tactfully advising, "The role of the Bank of France is to backstop other banks in case of bankruptcy. Hastily lending to the market might lead the French market into a temporary state of prosperity. But once the tide recedes, the French market might face an even greater threat."

Although Count Algou hadn’t systematically studied Keynesian theory, based on his keen financial intuition honed through years of managing the Bank of France, he felt that what Mr. President suggested—using financial means to stimulate industrial methods—was essentially akin to injecting opium into a weakened person. The patient would become excited due to the influence of opium for a short time, but after the stimulant of opium wore off, the originally ill person would become even sicker.

"Count Algou, in the long run, we are all dead!" Jerome Bonaparte retorted with a sneer, using one of Keynesian theory’s most classic analogies to counter the conservative-minded Count Algou: "It’s like a sick person; rather than prescribing medicine to him, you tell him we are all going to die eventually! The side effects of the medicine might lead the patient to face dangers afterward, but should we abandon treating the patient due to the inherent risks of the medication? Should we pray that the patient’s body is robust enough to pull through?"

Jerome Bonaparte’s barrage of questions left Count Algou pondering deeply, and not only him but also Achille Fuld, Mane, and the Pereire Brothers found themselves deep in thought.

Particularly, Achille Fuld and the Pereire Brothers, who believed in Saint-Simonism, sensed that the theory proposed by the President had many similarities with the theory of Saint-Simon, as well as some differences.

"Your Majesty, please have faith in France!" Count Algou implored Jerome Bonaparte: "Some fluctuations cannot overthrow the French market; France can withstand with its self-regulating mechanism!"

"Mr. Algus!" Jerome Bonaparte no longer honored the President of the Bank of France with the title, and he said coldly: "Tell me, what was that disaster a year ago about? Where does the self-regulatory mechanism of France that you speak of exist! All I see are banks going bankrupt on a large scale, and factories closing down en masse."

Count Algou remained silent, unable to refute Jerome Bonaparte’s words. The upheaval from a year ago still made the directors of the Bank of France shudder with fear.

The large-scale bankruptcy of banks brought about a huge amount of bad debts, coupled with the Bank of France’s lack of intention to bail out the market, resulting in more enterprises facing bankruptcy. Under the dual blows of bank closures and corporate bankruptcies, the entire securities exchange in Paris fell into utter chaos, with various bonds plummeting frantically. The large-scale plummet of bonds directly affected the overall operation of the Bank of France, forcing it to sell off a batch of reserves in an attempt to save the market. However, having missed the optimal rescue time, the Bank of France found it tragically difficult to cope with the entire Parisian financial tide after releasing one-third of its reserves. The trend of decline in the securities exchange showed no signs of stopping; rather, it swept toward France with even greater speed.

Out of a motivation for self-preservation, the Bank of France had to announce the suspension of exchanges, while furious Parisians wanted to storm the Bank of France to retrieve their assets.

If not for the government’s consideration at the time that the bankruptcy of the Bank of France would bring an even greater disaster to the entire country, the Bank of France would have long been reduced to ruins amidst the torrent.

The fact that Lamartine and others used administrative means to forcibly stop the Bank of France from exchanging allowed the bank to breathe a sigh of relief while still having the strength to extend its influence by absorbing a batch of bankrupt banks and spreading its impact to secondary cities in France.

"Your Majesty, the previous year’s turmoil was the result of the intersection of political and economic problems!" Count Algou flatteringly told Jerome Bonaparte: "I believe that under your leadership, France will certainly not fall into such a predicament!"

Count Algou’s flattery did not bring even the slightest joy to Jerome Bonaparte, who believed that Count Algou was merely responding evasively to his question.

Medieval financial thought has always entangled France tightly, and under conservative finance, France would only invest all of its money into more profitable areas.

"Your Majesty, the Bank of France cannot conjure money out of thin air!" Achille Fuld, standing aside, also offered a tactful remark: "Even if we inject funds into the market, it might face a potential bank run due to being unable to bear the burden!"

"Minister Fuld, have you not considered this?" Jerome Bonaparte took out a voucher worth one thousand francs from the Bank of France: "If we can lower the standards and issue 50-franc or even 10-franc notes through the Bank of France, wouldn’t we then have more means to stabilize the market and momentarily alleviate runs? The economic weakness is only temporary; we only need to stabilize employment during the economic downturn to prevent large-scale unemployment. When the economy recovers, the currency we issued will be offset by the economic recovery."

Historical experience told Jerome Bonaparte that the industrial revolution could offset a part of the crisis brought by the excessive issuance of currency.

After World War II, the capitalist world had to provide high-welfare systems for its citizens to compete with the Soviet Union, leading to obvious drawbacks. This high-welfare system forced the capitalist world to run the printing press on a large scale to plunder global wealth.

Through the joint efforts of all capitalist countries, Keynesianism continued for more than 30 years before yielding marginal utility.

Both the capitalist great powers and the Soviet Union exhibited signs of fatigue, and the adverse effects brought by the super issuance of currency were partially alleviated after the dissolution of the Soviet Union, followed by the third information revolution, which similarly eliminated some of the adverse effects brought by Keynesianism.

This allowed Keynesianism to continue for another 30 years until Jerome Bonaparte’s previous era, where Keynesianism was still being passed down like a game of pass-the-parcel.

The monetary oversupply problem triggered by the First Industrial Revolution could be partially solved by the Second Industrial Revolution, not to mention that there were still many undeveloped regions around the world at present.

The adverse effects caused by Keynesianism could be completely resolved by relying on the Third World.

Of course, Achille Fuld and others didn’t know Jerome Bonaparte’s plan, nor could they imagine the speed at which the world would develop beyond their imagination.

The productivity emerging over 200 years surpassed the total of thousands of years before, with the bourgeoisie crushing the shackles of nobility with its immense productivity and vitality, pushing the world to new heights.

In Algou’s view, Jerome Bonaparte’s approach was nothing more than a national-level plundering of the "people," and worse yet, this plunder was justified in the name of the "state."

"Your Majesty, such an action might induce a rise in prices!" Count Algou dared not accuse Jerome of plundering the people; he could only cautiously advise Jerome Bonaparte to abandon his idea: "Every price fluctuation in Paris leads to a revolution!"

"Then employ administrative measures to ensure prices don’t rise in Paris!" Jerome Bonaparte said nonchalantly.

The history of France is one where allocation has been about emotional outbursts; not raising prices in Paris does not mean other cities can’t increase their prices.

It only requires making other cities bear the pain for Paris.

"Mr. Algus, compared to rising prices, I find unemployment to be more lethal!" Jerome Bonaparte responded to Count Algou.

"Your Majesty, it will cause panic in the exchange, and more people will sell off their bonds!" Count Algou replied to Jerome Bonaparte.

"If necessary, certain means can be employed to maintain stability!" Jerome Bonaparte brazenly stated to Count Algou.

Everyone present understood Jerome Bonaparte’s implicit message: if normal trading means fail, guns and cannons are not a bad solution.

In Algou’s perspective, Jerome Bonaparte’s theory no longer belonged to the traditional financial domain; it was completely about directing intentions across Paris’ financial sphere through administrative directives.

The shadow of Emperor Napoleon once again appeared in Algou’s mind, bringing to his face a bitter smile.

"Of course, I mean that if necessary, we might consider closing the market!" Jerome Bonaparte reassured the Count Algou, not wanting to anger the President of the Bank of France with his rhetoric to death.

"Your Majesty, if you insist on doing so, please relieve me of my duties!" Count Algou put forth his final trump card, unable to imagine what impact executing Jerome Bonaparte’s policies would bring to France with his conservative mindset.

Although he still cherished his role as President of the Bank of France, he was more reluctant to implement Jerome Bonaparte’s near-suicidal policy.

According to the French Republic’s constitution, the President has the authority to nominate the President of the Bank of France.

One of the prerequisites to becoming President of the Bank of France, however, is being a member of the French Board of Directors.

The only banker Jerome Bonaparte had to offer was Achille Fuld, who was a board member, but he could not simultaneously hold the position of Minister of Finance and President of the Bank of France.

Choosing an unknown figure whom Jerome Bonaparte was unfamiliar with altogether posed unknown advantages and disadvantages.

Rather than facing an unknown central bank president, sticking with Count Algou would be better.

At least until Jerome Bonaparte seized power completely, he could not let the Bank of France cause too much disturbance.

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